YOUSEFIEH-1 OIL DISCOVERY:

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 only trace amounts of water. 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.

KHURBET EAST FIELD, BLOCK 26, SYRIA:

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.

Syria

Gulfsands owns a 50% working interest and is operator of Block 26 in North East Syria.  The Khurbet East oil field was discovered following the completion of drilling of the KHE-1 well in June 2007 and commenced commercial production within 13 months of the discovery. This field is currently producing approximately 11,500 barrels of oil per day through the Khurbet East Early Production Facility (EPF).  Block 26 covers approximately 8,250 square kilometres and encompasses existing fields which currently produce over 100,000 barrels of oil per day. These fields are operated mainly by the Syria Petroleum Company.  On 23 August 2007, the Company initiated the first extension period of exploration on Block 26 for a further period of three years. 

Iraq

Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministry of Oil in Iraq for the Maysan Gas Project in Southern Iraq and following completion of a feasibility study on the project is negotiating details of definitive contract for this regionally important development.  The project will gather, process and transmit natural gas that is currently a waste by-product of oil production and as a result of the present practice of gas flaring, contributes to significant environmental damage in the region.

Gulf of Mexico, USA

The Company owns interests in 48 offshore blocks comprising approximately 168,000 gross acres which includes numerous producing oil and gas fields offshore Texas and Louisiana with proved and probable recoverable reserves net to Gulfsands at 31 December 2007 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3 BCFG and 2.36 MMBO.

Onshore USA

Gulfsands owns interests in two oil and gas fields onshore Texas, USA (98.5% working interest in Emily Hawes Field and 37.5% working interest in Barb Mag Field) with proved and probable recoverable reserves net to Gulfsands at 31 December 2007 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000 barrels of oil.

Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements are based on certain assumptions made by Gulfsands and as such are not a guarantee of future performance. Actual results could differ materially from those expressed or implied in such forward-looking statements due to factors such as general economic and market conditions, increased costs of production or a decline in oil and gas prices. Gulfsands is under no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

-Ends-

ABOUT GULFSANDS:
Gulfsands is listed on AIM.

More information can be found on the Company's website www.gulfsands.net.

For more information please contact:
Gulfsands Petroleum (London)
+44 (0)20 7434 6060

Kenneth Judge, Director of Corporate Development
+44 (0)7733 001 002     

Buchanan Communications Limited (London)
+44 (0)20-7466-5000
Bobby Morse
Ben Willey

RBC Capital Markets (London)
+44 (0)20-7653 4804
Sarah Wharry
Brett Jacobs

© Press Release 2008 from Buchanan ME

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