Gulfsands Petroleum plc, the oil and gas production, exploration and development company with activities in Syria, Iraq, and the U.S.A., provides the following update on the Company's operations at Block 26, Syria where Gulfsands holds a 50% interest and acts as operator.
Zaman-1 Exploration Well Completed
Operations have been concluded on the Zaman-1 exploration well, the first of four wells in the 2010 exploration drilling programme.
The Zaman-1 well, located approximately 4.5 kilometres to the south of the Khurbet East Field, targeted the same Cretaceous Massive Formation as is under production at the Khurbet East Oil Field. Zaman-1 encountered the top of the Cretaceous Massive Formation at approximately 2086 metres Measured Depth ("MD"), or 1699 metres True Vertical Depth ("TVD") below mean sea level and 9 metres deeper than pre-drilling prognosis. A core section of approximately 3 metres was recovered at 2092 metres MD that was stained with shows of viscous oil. Wireline logs indicated that approximately 4 metres of net reservoir pay of average porosity 17% were encountered near the top of the well, a result consistent with the oil staining observed on the core section.
An open-hole test was conducted between 2086 and 2100 metres MD that flowed formation water at a rate of approximately 1460 barrels per day with only traces of oil being observed at surface. Below 2100 metres MD, the reservoir was evaluated from wireline logs as being water bearing and tight with secondary porosity attributable to natural fractures.
Consequently, the Zaman-1 well has been interpreted as having a small non-commercial quantity of oil reservoired and has been plugged and abandoned. The cost to Gulfsands for its 50% share of the Zaman-I exploration well is estimated at approximately US$1.5 million before cost recovery and approximately US$450,000 after cost recovery.
Hanoon-1 Exploration Well to Spud Imminently
Following the completion of operations at Zaman-1, the rig will be moved to the Hanoon-1 exploration well location. The Hanoon-1 well will target the Cretaceous Massive formation within an anticlinal closure located less than 10 kilometres north of Khurbet East Field.
Khurbet East Field Oil Production
Average daily gross oil production at the Khurbet East Field continues at a rate of approximately 17,000 barrels per day with the result that cumulative gross oil production has exceeded 7 million barrels, with minimal water production and minimal pressure depletion being observed to date.
The KHE-13 vertical development well, located approximately 1.5 kilometres to the south-west of the KHE-1 discovery well which was brought into production in January producing approximately 300 barrels of oil per day began to produce formation water with a water-cut rising to approximately 15%. The well has demonstrated the production capability of the southern portion of the Khurbet East Field, and it will now be shut in until completion of the commissioning of the Central Processing Facility ("CPF") which will incorporate water separation and processing capabilities currently not available at the Early Production Facility.
A down-hole operation to shut off the water producing zone in the KHE-13 well will not be attempted at this time to avoid any risk of blocking oil production from a key productive zone in the Khurbet East Field as the CPF will comfortably handle any water produced in association with oil production from this well.
This decision is not expected to negatively impact the Company's guidance of anticipated production from the Khurbet East Field during 2010.
Ric Malcolm, Gulfsands CEO, said
"The results of Zaman-1, the first of our four exploration wells this year, will be evaluated in order to understand the implications for future exploration in the area immediately south of the Khurbet East field. However the data from this drill stem test suggests that good quality reservoirs can be encountered to the south of the Khurbet East Field which is encouraging for future exploration in this area and something we were keen to establish with this well. We look forward to spudding our second exploration well, Hanoon-1, imminently which will test the exploration potential to the north of the Khurbet East Field".
We are obviously pleased with the continuing strong performance of the Khurbet East Field and short time it has taken to reach this production milestone."
