Gulfsands Petroleum Forms Partnership with Cham Holding

Gulfsands Petroleum has established an important strategic partnership with Cham Holding, which is well recognized as one of Syria’s most important business groups. The strategic partnership is to be established in the form of a venture company owned 65% by Cham Holding and 35% by Gulfsands with each party responsible for only their proportionate share of funding. The intention of the Strategic Partnership will be to pursue the acquisition of several high-value energy projects in Syria and potentially Iraq. The directors of Gulfsands and Cham Holding have been working together for some time in pursuing the acquisition of interests in the Projects and matters have now reached a stage where it was considered appropriate to formally establish the Strategic Partnership in order to be in a position to participate in any potential Project through the Strategic Partnership.

In addition to its minority position in the Strategic Partnership, it is the intention of the partners that Gulfsands should act as the Operator under any Government Contract acquired by the Strategic Partnership. Gulfsands will also be entitled to acquire additional direct interests in the Projects alongside any participating interests acquired by the Strategic Partnership.

Cham Holding, a private joint stock company, was established in 2006 and then completed a US$360 million equity raising for investment in a range of sectors including the energy sector, power generation, real estate (including hotels and leisure), finance, health and education. Cham’s significant shareholders include the Al Mashreq Investment Fund, which recently became a substantial shareholder in Gulfsands, and a number of prominent Syrian businessmen and corporations.

Cham Holding, currently the largest private Syrian consortium, is chaired by Mr. Nabil Kuzbari and vice chaired by Mr. Rami Makhlouf. Cham Holding is currently developing projects that exceed in value more than one billion U.S. Dollars, including a wide variety of real estate and hospitality projects, some of which are being developed within joint ventures with well known international companies.

Maturing Middle East Strategy

In light of the Company’s recent exploration success at Khurbet East in Syria and the establishment of the Strategic Partnership, the Company will seek to build upon these important milestones with an expansion of its activities in the Middle East.

Gulfsands’ focus in the region will be on acquiring development or re-development projects with existing production infrastructure and proven oil and gas reserves, and on further exploitation and exploration projects with high potential upside, but lower technical risk. Gulfsands will concentrate on forming further strong working relationships with host governments and with local business interests in a similar manner to the Strategic Partnership formed with Cham Holding.

The Company’s identified opportunities in the Middle East for the short and long term includes:

  1. Securing early development and production of the Khurbet East discovery;
  2. Expanding the Company’s exploration efforts in Syria Block 26 during the period of the recently announced first extension of the Production Sharing Contract during the next 3 years;
  3. Acquiring development projects in Syria, several of which have already been identified by the Strategic Partnership;
  4. Finalizing formal contracts for the development of the Maysan gas gathering and processing project in southern Iraq;
  5. Acquiring exploration and development rights in Kurdistan and upstream field development rights elsewhere in Iraq; and
  6. Acquiring Syrian and Iraqi cross-border oil and gas development opportunities which are expected to become available in the near-term following formal Parliamentary approval of the new Oil and Gas Law in Iraq.

Gulfsands’ Chairman, Andrew West, said:

"We are delighted to have reached agreement with Cham Holding for establishment of the Strategic Partnership which we view as important to our ambitions in the Middle East.

We are optimistic that, in partnership with Cham Holding, Gulfsands will be able to acquire direct and indirect interests in several potentially high-value energy projects which have already been identified in Syria and Iraq and which we have been considering in collaboration with certain shareholders of Cham Holding for some time."

Cham Holding’s Chairman, Nabil Kuzbari, said:

"Gulfsands is well known and respected in Syria as a highly professional operator and for its recent and significant exploration success at Khurbet East in the north east of Syria. Gulfsands is also widely recognized for its ability to work with local companies and its competence in efficiently meeting technical challenges and executing commercial projects.

For some time now, we have enjoyed a close working relationship with Gulfsands’ management and directors and are therefore pleased to be working with Gulfsands in pursuing several high value energy projects where we believe our combined skill sets will help us secure one or more significant projects and provide us with the opportunity to create a great deal of value for our respective shareholders."


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