Gulfsands Petroleum plc reported that the Company has received approval from the Syrian Ministry of Oil and Mineral Resources and the Syrian Petroleum Company ("SPC") for commercial development of the Khurbet East Field. Development of the Cretaceous Massive Reservoir within the Field will commence immediately.
The Khurbet East Oil Field is within Block 26 in North East Syria. Gulfsands is the operator, on behalf of the Block 26 Contractor group ("Contractor"), and owns a 50% working interest in Block 26 subject to the terms of the Contract for the Exploration and Development and Production of Petroleum for Block 26 (the "Contract"). A map and details of the Khurbet East Oil Field are available on the Company's website: www.gulfsands.net.
The Company has also received the first Reserves report for the Massive Reservoir in the Khurbet East Field which estimates gross life-of-field Proved and Probable ("2P") Reserves of the Massive Reservoir as 66 million barrels of oil and gross life-of-field Proved, Probable and Possible ("3P") Reserves as 143 million barrels of oil. Gulfsands' share of net attributable reserves is explained below in the section of this announcement headed "Khurbet East Reserves."
Reserves estimates for the Butmah Formation and the Kurrachine Dolomite reservoirs discovered in the KHE-1 well will be made once further drilling and appraisal work has been completed.
The Reserves report was prepared by independent consultants, RPS Energy Ltd. ("RPS") of London. The standard used by RPS in preparing its Reserves report was the SPE/WPC/AAPG/SPEE Petroleum Resources Management System (SPE-PRMS).
The Company expects that an EPF capable of producing some 10,000 bopd can be operational by the fourth quarter of 2008 and will be followed by the Full Field Development ("FFD") facility installation in 2009. Production through the EPF will provide valuable information about reservoir performance that will be integrated into the design of the FFD facilities as well as generate cash flow. Engineering and construction of the EPF is scheduled to commence this quarter with drilling of the first development well expected to commence shortly.
The Contractor's net attributable (after royalties, taxes and government share) 2P Reserves are estimated at 22.5 million barrels of oil. The Contractor's 3P Reserves have been estimated as 44.8 million barrels of oil. Therefore, Gulfsands net attributable (after royalties, taxes and government share) 2P Reserves have been estimated as 11.3 million barrels of oil and net attributable (after royalties, taxes and government share) 3P Reserves have been estimated as 22.4 million barrels of oil.
Gulfsands' CEO, John Dorrier, said, "We are very pleased to have received rapid approval for commercial development of the Khurbet East Field from the Syrian Government. With the active cooperation and support of the Oil Ministry and SPC, the Company and its partners will proceed immediately with development activities and seek to achieve early production from the Field by the fourth quarter of 2008. We are also very pleased to confirm a substantial reserves estimate for the Khurbet East Field at this early stage of Field appraisal following the excellent results obtained in the first three wells in the Field."
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