Gulfsands Encounters Additional Oil in Syria's Khurbet East Field

Gulfsands has announced that drilling operations have been completed on the Khurbet East No 7 well ("KHE-7"), with an oil column identified in this planned water disposal well located on the northern limits of the Khurbet East Field within Syria Block 26. The Company also announces the commencement of a 640 square kilometer 3D seismic program that is expected to assist the Company in identifying additional opportunities in the area of Block 26 which now includes the Khurbet East and Yousefieh discoveries.

Drilling Update in Syria

The KHE-7 well was designed to provide geologic information on the northern limits of the Khurbet East Field, establish the oil-water contact and to be available to serve as a disposal well for the water that is expected to be eventually produced in conjunction with oil production from the Khurbet East Field.

The well was drilled to a total depth of 2,060 meters and encountered the top of the Cretaceous Massive reservoir at approximately 1978 meters. Good oil shows were encountered while drilling through the upper 7 meters of the reservoir and gradually diminished over the next 13 meters.

The reservoir porosities encountered in the KHE-7 well were measured to be mainly in the range of 5% to 10%, which are significantly lower than the exceptional reservoir properties encountered in the central portion of the Field where porosities are in the range of 16 -- 20%. Variations in reservoir properties such as these are not unusual in carbonate reservoir systems and this new information, combined with the production history to date, will be important in developing a more refined reservoir model.

Preliminary analysis of the wireline logs has been unable to directly establish an oil-water contact due to the generally higher resistivities measured in this lower porosity reservoir. Although the oil-water contact was not directly determined by the wireline logs, preliminary analysis of these logs and the drilling data together indicates that the oil-water contact in the field may be slightly deeper and the field may extend further north than previously interpreted.

A drill-stem test was not undertaken at KHE-7, but has been suspended for further evaluation which may include production testing and eventual use as a water disposal well. To date only trace amounts of water have been produced from the Khurbet East Field.

3D Seismic Acquisition Program

Acquisition has also commenced on a 640 square kilometer 3D seismic program that is designed to provide contiguous data coverage over a large area surrounding the recent Khurbet East and Yousefieh oil discoveries. The seismic data acquired will complement and expand the area previously surveyed by 3D seismic and assist in delineating already identified leads in the region and provide more information on the new stratigraphic play that has been identified in an area that now includes the Yousefieh discovery. The 3D seismic program is expected to be completed in approximately 5 months, with final processed data available during the third quarter of this year.

Ric Malcolm, Chief Executive said, "We are very pleased to have encountered oil in this well and with the evaluation we have carried out to date, providing us with valuable information on the characteristics of the reservoir in the northern part of the Field. This represents a good start to the busy year ahead. This important information and the continued remarkable production performance of the Khurbet East Field ensures we are looking forward with some anticipation to receipt of the reserves re-evaluation which should be completed during the first quarter of 2009.

"The data being acquired in the 3D seismic program currently underway is also going to be eagerly awaited as we expect it to provide us with new information to enable us to pursue the new stratigraphic play that has been identified by the Yousefieh-1 oil discovery."