Gulfsands Goes Shopping in North Africa
Gulfsands has reached an agreement to acquire working interest positions in two exploration permits in Tunisia (Chorbane and Kerkouane Permits) and one exploration permit in Southern Italy (G.R15.PU) from AuDAX Resources Ltd. The agreement remains subject to the completion of formal farm-in documentation and board approvals from both companies.
Chorbane Permit -- Onshore Tunisia
The Chorbane permit is located onshore central Tunisia near the port city of Sfax and covers an area of 2,428 square km. The terms of the exploration and production within the Chorbane Permit are governed by a Production Sharing Contract ("PSC") with the Enterprise Tunisienne D'Activities Petrolieres or "ETAP". The permit is surrounded by several producing oil fields and extensive oil & gas infrastructure. The forward work commitment for the Chorbane permit requires the drilling of one exploration well and Gulfsands will pay 80% of the cost of the first exploration well in order to earn a 40% interest in the permit.
A number of prospects and leads have been indentified within the permit, the most prospective being a large tilted horst block ("Sidi Daher") that contains multiple potential targets and recoverable un-risked prospective resources of 80 mmboe (AuDAX estimate).
AuDAX has identified a seismic amplitude feature of particular interest that may indicate the presence of gas within one of the primary reservoir targets. The resource estimate associated directly with the seismic amplitude feature is 175 Bcf of gas or 29 mmboe (Audax probabilistic mean case).
Gulfsands expects to drill the Sidi Daher exploration well prior to the end of 2010, and the gross well cost is estimated at approximately $5.0 million. In the success case, appraisal and development activities will commence as quickly as practicable with first production expected within 18-24 months of discovery.
Kerkouane Permit -- Offshore Tunisia
G.R15.PU Permit (Pantelleria Permit) -- Offshore Italy
G.R15.PU, is located offshore the island of Pantelleria southwest of Sicily in Italian waters and the Kerkouane Permit is located offshore northeast Tunisia. The two permits are contiguous and comprise a total area of approximately 4500 square km. The terms of the exploration and production within the Kerkouane Permit are governed by a Tunisian Production Sharing Contract ("PSC"), whist the G.R15.PU permit is governed under an Italian tax/royalty structure.
The permits contain multiple prospects and leads, the most significant of which is the Lambouka Prospect, a large horst block containing multiple reservoir targets. The Lambouka Prospect lies in approximately 400m of water. AuDAX has published 270 mmboe as the mean reserve estimate for the Lambouka Prospect.
The forward work commitment for the Kerkouane Permit requires the drilling of one exploration well. Atwood Oceanics Inc will be providing the Atwood Southern Cross semisub to conduct the work program for the Lambouka prospect with an expected spud date of June 15, 2010.
Gulfsands will earn 20% working interest in both permits by paying 30% of the cost of an upcoming 3D seismic program that will be used to define the first drilling location, and has the option to earn an additional 10% in the permits with payment of an additional 15% of the initial well cost, with option election prior to the spud of the first exploration well. The gross cost of the seismic program is approximately $5.2 million and the gross cost of the first exploration well is approximately $20 million.
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