Gulfsands provided the following update on the Company's operations at Block 26, Syria where Gulfsands holds a 50% interest and acts as operator.
Yousefieh-4H Development Well
The drilling of a third development well on the Yousefieh field, Yousefieh-4H, has recently been completed. Located approximately 500 meters north of the Yousefieh-1 discovery well, this horizontal well encountered the Cretaceous Massive Formation at 2068 meters Measured Depth (1543 meters True Vertical Depth below mean sea level), approximately 3 meters deeper than the pre-drilling prognosis. A gross horizontal reservoir section of 718 meters was drilled in an easterly direction across the Yousefieh structure, with an average net reservoir pay section being assessed from formation logging as 710 meters, average porosity of 17.9% and average oil saturation of 86.5%.
The gross horizontal reservoir section drilled in this well was a record for Gulfsands, exceeding that of 311 meters previously achieved in the Khurbet East-5H well. Assessment of reservoir facies along hole via the running of a formation imaging logging tool suggests that the Yousefieh structure is of increased vertical thickness to the east than previously understood from the evaluation of seismic data, indicating the potential for further upside in Yousefieh field oil-in-place volumes. Flow testing of the well will be conducted in late September, followed by a field wide pressure survey to further assess the extent of the field's resource.
Khurbet East and Yousefieh Production
Aggregate oil production from the Khurbet East and Yousefieh Fields has now exceeded 10,750,000 barrels with daily production continuing to average approximately 20,000 barrels of oil per day and negligible amounts of water being produced.
Block 26 Exploration License Extension
Following agreement having been reached with the General Petroleum Corporation of Syria on the planned relinquishment of 25% of the exploration license for Block 26, the area of Block 26 has been reduced to a contiguous area of 5,414 square kilometers nominated by Gulfsands and the term of the license extended until August 2012.
Forward Exploration Drilling Program
The rig used in the drilling of the Yousefieh-4H well has been moved to the south of the producing Yousefieh field area and has spud the Yousefieh South 1 (YSO-1) exploration well, which is located approximately 2 km south of the Yousefieh field and is targeting a similar objective to the producing reservoir at Yousefieh Field with unrisked gross speculative reserves in the range of 9 to 15 million barrels. Drilling and evaluation of the YSO-1 well is expected to take approximately 30 days.
Following this well, the rig will then move back into the Khurbet East field area to drill an additional vertical delineation well, KHE-18, on the north-west flank of the field.
3D Seismic Program
The 2010 3D seismic acquisition program has been expanded to approximately 1020 km2 and acquisition of 3D seismic data has now commenced. These data are being acquired over a prospective region of the block that lies immediately to the west of the Greater Khurbet East survey area. These data will be contiguous with Gulfsands existing database of 3D seismic data, and will be used to identify new leads and prospects for drilling in 2011 and 2012. Delivery of the processed data is expected during the first quarter of 2011.
Commenting on this operations update, Ric Malcolm, CEO of Gulfsands, said, "We look forward to the tie-in of Yousefieh-4H which appears to have the capability to significantly increase the daily production from the Yousefieh Field. Gulfsands has commenced a period of unprecedented level of exploration and development drilling activity that includes the recently spud Yousefieh South-1 well and the acquisition of another large 3D seismic survey in preparation for further exploration activity in the remaining two years of the Block 26 license."
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