Syria Block 26 Production and Drilling Activities Update

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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 USA, provide the following update on oil production in Syria.

Block 26 Production Operations

During September 2011, Gulfsands Petroleum was instructed by the Syrian Oil Ministry to reduce Block 26 production in line with reduced availability of crude storage capacity within the country. Production operations on Block 26 have consequently been impacted such that average gross production during the month of September was 14,547 bopd versus the average for the month of August of 24,112 barrels of oil per day (“bopd”). As of October 3rd daily gross production had been reduced further and is currently steady at approximately 6,000 bopd.

During this period of reduced offtake, the opportunity has been taken to undertake a complete shut-in of the Yousefieh field in order to conduct a long term field pressure build-up survey. Memory pressure gauges have been placed in all Yousefieh wells prior to the shutdown of the field on 26th September. This data acquisition exercise represents an opportunity to determine average field reservoir pressure to a level of accuracy that would not otherwise be possible to achieve when the field is under normal production conditions. Measuring reservoir pressure in this way will enable a more accurate calculation of field in-place volumes and recoverable reserves to be made.

The outlook for Block 26 oil production during October remains uncertain as refinery maintenance work within the country may contribute to further temporary restrictions on production levels.

An update on Block 26 production levels will be provided as soon as further information becomes available.

Block 26 Drilling Operations

Wardieh Exploration Well

Drilling operations have concluded on the Wardieh-1 exploration well after a zone of live asphaltic hydrocarbons was encountered while drilling, overlying a porous reservoir zone, the combination of which threatened the safety of the drilling operation. For safety reasons, the well was plugged and abandoned at a depth of 2229 metres Measured Depth below Rotary Table (“m MDBRT”), 271 metres shallow to the planned total depth for the well.

The asphalt zone was encountered in a layer overlying and within the upper part of the exploration objective in the Cretaceous Shiranish and Massive formations. Wireline logging operations were successfully completed prior to the continuation of drilling operations. A high density oil-based drilling fluid was deployed to replace the water-based system to assist with the control of influxes of asphalt and maintain borehole stability. However, upon drilling ahead, a highly porous and potentially cavernous zone was encountered resulting in the complete loss of the heavier drilling fluid, which resulted in the decision to halt operations for safety reasons.

The Wardieh-1 exploration well was designed as a test of a combined structural and stratigraphic trap in formations of Cretaceous age. The well was located approximately 16 kilometres to the southeast of Yousefieh Field and targeted a new stratigraphic exploration play.

The exploration objectives within the Wardieh area remain of interest due to the presence of live asphaltic hydrocarbons and underlying highly porous reservoir rocks. A similar occurrence of a hazardous asphaltic zone overlying a productive oil field of Cretaceous age is found in Syria at the North Karatchok field which is located 25 kilometres to the northeast. The company will conduct a comprehensive geological and operational review of the Wardieh-1 well result prior to taking a decision on whether to conduct further drilling and to establish the optimal drilling procedure to ensure a safe and successful operation.

Khurbet East 20 Delineation Well

Operations have been completed on the Khurbet East 20 (“KHE-20”) vertical delineation well located in the north flank of the Khurbet East field, approximately 650 metres to the east of successful horizontal production well KHE-19H and approximately 830 metres to the north-east of successful vertical production well KHE-18. The KHE-20 well location was selected as a test of the presence of good quality karst reservoir on the field’s northern flank as predicted from a newly developed field mapping methodology utilizing non-standard seismic data interpretation techniques. Mapping of the Khurbet East karst reservoir to date has proved challenging due to the non-reflective properties of this type of rock.

The KHE-20 well encountered the hydrocarbon bearing Cretaceous Massive Formation at a depth of 1933 metres Measured Depth Below Rotary Table (“m MDBRT”), 1529 metres True Vertical Depth Sub-Sea (“m TVDSS”), 3 metres shallow to the prognosis indicated from the new mapping technique. Interpretation of wireline logs indicated a high quality gross porous karst reservoir interval of 38.6 metres with a net oil column of 29.8 metres, average porosity of 20% and average oil saturation of 82%. No oil-water contact has been observed in this well.

An open hole well test was conducted over a 36 metres gross interval from1933-1969m MDBRT (1529-1565m TVDSS), during which the well flowed at a rate of 1897 barrels of oil per day (“bopd”) for a 6 hour period on a choke setting of 48/64th inch at a wellhead pressure of 103 psi and with an associated water-cut of 1% by volume. Oil quality and formation pressure were recorded as being in line with surrounding Khurbet East production wells.

Forward Drilling Programme

Gulfsands drilling operations in Syria Block 26, using the Crosco E-401 and M-501 drilling rigs, will continue as planned on the Yousefieh 8 sub-horizontal development well (“Yousefieh-8H”) and on the Khurbet East 102 Triassic reservoirs appraisal well (“KHE-102”) respectively.

The Yousefieh-8H development well targets recoverable oil volumes located on the south flank of the Yousefieh field. The well is located 315 metres to the south of the Yousefieh-3 vertical production well and is designed to be drilled in an east-northeast direction with a planned sub-horizontal open hole reservoir section of approximately 360 metres. The production target for this well is to add an incremental 500 bopd to Yousefieh field production.

The KHE-102 vertical well is targeted to appraise the as yet undrilled northern flank of the Khurbet East field Triassic Butmah and Kurrachine Dolomite reservoirs. This well will be located approximately 1100 metres north north-east of the KHE-1 Khurbet East field Triassic reservoirs discovery well, and will obtain key information on reservoir top structure and quality, the depth of the fluid contacts and on the properties of the hydrocarbons encountered.

The results of these drilling operations will be the subject of a future news release.

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.

ABOUT GULFSANDS:

Gulfsands is listed on the AIM market of the London Stock Exchange.

Syria
Gulfsands owns a 50% working interest and is operator of Block 26 in North East Syria. The Khurbet East oil field was discovered in June 2007 and commenced commercial production within 13 months of the discovery. This field has been producing at an average gross production rate of approximately 21,500 barrels of oil per day through early production facilities during August 2011. A second field discovery, the Yousefieh field, was brought on-stream in April 2010, and has been producing at approximately 2,600 barrels of oil per day. Current restrictions on Block 26 oil production which came into force during September 2011 are discussed elsewhere in this release. Block 26 covers approximately 5,414 km2 and encompasses existing fields which currently produce over 100,000 barrels of oil per day, and are operated mainly by the Syrian Petroleum Company. The current exploration license expires in August 2012. Gulfsands’ working interest 2P reserves in Syria at 31 December 2010 were 53.6 mmbbls.

Tunisia
Gulfsands is acquiring working interest positions in two exploration permits in Tunisia (Chorbane and Kerkouane Permits) and one exploration permit in Southern Italy (G.R15.PU) from ADX Energy Ltd the operator of all three permits. The Company’s interest in these permits remains subject to the completion of the Company’s farm obligations and various approvals from the governments of Tunisia and Italy.

Kerkouane Permit — Offshore Tunisia
G.R15.PU Permit (Pantelleria Permit) — Offshore Italy

G.R15.PU, is located offshore the island of Pantelleria southwest of Sicily in Italian waters and the Kerkouane Permit is located offshore northeast Tunisia. The two permits are contiguous and comprise a total area of approximately 4,500 km2.

The operator has identified multiple leads and targets on these permits. Drilling operations were recently completed at the Lambouka-1 well where gas was encountered in the Abiod Formation. However, as a result of down-hole problems, no fluid samples or gas flow were established. The well was suspended with the intention of re-entering at a later date and drilling and testing the reservoir in a sidetrack hole up-dip of the existing discovery.

Gulfsands has completed its earn commitments with respect to the Kerkouane and Pantelleria Permits with the drilling of the Lambouka-1 well. Gulfsands has earned a 30% working interest in both permits by paying approximately 35% of the cost the Lambouka-1 well and reimbursing the operator for a portion of various pre-drill costs that include a recently completed 3D seismic programme.

Chorbane Permit — Onshore Tunisia
The Chorbane permit is located in central Tunisia and covers an area of 2,428 km2. The permit is surrounded by several producing oil fields and extensive oil & gas infrastructure. Gulfsands’ work commitment for the Chorbane permit included the drilling of one exploration well, the Sidi Dhaher- 1 well, which was concluded recently with the announcement on 3rd October, 2011 of a potential oil discovery. Gulfsands was responsible for paying 80% of the first $5 million in drilling costs, and 40% of the drilling costs in excess of $5 million, so as to earn a 40% interest in the permit.

A number of prospects and leads have been indentified within the permit, the most prospective being a large tilted horst block (“Sidi Daher”) where the operator has identified multiple potential targets estimated to hold recoverable mean un-risked prospective resources of 175 billion cubic feet of gas (“bcfg”) and 44 million barrels of oil from Tertiary and Cretaceous aged reservoirs.

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, following completion of a feasibility study on the project, and is negotiating details of a 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. The Company is actively engaged in discussions with respect to financing and potential equity partners. Gulfsands has no reserves in Iraq.

Gulf of Mexico, USA
The Company owns interests in 14 leases offshore Texas and Louisiana, which include 9 producing oil and gas fields with proved and probable (2P) working interest reserves at 31 December 2010 of 2.1 mmboe (figures adjusted for the disposal of non-core properties in December 2010 and September 2011).

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.

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