Disposal of Three Gulf of Mexico Properties Gulfsands Petroleum

abarrelfullabarrelfull wrote on 22 Dec 2010 08:04
Tags: deals gulf-of-mexico gulfsands

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Gulfsands Petroleum plc ("Gulfsands", the "Group" or the "Company" - AIM: GPX), the oil and gas production, exploration and development company with activities in Syria, Iraq, Tunisia, Italy and the U.S.A., is pleased to announce the sale of three properties from the Company's Gulf of Mexico asset portfolio.

These non-core producing properties are located in the shallow water shelf area of the Gulf of Mexico and the disposal is a part of the Company's ongoing plans to rationalize its US oil and gas property portfolio. The properties include various working interests in the Eugene Island 57/58 (EI 57/58) gas field, the Vermillion 379 (VR 379) oil and gas field and the South Pelto 13 (PL13) oil and gas field. The transaction has an effective date of 1st May, 2010 and a sale price of US$4.2 million prior to closing adjustments. Completion of the transaction is expected to occur in late January 2011.

These properties are considered non-core due to either their production being dominated by natural gas (EI 57/58) or their relatively low working interest positions (VR 379 and PL 13). In addition to receipt of the cash consideration, the sale of these properties removes the Company's forward liability provision related to the decommissioning (plugging and abandonment of wells, decommissioning of facilities on these licences) and therefore the Company will be returned cash deposits that are currently held in escrow as security against these future liabilities. The amount of cash deposits expected to be returned will be approximately US$5.6 million.

The Company's pro forma proved and probable US working interest reserves at 31 December 2009, adjusted for this disposal, were 3.4 mmboe compared with 4.7 mmboe prior to the disposal.

This release has been approved by Richard Malcolm, Chief Executive of Gulfsands Petroleum Plc who has a Bachelor of Science degree in Geology with 30 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.

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