Gulfsands Petroleum’s (LON:GPX) may significantly increase daily production from the Yousefieh oilfield in Syria, after the completion of the horizontal Yousefieh-4H development well.
The third development well at Yousefieh encountered an average net reservoir pay section of 710 metres, average porosity of 17.9% and average oil saturation of 86.5%. With a 718 metre gross horizontal reservoir the well represents a record for Gulfsands, eclipsing the Khurbet East-5H well which has 311 metres.
"We look forward to the tie-in of Yousefieh-4H which appears to have the capability to significantly increase the daily production from the Yousefieh field,” Gulfsands chief executive Ric Malcolm commented.
Later this month, Gulfsands plans to flow test the well, and this will be followed by a field-wide pressure survey to assess the extent of the field's resource.
Crucially, the company highlighted that Yousefieh-4H indicates potential upside to Yousefieh field oil-in-place volumes. Gulfsands said that an assessment, based on formation imaging in Yousefieh-4H, suggests that the Yousefieh structure is thicker (vertical thickness) to the east than it previously understood.
The well was drilled approximately 500 metres north of the Yousefieh-1 discovery well. Yousefieh-4H encountered the Cretaceous Massive Formation at 2,068 metres, or 1,543 metres True Vertical Depth (TVD).
Now the rig has moved to the south of Yousefieh’s producing area, and Gulfsands has already spudde the Yousefieh South 1 (YSO-1) exploration well.
YSO-1 is located approximately 2km south of the Yousefieh field, and it is targeting a similar objective to the producing reservoir.
The well will target unrisked gross speculative reserves of between 9-15 million barrels.
It is expected that drilling and evaluation of YSO-1 will take approximately 30 days. The rig will then return to the Khurbet East field area to drill an additional vertical delineation well.
Furthermore, at Khurbet East, Gulfsands has expanded the 2010 3D seismic programme. The seismic data is being acquired over a prospective region, immediately to the west of the Greater Khurbet East survey area.
The 1,020km2 seismic acquisition will be contiguous with Gulfsands' existing database, and it will be used to identify new leads and prospects for drilling in 2011 and 2012.
Acquisition is now underway, and the processed data is expected in the first quarter of 2011.
Ric Malcolm highlighted that the current period represents an “unprecedented level of exploration and development”.
“All is looking good for Gulfsands in Syria”, said Fox-Davies analyst Lionel Therond.
In a note to investors, Therond emphasised that whilst exploration drilling beyond Khurbet East and Yousefieh have not had success so far, there is “still plenty of acreage to explore”.
“The potential increase of reserves for Yousefieh is also good news and could potentially positively impact our risked valuation of the company.”
Both the Khurbet East and Yousefieh fields are hosted on Block 26, which approximately 8,300km² in North-East Syria. Gulfsands has a 50% interest in Block 26, alongside its partner Sinochem – the Chinese conglomerate gained its 50% stake though its acquisition of Emerald Energy.
Block 26’s two producing oilfields have produced 10.75 million barrels of oil between them, and aggregate daily production averages approximately 20,000 barrels of oil per day.
In this morning’s statement, Gulfsands also confirmed that it has extended Block 26’s exploration license, which will now run until August 2012.
As part of the agreement with the General Petroleum Corporation of Syria, Gulfsands relinquished 25% of the exploration area, which now covers 5,414km2.