New Oil Column Identified at Gulfsands' Tunisia Well

Gulfsands provided the following update on the Company's drilling activity in Tunisia.

The Sidi Dhaher-1 well has been drilled to a total depth of 2011 meters measured depth (m MD). A potential oil column has been identified in the well based on formation pressure data, and oil along with drilling mud and mud filtrate has been recovered from the reservoir via wireline sampling methods. After running casing to preserve the well-bore, the well will be suspended and a production testing operation will be undertaken after completion of program design and mobilization of the required equipment to the site. In the event that testing operations indicate a commercial oil discovery, Gulfsands has the option to become operator of the development.

Sidi Dhaher-1 Exploration

ADX Energy, the operator of the Chorbane license onshore Tunisia, has confirmed that the Sidi Dhaher-1 well has been drilled to a total depth of 2011 m MD. Wire-line logs, as well as formation pressures and reservoir fluids, have been acquired over the open-hole interval from 999 to 2011 m MD in order to evaluate the quality and hydrocarbon content of several potential reservoirs encountered within this bore-hole section.

A potential hydrocarbon column has been identified based on formation pressure data and oil, along with drilling mud filtrate, being recovered from the reservoir via wireline sampling methods. After running casing to preserve well-bore integrity, the well will be suspended pending future production testing operations.

Formation pressure measurements indicated the presence of a possible oil column commencing at a depth of approximately 1156 m MD and within a Late Cretaceous aged reservoir. Subsequent wireline fluid samples recovered yielded a mixture of drilling mud filtrate and moveable oil. The mud filtrate recovery is consistent with fluid invasion into a permeable reservoir during the lengthy process of drilling the well to total depth.

A quantitative assessment of the parameters for this reservoir, including net thickness, porosity and oil quality, will be available when the full evaluation of the logs and samples is completed. The recovery to surface of oil from this reservoir is considered a positive result for the Sidi Dhaher prospect, as well as for further exploration within the Chorbane Permit.

In order to prepare the well for future production testing operations, 9 5/8" casing will be run from surface to a depth of 1295 m MD, and the well will be suspended. Upon completion of the suspension operations, the current drilling rig will be released from the location. Production testing operations will be conducted following completion of the program design and mobilization of the appropriate equipment.

The Sidi Dhaher-1 well is located within the 2,428 km2 Chorbane Exploration Permit onshore central Tunisia, near the port city of Sfax. It is surrounded by several producing oil fields and extensive oil and gas infrastructure.

Gulfsands is earning a 40% interest in the Chorbane permit by meeting 80% of the well costs for the Sidi Dhaher-1 well which are capped at US $5 million and thereafter meeting its pro rata (40%) share of any additional costs beyond US $5 million. In the event of a commercial success with the Sidi Dhaher-1 well, Gulfsands will be entitled to become the operator of the Chorbane permit.