Gulfsands Petroleum Inks Farm-in for Tunisian Exploration

Gulfsands Petroleum has signed a farm-in agreement to acquire working interest positions in an exploration permit in Tunisia (Kerkouane Permit) and an adjacent exploration permit in Southern Italy (G.R15.PU, known as the Pantelleria License) from subsidiaries of AuDAX Resources.

Kerkouane Permit -- Offshore Tunisia
G.R15.PU ("Pantelleria License") -- Offshore Italy

The Pantelleria License is located offshore the island of Pantelleria southwest of Sicily in Italian waters and the Kerkouane Permit is located offshore northeast Tunisia. The two permits are contiguous and comprise a total area of approximately 4500 square km (see figure below). The terms of the exploration and production within the Kerkouane Permit are governed by a Tunisian Production Sharing Contract ("PSC"), whist the Pantelleria License is governed under an Italian tax/royalty structure.

The permits contain multiple prospects and leads, the most significant of which is the Lambouka Prospect, a large horst block containing multiple reservoir targets and straddling the boundary between the permits. A 3D seismic survey has been acquired over the Lambouka Prospect, with acquisition completed on April 1, and processing of the "fast-track cube" completed on May 2. These data will be used to select the final drilling location for the Lambouka-1 exploration well which will be made following completion of a geotechnical site survey currently underway and receipt of government approval.

AuDAX has estimated the mean prospective resource for the Lambouka Prospect at 270 million barrels oil equivalent ("MMBOE") with the primary objectives for the well being the Miocene aged Birsa Formation and the Cretaceous aged Abiod Formation.

The expected spud date of the Lambouka-1 well is June 18, 2010. The drilling rig to be used is the Atwood Southern Cross, as supplied by Atwood Oceanics Inc. The Lambouka Prospect lies in approximately 400m of water.

Gulfsands has earned the right to acquire a 20% working interest in both permits by paying 30% of the cost of the recent 3D seismic program, and has the option to earn an additional 10% in both permits with payment of an additional 15% of the initial well cost, with this option required to be exercised prior to the spud of the first exploration well. The gross cost of the seismic program was approximately $5.2 million and the gross cost of the Lambouka exploration well is approximately $20 million.

The Farm-in Agreement provides that Gulfsands has or will initially acquire interests in the Kerkouane Permit and has an election, exercisable at no further cost, to acquire parallel interests in the Pantelleria License equivalent to the interest earned in the Kerkouane Permit.

Following completion of all earn-in obligations, the respective interests of the parties in the "Lambouka Prospect Area" being the limited area defined to be over the Lambouka prospect within both the Kerkouane Permit and the Pantellaria License, will be:

  • AuDAX 40% (operator)
  • Gulfsands 20% (with an option to acquire a further 10% from AuDAX)
  • Bombora Energy 10%
  • Carnavale Resources 20%
  • PharmAust 10%

Following completion of Gulfsands' and Bombora's farm-in obligations and exercise of elections with respect to the Pantelleria License, the respective interests in the remainder of the Kerkouane Permit and the Pantelleria License (outside of the Lambouka Prospect Area) and the Kerkouane production sharing contract will be as follows:-

  • AuDAX 70% (operator)
  • Gulfsands 20% (with an option to acquire a further 10% from AuDAX)
  • Bombora Energy 10% (with an option to acquire a further 10% from AuDAX)

Chorbane Permit -- Onshore Tunisia

Formal farm-in documentation for the acquisition of a 40% interest in the Chorbane permit, located onshore central Tunisia is being finalized and is expected to be signed shortly with the intention to drill a well on the Chorbane permit before the end of 2010.

Kerkouane & Pantelleria block map showing leads & prospects and the rectangular shaped Lambouka Prospect Area (approx. 150 sqkm). The insert map shows a depth structure map of Lambouka at Birsa oil reservoir level and the Lambouka area.

Ric Malcolm, Gulfsands CEO, said, "We are pleased to have completed the formal documentation for our farm-in to these offshore permits in Tunisia and Italy. We have been encouraged by our initial review of data acquired in the recent 3D seismic program and look forward to the commencement of drilling operations on the Lambouka prospect in mid June."

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