Gulfsands Petroleum provided the following update on the Company's operations at Block 26, Syria where Gulfsands holds a 50% interest and acts as operator.
Oil Production Commences at the Yousefieh Field
Gulfsands announced that production of oil commenced at the Yousefieh field, onshore Syria Block 26 on April 24, 2010, 18 months after the drilling of the Yousefieh-1 discovery well in November 2008 and only 3 months after receiving commerciality approval from the Syrian Authorities.
Initially, Yousefieh oil will be produced from two vertical wells, Yousefieh-1 and -3, to a local production facility constructed by and leased from the Syrian Petroleum Company. Oil is separated and metered at this facility and then taken via a 4" pipeline to existing oil storage tanks located adjacent to the nearby Khurbet East Field Early Production Facility ("EPF"), 3 kilometres to the west of the Yousefieh field. Processing and exporting Yousefieh's initial oil production in this manner will not constrain production from the Khurbet East field, where production is limited by the Khurbet East EPF capacity of 18,000 bopd.
Initial rates from the two Yousefieh wells have combined to yield a field initial rate of approximately 1200 barrels of oil per day ("bopd"). The production facilities installed at Yousefieh possess sufficient capacity to handle at least 6,000 bopd, which is the targeted production rate for the Yousefieh Field that Gulfsands is aiming to achieve by 2012. The Company will provide an update on the Yousefieh field production rate once it has stabilized from initial rates in the coming weeks.
It is anticipated that a further development well will be drilled in the Yousefieh field later this year.
Khurbet East Drilling Program
Following the completion of operations at Hanoon-1, the rig has been moved back to the Khurbet East field to commence a three well combined development and appraisal drilling program which will be executed over the next three months.
Two new horizontal production wells, Khurbet East-15H ("KHE-15H") and Khurbet East-17H ("KHE-17H") are planned in the crest of the Khurbet East field. The multiple objectives in drilling these two wells are the provision of additional production capacity for increasing oil production, the facilitation of better reservoir management and the further development of field reserves as identified from technical modeling studies.
The KHE-15H production well was spudded on the 27th April, and will target the producing Cretaceous Massive formation in the north central crestal area of the Khurbet East field.
Following completion of drilling operations on the KHE-15H well, a vertical delineation well, Khurbet East-16 ("KHE-16"), is to be drilled as a north-easterly step out from the central crestal area of the Khurbet East field. Geological data from 3D seismic combined with pressure data indicating minimal reservoir depletion to date suggests that the field could extend beyond the reservoir limits as currently mapped in the base case field interpretation performed for the Company's recent reserves assessments. The KHE-16 well will test the potential for an extension of the crestal karstified reservoir along a ridge that has been interpreted to lie to the north-east. Accordingly, the KHE-16 well will be drilled 1.5 kilometers to the north-east of the field discovery well KHE-1, and is expected to spud at the end of May. If the KHE-16 well is successful then the Company considers there may be potential to further delineate this trend with a more aggressive north-easterly step-out from the presently interpreted limit of the field.
The KHE-17H horizontal production well will target the producing Massive formation in the south central crestal area of the field and it is presently anticipated that this well will spud at the end of June.
Ric Malcolm, Gulfsands CEO, said, "Achieving first oil production at Yousefieh within 3 months of Government approval to develop the field is an outstanding result and demonstrates the commitment our employees, the General Petroleum Corporation and the Syrian Petroleum Company have in making this project such a success. Together with production from the Khurbet East field, total Syrian production is now anticipated to be able to be increased further from today's combined production from both fields of approximately 18,000 bopd to approximately 20,000 bopd in the second half of 2010."
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