Gulfsands Petroleum plc is pleased to provide the following update on the Company's operations at Block 26, Syria where Gulfsands holds a 50% interest and acts as operator.
Khurbet East Oil Production
The Company is pleased to announce that cumulative gross oil production since the commencement of production at the Khurbet East Early Production Facility ("EPF") in July 2008 has now passed 4 million barrels of oil, with negligible associated formation water content.
Khurbet East 12 Drilling Operations Completed
Drilling operations have recently been completed on delineation well KHE-12, located 3.2 kilometres south of KHE-8, previously the most southerly well drilled in the field.
The KHE-12 well was drilled to a total measured depth of 2070 metres and encountered the top of the Cretaceous Massive reservoir at a measured depth of 1984 metres, or 1592 metres true vertical depth subsea ("TVD ss"), approximately 22 metres deeper than the pre-drill prognosis and below 1570 metres TVD ss, the previously interpreted lowest known level of moveable oil used in determining reserves for the field.
The presence of viscous oil in KHE-12 observed while drilling has been confirmed in a 6 metre core section. Analyses of the drilling, core and petrophysical data indicate that the well encountered a net reservoir section of approximately 10 metres, extending down to 1605 metres TVD ss, with average porosity of approximately 18 percent. The reservoir parameters and viscous oil encountered appear similar in quality to those encountered in KHE-8 and an initial evaluation suggests that the reservoir section is located in an oil-water transition zone. However, as with the previous wells drilled in the southern portion of the field area, a definitive oil-water contact is not identified in this well.
A wire-line formation pressure and fluid sampler measured formation pressures at depths of approximately 1600 metres TVD ss that are consistent with the oil gradient previously observed elsewhere in the Khurbet East Field. However, three fluid samples recovered by this wire-line tool from the same depth contained formation water. Flow testing operations are planned to be conducted on the reservoir interval following demobilization of the drilling rig in order to determine the fluids that will be produced under production conditions.
The implications of the results of this well on field reserves will need to await a detailed evaluation following testing operations, analysis of oil quality and remapping of the Field.
Khurbet East 11 Production Testing
The KHE-11 "horizontal" development well penetrated a 60 metre section of Cretaceous Massive reservoir from approximately 1540 to 1562 metres TVD ss. The well has undergone an extended production test flowing oil to surface at stabilized rates under natural flow of 1660 barrels of oil per day ("bopd") on a 48/64" choke setting. Production from the well has an associated water cut of approximately 30% and further production monitoring operations are planned to be conducted in order to determine the source of the water production.
Following completion of logging and testing operations the well will be completed as a future production well, although consideration is presently being given to the use of a remedial water shut-off operation that would allow early production from this well to be received at the EPF.
Yousefieh No.1 Remedial Cementing and Flow Testing
The Yousefieh-1 well, drilled in November 2008, was re-entered in August 2009 to conduct remedial cementing operations on the production liner and to subsequently flow test the well.
Remedial cementing operations were conducted successfully and the production liner was then perforated across a 14.5 metre interval between 1942.5 metres and 1957 metres. During subsequent flow testing operations the well flowed oil of approximately 25 degrees API to surface at an average rate of approximately 356 barrels per day over a 7 hour period, under natural flow and through a 48/64" choke, with an average water cut of less than 1%. Under artificial lift with nitrogen and through a 2 inch choke, the well flowed over a 2 hour period at an average oil rate of approximately 823 barrels per day with a water cut of less than 1%.
Yousefieh-1 is now being completed for future production.
Yousefieh-2 Appraisal Well Flows Oil to Surface
The Yousefieh-2 appraisal well, located approximately 1.8 km east of the Yousefieh-1 well, was drilled in February 2009 to target the eastern limit of the same but thinner Cretaceous reservoir encountered in the Yousefieh-1 discovery well. The well was re-entered on 7th August 2009 to further evaluate the potential of an oil zone that was tested previously with inconclusive results. Using a work-over rig, a liner was set over the potential reservoir interval 1558 to 1571 metres TVD ss. Following acid treatment, the reservoir flowed 17 degrees API oil to surface at an average rate of 139 barrels bopd under artificial lift using nitrogen on a 2" choke setting over a period of 12 hours with an associated water cut of 49%.
As expected, reservoir and oil properties from this tested zone were confirmed to be of lower quality compared to those encountered at shallower depths in the Yousefieh-1 discovery well. However, the results of this successful oil flow test are expected to have positive implications for the future commercial development of the Yousefieh Field and will be evaluated alongside existing geological information to better understand the nature of the Yousefieh oil accumulation.
Yousefieh-3 Appraisal Well
The Yousefieh-3 appraisal well, located approximately 500 metres to the south-east of the Yousefieh-1 discovery well and intended as the second appraisal well for the Yousefieh discovery, will be spudded later this week. A successful appraisal of the field at this location is expected to enable the Company to proceed later this year with an application for commercial development of the Yousefieh Field. Drilling and testing operations are anticipated to take approximately 45 days.
Ric Malcolm, Gulfsands CEO, said
"Oil production from the Khurbet East Field continues to perform extremely well with over 4 million barrels of gross oil produced, along with minimal water production and minimal pressure depletion. The results of the KHE-12 delineation well are welcome, indicating the potential for a further southern extension to the Field. We are also pleased with achieving a successful oil flow test on the Yousefieh-2 appraisal well.
We now look forward to the testing results of Khurbet East-12 and the upcoming Yousefieh-3 appraisal well."
This release has been approved by Richard Malcolm, Chief Executive of Gulfsands Petroleum Plc who has a Bachelor of Science degree in Geology with 29 years of experience in petroleum exploration and management. Mr. Malcolm has consented to the inclusion of the technical information in this release in the form and context in which it appears.