Gulfsands to develop Khurbet East oil discovery

Development of the Cretaceous Massive Reservoir ("Massive Reservoir") within the Field will commence immediately.

The Khurbet East Oil Field is within Block 26 in North East Syria. Gulfsands is the operator, on behalf of the Block 26 Contractor group ("Contractor"), and owns a 50% working interest in Block 26 subject to the terms of the Contract for the Exploration and Development and Production of Petroleum for Block 26 (the "Contract"). A map and details of the Khurbet East Oil Field are available on the Company's website: www.gulfsands.net.

The Company has also received the first Reserves report for the Massive Reservoir in the Khurbet East Field which estimates gross life-of-field Proved and Probable ("2P") Reserves of the Massive Reservoir as 66 million barrels of oil and gross life-of-field Proved, Probable and Possible ("3P") Reserves as 143 million barrels of oil. Gulfsands' share of net attributable reserves is explained below in the section of this announcement headed "Khurbet East Reserves".

Reserves estimates for the Butmah Formation and the Kurrachine Dolomite reservoirs discovered in the KHE-1 well will be made once further drilling and appraisal work has been completed.

The Reserves report was prepared by independent consultants, RPS Energy Ltd. ("RPS") of London. The standard used by RPS in preparing its Reserves report was the SPE/WPC/AAPG/SPEE Petroleum Resources Management System (SPE-PRMS).

The Khurbet East Oil Field was discovered in the second quarter of 2007 with the KHE-1 well. Two appraisal wells, KHE-2 and KHE-3 have since been drilled in the Field. The KHE-3 well flowed oil to surface on drill-stem test at an average stabilized rate of 3,420 barrels of oil per day ("bopd").

Initial Development Plan

Gulfsands and its partners intend to commence Field development immediately and establish early production from the shallow Massive Reservoir as soon as an Early Production Facility ("EPF") can be installed at the site, and prior to any further appraisal of the Triassic discoveries within the Khurbet East Field.

The Company expects that an EPF capable of producing some 10,000 bopd can be operational by the fourth quarter of 2008 and will be followed by the Full Field Development ("FFD") facility installation in 2009. Production through the EPF will provide valuable information about reservoir performance that will be integrated into the design of the FFD facilities as well as generate cash flow. Engineering and construction of the EPF is scheduled to commence this quarter with drilling of the first development well expected to commence shortly.

Initial modeling of the Massive Reservoir shows that horizontal wells should provide the most efficient production method in the Field. Utilizing horizontal wells, the Company expects that the FFD facility will be designed to produce some 30,000-40,000 bopd.

As a consequence of the substantial SPC infrastructure already available in close proximity to the Khurbet East Field and the excellent working relationship the Company enjoys with SPC which has extended to invaluable assistance with the development of the EPF, the estimated costs for the EPF, which includes the drilling of three wells and construction of facilities, are not expected to exceed $10m, or a net $5m to Gulfsands. The Company further anticipates that the FFD costs, including all future development wells within the Massive Reservoir, can be met from the substantial cash flows expected to be generated by early production from the Field.

Khurbet East Reserves

Gulfsands commissioned RPS in London to provide an independent Proved, Probable and Possible Reserves report of the Massive Reservoir in the Khurbet East Field as of 31 December 2007. RPS estimated gross life-of-field 2P Reserves of the Massive Reservoir as 66 million barrels of oil with gross life-of-field 3P Reserves totaling 143 million barrels of oil (see note 1 below). These Reserves are subject to the terms of the Contract in which Gulfsands owns a 50% working interest.

The net barrels recoverable and attributable to the Contractor and to Gulfsands (as to its 50% share) have been calculated by reference to the terms of the Contract which call for a royalty to be paid to the Government of the Syrian Arab Republic and an after tax profit share of the oil produced, to be provided to Gulfsands. The Contractor is also entitled to recover its costs through a cost recovery pooling of revenues from production. The fiscal terms of the Contract are referred to in the Company's corporate presentation which is available on the Company's website.

The Contractor's net attributable (after royalties, taxes and government share) 2P Reserves are estimated at 22.5 million barrels of oil. The Contractor's 3P Reserves have been estimated as 44.8 million barrels of oil. Therefore, Gulfsands net attributable (after royalties, taxes and government share) 2P Reserves have been estimated as 11.3 million barrels of oil and net attributable (after royalties, taxes and government share) 3P Reserves have been estimated as 22.4 million barrels of oil.

The RPS Reserves report related only to the Reserves estimates for the Massive Reservoir and a full Reserve report will be carried out on both the Triassic Butmah and Triassic Kurrachine Dolomite Formations upon appraisal of these formations which is expected to commence in the second half of 2008 following first production from the Massive Reservoir. Until the appraisal of the Triassic reservoirs is completed and a development plan prepared, these formations have been classified as containing Contingent Resources. Additionally, the Reserves estimate for the Massive Reservoir will be updated annually or more frequently if appropriate.

Gulfsands' CEO, John Dorrier, said:

"We are very pleased to have received rapid approval for commercial development of the Khurbet East Field from the Syrian Government. With the active cooperation and support of the Oil Ministry and SPC, the Company and its partners will proceed immediately with development activities and seek to achieve early production from the Field by the fourth quarter of 2008. We are also very pleased to confirm a substantial reserves estimate for the Khurbet East Field at this early stage of Field appraisal following the excellent results obtained in the first three wells in the Field."