Gulfsands Commences Workovers at Syria's Block 26

Gulfsands Petroleum has announced the successful completion of the expansion of the processing capacity at the Khurbet East Early
Production Facility ('EPF') to approximately 18,000 barrels of fluid per day and to provide the following update on operations at Block
26, Syria.


The planned expansion of the Khurbet East EPF has been completed with the EPF now capable of handling approximately 18,000 barrels of fluid per day ('bfpd'). Tie-in operations have also been concluded on the previously drilled KHE-9 and KHE-10 production wells coincident with the completion of the expansion of the EPF, with the result that gross daily production from the Khurbet East Field has increased from approximately 10,730 barrels of oil per day ('bopd') during the month of June to approximately 14,700 bopd. The KHE-9 well is currently flowing at approximately 2,100 bopd and KHE-10 well is contributing approximately 1,900 bopd. As with the other production wells in the
Khurbet East Field, these new wells are flowing oil with negligible associated water cut.

Drilling operations on the KHE-11 horizontal well ('KHE-11') have also recently been successfully concluded, and this well is awaiting tie-back to the EPF. The KHE-11 well was spudded on June 20, at a surface location approximately 700 meters to the east of the Khurbet East discovery well KHE-1. KHE-11 is the third of three development wells planned to support the expansion of the Khurbet East EPF.

The KHE-11 well was drilled to a total measured depth of 2235 meters or 1962 metres true vertical depth ('TVD') and encountered the top of
the oil bearing Cretaceous Massive reservoir at 1945 meters TVD. A horizontal section of approximately 60 metres of Cretaceous Massive
Formation was penetrated within the uppermost portion of the reservoir. Reservoir properties encountered in the KHE-11 well-bore are consistent with those in the other high performance wells in the central portion of the Khurbet East Field, and this well is anticipated to produce oil at similar rates to the other production wells located near the structural crest of the Field.


The drilling rig has now moved on to drill well KHE-12, a delineation well located near the currently interpreted southern limit of the Khurbet East structure. KHE-12 is located some 3.2 kilometers south of the previous delineation well KHE-8, which encountered a full oil column. The objective of KHE-12 well is to provide structural and stratigraphic information which may lead to the extension of the Khurbet East Field into the southern tip of the Khurbet East fault block structure and to locate the field-wide oil-water contact. The KHE-12 well was spudded on August 1, and drilling operations are expected to be completed within approximately 45 days.


Operations have commenced this week on a three-well workover program using a recently contracted workover rig. The multiple
objectives of the planned workover program are to prepare the Yousefieh-1 well as a future producer from the Yousefieh Field and to
establish continuous oil production to surface from the Yousefieh-2 and KHE-7 wells which were drilled as delineation wells on the
Yousefieh and Khurbet East Fields, respectively.

Wireline logs and core samples taken from the Yousefieh-2 and KHE-7 wells suggest that the oil bearing reservoirs in these wells are of
relatively poor quality and as such the oil volumes that have been encountered at these well locations are not currently classified as
reserves. However, a successful outcome from the workovers of Yousefieh-2 and KHE-7 wells may lead to additional reserves being

The workover programs will involve well testing operations inclusive of acid stimulation and artificial lift if required. Previous open hole testing conducted on the Yousefieh-2 well during drilling operations recovered oil to surface in the absence of acid stimulation, but in sub-commercial quantities. Workover operations will initially commence on the Yousefieh-2 well and be followed by the Yousefieh-1 well where a remedial cement operation will be carried out. Following completion of work on the Yousefieh wells the workover rig will then move to KHE-7 well to commence testing operations.

Ric Malcolm, Gulfsands CEO, said, "The impressive performance from new development wells at Khurbet East has resulted in an increase in field production from 10,700 to in excess of 14,700 bopd. With production well KHE-11 yet to come on stream, we remain on track to achieve our target of producing 16,000 bopd by the end of the year."