Gulfsands Ups U.S. Proved, Probable Reserves by 31%
Proved and probable reserves in the U.S. increased by 31% to 44.6 billion cubic feet of natural gas equivalents (BCFGE), or 7.4 million barrels of oil equivalents (MMBOE), as of 31 December 2006 compared to 34 BCFGE as of 31 December 2005. The net present value (NPV) of the proved and probable reserves as of 31 December 2006 discounted at 10% totals $197 million with 84% of the NPV in the proven reserves.
Gulfsands' reserve additions for the 2006 calendar year replaced 389% of its 2006 produced oil and gas volumes. Produced oil and gas volumes for 2006 were 3.67 BCFGE.
Gulf of Mexico Reserves
Gulfsands commissioned Netherland, Sewell & Associates Inc. to provide a reserves report for the U.S. offshore Gulf of Mexico oil and gas properties as of 31 December 2006. This reserve report reflected an increase in overall reserves primarily associated with extensive workover and recompletion work on many of the properties. The reserves report states that Gulfsands' Gulf of Mexico properties contain proved and probable reserves of 41.5 BCFGE, consisting of 27.3 billion cubic feet of natural gas (BCFG) and 2.36 million barrels of oil (MMBO). On an oil barrel equivalent basis this represents 6.9 MMBOE. The report further classifies an additional 2.1 BCFGE of possible recoverable reserves.
The NPV at 31 December 2006 of the proved and probable reserves discounted at an annual rate of 10% is $185 million (86% of net present value is in proven reserves). The NPV of the possible reserves was $9.8 million.
Onshore Gulf Coast Reserves
Collarini Associates completed a reserves report for the U.S. onshore Gulf Coast oil and gas properties of the Company at 31 December 2006. This reserve report also reflected an increase in overall reserves. The reserves report states that Gulfsands' onshore properties contain proved and probable reserves of 3.1 BCFGE, consisting of 2.8 BCFG and 57,000 barrels of oil. The report further classifies an additional 4.7 BCFGE of possible recoverable reserves, consisting of 4.6 BCFG and 24,000 barrels of oil.
The NPV of the proved and probable reserves discounted at an annual rate of 10%, is $11.8 million and the NPV of the possible reserves is $11.2 million.
Gulfsands' CEO, John Dorrier, said:
"The increases in our U.S. reserves have exceeded our expectations with a resulting increase in their value despite lower commodity prices."
Oil prices are based on 31 December 2006, NYMEX West Texas Intermediate futures prices and are adjusted by field for quality, transportation fees, and regional price differentials. Gas prices are based on the 31 December 2006, NYMEX Henry Hub futures prices and are adjusted by field for energy content, transportation fees, and regional price differentials.
Gulf of Mexico, U.S.
The Company owns interests in 54 offshore blocks comprising approximately 193,000 gross acres which includes numerous producing oil and gas fields offshore Texas and Louisiana with proved and probable recoverable reserves net to Gulfsands at 31 December 2006 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3 BCFG and 2.36 MMBO.
Gulfsands owns interests in two oil and gas fields onshore Texas, U.S. (98.5% working interest in Emily Hawes Field and 37.5% working interest in Barb Mag Field) with proved and probable recoverable reserves net to Gulfsands at 31 December 2006 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000 barrels of oil.
Gulfsands owns a 50% working interest and is operator of Block 26 in North East Syria. Block 26 covers 11,000 square kilometers and encompasses existing fields that currently produce over 100,000 barrels of oil per day. These fields are operated by third parties including the Syria Petroleum Company.
Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministry of Oil in Iraq for the Misan Gas Project in Southern Iraq and following completion of a feasibility study on the project is negotiating details of definitive contracts for this regionally important development. The project will gather process and transmit natural gas that is currently a waste by-product of oil production and as a result of the present practice of gas flaring, contributes to significant environmental damage in the region.