Oil discovery at Yousefieh-1, Block 26, Syria

Gulfsands Petroleum plc the oil and gas production, exploration and development company with activities in Syria, Iraq and the U.S.A., is pleased to announce an oil discovery at the Yousefieh-1 well in the Gulfsands’ operated Block 26, Syria. In addition, the Company is delighted to confirm that cumulative oil production from the Khurbet East Field (the “Field”) has now exceeded one million barrels.

The Yousefieh-1 well, located approximately 3 kilometres from the Khurbet East Early Production Facility in Block 26, Syria, has encountered 63 metres of net oil pay in the target Cretaceous reservoir system and flowed oil to surface under natural flow at approximately 900 barrels of oil per day (“bopd”).

Yousefieh-1 well was drilled to a total vertical depth of 2139 metres and encountered the target Cretaceous reservoirs at a slightly shallower depth than the pre-drill prediction and based on preliminary wire-line log evaluation, the well encountered an oil column of approximately 64 metres, with approximately 63 metres of net oil pay and average porosity of 18.6%.

A drill stem test (“DST”) was conducted over the top 19 metre interval, flowing oil to surface under natural flow and through a 48/64 inch choke, at an average rate of approximately 900 barrels per day over a 3 hour period with no water produced. While preparing for the main flow period of the DST, the well produced, with the assistance of gas lift, at an average rate of approximately 1,450 barrels per day through a 95/64 inch choke over a 3 hour period. The preliminary results of the test indicate very good reservoir permeability.

Preliminary well site analyses indicate the oil gravity is approximately 23 degrees API, similar to the on-site analysis carried out upon discovery of oil at KHE-1. Core recovery operations were successfully completed over the entire reservoir interval and the information obtained from these cores, together with the wire-line log information and results of the DST will provide valuable information for the further appraisal of this discovery.

The Yousefieh-1 well was an exploration well designed to evaluate a stratigraphic trap in this portion of Block 26 unlike the structural trap of the Khurbet East Field.

The Company is currently preparing plans to undertake an extensive 3D seismic data acquisition programme to assist in the delineation of leads and prospects in the areas surrounding the Khurbet East Field and the Yousefieh-1 discovery.

The Yousefieh-1 well will now be suspended and the rig moved to the Khurbet East Field to drill a delineation well at the north end of the Khurbet East Field with the aim of establishing the oil water contact and also with the potential to be used later as a water disposal well. A more extensive production testing programme over the reservoir section of the Yousefieh well is expected to commence in the next few weeks.

Production of oil from the Khurbet East Field has just passed an important milestone with confirmation over the recent weekend that production from the Field has passed a cumulative one million barrels since the commencement of production in July from the Early Production Facility built in cooperation with the Syrian Petroleum Company.

The Khurbet East Field is continuing to average production of approximately 11,500 bopd from 5 wells (2 horizontal and 3 vertical producers) with only trace amounts of water. Pressure monitoring of the producing wells indicates there continues to be only minimal reservoir pressure reduction.

As a consequence of the better than expected performance of the Khurbet East Field, the Company is anticipating a re-evaluation of the Khurbet East Field reserves which will be undertaken by RPS Group Plc as of year-end 2008, with results expected in Q1 2009.

Gulfsands’ CEO, Ric Malcolm, commented:

“The discovery of oil at Yousefieh-1 in a new play-type is an exciting and significant outcome for the Company and provides strong encouragement for future exploration. This is the second oil discovery to be made in Block 26 within two years and demonstrates it’s very prospective nature. The first discovery at Khurbet East is consistently producing at high rates through the early production facility and we are proud of our achievement in having produced more than one million barrels of oil since production commenced back in July. The close proximity of the Yousefieh oil discovery to Khurbet East, together with the high quality reservoir encountered, provides encouragement for an early declaration of commerciality on this discovery.”

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.

(Gulfsands Press Release)


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