The Massive Formation was encountered in the KHE-2 appraisal well at a depth of 1,931 meters. The Company then successfully recovered approximately 10 meters of whole core from a 20 meter coring interval. Recovery of the entire cored section was limited due to the presence of fractures in the reservoir. Prior to drilling ahead, the Company commenced an open-hole drill-stem test of approximately the top 10 meters of the reservoir, which resulted in oil flow to surface at a maximum rate of approximately 1,085 bopd during nitrogen lift of the well. During the test period following the nitrogen lift the average production rate was 710 bopd increasing to a final rate of 820 bopd. The results of the testing operation indicate excellent formation permeability and indicate that this production rate would be materially enhanced with artificial lift methods (gas lift or pump). All wells in the Massive Formation in the Block 26 area go onto artificial lift relatively soon after they go onto initial production. Preliminary assessment of the oil gravity is 26 degrees API, which makes this oil virtually identical to the oil produced in the Souedieh Field, located some 12 kilometers to the northeast. Oil samples from the test have been submitted for laboratory analysis, but this preliminary assessment is consistent with the oil recovered from Massive Formation in the KHE-1 well.
After the successful drill-stem test, the Company drilled the KHE-2 to a total depth of 2,050 meters and completed a wireline logging program. Independent wireline log analysis of the Massive reservoir indicates a gross oil column of some 49 meters with approximately 29 meters of net oil pay, compared with the lower figures of 31 meters and 22.5 meters respectively seen in the KHE-1 well.
The strong flow-rate from KHE-2 plus the geologic and reservoir information gained from both the KHE-1 and KHE-2 wells indicate that the Khurbet East discovery should be highly economic in the context of low development costs, proximity to production infrastructure and a favorable Production Sharing Contract in Block 26.
The Chilou Formation
The Tertiary aged Chilou B Formation was also encountered in the KHE-2 well. This section appears similar to that encountered in the KHE-1 well; however, preliminary analysis suggests the presence of water and residual or immoveable oil, or a relatively low permeability reservoir. Consistent with other wells drilled in the area, the Chilou B is considered to have minor resource potential compared to both the Cretaceous and Triassic reservoirs at Khurbet East.
Following the successful results from the KHE-1 and KHE-2 wells, the Company plans to acquire a 3D seismic survey over Khurbet East commencing in September. This data will be used to optimize future drilling locations at Khurbet East, facilitating a strategy to move towards early development and production. In parallel with this acquisition program, the Company will commence appraisal of the Kurrachine Dolomite, and draft the further field appraisal program and the initial Development Plan for discussion with its industry and government partners for implementation at the earliest possible point in time. Finally, the Company will continue further exploration on the Block following up on the Khurbet East discovery.
Gulfsands' CEO, John Dorrier, said:
"The test of oil from the Massive formation confirms the excellent flow potential of this reservoir and the lateral continuity of the reservoir between the KHE-1 and KHE-2 wells. Greater net oil pay in KHE-2 than KHE-1 indicates a deeper oil-water contact than previously expected, thereby increasing the reserves potential in this reservoir. The Company now plans to move rapidly to commercialize this discovery in cooperation with its partners."
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