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Blue:   P 2756C
Green: P 364C
Gulfsands Petroleum Plc  Annual Report and Accounts 2008
Gulfsands Petroleum Plc
Annual Report and Accounts 2008 01 2008 Highlights
02 Gulfsands at a glance
05 Chairman’s statement
08 Chief executive’s report
10 Operations review
14 Reserves and contingent resources
16 Financial review
20 Our people
22 Board of directors
24 Corporate social responsibility
27 Directors’ report
31 Corporate governance report
32 Directors’ remuneration report
34 Independent auditors report
35 Consolidated income statement
36 Consolidated balance sheet
37 Company balance sheet
38 Consolidated statement of changes in equity
39 Company statement of changes in equity
40 Consolidated cash flow statement
41 Company cash flow statement
42 Notes to the consolidated financial statements
63 Glossary
64 Corporate information
Gulfsands Petroleum Plc is an independent oil and 
gas exploration and production company, incorporated 
in the United Kingdom, whose shares are traded on the 
Alternative Investment Market (“AIM”) of the London 
Stock Exchange (symbol: GPX). The Group’s major 
focus is on the Middle East, where it has oil exploration 
and development projects in the Syrian Arab Republic 
and upstream and midstream oil and gas business 
development activities in Iraq. Gulfsands also produces 
oil and gas from a portfolio of properties in the USA, 
offshore Gulf of Mexico.
Gulfsands’ vision is to become one of the pre-eminent 
independent exploration and production companies in 
the Middle East and to be viewed as a preferred 
operator and partner.
Early production facility at Khurbet East, 
Block 26, Syria. 01
Gulfsands Petroleum Plc
Annual report and accounts 2008
01
Gulfsands Petroleum Plc
Annual report and accounts 2008
2008 Highlights
$53.6m
Revenue
$18.7m
Cash flow 
from operations
$36.8m
Cash balance
$0.0m
Debt free
Operations
Production commenced on Khurbet East field in Syria in  ●
July, five months after commercial approval was obtained
With only five months of production, Syria became  ●
Gulfsands’ largest producing asset and averaged in 
excess of 5,000 bopd (net WI) during Q4 2008 with no 
significant water production or pressure depletion
Discovery of Yousefieh field in Block 26 in Syria ●
2P Working Interest Reserves in US Gulf of Mexico  ●
reduced by 3.8 mmboe to 5.1 mmboe: re-estimation of 
Syrian reserves still in progress
Group entitlement production of 0.4 mmbbl from Syria,  ●
0.4 mmboe from US vs 0.7 mmboe (all from US) in 2007 
Corporate
Appointment of Ric Malcolm and Andrew Rose as CEO  ●
and CFO respectively
Group head office successfully relocated to London ●
Placing of 5.5 million new shares at 170p per share to  ●
raise $18.6 million
Financial
Revenues up 44% to $53.6 million (2007: $37 .3 million) ●
Gross profit nearly doubled to $21.9 million (2007:   ●
$11.9 million)
Cash flow from operating activities more than tripled to  ●
$18.7 million (2007: $5.9 million)
Net loss of $9.7 million (2007: loss of $1.2 million, restated)  ●
after impairment charges on US assets and exceptional 
administrative expenses
Available cash balances at year-end of $36.8 million  ●
 
 
 
Outlook
Expect commercial development approval for Yousefieh  ●
field up by end of 2009
850 km² 3D seismic acquisition under way in Syria to  ●
provide 2010 exploration targets
Targeting year-end gross production on Khurbet East  ●
field of up to 16,000 bopd
Group capex for 2009 in the order of $40 million funded  ●
through operating cash flow
Proceeding with design and construction of permanent  ●
production facility, capacity 50,000 bfpd
Contract approaching signature for Maysan project in  ●
Iraq: actively engaged in discussions regarding financing 
and potential equity partners
Annual General Meeting
The Annual General Meeting of shareholders will take place at 11am on 23 June 2009 at the offices of Buchanan 
Communications, 45 Moorfields, London, EC2Y 9AE. All shareholders are welcome to attend. If unable to attend, 
shareholders are encouraged to fill out the form of proxy and return it to Capita IRG. Iraq
Syria
02
Gulfsands Petroleum Plc
Annual report and accounts 2008
Gulfsands at a glance
Syria (Block 26)
Iraq (Maysan/Misan gas project)
Syria
Gulfsands owns a 50% working interest in, and is the 
operator of, Block 26 in north-east Syria under  
a production sharing contract (“PSC”). The block 
covers approximately 8,250 km
2
 and encompasses 
existing fields which currently produce over 100,000 
bopd of medium gravity 20–26° API crude oil 
primarily from mid-Cretaceous limestone reservoirs. 
These fields, which are carved out of the PSC, are 
operated by third parties including the Syrian 
Petroleum Company, but Gulfsands retains the deep 
exploration rights (pre-Triassic) beneath these fields. 
Gulfsands has made two discoveries on Block 26: Khurbet 
East (June 2007) and Yousefieh (November 2008). 
Commercial approval to develop Khurbet East was granted 
in February 2008 and production commenced in July 2008. 
In the last quarter of 2008 the field had average gross crude 
oil production in excess of 10,000 bopd, with an API in 
excess of 25°. Proven and probable reserves attributable to 
Gulfsands at 31 December 2008 were 28.7 mmbbl (working 
interest), 10.9 mmbbl (entitlement). The Yousefieh discovery 
will undergo full appraisal during 2009, and the Group 
expects to obtain approval for commercial development of 
this discovery during the year. Having previously acquired 400 
km
2
 of 3D seismic data, Gulfsands is in the process of 
acquiring an additional 850 km² of 3D seismic over Block 26 
during 2009.
The current exploration period for Block 26 expires in 
August 2010 but may be extended at the Contractor’s 
option for a further two years. The minimum work 
commitments for the current exploration period have 
already been satisfied. The development and production 
period for Khurbet East expires in February 2033 (25 years 
after commercial approval) but may be extended at the 
Contractor’s option for a further 10 years.
 
The Company has also formed a strategic partnership with 
Cham Holding, a prominent local industrial group, for the 
purpose of acquiring additional oil and gas projects in Syria 
and Iraq. Gulf of Mexico
03
Gulfsands Petroleum Plc
Annual report and accounts 2008
Iraq
Gulfsands has been conducting business 
development activities in Iraq since 2003 and has 
formed a subsidiary for its operations in Iraq as well 
as opened an office in Baghdad. 
In January 2005 the Group signed a Memorandum of 
Understanding with the Ministry of Oil in Iraq for the Maysan 
Gas Project in Southern Iraq, following completion of a 
feasibility study in August 2004, and is currently finalising 
details of a definitive contract. The project involves the 
engineering, procurement, construction and operation of a 
gas gathering system, gas liquids plant and power plant that 
will gather, process and transmit natural gas currently being 
flared as a waste by-product of oil production, and will produce 
electricity to supply the local grid. The project has regional 
importance not only because of the acute need for power in 
the area but also because the present practice of gas flaring 
results in significant environmental damage to the region. 
Gulfsands is actively engaged in discussions with respect to 
financing and potential equity partners.
The Group’s primary medium term objective in Iraq is to 
secure oil and gas exploration and developments projects, 
and discussions have taken place with certain third parties 
with this intent. The Group has no reserves in Iraq at present.
USA
In the USA Gulf of Mexico, Gulfsands owns interests 
in 44 blocks comprising approximately 138,000 
gross acres in shallow water offshore Texas and 
Louisiana, which include 30 producing oil and gas 
fields. All of these fields are operated by third 
parties. The Group also has an interest in one 
onshore gas field in Texas. 
Working interest production in the last quarter of 2008 
averaged 700 boepd, compared with 1,875 boepd in  H1 
2008, having been adversely impacted by Hurricanes Ike 
and Gustav in Q3 2008.
Proven and probable reserves at 31 December 2008 were 
5.1 mmboe (working interest), 3.9 mmboe (net revenue 
interest), of which some 46% was oil and 54% gas. 
Our principal area of activity is 
in Syria, where we operate the 
Block 26 concession in the 
North East. We also have non-
operated minority interests  
in the Gulf of Mexico and  
a nascent business in Iraq. 04
Gulfsands Petroleum Plc
Annual report and accounts 2008
Drilling at Khurbet East, Block 26, Syria. 05
Gulfsands Petroleum Plc
Annual report and accounts 2008
Chairman’s statement
2008 saw a new management team in 
place and the commencement of early 
commercial production in Syria.
Dear Shareholder,
I am pleased to report on a year 
of significant achievement and 
change at Gulfsands.
2008 was characterised by two 
developments in particular. 
The first has been the 
recruitment of a new Chief 
Executive Officer and Chief 
Financial Officer, each of whom 
is now thoroughly settled in his 
new responsibilities in our 
recently established London 
head office. We are fortunate 
indeed to have secured the 
services of two such 
experienced individuals as Ric 
Malcolm and Andrew Rose.
The second was the bringing into 
early commercial production of 
the Khurbet East field in Syria 
during the third quarter. To 
achieve commercial levels of 
production within little more than  
a year of completing the initial 
discovery well is an impressive 
achievement for any oil and gas 
company, and great credit is due 
in particular to Mahdi Sajjad and 
our team in Syria as well as the 
Syrian Petroleum Company for 
the commitment and support they 
have given us. At the time of 
writing, gross production from 
Khurbet East is around 11,000 
barrels of oil per day (“bopd”) 
which we intend to increase to up 
to 16,000 bopd by the year-end, 
as an interim step towards full 
commercial development of the 
Khurbet East and Yousefieh fields 
in late 2010.
Strong Financial Position
Against a backdrop of 
extraordinarily fraught global 
financial and economic 
circumstances, Gulfsands’ 
financial strength is one of its 
principal attributes. 
At year end we had free cash 
balances of approximately $37 
million and no borrowings. That 
position remains essentially 
unchanged at the time of writing. 
Even in the recent environment 
of much reduced oil prices, our 
Syrian operations remain 
comfortably cash generative. 
In light of the continuing 
economic uncertainties, your 
Board feels it is important to 
focus in particular on the Group’s 
ability to cope with “downside” 
scenarios. In this regard, it 
should be a comfort to 
shareholders that we could 
absorb still further significant oil 
price reductions and remain able 
to meet all our operating and 
corporate overheads, including 
the costs of developing our 
Khurbet East and Yousefieh 
fields, without recourse to 
additional external funding.
Restatement of Prior Year 
Accounts and Exceptional 
Charges
As part of a thorough review 
undertaken by the new Chief 
Financial Officer, the Board has 
decided that it is appropriate to 
restate the 2006 and 2007 
Financial Statements to reflect 
what we now consider to have 
been erroneous under-recording 
of estimated decommissioning 
liabilities and depreciation 
associated with the Group’s Gulf 
of Mexico assets.
Additionally, the 2008 Income 
Statement reflects significant 
charges for compensation-related 
expenses. These charges are a 
consequence in part of severance 
costs and option grants related to 
the changes in senior management 
which took place during 2008, and 
in part of the re-grant of certain 
options which were unable to be 
exercised before their expiry at the 
end of 2007 due to restrictions on 
Directors’ ability to deal in the 
Company’s shares for the last 
several months of that year.
Finally, the 2008 Income 
Statement reflects a charge for 
loss on currency translation, 
brought about by the very 
sudden movement in the US 
Dollar/Sterling exchange rate in 
the latter part of 2008. As the 
Company now has significant 
Sterling-denominated overheads 
by virtue of migrating its central 
management function to London, 
it is appropriate to maintain 
significant Sterling balances and 
the loss on translation does not 
represent a cash outflow.
All these matters are dealt with in 
detail elsewhere in the Annual 
Report. My reason in drawing 
attention to them is merely to 
emphasise that, notwithstanding 
the rather severe impact on 
bottom line reported earnings, 
they have no impact on the 
Group’s cash position or ability to 
generate positive cash flow and 
are entirely historic in their nature.
Milestones
Appointment of new •	
CEO and CFO 
Commencement of •	
production at Khurbet 
East, Block 26, Syria 
Discovery of Yousefieh •	
field, Block 26, Syria 
Strong cash flow •	
performance 
Significant free cash •	
balance of $37 million
Andrew West
Chairman 06
Gulfsands Petroleum Plc
Annual report and accounts 2008
Chairman’s statement continued
Syria
In the course of 2008 Gulfsands 
made a further significant 
discovery in Block 26 in the form 
of the Yousefieh field. This 
discovery, together with the 
adjacent Khurbet East field, is 
the subject of an aggressive 
appraisal and development 
campaign intended to define 
more precisely the oil-bearing 
characteristics of the two fields 
and to bring them both into full 
commercial development as 
early as possible. This remains 
our single highest priority.
Only slightly behind the 
development of the Khurbet East 
and Yousefieh Fields as a priority, 
and on a parallel track, we are 
proceeding apace to evaluate 
and exploit the remaining 
exploration opportunities within 
Block 26. A major programme of 
3D seismic acquisition is well 
under way. We continue to 
believe, based on all the 
evidence at our disposal, that the 
remaining potential of our block 
is tremendous.
It is an old adage that success 
breeds success. As a result of 
what the Group has been able to 
achieve to date in Block 26, and 
the political capital and credibility 
thereby accumulated, we are 
now in an excellent position to 
pursue further opportunities in 
Syria. In this regard, the timing  
of the current tentative 
rapprochement between Syria 
and the United States is 
propitious. We are determined  
to pursue the openings thereby 
presented to the full.
Iraq
Political circumstances in Iraq, 
although far from perfect, are 
more favourable to beginning to 
establish long term commercial 
operations than has been the 
case at any time since the 
invasion in 2003.
We have in recent months made 
significant progress in negotiations 
for the Maysan gas project. We 
are also involved in a number of 
discussions on other opportunities 
in Iraq which are of very 
considerable long term potential.
Your Board is cautiously 
optimistic that in the near future 
we will be in a position to 
announce positive developments 
bringing with them the prospect 
of handsome ultimate reward for 
the time and effort we have 
expended in Iraq over the past 
five years. At the same time we 
remain conscious of the 
considerable uncertainties that 
continue to overhang that 
country’s future. We will only sign 
up to commitments which we are 
convinced are soundly based, 
within the Group’s financial 
compass and which do not 
jeopardise the Group’s ability to 
maximise the opportunities for 
value creation represented by 
our existing successful  
Syrian operations.
Gulf of Mexico Assets
The Group’s Gulf of Mexico 
assets have played a key role in 
getting us to the position we now 
enjoy. Without the cash 
generated by these assets over 
the past few years we would not 
have been able to have achieved 
our exploration and development 
success in Syria.
The diminution in the continuing 
strategic importance of these 
assets to Gulfsands has 
coincided fortuitously with the 
recent drop in oil and gas prices 
and the global credit crisis, which 
factors have impacted severely 
both the operating profitability of 
our Gulf of Mexico business 
(particularly gas production) and 
the market for such assets. In 
addition, the severity of the 
hurricane season in 2008 once 
again shut in much of the 
Company’s production for the 
second half of the year. 
Accordingly, our Gulf of Mexico 
business made a loss for the year.
Your Board takes an entirely 
pragmatic view of these assets. 
They are clearly no longer 
strategic to the Group. They are 
also unlikely for the foreseeable 
future, absent a meaningful 
strengthening in gas prices, to 
make much in the way of a 
positive contribution to profits 
and cash flow. At the same time, 
Gulfsands is under absolutely no 
pressure to sell these assets and 
this would be a bad time to try to 
do so. The assets continue to 
hold potential for the future. 
Accordingly, we will continue to 
selectively invest in them to the 
extent we deem appropriate, and 
to wait until market conditions for 
transactions in assets of this kind 
revert to some sort of normality.
Concluding Remarks
My fellow Directors and I are 
highly enthusiastic about the 
Group’s prospects for 2009 and 
beyond. While we would certainly 
welcome a recovery in oil and 
gas prices, we are well-
positioned not only to survive but 
indeed to flourish in the absence 
of such a recovery for the 
foreseeable future. I look forward 
to reporting significant further 
progress in a year’s time.
Yours sincerely,
Andrew West
Chairman 
16 April 2009 07
Gulfsands Petroleum Plc
Annual report and accounts 2008
Major programme of 3D seismic under 
way, Block 26, Syria. 08
Gulfsands Petroleum Plc
Annual report and accounts 2008
Chief Executive’s report
Strategy
Principal focus on •	
exploration and 
production in Syria 
Build significant •	
business in Iraq 
Focus on low-cost •	
high-impact on-shore 
operations with 
significant equity 
interests 
Maintain strong •	
balance sheet and  
cash flow 
Since coming on board as Chief 
Executive Officer in October 
2008, I have seen oil production 
from the Khurbet East field 
exceed our expectations by 
averaging over 10,000 barrels of 
oil per day, as well as the 
discovery of the Yousefieh oil 
field, which is located just three 
kilometres from the Khurbet East 
early production facility. 
I joined Gulfsands after almost 10 
years of service with OMV, for 
three primary reasons. Firstly, the 
Group has a strong balance sheet 
with no debt and is highly cash 
generative. Secondly, the assets 
held were of a high calibre, in 
particular Block 26 in Syria where 
significant upside exists, and 
thirdly, I was impressed with the 
quality and the blend of skills of 
senior management and 
members of the Board. Having 
restructured the Company in 
2008 and focused on its strategy 
of fast-tracking the development 
of its Middle East assets, 
Gulfsands is now in a good 
position to grow substantially over 
the next 12 months and beyond. 
Since joining the Company last 
October, I have further 
strengthened the technical and 
financial teams based in London 
to enable us to better service our 
operations in the Middle East.
It is clear we have a number of 
key challenges ahead. This 
period of relatively low oil prices 
places pressure on cash flow 
and requires a prudent, but 
balanced, approach to 
investment. In the USA, the 
relative maturity of our assets in 
the Gulf of Mexico is evidenced 
by the downgrading of our 
proved and probable reserves by 
3.8 million barrels of oil 
equivalent (“mmboe”) to 5.1 
mmboe at year-end (working 
interest basis), owing to sharply 
higher levels of water production 
in certain wells. We intend to 
contain expenditures in our US 
business, with future activity 
concentrating on high impact, 
low risk, low cost operations that 
have the potential to efficiently 
increase production and ultimate 
reserves. In Syria, however, our 
assets are at a very early stage 
of development. The exploration 
period in Block 26 will finally 
cease in August 2012 and as a 
result, a very active programme 
is required to fully evaluate and 
capture opportunities prior to 
this date. As we have 
demonstrated with development 
of the Khurbet East field, 
additional discoveries will be 
efficiently commercialised. 
Gulfsands aims to be one of the 
pre-eminent independent 
exploration and production 
companies in the Middle East 
and a preferred partner and 
operator. We will focus on low 
cost, high impact onshore 
operations with significant equity 
interests in a small number of 
countries where we can 
capitalise on strong local 
relationships. Our primary focus 
will continue to be Syria where
we intend to build on our 
success and reinvest in new 
value-adding projects. We also 
intend to capitalise on 
opportunities to position the 
Group for the longer term in Iraq. 
During 2008 Gulfsands 
established an impressive track 
record in exploration, appraisal, 
development and production. 
The Yousefieh oil discovery was 
made in November with a  
63 metre net oil column being 
encountered which flowed at 
rates of up to 1,460 barrels of oil 
per day via a 48/64 inch choke 
over a four hour test period. 
Approval to develop the Khurbet 
East field through an early 
production facility was gained in 
February 2008 and only five 
months later the facility had been 
constructed, development wells 
drilled and oil produced. The 
time taken from discovery of 
Khurbet East to first production 
was just 13 months. The Khurbet 
East early production facility has 
consistently produced in excess 
of the 10,000 barrels of oil per 
day design capacity with little 
pressure depletion and minimal 
water production.
Building of a permanent 
production facility at Khurbet 
East will start in 2009 with the 
award of contracts in the third 
quarter, with the expectation that 
the 50,000 barrels of fluid per 
day (“bfpd”) facility will be 
commissioned by the end of 
2010. In the meantime, the 
capacity expansion of the early
Richard Malcolm
Chief Executive Officer
2008 was a transformational year for 
Gulfsands which has provided the 
platform for sustaining the future growth 
of the Group.  09
Gulfsands Petroleum Plc
Annual report and accounts 2008
production facility from 10,000 to 
18,000 bfpd will be in place by 
mid-year with three new Khurbet 
East development wells drilled in 
order to provide the additional 
volume of oil required to utilise 
this additional capacity. The 
Yousefieh discovery will be 
appraised in 2009 with the 
drilling of two wells and an 
application will be submitted for 
development of this field. 
The acquisition in 2009 of 850 km
2
 
of 3D seismic data surrounding 
the Khurbet East and Yousefieh 
oil fields will provide the best 
opportunity to identify new 
exploration prospects for drilling 
in late 2009 and 2010, in what 
has been demonstrated to be a 
highly prospective fairway. 
Processing of the data will take 
place in the third quarter, 
followed by seismic interpretation 
and prospect definition in the 
fourth quarter.
Due to high levels of activity in 
Syria, capital investment by the 
Group for both 2009 and 2010 
will be in the order of $40 million, 
all of which is expected to be 
fully funded from operating cash 
flow. In 2010, in addition to an 
active exploration programme, 
seven development wells are 
planned to be drilled in the 
Khurbet East field and an as yet 
undefined number of 
development wells at Yousefieh. 
Consequently, a very busy year 
ahead is expected on many 
fronts. The hard work, innovative
 approach and dedication of all 
employees during 2008 is duly 
recognised and appreciated, 
along with the support of 
shareholders as the Company 
prepares to meet its objectives 
and continues to build an ever 
stronger exploration and 
production company in the 
Middle East. 
Richard Malcolm
Chief Executive Officer
16 April 2009
Early production facility, Khurbet East, 
Block 26, Syria. Syria
10
Gulfsands Petroleum Plc
Annual report and accounts 2008
Operations review
Gulfsands is the operator of the Block 26 
Production Sharing Contract (“PSC”) with 
a 50% working interest. Block 26 covers 
an area of 8,250 km². 
Syria
Gulfsands is the operator of the 
Block 26 Production Sharing 
Contract (“PSC”)  with a 50% 
working interest. Block 26 covers 
an area of 8,250 km². The PSC 
grants rights to explore, develop 
and produce from all 
stratigraphic levels outside the 
existing field areas and the 
deeper stratigraphic levels below 
the pre-existing discovered field 
areas. The current exploration 
period expires in August 2010 
but may be extended at the 
Contractor’s option for a further 
two years. The minimum work 
commitments for the current 
exploration period have already 
been satisfied. The development 
and production period for the 
Khurbet East field expires in 
February 2033 (25 years after 
commercial approval) but may 
be extended for a further 10 
years at the Contractor’s option. 
The terms of the PSC comprise a 
12.5% royalty, cost recovery 
allowance, and the sharing of the 
resultant profit oil.
Khurbet East field
The Khurbet East field was 
discovered in June 2007 by the 
KHE-1 well and was appraised 
by two further wells in H2 2007. 
The second appraisal well 
(KHE-3) had tested at an average 
stabilised rate of 3,420 bopd. In 
February 2008, the Syrian 
Ministry of Oil and Mineral 
Resources granted approval for 
commercial development of the 
field. The development and 
operation of the field is being 
undertaken by Dijla Petroleum 
Company (“DPC”), a joint 
operating company formed with 
the national Syrian Petroleum 
Company (“SPC”) for this 
purpose in accordance with the 
terms of the PSC.
The KHE-1 well was a multi-zone 
discovery, encountering 
hydrocarbons in the Cretaceous 
Massive formation and in the 
deeper Butmah and Kurachine 
Dolomite formations. According 
to an independent reserves 
evaluation, conducted prior to 
the approval for commercial 
development, the gross 
life-of-field Proved plus Probable 
reserves of the Cretaceous 
Massive formation as at 31 
December 2007 were 65.6 
mmbls (58.7 mmbls if account is 
taken of the economic life of the 
PSC: see “Reserves and 
contingent resources”). This 
excluded hydrocarbons in the 
deeper Butmah and Kurachine 
Dolomite formations. 
Following commercial approval 
three development wells were 
drilled in H1 2008 to a depth of 
approximately 2,050 metres into 
the Massive reservoir : one 
vertical well (KHE-4) followed by 
two horizontal wells (KHE-5 & 6). 
The latter wells had horizontal 
sections of 300 metres and 200 
metres respectively. KHE-5 was 
tested at a stabilised rate of 
2,041 bopd through a 24/64” 
choke with less than 10 psi 
pressure drawdown at the 
reservoir. Neither KHE-4 nor 
KHE-6 was tested since it was 
considered that sufficient 
information had already been 
obtained from other wells.
Oil production commenced from 
the Khurbet East field in July 
2008 using a newly installed 
Early Production Facility (“EPF”), 
which had been constructed by 
SPC and leased to the 
Contractor group. Gross oil 
production to the end of 2008 
was 1.41 million barrels of oil (of 
which Gulfsands net entitlement 
was 0.42 million barrels). No 
water was produced. Five 
producer wells have been 
available for production during 
this period, consisting of three 
vertical producers, KHE-2, 3 & 4, 
and two horizontal producers, 
KHE-5 & 6. The KHE-1 discovery 
well has not been completed for 
production from the Massive 
reservoir as it is intended to be 
used for further appraisal of the 
deeper reservoirs. Gross field 
production during the first two 
weeks of April 2009 averaged 
just over 11,000 bopd, with only 
trace amounts of water. Over 2.5 
million barrels of oil have been 
produced from the field to date. 
Since the commencement of 
production, various reservoir and 
pressure monitoring programmes 
have been conducted to collect 
information to optimise the design 
of the full field development 
facilities and for effective 
reservoir management.
The crude oil produced from the 
Khurbet East field was 
determined to have specifications 
slightly better than those typical 
of Syrian Heavy crude oil of 25° 
API. Under oil marketing 
arrangements agreed with SPC 
and the Oil Marketing Bureau of 
the Syrian Government (“OMB”),  11
Gulfsands Petroleum Plc
Annual report and accounts 2008
Drilling activity, 
Khurbet East, Block 26, Syria.
oil produced from the Khurbet 
East field is transported to an 
SPC-nominated delivery point 
where it is mixed with the Syrian 
Heavy crude oil, and exported 
through the Mediterranean port 
of Tartous using SPC’s oil 
handling infrastructure. In the 
period to September 2009, 
under the OMB’s arrangements 
for marketing oil produced from 
newly developed fields in this 
area, the Contractor group 
receives 80% of the price of the 
Syrian Heavy crude oil, with the 
settlement for the remaining 
unpaid amount, subject to any 
adjustments for variations in oil 
quality, taking place in 
September 2009. 
Since the beginning of 2009, two 
delineation wells have been 
drilled with the intent of 
establishing the northern and 
southern boundaries of the 
Khurbet East field. The first of 
these, KHE-7, located 4.1 km to 
the north of KHE-1, was drilled in 
January. Good hydrocarbon 
shows were encountered across 
a seven metre reservoir interval 
and gradually diminished over 
the next 13 metres. Reservoir 
porosities in the range of 5% to 
10% were measured, significantly 
lower than the 16% to 20% 
encountered in the central 
portion of the field. Although the 
oil-water contact was not directly 
determined by the wireline logs, 
preliminary analysis indicates 
that the oil-water contact in the 
field may be slightly deeper than 
previously interpreted. The well 
has the potential to be used for 
future water disposal.
The southern delineation well, 
KHE-8, located 2.7 km to the 
south of KHE-1, was spudded in 
March 2009 and is currently 
drilling with results anticipated in 
late April.
As a result of the early field 
performance, work is now under 
way to expand the capacity of 
the Khurbet East early 
production facilities to 18,000 
bfpd as an interim step prior to 
the full field development of the 
Khurbet East field. This increase 
in capacity, consisting of the 
installation of additional surface 
equipment, is expected to be 
operational in the third quarter of 
2009. Three further development 
wells are planned during the 
second and third quarters of the 
year in order to utilise this 
additional capacity. A full field 
development plan, consisting 
predominantly of additional 
processing facilities and 
development drilling, and 
targeting a total production 
capacity of around 50,000 bfpd, 
is in preparation. Gulfsands 
anticipates that the operating 
company, DPC, will commit to 
the full field development plan 
during 2009.
An updated independent reserves 
report for Khurbet East is in 
preparation, taking into account 
seismic, well and production 
information acquired since the 
last evaluation, including the 
results of the recent KHE-7 and 
KHE-8 delineation wells, and is 
expected to be concluded in the 
second quarter of 2009. Since 
the 31 December 2007 reserves  12
Gulfsands Petroleum Plc
Annual report and accounts 2008
Operations review continued
evaluation (which was based on 
2D seismic data), the results of 
the 3D seismic interpretation 
across the field and the lower 
reservoir quality encountered in 
the northern step-out well 
(KHE-7) are expected to reduce 
the interpreted oil in place. 
However, the better-than-
expected reservoir production 
combined with the field pressure 
performance is expected to 
enhance the predicted  
recovery factor.
Yousefieh discovery
The Y-1 exploration well was 
drilled in November 2008 to a 
total depth of 2,139 metres to 
evaluate the potential of a new 
exploration play identified from 
the 3D seismic survey acquired 
in 2007 over the Khurbet East 
field and nearby areas. The well 
encountered an oil column of 
approximately 64 metres in the 
target Cretaceous aged 
formations, containing 
approximately 63 metres of net 
oil pay having an average 
porosity of 18.6%. During an 
open-hole test of the top 19 
metres of the reservoir the well 
flowed 23° API oil to surface, 
under natural flow, at 
approximately 900 bopd through 
a 48/64˝ choke. In January 2009 
a cased-hole flow test of the Y-1 
well was performed, effectively 
testing the whole 63 metre net oil 
pay interval as an ineffective 
cement bond behind the casing 
provided poor vertical isolation 
over the interval. The well flowed, 
under natural flow and through a 
48/64˝ choke, at an average rate 
of approximately 1,460 bopd 
over a four hour period with a 
water cut of up to 5% comparing 
favourably with the previous 
open-hole test. Remedial 
cementation of the production 
liner is planned to isolate the 
water producing zone prior to 
commencement of production 
from the well.
The Y-2 appraisal well, located 
approximately 1.8 km east of the 
Y-1 discovery well, commenced 
drilling in January 2009 and 
reached a total depth of 2,070 
metres in February 2009. Based 
on wireline logging and cores 
recovered while drilling, the well 
encountered approximately 16 
metres of net potential 
hydrocarbon pay with an average 
porosity of approximately 16%. 
An open-hole production test of 
the reservoir interval recovered 
quantities of oil and water but did 
not establish continuous 
production at surface. A liner 
was run in the well and the 
reservoir interval may be retested 
at a later date. As expected in 
the pre-drill estimation, the Y-2 
well encountered the reservoir 
with less thickness and lower 
reservoir quality than seen in Y-1. 
This variation is consistent with a 
stratigraphic carbonate 
accumulation such as the 
Yousefieh discovery. The data 
acquired in this well will be used to 
refine the understanding of these 
lateral variations in the geological 
and reservoir modelling of the 
accumulation and to assist in 
development planning. 
Based on a preliminary evaluation 
of the data acquired in the Y-1 and 
Y-2 wells, the range of gross oil in 
place is estimated to be 27.2 (P90), 
48.5 (P50) and 73.9 (P10) million 
barrels. Further work is required to 
determine the expected range of 
recovery factors and, hence, 
reserves, but Gulfsands’ best 
estimate using a reasonable 
recovery factor is in the range of 
10 to 15 million barrels.
The Yousefieh discovery is located 
close to existing infrastructure, 
with the Y-1 surface location being 
approximately 3 km from the early 
production facilities in the Khurbet 
East field. The close proximity of 
the Yousefieh discovery to the 
intended site for the full field 
development facilities for Khurbet 
East may lead to an enlarged 
shared facility being installed 
resulting in both capital and 
operating cost savings.
Exploration
Following the success in the 
Yousefieh discovery, the Block 
26 joint venture has commenced 
the acquisition of an 850 km² 3D 
seismic survey to assist in the 
identification of further prospects 
and leads in this new exploration 
play in the areas surrounding  
the Khurbet East field and 
Yousefieh discovery.
Health & Safety
Gulfsands’ health & safety record 
since it became operator of 
Block 26 in 2005 has been 
exemplary. Since formal safety 
records first began to be kept in 
April 2006 there have been no 
lost time incidents. 
Syria continued Gulf of Mexico
13
Gulfsands Petroleum Plc
Annual report and accounts 2008
USA (Gulf of Mexico)
In the USA Gulf of Mexico, 
Gulfsands owns interests in 44 
blocks comprising approximately 
138,000 gross acres in shallow 
water offshore Texas and 
Louisiana, which include 30 
producing oil and gas fields. All 
of these fields are operated by 
third parties. The Group also has 
an interest in one onshore gas 
field in Texas. 
The dominating events of 2008 
were the Hurricanes Gustav and 
Ike in late August and early 
September. The damage they 
caused, primarily to third party 
pipeline infrastructure, led to 
severely reduced production 
levels from September 2008 
through to the end of the year and 
well into 2009. In all, production 
for the year, in oil equivalent terms 
and including NGLs, averaged 
1,433 boepd on a working 
interest basis and 1,095 boepd 
on a net revenue interest basis, 
compared with 2,575 boepd and 
1,970 boepd respectively in 2007. 
Of the 2008 production, oil and 
NGLs amounted to just under 
40%, with the rest being gas. 
Working interest production fell 
below 400 boepd in September 
and October 2008 compared 
with pre-hurricane levels of 1,850 
boepd in August. Production in 
March 2009 was still well below 
former levels.
Having suffered in 2007 from a 
scarcity of available Group cash 
resources for investment, during 
2008 investment levels in the USA 
operations were restored in order 
to limit production declines and 
maintain or enhance the value of 
producing assets. On the Eugene 
Island property two new wells (EI 
58 #16 and EI 38 #17) were drilled 
and completed as multi-zone 
hydrocarbon discoveries, and 
were tied in to the adjacent EI 57 
production facility during August. 
Tie-in operations were completed 
just prior to the facility shutdown 
due to Hurricane Ike. The EI 57 
production facility sustained only 
minor damage due to the 
hurricane, but the facility still 
remains shut-in due to damage to 
the third party owned gas pipeline 
via which production is off-taken. 
Gulfsands owns an approximate 
25% working interest in these 
new wells, which are expected to 
add significant daily gas volumes 
once production at this facility 
resumes in Q2 2009. In the West 
Cameron area, the WC 498 
B8ST1 well encountered 
producible hydrocarbons in four 
zones, and after tie-in the well 
commenced production through 
the WC 498 facility. The Group 
owns an approximate 4% working 
interest in the WC 498 field.
Significant well workovers and 
recompletions were undertaken 
in the Eugene Island 32 field and 
at Vermillion 161. These 
operations were also successful, 
leading to significantly increased 
production levels from these 
properties. The Group owns a 
26.3% working interest at 
Eugene Island 32 and 30.6% 
working interest at Vermillion 161.
A number of leases expired in 
2008. These include Eugene 
Island 83, High Island A-471 and 
Matagorda 555. The leases 
associated with the onshore 
Emily Hawes field, located on 
Matagorda Island in Texas, were 
relinquished during 2008.
The total net cost of hurricane-
related repairs due to Hurricanes 
Gustav and Ike is currently 
estimated at $3.5 million, with 
approximately two thirds of these 
costs concentrated on two 
properties (Eugene Island 32 and 
Vermillion 315/332). Amounts in 
excess of $2.75 million are 
covered by insurance. Repairs to 
third party facilities, such as 
pipelines, are not a direct cost 
but have a significant impact due 
to shut-in production. Third party 
infrastructure repairs are 
expected to continue throughout 
much of 2009, but with the 
majority being completed by the 
end of the second quarter. 
A new reserves assessment as 
at 31 December 2008 was 
undertaken by Netherland, 
Sewell & Associates, Inc. This 
showed proven and probable 
reserves of 5.1 mmboe on a 
working interest basis and 3.9 
mmboe on a net revenue interest 
basis: a reduction, compared 
with the equivalent report a year 
earlier, of 3.8 mmboe (working 
interest) and 2.9 mmboe (net 
revenue interest). The greater 
part of this reduction was to 
proven reserves, and arose mainly 
from a sharp increase in water 
production at certain producing 
wells. Proven and probable net 
revenue interest reserves at 
year-end comprised 1.8 mmbbl 
of oil and 12.7 bcf of gas. 14
Gulfsands Petroleum Plc
Annual report and accounts 2008
Reserves and contingent resources
The figures in the table below are 
taken from an independent 
estimate of reserves as at 31 
December 2007 carried out by 
RPS Energy, adjusted for 
production in 2008. An updated 
reserves estimate is under 
preparation by RPS but the work 
had not been completed as at 
the date of this annual report.
Working interest reserves 
represent the proportion, 
attributable to the Group’s 50% 
joint venture participating 
interest, of forecast future crude 
oil production during the 
economic life of the Khurbet East 
PSC, including the share of that 
production attributable to Syrian 
Petroleum Company (“SPC”) 
under the terms of the PSC. In 
assessing the economic life it 
has been assumed that the 
option to extend the life of the 
PSC for a further 10 years after 
its initial expiry date is exercised. 
Entitlement reserves represent 
the Group’s estimated share of 
working interest reserves after 
deducting the proportion of 
forecast future production 
attributable to the state under the 
terms of the PSC. This 
proportion is impacted by 
assumptions as to future 
development expenditure and 
future oil prices. For the purpose 
of the estimate as at 31 
December 2007 the average 
price of Brent crude during 2008 
was assumed to be $95/bbl, 
declining to $88/bbl in 2012 and 
constant thereafter. No 
adjustment has been made to 
this estimate to reflect current 
assumptions as to future  
oil prices.
Under the terms of the PSC  
the Group’s liability for income 
tax in Syria is settled by SPC  
out of their share of crude  
oil production.
In the 2007 annual report 
reference was made to gross life-
of-field proved and probable 
reserves for the Khurbet East 
field of 66 mmbbl and to proved, 
probable and possible reserves 
of 143 mmbbl. These figures are 
estimates of the recoverable oil 
given an unlimited time horizon 
and take no account of the 
economic life of the Block 26 
PSC. This does not comply with 
the definitions of reserves 
approved by the Society of 
Petroleum Engineers (“SPE”). 
The comparable gross reserves 
figures at 31 December 2007 
which take into account the 
economic life of the PSC were 
58.7 mmbbl (proved and 
probable) and 130.0 mmbbl 
(proved, probable and possible). 
Gulfsands’ working interest 
reserves at that date, on the 
same basis, were 50% of  
these figures.
 Oil Gas Total oil equivalent
   Proved Probable P+P Possible Proved Probable P+P Possible Proved Probable P+P Possible 
   mmbbl mmbbl mmbbl mmbbl bcf bcf bcf bcf mmboe mmboe mmboe mmboe
Working interest
At 31 December 2007  9.7 19.7 29.4 35.6 0.0 0.0 0.0 0.0 9.7 19.7 29.4 35.6
Additions less disposals  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Revisions  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less 2008 production  (0.7) 0.0 (0.7) 0.0 0.0 0.0 0.0 0.0 (0.7) 0.0 (0.7) 0.0
At 31 December 2008  9.0 19.7 28.7 35.6 0.0 0.0 0.0 0.0 9.0 19.7 28.7 35.6
Entitlement
At 31 December 2007  5.0 6.3 11.3 11.2 0.0 0.0 0.0 0.0 5.0 6.3 11.3 11.2
Additions less disposals   0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Revisions  0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less 2008 production  (0.4) 0.0 (0.4) 0.0 0.0 0.0 0.0 0.0 (0.4) 0.0 (0.4) 0.0
At 31 December 2008  4.6 6.3 10.9 11.2 0.0 0.0 0.0 0.0 4.6 6.3 10.9 11.2
Syria 15
Gulfsands Petroleum Plc
Annual report and accounts 2008
The figures in the table below are 
taken from a new independent 
estimate of reserves attributable 
to the Group’s interest in oil and 
gas properties in the Gulf of 
Mexico and onshore in the state 
of Texas as at 31 December 
2008 carried out by Netherland, 
Sewell & Associates, Inc. (“NSA”).
Working interest reserves 
represent the proportion, 
attributable to the Group’s 
participating interests, of forecast 
future oil and gas production 
during the economic life of the 
properties in question, before 
deduction of state production 
taxes and overriding royalty 
interests. Working interest 
reserves have been derived from 
the net revenue interest reserves 
data contained in the NSA 
report, by grossing up for the 
percentage production tax and 
royalty “burden” applicable to 
each property. The reserves-
weighted average burden at 31 
December 2008 was 23.6%.
Net revenue interest reserves 
represent the Group’s estimated 
share of working interest 
reserves after deduction of the 
equivalent share of oil and gas 
production attributable to state 
production taxes and overriding 
royalty interests.
 Oil Gas Total oil equivalent
   Proved Probable P+P Possible Proved Probable P+P Possible Proved Probable P+P Possible 
   mmbbl mmbbl mmbbl mmbbl bcf bcf bcf bcf mmboe mmboe mmboe mmboe
Working interest
At 31 December 2007  2.1 0.8 2.9 0.1 31.7 4.5 36.2 9.8 7.3 1.6 8.9 1.7
Additions less disposals  0.0 0.0 0.0 0.0 (1.0) (0.4) (1.4) (6.0) (0.1) (0.1) (0.2) (1.0)
Revisions  (0.3) 0.0 (0.3) 0.0 (14.9) (1.5) (16.4) (1.4) (2.8) (0.3) (3.1) (0.2)
Less 2008 production  (0.2) 0.0 (0.2) 0.0 (1.9) 0.0 (1.9) 0.0 (0.5) 0.0 (0.5) 0.0
At 31 December 2008  1.6 0.8 2.4 0.1 13.9 2.6 16.5 2.4 3.9 1.2 5.1 0.5
Net revenue interest
At 31 December 2007  1.5 0.6 2.2 0.1 24.2 3.5 27.7 7.5 5.6 1.2 6.8 1.3
Additions less disposals   0.0 0.0 0.0 0.0 (0.7) (0.3) (1.0) (4.6) (0.1) 0.0 (0.1) (0.8)
Revisions  (0.2) 0.0 (0.3) (0.1) (11.4) (1.1) (12.5) (1.1) (2.1) (0.3) (2.4) (0.2)
Less 2008 production  (0.1) 0.0 (0.1) 0.0 (1.5) 0.0 (1.5) 0.0 (0.4) 0.0 (0.4) 0.0
At 31 December 2008  1.2 0.6 1.8 0.0 10.6 2.1 12.7 1.8 3.0 0.9 3.9 0.3
USA (Gulf of Mexico) 16
Gulfsands Petroleum Plc
Annual report and accounts 2008
Financial review
Andrew Rose
Chief Financial Officer
2008 saw Gulfsands achieve good 
revenue growth, strong cash flow and 
end the year debt-free, with cash 
balances of $36.8 million.
Selected Operational and Financial Data
  2008 2007 
   (restated)
Production: working interest mmboe 1.2 0.9
Production: entitlement mmboe 0.8 0.7
Revenue US$MM 53.6 37.3
Gross profit US$MM 21.9 11.9
Operating (loss)/profit US$MM (11.2) 2.0
Net loss after tax US$MM (9.7) (1.2)
Net cash provided by Operating Activities US$MM 18.7 5.9
Capital expenditures US$MM (17.7) (18.8)
Decommissioning costs net of escrow cash released US$MM (2.7) (5.9)
Cash balance at end of year US$MM 36.8 18.5
Average realised sales price/bbl US$/bbl 65.5 51.9
Production cost/working interest bbl US$/bbl 13.5 18.5
DD&A/entitlement bbl US$/bbl 10.7 9.1
A close examination of the historic 
financial statements for 2007 and 
2006 has revealed a number of 
errors in the preparation of those 
financial statements which require 
correcting, and so the balance 
sheets, income statements and 
cash flow statements for those 
years have been restated. A full 
explanation of the restatements 
and the reconciliation with the 
original financial statements is 
contained in the notes to the 
Consolidated Financial 
Statements, and is summarised 
below. In the commentary that 
follows the prior year comparison 
refers to the restated financial 
statements.
Income Statement
Entitlement production in 2008 
was 0.8 mmboe, of which half 
came from Syria and half came 
from the US operations, 
compared with 0.7 mmboe in 
2007, all of which arose in the US. 
Syrian production commenced in 
July 2008: as there were 
significant unrecovered past 
costs throughout the year 
Gulfsands’ entitlement production 
in Syria was 59% of its working 
interest production, being the 
maximum achievable under the 
PSC. Virtually all oil and gas 
produced in both Syria and the 
Gulf of Mexico is sold in the 
month of production: storage in 
the field is negligible. 
The 44% increase in revenue to 
$53.6 million was partly due to 
the increased production volumes 
and partly to higher realised unit 
prices which rose to $65.5/bbl 
from $51.9/bbl in 2007. In Syria 
the average realised unit price 
was $61.1/bbl, representing a 
$10.9/bbl discount to the 
production-weighted Brent price. 
In the US the average sales prices 
for oil and gas were $103.6/bbl 
and $9.4/mcf respectively.
Excluding depletion and 
impairment charges, cost of 
sales fell slightly from $17.4 
million in 2007 to $16.6 million in 
2008. All but $1.3 million of this 
expense arose in the US 
operations. Underlying US lease 
operating expenses fell by $2.6 
million to $8.3 million, but this 
was partly offset by an increase 
in decommissioning costs 
incurred in excess of the relevant 
existing provision (the excess 
being charged to the income 
statement). Insurance premiums 
of $2.3 million are included within 
the 2008 US cost of sales figure.
Depletion charges rose from 
$6.5 million to $8.8 million as a 
result of increases in both 
entitlement production and the 
unit depletion charge ($10.5/boe 
in 2008 vs. $9.1/boe in 2007). 
Impairment charges rose sharply 
to $6.3 million (2007: $1.4 million) 
as the commerciality of some of 
the Group’s Gulf of Mexico 
properties was impacted by the 
fall in expected future oil and gas 
prices during 2008 and by lower 
reserve estimates. However, 
these higher non-cash charges 
did not outweigh the impact of 
higher revenues, and as a result, 
gross profit nearly doubled to 
$21.9 million (2007: $11.9 million).
Excluding exceptional charges, 
which comprised share-based 
payment charges and foreign 
exchange losses, administrative 
expenses increased by 75% to 
$13.0 million, owing to increased 
staffing in London and Syria, 
severance payments made to the 
former Chief Executive and Chief 
Financial Officer, and incentive 
and retention bonuses paid to 
certain directors and key 
members of staff in the wake of 
the senior management changes 
in H1 2008. Share-based 
payment charges of $12.6 million 
arose as a result of the award of 
options over 7.2 million shares to 
existing and incoming 
management: under the Group’s 
present option scheme the 
majority of option awards vest 
immediately and so the impact of 
these awards is felt in the Income 
Statement in the year of award. 
$2.4 million of this charge arose 
as a result of the decision to 
re-grant short-term options over 
0.6 million shares at the original 
strike price to a Director who was 
prevented from exercising the 
existing options prior to their 
expiry due to the Company being 
in possession of material 
unpublished price sensitive 
information during the last 
several months of 2008. Foreign  17
Gulfsands Petroleum Plc
Annual report and accounts 2008
Early production facility, Khurbet East, 
Block 26, Syria. 18
Gulfsands Petroleum Plc
Annual report and accounts 2008
Financial review continued
exchange losses of $4.7 million 
arose because the majority of the 
£9.4 million proceeds of the 
share issue in April 2008 were 
retained in Pounds Sterling, inter 
alia to defray future costs of the 
new London head office and 
senior management. 
The amount charged to income 
for hurricane repairs was $2.8 
million, being the amount of the 
first loss to be borne by the Group 
under its windstorm insurance 
policy. The estimated total cost of 
the repairs is approximately $3.5 
million, and the balance will be 
the subject of an insurance claim 
as and when the final total cost 
has been established.
The above factors resulted in an 
operating loss for the year of 
$11.2 million, compared with an 
operating profit of $2.0 million in 
2007. After crediting interest 
income of $1.2 million, deducting 
a non-cash charge of $1.7 million 
for the gradual unwinding of the 
present value discount inherent 
in the balance sheet 
decommissioning provision, and 
crediting a deferred tax clawback 
of $1.9 million, the net loss for 
the year amounted to $9.7 million 
(2007: net loss of $1.2 million).
Cash Flow and Capital 
Expenditure
Net cash from operations in 
2008, after a net working capital 
increase of $1.7 million, was $18.0 
million (2007: $5.1 million). Interest 
received added $1.2 million and 
tax of $0.5 million was paid (all in 
the US). Capital expenditure was 
$17.7 million compared with $18.8 
million in 2007: of this $16.2 
million was on development 
assets, in contrast with the 
previous year when most of the 
expenditure was on exploration.
Decommissioning costs paid were 
$5.6 million, double that paid in 
2007. Of this amount, $2.9 million 
was funded by cash released from 
blocked escrow accounts backing 
bonds posted in respect of 
decommissioning liabilities.
A placing of 5.5 million new 
shares in April 2008 at 170p per 
share raised £9.4 million ($18.6 
million) and the exercise of 
options during the year raised a 
further $1.4 million.
The net increase in the Group’s 
cash balances over the year was 
$18.3 million. 
Financial Position
Gulfsands’ financial position is 
strong, with cash balances of 
$36.8 million at the end of the 
2008 financial year and a further 
$13.2 million in blocked escrow 
accounts backing 
decommissioning bonds. The 
Group has no debt facilities in 
place and no hedges in place 
against movement in oil, gas or 
foreign exchange prices.
Since the year-end the Group’s 
energy insurance policy, which 
last year included insurance 
against windstorms in the Gulf of 
Mexico, has come up for 
renewal. Owing to the losses 
suffered by underwriters as a 
result of the 2008 hurricanes, the 
indicative terms received for the 
renewal of the windstorm 
element of this policy showed a 
marked deterioration compared 
with the previous year, including 
a substantial reduction in the 
level of cover and substantial 
increases both in first loss 
retention by the insured and in 
premium. In light of these 
indicative terms, and in view of 
the lower strategic importance of 
the Gulf of Mexico assets to the 
Group now that production from 
Syria is on stream, the Directors 
have decided not to insure 
against windstorm risk for 
2009/10 but only to cover the 
Gulf of Mexico assets against 
normal operational risks.
Restatement of Prior Year 
Financial Statements
The current management of 
Gulfsands considers that a 
number of errors and omissions 
were made in the compilation of 
the 2007 and 2006 Financial 
Statements, which has led to  
the restatement of those  
financial statements. 
The errors and omissions 
identified are as follows:
i) Depletion charges on oil and 
gas assets had been 
calculated based on proven 
and probable reserves but 
incorporating no allowance 
for forecast future capital 
expenditure required to 
produce those reserves. The 
restated figures incorporate 
this forecast future capital 
expenditure, with a 
consequent additional charge 
to the Income Statement for 
the years in question.
ii) The provision for 
decommissioning liabilities 
was based on the amount of 
bonds outstanding relating to 
those liabilities, many of which 
had been posted several years 
previously. No account was 
taken of a report from third 
party specialist surveyors 
which included up-to-date 
estimates of decommissioning 
costs. The restated figures 
reflect the up-to-date 
estimates in this report, with a 
consequent additional charge 
to the Income Statement for 
the years in question
iii) Cash held in blocked escrow 
accounts was included within 
cash and cash equivalents in 
the Balance Sheet even 
though these amounts were 
not readily available for 
withdrawal. It is felt that a 
more appropriate treatment 
would be to record such 
amounts as long term financial 
assets, and so the historic 
Balance Sheets have been 
restated accordingly. This 
restatement has no impact on 
historic Income Statements
The net impact of the above 
adjustments is to reduce the net 
profit of $2.7 million originally 
reported for 2007 by $3.9 million, 
to give a restated $1.2 million net 
loss for 2007, and to reduce the 
net profit of $2.1 million originally 
reported for 2006 by $9.3 million 
(representing the cumulative 
adjustments to 31 December 
2006) to give a restated $7.2 
million net loss for 2006.
Andrew Rose
Chief Financial Officer
16 April 2009 19
Gulfsands Petroleum Plc
Annual report and accounts 2008
Drilling operations, Block 26, Syria. 20
Gulfsands Petroleum Plc
Annual report and accounts 2008
Our people 21
Gulfsands Petroleum Plc
Annual report and accounts 2008
Drilling operations, Block 26, Syria. 22
Gulfsands Petroleum Plc
Annual report and accounts 2008
Board of directors
Andrew West
Non-Executive Chairman
Andrew West, a British subject 
and resident, age 51, is an 
investment banker and 
businessman with nearly thirty 
years experience in London and 
New York. During his early career 
he worked from 1981 to 1985 as 
a Vice President of Smith Barney 
and from 1985 to 1990 as an 
Executive Director of Lehman 
Brothers, where he specialised in 
mergers and acquisitions. From 
1990 to 1997 Andrew was a 
Director of Guinness Mahon & 
Co. and a Managing Director of 
its Corporate Finance Division, 
and from 1997 to 1999 was 
Managing Director of Strand 
Partners Limited, a privately 
owned investment banking firm. 
For the past several years he has 
worked independently. Andrew is 
currently a non-executive director 
of numerous companies. He has 
had considerable previous 
experience as both a financial 
adviser and a non-executive 
director in the oil and gas sector. 
Andrew joined Gulfsands in 2006.
Richard Malcolm
Chief Executive
Richard (Ric) Malcolm is a 
professional geoscientist with 
over 29 years of varied oil and 
gas experience. Ric began his 
career as a Petroleum Geologist 
with Woodside in Perth, Australia 
exploring for oil and gas on the 
Northwest Shelf. He then spent 
10 years with Ampolex Limited 
(Perth & Sydney) where he 
served as the Senior 
Explorationist and Exploration 
Manager Western Australia & 
Northern & Eastern Australia. 
Following three years with Mobil 
as Manager for Papua New 
Guinea, he joined the Austrian  
oil & gas company OMV in 1999. 
Initially Exploration Manager for 
Australia and New Zealand, his 
roles have included Exploration 
and Reservoir Manager for OMV 
Libya, General Manager of OMV 
Norway and finally in 2006 
Managing Director for OMV UK. 
Ric joined Gulfsands as Chief 
Executive in October 2008.
Mahdi Sajjad
Executive Director and President
 
Educated in the United Kingdom, 
Mahdi Sajjad worked from 
1981–1988 with a consortium of 
British companies marketing 
products and engineering 
services in the Middle East and 
Africa. In 1988, he joined 
International Development 
Corporation in Dubai as a Senior 
Executive and later as Managing 
Director whilst also serving 
during the same period through 
to 1995 as a Director of Oil & 
Minerals Development 
Corporation. He has also 
established, as a founder 
shareholder and financier, a 
number of companies with 
interests in the Middle East in 
different industry sectors but 
with particular emphasis on the 
energy and mining sectors. 
Mahdi joined Gulfsands in 1998. 23
Gulfsands Petroleum Plc
Annual report and accounts 2008
Andrew Rose
Chief Financial Officer
Andrew Rose was until March 
2008 Chief Financial Officer of 
Burren Energy, the UK 
independent oil and gas 
company which he joined in 
2001, when it was a private 
company, and helped to list it on 
the London Stock Exchange in 
December 2003 and to build it 
into one of the UK’s most 
successful mid tier independent 
oil companies, culminating in its 
sale to ENI in January 2008. 
Prior to joining Burren Energy he 
had spent his career in 
investment banking, working in 
advisory, capital markets and 
structured finance roles, and 
most recently was head of 
Corporate Finance for Eastern 
Europe, Middle East and Africa 
at Societe Generale. He has an 
MA in Engineering from 
Cambridge University. Andrew 
joined Gulfsands as Chief 
Financial Officer in June 2008.
Ken Judge
Director of Corporate 
Development & 
Communications
Ken Judge is a former corporate 
lawyer with extensive business 
management and corporate 
development experience having 
held numerous public company 
directorships and having been 
engaged in the establishment or 
corporate development of oil and 
gas, mining and technology 
companies in the United 
Kingdom, Middle East, USA, 
Australia, Europe, Canada, Latin 
America and South East Asia. He 
has undergraduate and 
post-graduate degrees in 
Commerce, Jurisprudence and 
Laws from the University of 
Western Australia and was 
awarded an Order of Australia 
Medal in 1984. Ken became a 
Director of Gulfsands in 2006.
David Cowan
Non-Executive Director 
David Cowan is a solicitor 
residing in Vancouver, Canada. 
He is a partner with Lang 
Michener LLP, a national 
Canadian law firm, and practices 
primarily in the area of corporate 
and securities law. He represents 
numerous publicly traded 
companies and has previously 
worked with the British Columbia 
provincial government, including 
the British Columbia Securities 
Commission, where he was 
involved in the drafting of 
securities legislation. David is a 
past Chairman of both the 
Securities and Natural 
Resources subsections of the 
British Columbia branch of the 
Canadian Bar Association, and 
the National Natural Resources 
subsection of the Canadian Bar 
Association. He has also served 
as a member of the Securities 
Policy Advisory Committee to the 
British Columbia Securities 
Commission and is a frequent 
lecturer for the Continuing Legal 
Education Society of British 
Columbia. His specific Middle 
East region experience includes 
ventures in Syria, Iraq and 
Algeria. He holds an LLB from 
the University of British Columbia 
(1979). David became a Director 
of Gulfsands in 2006. 24
Gulfsands Petroleum Plc
Annual report and accounts 2008
Corporate social responsibility
Gulfsands’ Board of Directors 
have put in place a number of 
policies and programmes 
designed to ensure the Group 
maintains high standards of 
corporate social responsibility 
(“CSR”). CSR is among the core 
values of the Group and 
therefore protecting those values 
is a key business priority. 
While the Board of Directors has 
a primary responsibility to the 
Company’s shareholders, we 
also recognise that we have a 
responsibility to take respectful 
account of the interests of the 
other stakeholders in our 
activities. We believe this is  
best achieved through the 
integration of responsible 
corporate policies and the 
adoption of programmes and 
conduct of activities designed  
to ensure that our business 
operates in a sustainable 
business and social environment 
which enables operations to 
thrive, our business development 
objectives to be met and which 
ensures that the interests of 
other “stakeholders” in our 
business are properly respected. 
Working within this framework, 
Gulfsands has achieved 
deserved recognition for its 
business ethics and social 
responsibility, while at the same 
time providing a safe, reliable 
and enjoyable working 
environment for all our 
employees and associates.
We believe the rigorous 
upholding of these values 
substantially lowers the Group’s 
general risk profile, facilitates 
efficiencies in our dealings with 
governments and regulatory 
authorities, and generally  
fosters and promotes new 
business opportunities. 
The implementation of 
community relations 
programmes and related risk 
management practices are 
important parts of our efforts to 
ensure the preservation and 
enhancement of our reputation 
and help to reduce operating 
risks. Being integrated with the 
communities of the regions in 
which we operate also helps 
those we interact with to better 
understand who we are and the 
dynamics of our business and, in 
return, these communities 
frequently assist us to identify 
newly emerging local risks 
affecting our business which 
helps us to be ready to respond 
with appropriate solutions. 
Gulfsands is committed to 
utilising, wherever sensibly 
possible, the skills of the local 
communities in which we 
operate and therefore virtually all 
of the people who work for our 
Group, whether in Syria or the 
US, and whether employees or 
contractors, are nationals of the 
respective region. 
Gulfsands provides its 
employees and contractors with 
access and encouragement to 
undertake technical training to 
the highest international 
standards. This commonly 
involves our sponsorship and 
support for international travel to 
undertake courses and training 
which not only upgrades the 
technical and business talent we 
employ but also has greatly 
assisted us in attracting and 
retaining talented employees  
and contractors. 
Gulfsands is also well recognised 
for its level of commitment to the 
creation of social programmes 
designed to support the national, 
regional and local communities 
where we operate. These 
programmes have included the 
establishment and ongoing 
operation of various programmes 
in the education and health care 
sectors as well as social welfare 
facilities and local infrastructure 
that has been identified as likely 
to directly improve the living, 
working and employment 
conditions in these communities. 
A number of these initiatives are 
worthy of mention here.
Gulfsands has been an important 
financial supporter of BASMA, a 
Syrian NGO established in 2006 
to provide paediatric cancer 
treatment facilities and 
assistance to sick children. 
Recently Gulfsands assisted 
BASMA with finance for the 
construction and establishment 
of a dedicated paediatric cancer 
ward at an important teaching 
hospital in Damascus, the first 
such facility of its kind in Syria.
Gulfsands continues to be a 
financial supporter of AMAL, a 
Syrian charitable organisation 
helping to provide education and 
training to meet the needs of 
disabled children. 
Corporate Social Responsibilty is among 
the core values of the Group and 
therefore protecting those values is a  
key business priority.  25
Gulfsands Petroleum Plc
Annual report and accounts 2008
Gulfsands-supported paediatric cancer 
treatment facility. 26
Gulfsands Petroleum Plc
Annual report and accounts 2008
Corporate social responsibility continued
Other community support 
initiatives in Syria have included 
FIRDOS, a rural development 
organisation which runs 
education, training and 
agriculture improvement projects 
in rural Syria, and the Syrian 
Trust for Development, which 
provides infrastructure and 
assistance to many organisations 
operating in the non-
governmental organisation 
sector, to help facilitate the 
implementation of their  
support programmes. 
In Iraq, Gulfsands has provided 
critically needed financial 
assistance for the development 
of a health clinic in the south  
of the country and support for 
Iraqi orphans and widows. 
Furthermore, our proposals to 
the government of Iraq in relation 
to the Maysan project and other 
business development projects 
that the Group is pursuing in Iraq 
all include commitments to 
directly provide or support 
various health, education and 
training initiatives and 
infrastructure for the 
communities in the regions 
where the Group expects 
eventually to operate.
While the sums of money that the 
Group has committed to all of 
these initiatives may be modest, 
its impact on the wellbeing of  
the communities affected has 
nevertheless been substantial 
and has made an important 
contribution to the reputation the 
Group enjoys in Syria for 
corporate citizenship, 
responsiveness to issues 
affecting the communities in 
which we operate, and respect 
for the privileged position we 
enjoy as operators of Block 26.
Gulfsands will continue to strive 
to achieve high standards of 
corporate social responsibility. 
We have already achieved some 
of our objectives in this area but 
recognise that there is scope to 
do more, including the expansion 
of our early initiatives to achieve 
a legacy from our presence in 
Syria and Iraq that includes the 
sustained long term economic 
development of the local 
communities where we operate. 
We will therefore look to expand, 
within reason, our efforts to 
create more local jobs and the 
building of new or expanded 
local infrastructure, including 
local primary education and 
health care.
Gulfsands’ early success in 
discovering the Khurbet East and 
Yousefieh oil fields in Block 26 
Syria, confirms that we are likely 
to have an important business 
presence in Syria for many years 
to come and we are looking to 
develop similar long term 
business opportunities in Iraq. 
Therefore our shareholders and 
stakeholders can expect to see 
Gulfsands’ future annual reports 
include an update of this 
expanding and increasingly 
important aspect of our  
business activities. 27
Gulfsands Petroleum Plc
Annual report and accounts 2008
Directors’ report
for the year ended 31 December 2008
The Directors present their Directors’ report together with the audited financial statements of Gulfsands Petroleum Plc and its subsidiary 
undertakings (“the Group” or “the Company” or “Gulfsands”) for the year ended 31 December 2008. 
Principal activity 
The Group was established in October 1997. The Company was incorporated in England on 2 December 2004 as a public company 
limited by shares, and became the parent company of the Group in March 2005 as a result of a corporate reorganisation. In April 2005 
the Company was listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
The Group’s principal activity is that of oil and gas production, exploration and development. The Group has development and exploration 
projects in the Syrian Arab Republic and a non-operated portfolio of producing oil and gas properties in the USA (offshore Gulf of Mexico 
and onshore Gulf Coast). The Group has also signed a Memorandum of Understanding relating to a large project in Iraq.
Review of the business and future prospects
A full review of the Group’s operations, business, performance and prospects are set out in the Chairman’s Statement, the Chief 
Executive’s Statement, the Review of Operations and the Financial Review contained in this Annual Report.
Key performance indicators
During the year ended 31 December 2008 the Group had not formally adopted any key performance indicators (“KPIs”). Since then 
Directors have adopted certain financial and non-financial KPIs for 2009 with which to measure performance of the Group during the 
current financial year.
Financial KPIs
The table below sets out the financial KPIs adopted for 2009 and the outcome of each KPI for the year ended 31 December 2008 as if 
these KPIs had been in operation from the beginning of that financial year.
KPI      Units 2008 2007
Production growth (working interest)      % 41.8% 7.8%
Production cost per barrel (working interest)      $/bbl 13.5 18.5
Cash flow available for exploration      $ MM (1.0) (5.4)
Earnings per share growth      % n.a. n.a.
Reserves growth per share (annualised three year average)     % 164% 155%
The definitions of these KPIs are as follows:
Production Growth (working interest)
The year-on-year growth in Group working interest production. Working interest production is selected in preference to entitlement 
production since the latter is affected by the prevailing oil price and by the extent to which past costs have been recovered.
Production Cost per Barrel (working interest)
Cost of sales before depreciation, impairment and decommissioning costs, divided by working interest production. A core measure of 
production efficiency.
Cash Flow available for Exploration
Net cash provided by operating activities, less net cash used in investing activities (but excluding exploration and evaluation expenditure). 
This gives a measure of the cash flow available to the Group for exploration after investment in the development of its existing reserves, 
purchase of other fixed assets and payment of decommissioning costs. 
Earnings per share growth
The annual increase in basic earnings per share. Where basic earnings per share is negative no figure is shown.
Reserves Growth per Share (annualised three year average)
Closing proved and probable reserves (in boe, working interest basis) divided by the number of shares in issue at the year-end, as a ratio 
of the proved and probable reserves three years previously divided by the number of shares in issue three years previously. This ratio is 
then annualised. This is a measure of the Group’s ability to grow its reserves from its financial resources without resorting to increasing its 
share capital. Given the typically sporadic pattern of reserves increases it is felt that an annualised three year moving average 
computation is more appropriate than an annual computation.
Non-Financial KPIs
The non-financial KPIs adopted for 2009 comprise measures relating to frequency and severity of Lost Time Incidents to monitor health 
and safety, employee staff turnover, and the frequency and severity of pollution incidents.
Statistics for non-financial KPIs have not been collated during 2008 and accordingly are not shown herein.  28
Gulfsands Petroleum Plc
Annual report and accounts 2008
Directors’ report continued
for the year ended 31 December 2008
Results and dividends
The Group made a loss after taxation for the year ended 31 December 2008 of $9,672,000 (2007 as restated – $1,212,000 loss). Earnings 
before interest, taxation, depreciation, impairment and share based payment charges was $16,688,000 (2007 as restated – $10,824,000). 
The Directors do not recommend payment of a dividend. 
Group structure and changes in share capital
There were no changes in the Group structure during 2008. Details of movements in the Company’s share capital during the year are set 
out in note 21 to the financial statements.
Directors and their interests
The Directors’ interests in the Company’s shares were as follows: 
 At 31 December 2008 At 31 December 2007
     Number of Number of Number of Number of 
     ordinary share ordinary share 
     shares options shares  options
A T West     – 1,300,000 – 200,000
M Sajjad
1
     9,588,601 1,450,000 8,141,875 1,893,750
R Malcolm
2
     – 1,500,000 – –
A Rose
3
     300,000 1,000,000 – –
K Judge
4
     3,966,750 1,000,000 3,966,750 400,000
D Cowan     441,750 525,000 437,500 300,000
J Dorrier
5
     – – 9,098,750 500,000
D Decort
5
     – – 5,164,375 450,000
1 The interest for Mr Sajjad disclosed above includes shares held by Nordman Continental S.A. and Wickham Holdings S.A. Both Nordman Continental S.A. and Wickham 
Holdings S.A. are owned by a trust of which Mr Sajjad’s relatives are potential beneficiaries.
2 Appointed 15 October 2008.
3 Appointed 1 June 2008.
4 The interest for Mr Judge disclosed above includes shares held by Hamilton Capital Partners Limited, a company of which Mr Judge is a director.
5 Resigned 23 April 2008.
Issue of share options
Details of share options issued, lapsed and exercised during the year ended 31 December 2008 are set out in note 21 to the  
financial statements.
Directors’ interest in transactions
Details of transactions with Directors for the year ended 31 December 2008 are set out in note 27 to the financial statements.
Internal controls
The Board is responsible for identifying and evaluating the major business risks faced by the Group and for determining and monitoring 
the appropriate course of action to manage these risks. Further information relating to the Directors’ Corporate Governance policies is 
shown on page 31.
Substantial shareholders 
The Company has been notified, in accordance with Chapter 5 of the FSA’s Disclosure and Transparency Rules, of the following interests 
in its ordinary shares as at 2 April 2009 of 3% shareholders and above.
       Number % of shares 
Name       of shares in issue
Schroder Investment Management       21,285,120 17.96%
Abdul Rahman Mohdabdullah Kayed       11,500,000 9.70%
Nordman Continental S.A. and Wickham Holdings
1
       9,588,601 8.09%
John Dorrier       9,098,750 7.68%
Al-Mashrek Global Invest Ltd       7,000,000 5.91%
Och-Ziff Capital Management       5,460,100 4.61%
David DeCort       5,164,375 4.36%
Hugh Sloan       5,007,240 4.22%
George Robinson       5,000,000 4.22%
Matterhorn Investment Management       4,258,409 3.59%
The Searle Family Trust       4,134,375 3.49%
Hamilton Capital Partners Limited
2
       3,966,750 3.35%
1 Nordman Continental S.A. and Wickham Holdings are owned by discretionary trusts of which Mr Sajjad’s relatives are potential beneficiaries.
2 Hamilton Capital Partners Limited is an associated company of Mr Judge. 29
Gulfsands Petroleum Plc
Annual report and accounts 2008
Principal risks and uncertainties facing the Group
The business of oil and gas exploration involves a high degree of risk which a combination of experience, knowledge and careful 
evaluation may not be able to prevent. Principal risks and uncertainties facing the Group include but are not limited to:
No assurance that oil or gas will be discovered and if it is, that it is not economically viable to be recovered. •	
Delays in construction or commissioning of drilling projects may result in the Group’s projected target dates for production being •	
delayed or further capital expenditure required.
Reliance on pipelines and facilities operated by others over which the Group has no control. •	
Market price of oil and gas and foreign exchange rates which are affected by numerous factors beyond the Group’s control but could •	
have a material effect on the financial condition and value of its oil and gas reserves. 
Operations may be disrupted by a variety of risks and hazards which are beyond the control of the Group, including environmental •	
hazards, accidents, technical failures, and inclement or hazardous weather conditions. 
The political situation in Syria and Iraq exposes the Group to political economic and other uncertainties, including but not limited to •	
terrorism and changes in energy policies, regulations, and taxation of operations of foreign-based companies.
Future exploration and development and/or acquisition of new properties may be dependent upon the Group’s ability to obtain •	
suitable financing and at reasonable terms.
The Group competes with other companies in the search for and acquisition of oil and gas and other interests as well as for the •	
recruitment and retention of qualified employees.
Supplier’s payment policy
It is the Group’s policy that payments to suppliers are made in accordance with those terms and conditions agreed between the Group 
and its suppliers, providing that all trading terms and conditions have been complied with. The Group’s average creditors’ payment period 
at 31 December 2008 was 56 days.
Use of financial instruments
Gulfsands’ financial risk management objectives are to limit debt to conservative levels, to fund exploration activity through cash flow and 
to ensure sufficient working capital for the Group’s overhead and capital expenditure commitments. This is achieved by prudent financial 
management and careful management of the Group’s cash balances, both short and long term. The financial risk management objectives 
and policies of the Group set out in note 26 to the Financial Statements include the Group’s exposure to price, credit, liquidity and  
credit risk.
Political and charitable contributions
There were no political contributions made by the Group during the year ended 31 December 2008. The Group has a policy of making 
social contributions in its areas of operations where it will impact directly in the local communities. Further details are included in the 
Corporate social responsibility report on pages 24 to 26. Approximately $175,000 was provided to community programmes undertaken 
in Syria during 2008.
Annual General Meeting
The Company’s Annual General Meeting will be held on 23 June 2009 at 11am. The Notice of the Meeting, which sets out the resolutions 
to be proposed, accompanies this Annual Report and Financial Statements.
Going concern
After making appropriate enquiries and examining those areas which could give rise to financial exposure the Directors are satisfied that 
no material or significant exposures exist and that the Group has adequate resources to continue its operations for the foreseeable future. 
For this reason the Directors continue to adopt the going concern basis in preparing the financial statements.
Information to shareholders
The Group has its own website (www.gulfsands.com) for the purposes of improving information flow to shareholders as well as  
potential investors.
Statement of responsibilities of those charged with governance
The Directors are responsible for preparing the financial statements in accordance with applicable laws and International Financial 
Reporting Standards as adopted by the European Union.
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of 
affairs of the Company and Group and of the profit or loss of the Group for that year. In preparing those financial statements, the Directors 
are required to:
select suitable accounting policies and then apply them consistently; •	
make judgements and estimates that are reasonable and prudent; •	
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the •	
financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue  •	
in business. 30
Gulfsands Petroleum Plc
Annual report and accounts 2008
Directors’ report continued
for the year ended 31 December 2008
The Directors confirm that the financial statements comply with the above requirements.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial 
position of the Company and the Group and to enable to ensure that the financial statements comply with the Companies Act 1985. They 
are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of 
fraud and other irregularities. 
Statement of disclosures to the auditors
So far as the Directors, at the time of approval of their report, are aware:
there is no relevant audit information of which the Company’s auditors are unaware; and •	
each Director has taken steps that they ought to have taken to make themselves aware of any relevant audit information and to •	
establish that the auditors are aware of that information. 
Auditors
A resolution to reappoint UHY Hacker Young LLP as auditors of the Company and that the Directors be authorised to fix their 
remuneration will be put to shareholders at the Annual General Meeting.
By order of the Board
Richard Malcolm Andrew Rose
Chief Executive Officer Chief Financial Officer 
16 April 2009 31
Gulfsands Petroleum Plc
Annual report and accounts 2008
31
Gulfsands Petroleum Plc
Annual report and accounts 2008
Corporate governance report
for the year ended 31 December 2008
Gulfsands Petroleum Plc is committed to meeting high standards 
of corporate governance and acting responsibly in all the 
Company’s business activities. The Company is committed to 
maintaining throughout the Group the highest standards of 
business conduct and ethics, as well as full compliance with all 
applicable government laws, rules and regulations, corporate 
reporting and disclosure, accounting practices, accounting 
controls, auditing practices and other matters relating to fraud 
against shareholders.
The Company has established appropriate subcommittees, 
adopted an Audit Committee Charter, a Code of Business 
Conduct and Ethics Policy, a Whistleblower Policy and has also 
established a formal Health, Safety and Environment (HSE) Policy.
Audit committee
The Audit Committee meets at least twice each year to discuss 
the review of the interim financial statements and the audit of the 
year-end financial statements. For the annual results the 
independent auditors are invited to discuss the conclusions arising 
from their audit and their assessment of the Group’s internal 
controls. The Chairman of the Audit Committee is Andrew West 
and the other participating members of the committee are David 
Cowan and Kenneth Judge.
The Company has adopted an Audit Committee Charter which 
addresses the mandate of the Committee, the composition, 
independence, expertise of the members, frequency of meetings, 
roles and responsibilities, external audit function, internal controls, 
financial reporting, annual and interim financial statements, release 
of financial information, non-audit services, delegation of authority, 
reporting responsibilities, resources and authority of the 
Committee, and compliance with laws and regulations.
Remuneration committee
The Remuneration Committee meets at least once per year and is 
responsible for setting the remuneration of the Board of Directors, 
including any pension and share incentive plan awards, and for 
establishing guidelines for the remuneration of staff in general, with 
closer scrutiny of the remuneration of senior management. The 
Chairman of the Remuneration Committee is David Cowan and the 
other participating member is Andrew West.
Code of business conduct and ethics
The Company has adopted a Code of Business Conduct and Ethics 
which addresses the purpose of the code, the workplace (to include 
a non-discriminatory environment, harassment-free workplace, 
sexual harassment, substance abuse, violence, employment of the 
family members, HSE, conflict of interest, gifts and entertainment, 
competitive practices, supplier and contractor relationships, public 
relations, and governmental relations), legal compliance, information 
and records, company assets, and reporting of violations.
Whistleblower policy
The Company has adopted a Whistleblower Policy. Pursuant to its 
charter, the Audit Committee of the Board of Directors of the 
Company is responsible for ensuring that a confidential and 
anonymous process exists whereby persons can report 
Accounting Concerns relating to the Company and its subsidiaries. 
In order to carry out its responsibilities under its charter, the 
Committee has adopted this Whistleblower Policy.
For the purposes of this Policy, “Accounting Concerns” is intended 
to be broad and comprehensive and to include any matter, which 
in the view of the complainant, is illegal, unethical, contrary to  
the policies of the Company or in some other manner not right  
or proper.
All Directors, officers, employees, consultants and contractors of 
the Company are made aware of the Policy and a copy of the 
Policy has been distributed to Directors, officers and employees. 
All Directors, officers and employees will be informed whenever 
significant changes are made and new directors, officers and 
employees will be provided with a copy of this Policy and educated 
about its importance.
Health, safety and environment (HSE) policy 
A primary goal of the Group is the protection of Health, Safety and 
Environment (HSE). The Group is dedicated to continuous efforts 
to make its operations compatible with protecting people, property 
and the environment.
This policy, whose implementation is overseen by the Chief 
Executive Officer, governs the Group’s operations and is 
specifically designed to:
Comply with and exceed relevant HSE legislation, regulations •	
and other requirements;
Maintain and develop systems to identify, assess, monitor, •	
review and control HSE issues;
Set HSE objectives and targets; •	
Implement mechanisms to communicate with and to obtain •	
input from: employees, contractors, partners and associates;
Coordinate HSE policy, including the HSE management •	
systems of contractors, to provide a unified system to guide 
operations;
Institute a site-specific Emergency Response Procedure (ERP) •	
so that immediate actions are taken, without delay, to minimise 
danger to personnel, the environment and property. Emergency 
Response Procedures will be rehearsed prior to commencing 
operations to ensure that personnel make the appropriate 
responses in the event of emergency.
It is the policy of the Group to consider the health and welfare of 
employees by maintaining a safe place and system of work as 
required by the Safety, Health and Welfare at Work Act, 1989.
The Group closely monitors activities to ensure to the best of its 
knowledge there is not potential for any such breach. There have 
been no convictions in relation to breaches of these Acts recorded 
against the Group during the reporting year.
Regular Board meetings
The Board of Directors holds regular Board Meetings approximately 
six times per year. 32
Gulfsands Petroleum Plc
Annual report and accounts 2008
Directors’ remuneration report
for the year ended 31 December 2008
This report has been prepared having regard to the Directors Remuneration Report Regulations 2002, which require the Auditors to 
report to a company’s shareholders on the auditable part of the Directors’ remuneration report and to state whether in their opinion  
that part of the report has been properly prepared. The report has therefore been divided into separate sections for audited and 
unaudited information. 
The report has been prepared by the Remuneration Committee and has been approved by the Board for submission to shareholders. 
Unaudited Information
Remuneration Policy
Up to and including the end of the 2008 financial year, no formal remuneration policy was in place for Directors and staff of the Group.
In March 2009 the Remuneration Committee retained the services of Hewitt New Bridge Street (“HNBS”) as remuneration consultants to 
review the Group’s historic remuneration policy and the existing share option plan, to undertake a benchmarking exercise for Directors 
and senior staff, and to make recommendations as to a formal remuneration policy for the Group going forward. A paper containing 
detailed proposals was prepared under the guidance of HNBS, reviewed by the Remuneration Committee on 15 April 2009 and 
discussed by the Board of Directors on 16 April 2009. Discussions to finalise the remuneration policy are still ongoing.
Audited Information
Remuneration of Directors
The remuneration of the Directors for the year ended 31 December 2008 was as follows:
 Annual remuneration ($000)
   Compensation for  
 Salary and fees Bonuses loss of office Benefits in kind Total
 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
A T West 268 100 49 – – – – – 317 100
M Sajjad 519 408 1,681 502 – – 53 331 2,253 1,241
R Malcolm
1
 97 – – – – – – – 97 –
A Rose
2
 160 – – – – – 4 – 164 –
K Judge 284 160 19 – – – – – 303 160
D Cowan
3
 91 45 – – – – – – 91 45
J Dorrier
4
 96 282 – 228 444 – 25 111 565 621
D DeCort
4
 83 242 – 195 399 – 45 119 527 556
Total 1,598 1,237 1,749 925 843 – 127 561 4,317 2,723
1 Appointed as a Director on 15 October 2008.
2 Appointed as a Director on 1 June 2008.
3 Non-executive Director.
4 Resigned on 23 April 2008.
In addition to the remuneration shown above the Group incurred share based payment charges of $10,725,000 (2007: $102,000)  
in respect of the above named Directors. 33
Gulfsands Petroleum Plc
Annual report and accounts 2008
Share options
The interests of the Directors in options over the Company’s shares are set out in the table below:
 Number of options    
Gain on
 At     At Exercise Market price exercise Date from  
 1 January     31 December price (£ at date of of options which  
 2008 Granted Exercised Lapsed 2008 unless stated) exercise (£) ($000) exercisable Expiry date
A T West 125,000 – – – 125,000 1.45 – – 14/02/06 13/02/11
 75,000 – – – 75,000 1.04 – – 25/07/06 24/07/11
 – 1,000,000 – – 1,000,000 1.88 – – 13/05/08 12/05/13
M Sajjad
1
 568,750 – – 568,750 – US$0.41 – – 01/01/03 31/12/07
 875,000 – 875,000 – – US$0.60 1.06 1,612 17/10/03 16/10/08
 450,000 – – – 450,000 1.30 – – 05/04/05 04/04/10
 – 1,000,000 – – 1,000,000 1.88 – – 13/05/08 12/05/13
 – 568,750 568,750 – – US$0.41 2.30 2,256 17/06/08 16/06/13
R Malcolm – 750,000 – – 750,000 1.86 – – 15/10/08 14/10/13
 – 375,000 – – 375,000 1.86 – – 15/10/09 14/10/13
 – 375,000 – – 375,000 1.86 – – 15/10/10 14/10/13
A Rose – 500,000 – – 500,000 1.80 – – 08/05/08 07/05/13
 – 250,000 – – 250,000 1.80 – – 08/05/09 07/05/13
 – 250,000 – – 250,000 1.80 – – 08/05/10 07/05/13
K Judge 400,000 – – – 400,000 0.96 – – 18/10/06 17/10/11
 – 600,000 – – 600,000 1.88 – – 13/05/08 12/05/13
D Cowan 175,000 – 175,000 – – US$0.57 1.06 322 17/10/03 16/10/08
 125,000 – – – 125,000 1.45 – – 14/02/06 13/02/11
 – 400,000 – – 400,000 1.88 – – 13/05/08 12/05/13
J Dorrier
2
 500,000 – – – 500,000 1.30 – – 05/04/05 04/04/10
D DeCort
2
 450,000 – – – 450,000 1.30 – – 05/04/05 04/04/10
1 Share options details shown above include options granted to Nordman Continental S.A. Nordman Continental S.A. is owned by a trust in which Mr Sajjad’s children are 
potential beneficiaries.
2 Resigned as a director on 23 April 2008.
This report was approved by the Board of Directors on 16 April 2009.
David Cowan
Chairman of the Remuneration Committee
16 April 2009 34
Gulfsands Petroleum Plc
Annual report and accounts 2008
34
Gulfsands Petroleum Plc
Annual report and accounts 2008
Independent auditors’ report 
to the shareholders of Gulfsands Petroleum Plc
We have audited the Group and Parent Company financial 
statements (the “financial statements”) of Gulfsands Petroleum Plc 
for the year ended 31 December 2008 which comprise the 
Consolidated income statement, the Consolidated and Company 
balance sheets, the Consolidated and Company statements of 
changes in equity, the Consolidated and Company cash flow 
statements and the related notes. These financial statements have 
been prepared in accordance with the basis and the accounting 
policies set out therein. We have also audited the information in  
the Directors’ remuneration report that is described as having 
been audited
This report is made solely to the Company’s members, as a body, 
in accordance with Section 235 of the Companies Act 1985. Our 
audit work has been undertaken so that we might state to the 
Company’s members those matters we are required to state to 
them in an auditor’s report and for no other purpose. To the fullest 
extent permitted by law, we do not accept or assume 
responsibility to anyone other than the Company and the 
Company’s members as a body, for our audit work, for this report, 
or for the opinions we have formed.
Respective responsibilities of directors and auditors
The Directors’ responsibilities for preparing the Annual Report and 
the Group and Company financial statements in accordance with 
applicable law and International Financial Reporting Standards 
(“IFRS”) as adopted by the European Union are set out in the 
paragraph entitled “Statement of Responsibilities of Those 
Charged with Governance” in the Directors’ Report, and for 
preparing the Directors’ remuneration report are set out therein.
Our responsibility is to audit the financial statements and the part 
of the Directors’ remuneration report to be audited in accordance 
with the relevant legal and regulatory requirements and 
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial 
statements give a true and fair view and whether the financial 
statements and the part of the Directors’ remuneration report to 
be audited have been properly prepared in accordance with the 
Companies Act 1985. We also report to you whether, in our 
opinion, the information given in the Directors’ Report is consistent 
with the financial statements. In addition, we report to you if, in our 
opinion, the Company has not kept proper accounting records, if 
we have not received all the information and explanations we 
require for our audit, or if information specified by law regarding 
Directors’ remuneration and transactions with the Company is  
not disclosed.
We read other information contained in the Annual Report, and 
consider whether it is consistent with the audited financial 
statements. This other information comprises the 2008 Highlights, 
Gulfsands at a glance, Chairman’s Statement, Chief Executive’s 
report, Review of operations, Reserves and contingent resources, 
Financial review, Board of Directors, Corporate social 
responsibility, Directors’ report, Directors’ corporate governance 
and the unaudited part of the Directors’ remuneration report. We 
consider the implications for our report if we become aware of any 
apparent misstatements or material inconsistencies with the 
financial statements. Our responsibilities do not extend to any 
other information.
Basis of opinion
We conducted our audit in accordance with International Standards 
on Auditing (UK and Ireland) issued by the Auditing Practices Board. 
An audit includes examination, on a test basis, of evidence relevant 
to the amounts and disclosures in the financial statements and the 
part of the Directors’ remuneration report to be audited. It also 
includes an assessment of the significant estimates and judgements 
made by the Directors in the preparation of the financial statements, 
and of whether the accounting policies are appropriate to the 
Company’s and the Group’s circumstances, consistently applied 
and adequately disclosed.
We planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary in 
order to provide us with sufficient evidence to give reasonable 
assurance that the financial statements and the part of the 
Directors’ remuneration report to be audited are free from material 
misstatement, whether caused by fraud or other irregularity or error. 
In forming our opinion, we also evaluated the overall adequacy of 
the presentation of information in the financial statements and the 
part of the Directors’ remuneration report to be audited.
Opinion
In our opinion:
the financial statements give a true and fair view, in accordance •	
with IFRSs as adopted by the European Union, of the state of 
the Group’s affairs as at 31 December 2008 and of the Group’s 
loss for the year then ended;
the Company financial statements give a true and fair view, in •	
accordance with IFRSs as adopted by the European Union, of 
the state of the Company’s affairs as at 31 December 2008;
the financial statements and the part of the Directors’ •	
remuneration report to be audited have been properly prepared 
in accordance with the Companies Act 1985; and
the information given in the Directors’ report is consistent with •	
the financial statements.
UHY Hacker Young LLP
Chartered Accountants
Registered Auditors
Quadrant House
17 Thomas More Street
Thomas More Square
London E1W 1YW
21 April 2009 35
Gulfsands Petroleum Plc
Annual report and accounts 2008
Consolidated income statement
For the year ended 31 December 2008
      2008  2007 (restated) 
     Notes $’000  $’000
Revenue     6 53,600  37,309
Cost of sales
 Depletion      (8,767)  (6,541)
 Impairment      (6,327)  (1,418)
 Other cost of sales      (16,588)  (17,425)
Total cost of sales      (31,682)  (25,384)
Gross profit      21,918  11,925
Administrative expenses before exceptional items      (13,033)  (7,431)
Foreign exchange losses      (4,729)  227
Share-based payments     7 (12,572)  (882)
Total administrative expenses      (30,334)  (8,086)
Hurricane repairs     8 (2,750)  (1,856)
Operating (loss)/profit     9 (11,166)  1,983
Discount expense on decommissioning provision     20 (1,667)  (1,828)
Net interest income     10 1,229  1,190
(Loss)/profit before taxation      (11,604)  1,345
Taxation     11 1,932  (2,557)
Loss for the year – attributable to equity holders of the Company    (9,672)  (1,212)
Loss per share (cents):
Basic     12 (8.37)  (1.13)
Diluted     12 (8.37)  (1.13)
The losses for 2008 and 2007 relate entirely to continuing operations. 36
Gulfsands Petroleum Plc
Annual report and accounts 2008
Consolidated balance sheet
As at 31 December 2008
      2008  2007 (restated) 
     Notes $’000  $’000
Assets
Non-current assets
 Property, plant and equipment     13 79,661  49,532
 Intangible assets     14 343  28,593
 Long term financial assets     17 13,167  16,078
      93,171  94,203
Current assets
 Inventory      2,401  –
 Trade and other receivables     16 15,536  11,154
 Cash and cash equivalents     17 36,812  18,533
      54,749  29,687
Total assets      147,920  123,890
Liabilities
Current liabilities
 Trade and other payables     18 11,245  6,672
 Provision for decommissioning     20 5,877  10,952
      17,122  17,624
Non-current liabilities
 Deferred tax liabilities     19 –  1,932
 Provision for decommissioning     20 20,430  16,824
      20,430  18,756
Total liabilities      37,552  36,380
Net assets      110,368  87,510
Equity
Capital and reserves attributable to equity holders
 Share capital     21 12,814  11,997
 Share premium      98,530  79,389
 Share-based payments reserve      14,305  1,733
 Merger reserve      11,709  11,709
 Retained losses      (26,990)  (17,318)
Total equity      110,368  87,510
These financial statements were approved by the Board of Directors on 16 April 2009 and signed on its behalf by:
Richard Malcolm Andrew Rose
Chief Executive Officer Chief Financial Officer 37
Gulfsands Petroleum Plc
Annual report and accounts 2008
Company balance sheet
As at 31 December 2008
      2008  2007 
     Notes $’000  $’000
Assets
Non-current assets
 Property, plant and equipment     13 145  13
 Investments in and loans to subsidiaries     15 50,136  80,178
      50,281  80,191
Current assets
 Trade and other receivables     16 33,911  108
 Cash and cash equivalents     17 28,339  14,831
      62,250  14,939
Total assets      112,531  95,130
Liabilities
Current liabilities
 Trade and other payables     18 4,467  221
Total liabilities      4,467  221
Net assets      108,064  94,909
Equity
Capital and reserves attributable to equity holders
 Share capital     21 12,814  11,997
 Share premium      98,530  79,389
 Share-based payments reserve      14,305  1,733
 Retained (losses)/earnings      (17,585)  1,790
Total equity      108,064  94,909
These financial statements were approved by the Board of Directors on 16 April 2009 and signed on its behalf by:
Richard Malcolm Andrew Rose
Chief Executive Officer Chief Financial Officer 38
Gulfsands Petroleum Plc
Annual report and accounts 2008
Consolidated statement of changes in equity
For the year ended 31 December 2008
     Share- 
     based 
   Share  Share payments Merger Retained Total 
   capital premium reserve reserve losses equity 
   $’000 $’000 $’000 $’000 $’000 $’000
Year ended 31 December 2008
At 1 January 2008 (restated)   11,997 79,389 1,733 11,709 (17,318) 87,510
Options exercised   194 1,224 – – – 1,418
Shares issued   623 17,917 – – – 18,540
Share-based payment charge   – – 12,572 – – 12,572
Loss for 2008   – – – – (9,672) (9,672)
At 31 December 2008   12,814 98,530 14,305 11,709 (26,990) 110,368
Year ended 31 December 2007
At 1 January 2007 (restated)   11,047 56,506 851 11,709 (16,106) 64,007
Options exercised   9 187 – – – 196
Shares issued   941 22,946 – – – 23,887
Share issue costs   – (250) – – – (250)
Share-based payment charge   – – 882 – – 882
Loss for 2007 (restated)   – – – – (1,212) (1,212)
At 31 December 2007 (restated)   11,997 79,389 1,733 11,709 (17,318) 87,510
The merger reserve arose on the acquisition of Gulfsands Petroleum Ltd and its subsidiaries by the Company by way of share-for-share 
exchange in April 2005, in conjunction with the flotation of the Company on the Alternative Investment Market (“AIM”) of the London 
Stock Exchange. 39
Gulfsands Petroleum Plc
Annual report and accounts 2008
Company statement of changes in equity
For the year ended 31 December 2008
      Share- 
      based Retained 
    Share  Share payments (losses)/ Total 
    capital premium reserve earnings equity 
    $’000 $’000 $’000 $’000 $’000
Year ended 31 December 2008
At 1 January 2008    11,997 79,389 1,733 1,790 94,909
Options exercised    194 1,224 – – 1,418
Shares issued    623 17,917 – – 18,540
Share-based payment charge    – – 12,572 – 12,572
Loss for 2008    – – – (19,375) (19,375)
At 31 December 2008    12,814 98,530 14,305 (17,585) 108,064
Year ended 31 December 2007
At 1 January 2007    11,047 56,506 851 1,885 70,289
Options exercised    9 187 – – 196
Shares issued    941 22,946 – – 23,887
Share issue costs    – (250) – – (250)
Share-based payment charge    – – 882 – 882
Loss for 2007    – – – (95) (95)
At 31 December 2007    11,997 79,389 1,733 1,790 94,909 40
Gulfsands Petroleum Plc
Annual report and accounts 2008
Consolidated cash flow statement
For the year ended 31 December 2008
      2008  2007 (restated) 
     Notes $’000  $’000
Cash flows from operating activities
Operating (loss)/profit      (11,166)  1,983
Depreciation, depletion and amortisation     13, 14 8,953  6,541
Impairment charge     13 6,327  1,418
Decommissioning costs paid in excess of provision     20 2,987  1,640
Share-based payment charge     7 12,572  882
Non-cash bonus      –  252
Loss on disposal of assets      9  2
Increase in receivables      (4,066)  (2,265)
Increase/(decrease) in payables      4,781  (5,398)
Increase in inventory      (2,401)  –
Net cash provided by operations      17,996  5,055
Interest received      1,229  1,190
Taxation paid      (524)  (356)
Net cash provided by operating activities      18,701  5,889
Investing activities
Exploration and evaluation expenditure     14 (645)  (13,510)
Oil and gas properties expenditure     13 (16,157)  (5,275)
Other capital expenditures     13, 14 (923)  (46)
Change in long term financial assets     17 2,911  (3,181)
Decommissioning costs paid     20 (5,566)  (2,752)
Net cash used in investing activities      (20,380)  (24,764)
Financing activities
Cash proceeds from issue of shares      19,958  23,831
Share issue costs      –  (250)
Net cash provided by financing activities      19,958  23,581
Increase in cash and cash equivalents      18,279  4,706
Cash and cash equivalents at beginning of year      18,533  13,827
Cash and cash equivalents at end of year     17 36,812  18,533 41
Gulfsands Petroleum Plc
Annual report and accounts 2008
Company cash flow statement
For the year ended 31 December 2008
      2008  2007 
     Notes $’000  $’000
Cash flows from operating activities
Operating loss      (23,627)  (3,499)
Depreciation and amortisation     13 17  11
Share-based payment charge     7 12,572  882
Non-cash bonus      –  252
Loss on disposal of assets      9  –
(Increase)/decrease in receivables      (26)  3,368
Increase in payables      4,397  40
Net cash (used in)/provided by operations      (6,658)  1,054
Interest received      4,252  3,796
Taxation paid      (413)  (1,096)
Net cash (used in)/provided by operating activities      (2,819)  3,754
Investing activities
Other capital expenditures     13 (158)  (1)
Loans to subsidiaries     15, 16 (3,473)  (22,331)
Net cash used in investing activities      (3,631)  (22,332)
Financing activities
Cash proceeds from issue of shares      19,958  23,831
Share issue costs      –  (250)
Net cash provided by financing activities      19,958  23,581
Increase in cash and cash equivalents      13,508  5,003
Cash and cash equivalents at beginning of year      14,831  9,828
Cash and cash equivalents at end of year     17 28,339  14,831 42
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements
For the year ended 31 December 2008
1. Authorisation of financial statements and statement of compliance with IFRSs
Gulfsands Petroleum Plc is a public limited company listed on the Alternative Investment Market (AIM) of the London Stock Exchange and 
incorporated in England. The principal activities of the Company and its subsidiaries (the Group) is that of oil and gas production, 
exploration, and development.
The Group’s financial statements for the year ended 31 December 2008 were authorised for issue by the Board of Directors on 16 April 
2009 and the balance sheets were signed on the Board’s behalf by Richard Malcolm and Andrew Rose.
The Company’s and Group’s financial statements have been prepared in accordance with International Financial Reporting Standards 
(IFRS) as endorsed by the European Union. The principal accounting policies adopted are set out in note 3 below.
2. Adoption of International Financial Reporting Standards and correction of errors in prior periods
The Company’s and Group’s financial statements for the year ended 31 December 2008 and for the comparative year ended 31 December 
2007 have been prepared in accordance with International Financial Reporting Standards and IFRIC (International Financial Reporting 
Interpretations Committee) interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS.
The Group has restated the Income Statements, Balance Sheets and Cash Flow Statements as reported for prior periods. In prior 
periods the Group had omitted to take into account future forecast capital expenditure when calculating a depletion charge for its Gulf of 
Mexico assets and had understated the provision for decommissioning for the periods ended 31 December 2007 and 31 December 
2006. In addition the Group had inaccurately recorded balances held in escrow accounts as cash equivalents rather than long term 
financial assets. Further details of these restatements are shown in note 30.
3. Significant accounting policies
3.1 Basis of preparation and accounting standards
The Group’s significant accounting policies used in the preparation of the financial statements are set out below.
The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards and 
under the historical cost convention.
These financial statements consolidate the accounts of Gulfsands Petroleum plc and all its subsidiary undertakings drawn up to 
31 December each year.
In the Group financial statements, merged subsidiary undertakings are treated as if they had always been a member of the Group. The 
results of such subsidiaries are included for the whole year in the year they join the Group.
3.2 Basis of consolidation
Intra-group sales, profits and balances are eliminated fully on consolidation.
The results of other subsidiaries acquired or sold are consolidated for the years from or to the date when control passed. Acquisitions are 
accounted for under the purchase method, under which purchase consideration is allocated to the assets and liabilities on the basis of 
fair value at the date of acquisition.
The consolidated financial statements include the accounts of subsidiary undertakings when the Company has the power to exercise, or 
actually exercises, dominant influence or control over the undertaking.
The Group is engaged in oil and gas exploration, development and production through incorporated and unincorporated joint ventures 
(together “Jointly Controlled Entities”). The Group accounts for its share of the results and net assets of these Jointly Controlled Entities 
using the proportional consolidation method.
No individual income statement is presented in respect of the Company as permitted by section 230 of the Companies Act 1985. The 
Company’s loss for the year was $19,375,000 (2007: loss of $95,000).
3.3 Reporting currency
These financial statements are presented in US Dollars. The Company’s operations and the majority of all costs associated with foreign 
operations are paid in US Dollars and not the local currency of the operations. Therefore the presentational and functional currency is the 
US Dollar. Gains and losses from foreign currency transactions, if any, are recognised in the Income Statement for the year. The effective 
exchange rate to the Pound Sterling at 31 December 2008 was £1: US$1.45 (2007: £1: US$1.99).
3.4 Oil and gas assets
The Group applies the requirements of IFRS 6 “Exploration for and Evaluation of Mineral Resources” and where additional guidance is 
needed IAS 16 “Property, Plant and Equipmen” and IAS 36 “mpairment of assets” noting that several items in the latter two standards are 
excepted due to the application of IFRS 6. Set out below are our interpretation of the principles set out in IFRS 6 and other IFRSs. It 
should be noted that guidance on certain aspects of IFRS 6 has not yet been provided by the IASB or IFRIC. Accordingly, amendments 
may be required to the accounting policies set out below in future years. 43
Gulfsands Petroleum Plc
Annual report and accounts 2008
There are two categories of oil and gas assets, exploration and evaluation assets which are included in Intangible assets, and 
development and production assets which are included in Property, plant and equipment.
Oil and gas assets: exploration and evaluation
Recognition and measurement
Exploration and evaluation (E&E) assets consist of costs of license acquisition, exploration, evaluation, appraisal and development 
activities and evaluating oil and gas properties. The cost of E&E assets includes capitalised overheads relevant to the exploration and 
evaluation up to the point of commercial discovery. Costs incurred prior to having obtained the legal rights to explore an area (pre-license 
costs) are expensed directly to the income statement as they are incurred and are not included in E&E assets. E&E costs are 
accumulated and capitalised into cost pools and added to Intangible assets pending determination of commercial reserves.
E&E assets relating to each exploration license/prospect are not amortised but are carried forward until the existence or otherwise of 
commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for 
impairment on a cash generating unit basis as set out below and any impairment loss is recognised in the income statement. The 
carrying value of the E&E assets, after any impairment loss, is then reclassified as development and production assets in Property, plant 
and equipment.
Impairment
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable 
amount. Such indicators include the point at which a determination is made as to whether commercial reserves exist.
Where the E&E assets concerned fall within the scope of a cash generating unit, the E&E assets are tested for impairment together with 
all development and production assets associated within the cash generating unit. The aggregate carrying value is compared against the 
expected recoverable amount of the pool, generally by reference to the present value of the future net cash flows expected to be derived 
from production of commercial reserves. Where the E&E assets to be tested fall outside the scope of a cash generating unit, there will 
generally be no commercial reserves and the E&E assets concerned will generally be written off in full.
Any impairment loss is recognised in the income statement and is separately disclosed. In the balance sheet it is recorded against the 
carrying value of the related E&E asset.
Oil and gas assets: development and production
Tangible oil and gas assets are grouped into a cash generating unit or groups of units for purposes of impairment testing and for 
depreciating the development and production assets. A cash generating unit is the smallest unit that does not have interrelated revenues 
and may be a well, field, area, block, region, or other defined area as appropriate. Interrelationships can be measured by oil and gas 
production agreements, reserve reports, or other documentation showing such relationships. The only limitation in the size of a cash 
generating unit is that it cannot be larger than a reporting segment of the Group.
Recognition and measurement
Development and production assets are accumulated on a cash generating unit basis and represent the cost of developing the 
commercial reserves discovered and bringing them into production, together with the E&E expenditures incurred in finding commercial 
reserves transferred from intangible E&E assets.
The cost of development and production assets also includes the cost of acquisitions and purchases of such assets, directly attributable 
overheads, and the cost of recognising provisions for future restoration and decommissioning.
Depletion of producing assets
Expenditure within each cash generating pool is depleted by a unit of production method using the ratio of oil and gas production in the 
year compared to the estimated quantity of commercial reserves at the beginning of the year. Costs used in the unit of production 
calculation comprise the net book value of capitalised costs plus the estimated future field development costs for proved and probable 
reserves. Changes in estimates of commercial reserves or future development costs are dealt with prospectively.
Impairment
An impairment test is performed whenever events and circumstances arising during the development or production phase indicate that 
the carrying value of a development or production asset may exceed its recoverable amount. The aggregate carrying value is compared 
against the recoverable amount of the cash generating unit, generally by reference to the present value of the future net cash flows 
expected to be derived from production of commercial reserves.
3.5 Decommissioning
Where a material liability for the removal of production facilities and site restoration at the end of the productive life of a field exists, a 
provision for decommissioning is recognised. The amount recognised is the present value of estimated future expenditure determined in 
accordance with local conditions and requirements. A fixed asset of an amount equivalent to the provision is also created (included in 
development and production assets) and depleted on a unit of production basis. Changes in estimates are recognised prospectively, with 
corresponding adjustments to the provision and the associated fixed asset. 44
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
3.6 Definition of reserves
The Group’s definition of commercial reserves is proven and probable reserves. Proven and probable oil and gas reserves are estimated 
quantities of commercially producible petroleum which the existing geological, geophysical and engineering data show to be recoverable 
in future years. The proven reserves included herein conform to the definition approved by the Society of Petroleum Engineers (“SPE”) 
and the World Petroleum Congress (“WPC”). The probable reserves included herein conform to the definition of probable reserves 
approved by the SPE/WPC using the deterministic methodology.
3.7 Property, plant and equipment other than oil and gas assets
Property, plant and equipment other than oil and gas assets are stated at cost less accumulated depreciation and any provision for 
impairment. Depreciation is charged so as to write off the cost, less estimated residual value, of assets on a straight-line basis over their 
useful lives of between two and five years.
3.8 Intangible assets other than oil and gas assets
Intangible assets other than oil and gas assets are stated at cost less accumulated amortisation and any provision for impairment. 
Amortisation is charged so as to write off the cost, less estimated residual value, of assets on a straight-line basis over their useful lives of 
between two and five years. Amortisation is included with depreciation and classified as cost of sales or administrative expenses as 
appropriate. No intangible assets other than oil and gas assets have indefinite lives.
3.9 Revenue recognition
Oil sales revenue represents amounts invoiced exclusive of sales related taxes for the Group’s share of oil and gas sales in the year.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective rate applicable.
3.10 Operating leases
Rentals payable under operating leases are charged to the income statement on a straight line basis over the lease term.
3.11 Taxation
Current tax, including UK corporation tax and overseas tax, is provided at amounts expected to be paid (or recovered) using the tax rates 
and laws that have been enacted or substantially enacted by the balance sheet date.
The liability method is used in accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are determined 
based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates 
and laws that will be in effect when the differences are expected to reverse. The recoverability of deferred tax assets are evaluated 
annually and an impairment provision is provided if it is more likely than not that the deferred tax asset will not give rise to future benefits 
in the Group’s tax returns.
3.12 Derivative financial instruments
The Group has in the past used forward crude oil and gas sales contracts and swaps to reduce exposure to fluctuations in the price of 
crude oil and natural gas in order to reduce the volatility of the cash flows of the Group. Contracts are only entered into to hedge physical 
positions related to the Group’s crude oil and natural gas production and are accordingly accounted for as hedge transactions. At year 
ends, unrealised gains or losses which were based on the market values of oil and gas prices compared to the value of the contracts at 
that date based on the designated prices on those contracts, are included in turnover.
3.13 Share-based payments
The Company has made share-based payments to certain employees and Directors by way of issues of share options. The fair value of 
these payments is calculated by the Company using the Black-Scholes option pricing model. The expense is recognised on a straight line 
basis over the period from the date of award to the date of vesting, based on the Company’s best estimate of shares that will eventually vest.
3.14 Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost and comprise cash in hand and deposits repayable on demand by 
banks and other short term investments with original maturities of three months or less. Balances held in bank accounts subject to 
escrow agreements as collateral for performance bonds issued are excluded from cash and cash equivalents.
3.15 Foreign currency
Foreign currency transactions of individual companies within the Group are translated to the functional and reporting currency of US 
Dollars at the rates when the transactions occurred. Monetary assets and liabilities denominated in foreign currencies are translated at 
the rate of exchange at the balance sheet date. All differences are taken to the Income Statement.
3.16 Investments
The Parent Company’s investments in subsidiary companies are included in the Company Balance Sheet at cost, less provision for  
any impairment.
3. Significant accounting policies continued 45
Gulfsands Petroleum Plc
Annual report and accounts 2008
3.17 Inventories
Inventories comprise materials and equipment, which are stated at the lower of cost and net realisable value. Cost includes all costs 
incurred in bringing the materials and equipment to its present condition and location.
3.18 Trade receivables
Trade receivables are carried at original invoice amounts less any provision made for impairment of receivables. A provision for 
impairment of trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due 
according to the original terms of the debt.
3.19 Trade payables
Trade payables are not interest-bearing and are stated at their nominal values.
3.20 Equity interests
Equity interests issued by the Company are recorded at the proceeds received, net of direct issue costs.
4. New IFRS standards and interpretations
The following pronouncements from the IASB will become effective for future financial reporting periods and have not yet been adopted 
by the Group.
IFRS 8 “Operating Segments” was issued in October 2006 and defines operating segments as components of an entity about which 
separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate 
resources and in assessing performance. The new standard sets out the required disclosures for operating segments and is effective for 
annual periods beginning on or after 1 January 2009. The Group will adopt the new standard with effect from 1 January 2009 and 
expects no change to its segments that are separately reported and no effect on the Group’s reported income or net assets. IFRS 8 has 
been adopted by the EU.
In September 2007, the IASB issued Amendments to IAS 1 “Presentation of Financial Statements” – A Revised Presentation, which 
requires separate presentation of owner and non-owner changes in equity by introducing the statement of comprehensive income. 
Whenever there is a restatement or reclassification, an additional balance sheet, as at the beginning of the earliest period presented, will 
be required to be published. The revised standard is effective for annual periods beginning on or after 1 January 2009 and the Group will 
adopt it from that date. There will be no effect on the Group’s reported income or net assets. IAS 1 Revised has been adopted by the EU.
In January 2008, the IASB issued a revised version of IFRS 3 “Business Combinations”. The revised standard still requires the purchase 
method of accounting to be applied to business combinations but will introduce some changes to existing accounting treatment. For 
example, contingent consideration is measured at fair value at the date of acquisition and subsequently remeasured to fair value with 
changes recognised in profit or loss. Goodwill may be calculated based on the parent’s share of net assets or it may include goodwill 
related to the minority interest. All transaction costs are expensed. The standard is applicable to business combinations occurring in 
accounting periods beginning on or after 1 July 2009 and the Group plans to adopt it with effect from 1 January 2010. Assets and 
liabilities arising from business combinations occurring before the date of adoption by the Group will not be restated and thus there will be 
no effect on the Group’s reported income or net assets on adoption. The revised standard has not yet been adopted by the EU.
Also in January 2008, the IASB issued an amended version of IAS 27 “Consolidated and Separate Financial Statements”. This requires 
the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. Such transactions will 
no longer result in goodwill or gains or losses. When control is lost, any remaining interest in the entity is remeasured to fair value and a 
gain or loss recognised in profit or loss. The amendment is effective for annual periods beginning on or after 1 July 2009 and is to be 
applied retrospectively, with certain exceptions. The Group plans to adopt the amendment with effect from 1 January 2010 and does not 
expect there to be any effect on the Group’s reported income or net assets. The revised standard has not yet been adopted by the EU.
IFRIC 18 “Transfers of assets from Customers” was issued in January 2009 and is effective prospectively from 1 July 2009. The Group 
has not yet completed its evaluation of the effect of adopting this interpretation.
There are no other standards and interpretations in issue but not yet adopted that the Directors anticipate will have a material effect on 
the reported income or net assets of the Group.
5. Critical accounting estimates and assumptions
In the process of applying the Group’s accounting policies, which are set out in note 3, the Directors have made the following judgements 
and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The 
estimates and assumptions that have a risk of causing material adjustment to the carrying amounts of assets and liabilities within the next 
financial year are discussed below.
a) Intangible oil and gas exploration and evaluation costs
Costs capitalised as intangible assets are assessed for impairment when circumstances suggest that the carrying value may exceed its 
recoverable value. This assessment involves judgement as to the (i) likely commerciality of the assets, and (ii) future revenues and costs 
pertaining and the discount rate to be applied for the purpose of deriving a recoverable value. 46
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
b) Decommissioning
The Group has decommissioning obligations in respect of its producing interests in the Gulf of Mexico. The full extent to which the 
provision is required depends on the legal requirements at the time of decommissioning, the costs and timing of any decommissioning 
works and the discount rate applied to such costs. The Group has received a report from external specialist decommissioning experts 
regarding the cost of future works. The timing of these works is inherently uncertain and depends upon the determination of the end of 
commercial production. The Group has utilised the expected useful lives in the year end reserves report to estimate the timing of 
decommissioning liabilities. An appropriate risk free interest rate plus a risk premium of 4.25% has been used to discount the expected 
costs of decommissioning.
c) Oil and gas development and production assets and reserves
Oil and gas development and production assets held in property plant and equipment are depleted on a unit of production basis 
calculated by reference to proven and probable reserves. The Group’s estimated commercial reserves take the estimated future cost of 
developing and extracting those reserves into account. Future forecast capital expenditure associated with developing proved and 
probable reserves is included in the cost base for the purposes of calculating depletion charges. Commercial reserves are determined 
using estimates of oil and gas in place, recovery factors and future oil and gas prices. The carrying amount of oil and gas assets therefore 
depends upon a number of estimates at year end.
The level of estimated commercial reserves is also a key determinant in assessing whether the carrying value of any of the Group’s oil and 
gas assets have been impaired.
6. Segmental information
The primary segmental reporting format is determined to be the geographical segment according to the location of the assets. The 
Directors consider the Group to have a single line of business, being the exploration, development and production of oil and gas. 
Accordingly no secondary segmental information is presented.
There are two major geographical segments, the USA and Syria. Both segments are involved with production and exploration of oil and gas.
The Group loss before interest for the year is analysed by geographical area as follows:
     2008
     USA Syria Other Total 
     $’000 $’000 $’000 $’000
Revenues     28,121 25,479 – 53,600
Depreciation, depletion and amortisation     (6,010) (2,930) (23) (8,963)
Impairment     (6,327) – – (6,327)
Hurricane repairs     (2,750) – – (2,750)
Other cost of sales     (15,270) (1,318) – (16,588)
Administrative expenses before exceptional items and depreciation    (3,208) (3,026) (6,603) (12,837)
Foreign exchange gains/(losses)     – 74 (4,803) (4,729)
Share-based payments     – – (12,572) (12,572)
(Loss)/profit before interest and taxation     (5,444) 18,279 (24,001) (11,166)
Net interest and unwinding of discount     (1,204) 133 633 (438)
Inter-segment interest     (3,618) – 3,618 –
Taxation     1,932 – – 1,932
(Loss)/profit for the year     (8,334) 18,412 (19,750) (9,672)
     2007 (restated)
     USA Syria Other Total 
     $’000 $’000 $’000 $’000
Revenues     37,309 – – 37,309
Depreciation, depletion and amortisation     (6,485) (44) (12) (6,541)
Impairment     (1,418) – – (1,418)
Hurricane repairs     (1,856) – – (1,856)
Other cost of sales     (17,425) – – (17,425)
Administrative expenses before exceptional items and depreciation    (3,522) (844) (3,065) (7,431)
Foreign exchange gains/(losses)     – (6) 233 227
Share-based payments     – – (882) (882)
Profit/(loss) before interest and taxation     6,603 (894) (3,726) 1,983
Net interest and unwinding of discount     (712) 72 2 (638)
Inter-segment interest     (3,296) – 3,296 –
Taxation     (2,164) – (393) (2,557)
(Loss)/profit for the year     431 (822) (821) (1,212)
5. Critical accounting estimates and assumptions continued 47
Gulfsands Petroleum Plc
Annual report and accounts 2008
Central costs have not been apportioned to geographical areas and are included with “other” above.
The segment assets and liabilities as at 31 December and the segment capital expenditure for the year ended 31 December were  
as follows:
     2008
     USA Syria Other Total 
     $’000 $’000 $’000 $’000
Assets     68,866 52,475 26,579 147,920
Liabilities     (33,397) (3,757) (398) (37,552)
Inter-segment balances     (40,466) (32,466) 72,932 –
Capital expenditure     5,887 11,125 156 17,168
     2007 (restated)
     USA Syria Other Total 
     $’000 $’000 $’000 $’000
Assets     72,978 35,769 15,143 123,890
Liabilities     (34,380) (1,769) (231) (36,380)
Inter-segment balances     (37,699) (36,161) 73,860 –
Capital expenditure     6,138 13,510 – 19,648
7. Share-based payments
The charge for the period is based upon the requirements of IFRS 2 regarding share-based payments. For this purpose, the weighted 
average estimated fair value of the share options granted was calculated using a Black-Scholes option pricing model. The volatility 
measured at the standard deviation of expected share price return is 63.6%. No dividends were factored into the model.
Details of option grants made during the year and assumptions included in the calculation of the charge to the income statement are 
as follows:
    Stock price  Number Weighted  
    at date Exercise of options average Risk free 
Grant date    of grant price issued option life interest rate
8 May 2008    £1.80 £1.75 1,000,000* 4.5 4.45%
13 May 2008    £1.88 £1.88 3,075,000 4.5 4.53%
13 May 2008    £1.88 £1.88 500,000 4.0 4.53%
13 May 2008    £1.88 £1.88 50,000 0.5 4.53%
17 June 2008    £2.38 £0.22 568,750 0.1 1.86%
18 July 2008    £1.95 £1.86 20,000 0.5 5.30%
5 September 2008    £1.75 £1.86 225,000 4.0 4.29%
15 October 2008    £1.17 £1.86 1,500,000* 4.5 4.37%
27 October 2008    £0.94 £1.86 200,000* 4.0 3.92%
24 November 2008    £1.37 £1.86 10,000 4.0 3.18%
8 December 2008    £1.30 £1.86 15,000 4.0 3.13%
Total options granted      7,163,750
The share options granted on 17 June 2008 were issued to replace an identical number of options granted on 1 January 2003 at the 
same price which had expired unexercised. These options were not exercised prior to their expiry date as the option holder was in 
possession of unpublished price sensitive information in the period leading up to the option lapse date. The reissued options were 
exercised immediately upon grant.
Other than the options marked with an * above, which vest over a period of three years, all options are exercisable immediately and 
accordingly the greater part of the estimated fair value was expensed during the period.
8. Hurricane repairs
In 2008 Hurricanes Gustav and Ike caused damage to several of the Group’s oil and gas properties and supporting infrastructure in the 
Gulf of Mexico. A provision has been made in these accounts for the full amount of any damage notified by the operators less potential 
insurance claim refunds. The amount charged to the Income Statement in the year end 31 December 2008 was $2,750,000.
In 2005, Hurricanes Katrina and Rita hit the Gulf Coast and several of the Group’s offshore oil and gas properties were damaged. Most of 
the repairs were not performed until 2006 and 2007. The charge to the Income Statement for these hurricane repairs was $1,856,000 in 
2007. These charges are net of insurance claims of which $3,701,000 was receivable at 31 December 2007 (see note 16). The insurance 
claim amount reflects the Directors’ best estimate of the refund due from insurance companies. 48
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
9. Operating (loss)/profit
The Group’s operating (loss)/profit is stated before charging:
        2007 
       2008 (restated) 
      Note $’000 $’000
Foreign exchange loss/(gain)       4,729 (227)
Auditors’ remuneration
 Audit services       203 176
 Non-audit services       21 73
Share-based payment charges      7 12,572 882
Hurricane repairs      8 2,750 1,856
Depletion of oil and gas properties      13 8,767 6,433
Depreciation and amortisation of other fixed assets      13, 14 186 108
Impairment of development and production assets      13 6,327 1,418
Staff costs excluding share-based payments      22 6,176 3,135
Operating lease rentals:
 Buildings       232 250
 Vehicles and equipment       2,614 4
The operating lease rentals shown for 2008 include $2,523,000 (2007: $ nil) in respect of the hire of drilling rigs and operating staff.
Fees payable to the Company’s auditors for non-audit services consist of $8,000 (2007: $47,000) for tax compliance services, $1,000 
(2007: $9,000) for general advisory services and $12,000 (2007: $17,000) for reviewing the interim results.
10. Interest receivable
       2008 2007 
       $’000 $’000
Short-term bank deposit interest       1,229 1,190
11. Taxation charge
        2007 
       2008 (restated) 
       $’000 $’000
Current Corporation Tax:
 UK Corporation Tax       – 393
 Overseas Corporation Tax       – 56
Deferred Taxation:
 Tax losses carried forward       1,725 996
 Timing differences       (3,657) 1,112
       (1,932) 2,557
The Group’s effective tax rate differs from the theoretical amount that would arise using the UK domestic corporation tax rate applicable 
to profits of the consolidated companies as follows:
       2008 2007 
       $’000 $’000
(Loss)/profit before tax       (11,604) 1,345
Tax calculated at domestic rates       (3,307) 484
Effects of:
Expenses not deductible for taxation purposes       19 (4)
Share-based payments       3,583 318
Tax losses for which no deferred taxation asset was recognised      8,032 369
Impact of local tax rates       (5,808) –
Other tax adjustments       163 (4)
Effect of prior period adjustment       (4,614) 1,394
       (1,932) 2,557
In 2008 the Group has reconciled the tax charge to the UK domestic corporation tax rate of 30% for the period from 1 January 2008 to 
31 March 2008 and 28% thereafter. This is a change to the method used in 2007 when the tax charge was reconciled to a weighted 
average rate of 36%. This change has been made to reflect the more diversified income stream of the Group. The 2007 calculation above 
has not been restated.
12. Loss per share
The basic and diluted loss per share have been calculated using the loss for the year ended 31 December 2008 of $9,672,000 (2007 loss 
(restated): $1,212,000). The basic and diluted loss per share were calculated using a weighted average number of shares in issue of 
115,520,651 (2007: 107,223,298). 49
Gulfsands Petroleum Plc
Annual report and accounts 2008
13. Property, plant and equipment
    Oil and gas properties
       Other  
     USA Syria fixed assets Total 
Group     $’000 $’000 $’000 $’000
Cost:
At 1 January 2007 (restated)     75,899 – 273 76,172
Additions (restated)     6,092 – 45 6,137
Disposals     – – (8) (8)
At 31 December 2007 (restated)     81,991 – 310 82,301
Additions     5,600 10,000 596 16,196
Transfer from Intangible assets     – 29,221 – 29,221
Disposals     – – (33) (33)
At 31 December 2008     87,591 39,221 873 127,685
Accumulated depreciation and depletion:
At 1 January 2007 (restated)     (19,475) – (80) (19,555)
Charge for 2007 (restated)     (6,433) – (93) (6,526)
Disposals     – – 7 7
At 31 December 2007 (restated)     (25,908) – (166) (26,074)
Charge for 2008     (5,961) (2,806) (185) (8,952)
Disposals     – – 24 24
At 31 December 2008     (31,869) (2,806) (327) (35,002)
Accumulated impairment:
At 1 January 2007 (restated)     (5,277) – – (5,277)
Impairment charge for 2007 (restated)     (1,418) – – (1,418)
At 31 December 2007 (restated)     (6,695) – – (6,695)
Impairment charge for 2008     (8,154) – – (8,154)
Reversal of impairment charges from prior years     1,827 – – 1,827
At 31 December 2008     (13,022) – – (13,022)
Net book value at 31 December 2008     42,700 36,415 546 79,661
Net book value at 31 December 2007 (restated)     49,388 – 144 49,532
The impairment charges for 2007 and 2008 relate to provisions against the Group’s carrying values of its USA producing assets, following 
a review of reserves at the year end. The decrease in the market price of oil and gas has led to reductions in forecast future revenues per 
barrel of oil equivalent and also a reappraisal of the economics of certain fields in the Gulf of Mexico together with decreases in the 
estimated commercially recoverable reserves of those fields.
      Offi ce equipment,  
      fixtures and fittings Total 
Company      $’000 $’000
Cost:
At 1 January 2007       32 32
Additions       1 1
At 31 December 2007       33 33
Additions       158 158
Disposals       (33) (33)
At 31 December 2008       158 158
Accumulated depreciation:
At 1 January 2007       (9) (9)
Charge for 2007       (11) (11)
At 31 December 2007       (20) (20)
Charge for 2008       (17) (17)
Disposals       24 24
At 31 December 2008       (13) (13)
Net book value at 31 December 2008       145 145
Net book value at 31 December 2007       13 13 50
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
14. Intangible assets
     Exploration and Computer 
     evaluation assets software Total 
Group     $’000 $’000 $’000
Cost:
At 1 January 2007      15,066 49 15,115
Additions      13,510 1 13,511
At 31 December 2007      28,576 50 28,626
Additions      645 327 972
Transfer to Property, plant and equipment      (29,221) – (29,221)
At 31 December 2008      – 377 377
Accumulated amortisation:
At 1 January 2007      – (18) (18)
Charge for 2007      – (15) (15)
At 31 December 2007      – (33) (33)
Charge for 2008      – (1) (1)
At 31 December 2008      – (34) (34)
Net book value at 31 December 2008      – 343 343
Net book value at 31 December 2007      28,576 17 28,593
Intangible Exploration and Evaluation (“E&E”) assets of $29,221,000 representing the cumulative cost of exploration work in Block 26 in 
Syria were transferred to development and production assets within tangible fixed assets upon the successful declaration of 
commerciality for the Khurbet East field in the second half of 2008. At 31 December 2008 there were no E&E assets.
Included in E&E assets at 31 December 2007 was an amount of $1,664,000 in respect of capitalised overheads related to the exploration 
and evaluation activities in Block 26, Syria. A further $645,000 of overhead expense was capitalised during the year ended 31 December 
2008 in respect of general and administrative costs prior to discovery of commercial reserves.
15. Investments
       2008 2007 
Company       $’000 $’000
Cost of shares in Gulfsands Petroleum Ltd.       7,306 7,306
Loans to subsidiaries       42,830 72,872
       50,136 80,178
The Company’s fixed asset investment of $7,306,000 represents the historic cost of acquisition of the entire share capital of Gulfsands 
Petroleum Ltd. by means of a share for share exchange in 2005, less any required provision for impairment.
Loans to subsidiary undertakings include a revolving loan from the Company to Gulfsands Petroleum USA, Inc. for $42,830,000 (2007: 
$39,588,000) including accrued interest. Interest is charged at 8.5% per annum on the outstanding principal and is payable in full on 31 
December annually. The principal balance may be paid in part or in full at anytime with no penalty. On 1 January 2011, the loan converts 
to a term loan and the payments will be made in four instalments over the next four years.
During 2008 the Group’s subsidiary in Syria commenced repayment of the Company’s loans to Gulfsands Petroleum Syria Limited upon 
the declaration of commerciality of Khurbet East and the commencement of production. These loans have been transferred to current 
assets during the year to 31 December 2008.
The Company’s investments in subsidiary undertakings are shown below. All investments are in ordinary shares and are directly or 
indirectly owned by the Company as stated below:
  Proportion of 
  voting shares at   Country of 
Name of Company  31 December 2008  Nature of business incorporation
Directly held by the Company:
Gulfsands Petroleum Ltd.   100%  Holding company Cayman Islands
Indirectly held by the Company:
Gulfsands Petroleum Holdings   100%  Holding company Cayman Islands
Gulfsands Petroleum Colombia Ltd.   100%  Dormant Cayman Islands
Gulfsands Petroleum Syria Ltd.   100%  Oil & gas exploration Cayman Islands
Gulfsands Petroleum Iraq Ltd.   100%  Oil & gas exploration Cayman Islands
Gulfsands Petroleum USA, Inc.   100%  Oil & gas exploration US
Darcy Energy LLC   100%  Oil & gas exploration US 51
Gulfsands Petroleum Plc
Annual report and accounts 2008
Gulfsands Petroleum Syria Limited owns 25% of the voting shares in Dijla Petroleum Company (“DPC”), a company incorporated in Syria. 
DPC is a joint venture undertaking between the Syrian Petroleum Company and the other parties participating in the production of 
hydrocarbons from Block 26 in Syria. All costs of DPC are ultimately borne equally between the Group and its joint venture partner, 
Emerald Energy plc. In the Group accounts the results of DPC are proportionally consolidated.
The Group’s share of the summarised aggregated balance sheet of jointly controlled entities is set out below:
       2008 2007 
       $’000 $’000
Long term assets       28,973 28,658
Current assets       16,958 7,111
Current liabilities       (36,223) (37,930)
Long term liabilities and provisions       – –
The Group’s share of the summarised aggregated income statement of jointly controlled entities is set out below:
       2008 2007 
       $’000 $’000
Income       25,479 –
Expenses       (7,193) (932)
16. Trade and other receivables 
    Group | Company
      2007   
     2008  (restated) 2008 2007 
     $’000 $’000 $’000 $’000
Trade receivables     8,266 4,491 – –
Other receivables     28 – – –
Insurance receivable     – 3,701 – –
Underlift     919 919 – –
Corporation tax recoverable     316 – 262 –
Prepayments and accrued income     1,378 2,043 134 108
Amounts due from oil and gas partnerships     4,629 – – –
Amounts due from subsidiaries     – – 33,515 –
     15,536 11,154 33,911 108
Included in trade receivables is an amount of $5,096,000 that represents a retention of 20% on the oil sales to the Oil Marketing Bureau 
of the Government of the Syrian Arab Republic. This retention will be released during September 2009 upon completion of certain assay 
tests on the quality of the crude oil delivered from the Khurbet East field. The Group does not believe that there is any significant risk that 
the crude oil delivered will fail to meet the benchmark tests in the oil sales agreement.
No significant trade receivables are classified as past due or considered impaired.
Underlift at 31 December 2008 and 2007 represents underlift acquired as a result of the acquisition of oil and gas properties in the Gulf of 
Mexico in May 2004. Underlift represents a right to future economic benefits (through entitlement to receive equivalent future production), 
which constitutes an asset. This amount is due after more than one year.
Amounts due from oil and gas partnerships represents the excess of the Group’s loans and advances to jointly controlled entities over its 
share of the assets less liabilities of those entities. This amount is recoverable within one year.
17. Cash and cash equivalents
    Group | Company
     2008 2007 2008 2007 
     $’000 $’000 $’000 $’000
Short term cash deposits     – 11,115 – 11,115
Cash at bank and in hand     36,812 7,418 28,339 3,716
Restricted cash balances     13,167 16,078 – –
     49,979 34,611 28,339 14,831
Included in long term financial assets     13,167 16,078 – –
Total cash and cash equivalents     36,812 18,533 28,339 14,831
Short term cash deposits comprised amounts held on deposit, but readily convertible to cash. 52
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
The restricted cash balances include (i) amounts held in escrow to cover decommissioning expenditures under the requirements of the 
regulatory authorities that manage the oil and gas and other mineral resources in the Gulf of Mexico and (ii) a bank guarantee that is 
required under the terms of the Production Sharing Contract with the Syrian Petroleum Company and which is reduced quarterly as the 
obligations under the required work programmes are completed.
18. Trade and other payables
    Group | Company
     2008 2007 2008 2007 
     $’000 $’000 $’000 $’000
Trade payables     9,266 6,194 251 60
Other payables     1,979 270 144 10
US Corporation tax payable     – 56 – –
UK Corporation tax payable     – 152 – 151
Amounts due to subsidiaries     – – 4,072 –
     11,245 6,672 4,467 221
19. Deferred tax assets/(liabilities)
    Group | Company
     2008 2007 2008 2007 
     $’000 $’000 $’000 $’000
Accelerated oil and gas depreciation allowance     767 (5,908) – –
Other short term timing differences     943 – – –
Tax losses carried forward     6,322 3,976 2,328 –
Unprovided deferred tax asset     (8,032) – (2,328) –
Deferred tax asset/(liability) at 31 December     – (1,932) – –
The tax effect of amounts for which no deferred tax asset has been recognised is as follows:
    Group | Company
     2008 2007 2008 2007 
     $’000 $’000 $’000 $’000
Unutilised tax losses     6,755 – 2,328 –
Other short term timing differences     1,277 – – –
     8,032 – 2,328 –
Deferred taxation assets are not provided where the Group does not consider it probable that sufficient future taxable profits will be made 
to offset the deductions represented by those deferred tax assets. In performing this calculation the Group considers deferred tax 
balances relating to each tax authority separately.
20. Provision for decommissioning
The provision for decommissioning relates to the expected present value of costs of plugging and abandoning the oil and gas properties 
held by Gulfsands Petroleum USA, Inc and Darcy Energy LLC. The provision for decommissioning is estimated after taking account of 
inflation, years to abandonment, and borrowing rates. At 31 December 2008, the oil and gas properties have estimated plugging and 
abandonment dates between 2009 and 2036.
The portion of the provision for decommissioning expected to be settled in 2009 totalling approximately $5.9 million is included in current 
liabilities and the remainder totalling approximately $20.4 million is included in non-current liabilities in the consolidated balance sheet at 
31 December 2008.
Actual decommissioning costs will ultimately depend upon future market prices for the necessary decommissioning work required, which 
will reflect market conditions at the relevant time. Furthermore, the timing of decommissioning is likely to depend on when the fields cease 
to produce at economically viable rates. This in turn will depend upon future oil and gas prices, which are inherently uncertain.
17. Cash and cash equivalents continued 53
Gulfsands Petroleum Plc
Annual report and accounts 2008
The movement in the provision for decommissioning was as follows:
        $’000
At 1 January 2007 (restated)        26,141
Changes in estimates (restated)        919
Additions (restated)        –
Costs in excess of provision (restated)        1,640
Decommissioning costs paid        (2,752)
Discount expense (restated)        1,828
At 31 December 2007 (restated)        27,776
Less: current portion (restated)        10,952
Non-current portion (restated)        16,824
At 1 January 2008 (restated)        27,776
Changes in estimates        (557)
Additions        –
Costs in excess of provision        2,987
Decommissioning costs paid        (5,566)
Discount expense        1,667
At 31 December 2008        26,307
Less: current portion        5,877
Non-current portion        20,430
21. Share capital
      2008  2007 
Group and Company      Number  Number
Authorised:
Ordinary shares of 5.714 pence each      175,000,000 175,000,000
      2008  2007 
      $’000  $’000
Allotted, called up and fully paid:
118,522,500 (2007: 111,178,750) ordinary shares of 5.714 pence each    12,814  11,997
The movements in share capital and share options were:
   Weighted average     
   exercise price  Number of  Number of 
   of options  share options  ordinary shares
At 1 January 2008    £0.95  5,413,750 111,178,750
Private placement      – 5,500,000
Share options exercised for cash    £0.39  (1,843,750) 1,843,750
Share options lapsed    £0.22  (568,750) –
Share options issued    £1.76  7,163,750 –
At 31 December 2008    £1.64  10,165,000 118,522,500
The detail of the share options outstanding at 31 December 2008 are as follows:
    Weighted average  Number of 
Exercise period   Year options vest exercise price  options
5 April 2005 – 4 April 2010    2005  £1.30  2,135,000
13 February 2006 – 18 October 2011    2006  £1.18  855,000
19 February 2007 – 3 June 2012    2007  £1.12  580,000
8 May 2008 – 8 December 2013    2008  £1.84  5,245,000
8 May 2009 – 27 November 2015   2009 and 2010  £1.83  1,350,000
      £1.64  10,165,000
Options are exercisable at prices from £0.96 to £1.88 per share and have a weighted estimated remaining contractual life of 3.8 years.
Of the total outstanding options at 31 December 2008, the options granted to the Directors numbered 6,675,000 (2007: 3,743,750) and 
those granted to other staff numbered 1,845,000. The remaining 1,645,000 were granted to ex-employees and ex-directors or 
consultants who are currently involved with or have performed work for the Group.
The average share price during 2008 was £1.64 (2007: £1.19). 54
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
22. Staff costs
The aggregate payroll costs of staff and Directors were as follows:
       2008 2007 
       $’000 $’000
Wages and salaries       5,858 2,764
Social security costs       175 371
Share-based payment charges       12,572 882
Other benefits in kind       143 –
       18,748 4,017
The average monthly number of persons employed by the Group, including Directors was as follows:
       2008 2007 
       Number Number
Operational and technical       6 4
Administrative       15 22
       21 26
Staff numbers and costs recorded above include the Group’s share of staff employed by jointly controlled entities.
Details of the remuneration of Directors are included in the Directors’ remuneration report on page 32. No employees other than Directors 
are determined to be key management personnel.
23. Obligations under operating leases
At the end of the year the Group had commitments for future minimum lease payments under non-cancellable operating leases  
as follows:
    2008  2007
     Land &  Land & 
     buildings Other buildings Other 
     $’000 $’000 $’000 $’000
Amounts payable on leases:
Within one year     539 395 362 10
In two to five years     1,462 7 293 5
After more than five years     – – – –
     2,001 402 655 15
In addition to the items mentioned above the Group had commitments to make payments under a non-cancellable lease for the provision 
of an oil rig. This lease expires in 2010. At 31 December 2008 the Group had a commitment to make further payments totalling 
approximately $7.5 million for the provision of the rig and operating staff. The ultimate timing of these payments will depend upon the 
Group’s drilling programme.
24. Commitments
At 31 December 2008 all exploration expenditure and work programme commitments pertaining to the current exploration period (ending 
August 2010) in Block 26 in Syria had been satisfied in full.
There were no other material obligations or contracts outstanding in relation to ongoing projects not provided for at 31 December 2008 
or 2007.
25. Contingent liabilities
Due to the nature of the Group’s business, some contamination of the real estate property owned or leased by the Group is possible. 
Environmental site assessments of the property would be necessary to adequately determine remediation costs, if any. The Directors do 
not consider the amounts that would result from any environmental site assessments to be significant to the financial position or results of 
operations of the Group. Accordingly, except for the provision made against decommissioning costs (note 20), no further provision for 
potential remediation costs is required.
26. Financial instruments and derivatives
Risk assessment
The Group’s oil and gas activities are subject to a range of financial and operational risks, as described below which can significantly 
impact its performance. 55
Gulfsands Petroleum Plc
Annual report and accounts 2008
Liquidity rate risk
At 31 December 2008 the Group had sufficient funds available to progress its exploration portfolio and projected requirements for the 
development of existing reserves. At the end of the year the Group had cash in hand of $36.8 million, and further bank balances of 
$13.2 million held in escrow.
Cash forecasts identifying the liquidity requirements of the Group are produced frequently. These are reviewed regularly by management 
and the Board to ensure that sufficient financial headroom exists for at least 12 months. At present the Group has no loan facilities in 
place and has no obvious need for such facilities based upon its current projects in hand and its available cash resources. However this 
position will continually be reviewed in the light of developments with existing projects and new project opportunities as they arise.
Currency risk
The Group has currency exposure arising from transactions denominated in currencies other than its functional currency, US Dollars. 
These transactions relate predominantly to the cost of its Syrian operations which are denominated in Euro and Syrian Pounds and its 
head office costs which are denominated in Pounds Sterling.
Although sales of crude oil by the Group’s Syrian operations are invoiced in US Dollars payment is made in Euro according to the 
exchange rate pertaining between US Dollars and Euro shortly before the payment is made. The Group manages any further risk through 
the use of short term foreign currency forward contracts of not more than 10 days duration. Each contract is entered into with the aim of 
exactly covering any foreign currency risk on Euro receivables.
Costs incurred in Euro in the Syrian operations are recoverable under the terms of the Production Sharing Contract at the rate of 
exchange between US Dollars and Euro at the date of payment.
The Group maintains part of its cash balances in Pounds Sterling to defray head office costs.
The following table demonstrates the sensitivity to changes in the US Dollar exchange rate, with all other variables held constant, on the 
Group’s profit before tax and Group’s equity.
    Effect on 
   Change in (loss)/profit Effect on 
   US Dollar before tax equity 
   rate $’000 $’000
2008   (+ or –) 5%  660  660
2007   (+ or –)  5%  157  157
Operational risk
Operational risks include equipment failure, well blowouts, pollution, fire and the consequences of bad weather. Where the Group is a 
project operator of either a producing field or an exploration drilling programme, it takes increased responsibility for ensuring that all 
relevant legislation is met, and that all partners have appropriate insurance cover in place. The Group’s insurance policies contain overall 
limits and deductibles, which are reviewed each year prior to policy renewal.
Credit risk
In the USA the Group trades only with recognised, creditworthy third parties. The Group manages the exposures to credit risk by 
performing credit evaluations on all of their major customers requiring credit.
In Syria, the Group’s share of crude oil is sold to the Oil Marketing Bureau of the Government of the Syrian Arab Republic. Management 
believe that the counterparty risk is low and similar to the sovereign risk of Syria.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide 
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. 
In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to 
reduce debt.
The Group considers capital to be its equity reserves. At the current stage of the Group’s life cycle, the Group’s objective in managing its 
capital is to ensure funds raised meet the exploration expenditure commitments.
The Group ensures it is meeting its objectives by reviewing its exploration activities are progressing in line with expectations, controlling 
costs and placing unused funds on deposit to conserve resources and increase returns on surplus cash held. 56
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
Financial assets
The Group’s financial assets consist of long term financial assets, cash at bank and receivables. The interest rate profile at 31 December 
for these assets at US Dollar equivalents was as follows:
    Financial assets Financial assets 
    on which interest on which no interest 
    is earned is earned Total 
    $’000 $’000 $’000
2008
US Dollar     35,780  16,042 51,822
UK Sterling     12,656  149 12,805
Euro     698  – 698
Syrian Pounds     185  5 190
     49,319  16,196 65,515
2007
US Dollar     27,287  15,108 42,395
UK Sterling     3,324  22 3,346
Syrian Pounds     –  24 24
     30,611  15,154 45,765
The UK Sterling, Euro and Syrian Pound assets principally comprise cash on hand, cash in instant access accounts and short term 
money market deposits. The US Dollar assets represent cash on call accounts, money market accounts, and short term receivables. The 
Group earned interest on its interest bearing financial assets at rates between 0.1% and 5.07%. All financial assets on which no interest is 
earned are considered immediately available to turn into cash on demand.
Included in US Dollar financial assets are amounts of $8,266,000 (2007: $4,491,000) of trade receivables. The Group considers that 
$7,015,000 (2007: £nil) carries the risk of the sovereign debt of the Syrian Arab Republic. The remaining trade receivables consist of 
amounts receivable from various counter-parties where the Group considers the credit risk to be low. This risk is monitored by the Group. 
No significant assets included in trade receivables are past due or considered impaired.
Financial liabilities
The Group’s financial liabilities consist of short term payables and decommissioning liabilities (as shown in note 20). None of these 
liabilities bear interest to external parties.
The Group imputes a charge to the Income Statement each year to reflect the unwinding of discounts on decommissioning liabilities. In 
2008 the discount rate used to record the charge was 10%. In 2009 the expected discount rate is 6%.
At 31 December financial liabilities are classified as shown below:
    Financial liabilities Financial liabilities 
    on which no interest on which interest 
    is charged is imputed Total 
    $’000 $’000 $’000
2008
US Dollar     10,755  26,307 37,062
UK Sterling     395  – 395
Euro     –  – –
Syrian Pounds     95  – 95
     11,245  26,307 37,552
2007
US Dollar     6,436  27,776 34,212
UK Sterling     179  – 179
Syrian Pounds     57  – 57
     6,672  27,776 34,448
The Group’s short term creditors, except decommissioning liabilities, are considered to be payable on demand.
Derivatives
The Group has exposure to changes in oil and gas prices. In the past the Group utilised derivative financial instruments to reduce 
exposure to market risks resulting from fluctuations in oil and gas prices in order to reduce the volatility of the cash flows of the Group. 
The derivative contracts expired in May 2007 and no such contracts are currently outstanding. The future use of derivatives will be kept 
under review. The Group incurred no expense in respect of oil and gas price derivatives in 2008 (2007: $92,000 loss).
26. Financial instruments and derivatives continued 57
Gulfsands Petroleum Plc
Annual report and accounts 2008
Fair values
At 31 December 2008 and 2007, the Directors considered the fair values and book values of the Group’s financial assets and liabilities to 
be materially the same.
27. Related party transactions and key management
Key management of the Group are considered to be the Directors of the Company. There were no transactions with Directors, other than 
interests in shares and their remuneration and share options as disclosed in the Directors’ remuneration report on page 32.
The remuneration of Directors is set out below in aggregate for each of the categories specified in IAS 24 “Related Party Disclosures”.
       2008 2007 
       $’000 $’000
Short-term employee benefits       3,384 2,423
Post-employment benefits       50 300
Termination benefits       843 –
Share-based payments       10,725 102
       15,002 2,825
There were no other related party transactions during the year ended 31 December 2008.
28. Ultimate controlling party
Ultimate control is exercised by the shareholders of Gulfsands Petroleum Plc.
29. Events after the balance sheet date
There have been no material events since 31 December 2008.
30. Restatement of previous period financial statements
The Group has identified corrections required to certain balances and also in the classification of certain other balances in the financial 
statements of prior periods. The Group has chosen to restate the Balance Sheets, Income Statements and Statements of Cash Flows as 
at, and for the periods ended, 31 December 2007 and 2006.
(i) In prior years the Group had calculated depletion charges on its oil and gas assets over the estimated proved and probable reserves. 
No allowance had been made for forecast future capital expenditure associated with producing those reserves. At 31 December 2007 
the forecast future capital expenditure, excluding plugging and abandonment costs, amounted to approximately $34,452,000  
(2006: $26,683,000).
(ii) In prior years the Group had provided for decommissioning liabilities using an outdated estimate of the cost of decommissioning work 
required (as stated in current prices). Prior to the completion of the financial statements for those years the Group had received a 
report from third party specialist surveyors in connection with insurance related matters which report also included an update of the 
estimated cost of decommissioning and which, if adopted for use in the preparation of the financial statements, would more accurately 
reflect the current cost of decommissioning work. This report included an estimated value of $38,127,000 (in current prices) for 
decommissioning. This is $17,539,000 in excess of the previously estimated amounts and the decommissioning liabilities for prior 
periods have been restated to reflect the higher figure.
(iii) In prior years bank balances held in escrow accounts were treated as cash and cash equivalents. These balances were, however, not 
available to the Group to fund short term requirements and the Group now considers that these should more accurately be classified 
as other financial assets. Retrospective adjustments have been made to the Balance Sheets and Statement of Cash Fows for the 
Group to reclassify $16,078,000 (2006: $12,897,000) of such balances. 58
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
The effect of these restatements to the Income Statement, Balance Sheet and Statement of Cash Flows is set out below:
Consolidated income statement
For the year ended 31 December 2007
      As originally  As 
      stated (i) and (ii) restated 
      $’000 $’000 $’000
Revenue      37,309 – 37,309
Cost of sales
 Depletion      (5,034) (1,507) (6,541)
 Impairment      (947) (471) (1,418)
 Other cost of sales      (15,883) (1,542) (17,425)
Total cost of sales      (21,864) (3,520) (25,384)
Gross profit      15,445 (3,520) 11,925
Administrative expenses before exceptional items      (7,204) – (7,204)
Share-based payments      (882) – (882)
Total administrative expenses      (8,086) – (8,086)
Hurricane repairs      (1,856) – (1,856)
Operating profit      5,503 (3,520) 1,983
Discount expense on decommissioning provision      (1,475) (353) (1,828)
Net interest income      1,190 – 1,190
Profit before taxation      5,218 (3,873) 1,345
Taxation      (2,557) – (2,557)
(Loss)/profit for the year – attributable to equity holders of the Company    2,661 (3,873) (1,212)
Earnings per share (cents):
Basic      2.48  (1.13)
Diluted      2.37  (1.13)
Note that the adjustments required to restate the depletion, impairment charges and decommissioning liabilities in (i) and (ii) above are not 
practicable to separate and are aggregated in the presentation above.
Consolidated income statement
For the year ended 31 December 2006
      As originally  As 
      stated (i) and (ii) restated 
      $’000 $’000 $’000
Revenue      33,934 – 33,934
Cost of sales
 Depletion      (4,716) (6,977) (11,693)
 Impairment      (1,334) (2,801) (4,135)
 Other cost of sales      (14,465) (969) (15,434)
Total cost of sales      (20,515) (10,747) (31,262)
Gross profit      13,419 (10,747) 2,672
Administrative expenses before exceptional items      (4,455) – (4,455)
Share-based payments      (851) – (851)
Total administrative expenses      (5,306) – (5,306)
Hurricane repairs      (2,573) – (2,573)
Operating profit      5,540 (10,747) (5,207)
Discount expense on decommissioning provision      (2,223) 1,438 (785)
Net interest income      1,193 – 1,193
(Loss)/profit before taxation      4,510 (9,309) (4,799)
Taxation      (2,433) – (2,433)
(Loss)/profit for the year – attributable to equity holders of the Company    2,077 (9,309) (7,232)
Earnings per share (cents):
Basic      2.17  (7.57)
Diluted      2.15  (7.57)
Note that the adjustments required to restate the depletion, impairment charges and decommissioning liabilities in (i) and (ii) above are not 
practicable to separate and are aggregated in the presentation above.
30. Restatement of previous period financial statements continued 59
Gulfsands Petroleum Plc
Annual report and accounts 2008
Consolidated balance sheet
As at 31 December 2007
     As originally   As 
     stated (i) and (ii) (iii) restated 
     $’000 $’000 $’000 $’000
Assets
Non-current assets
 Property, plant and equipment     46,925 2,607 – 49,532
 Intangible assets     28,593 – – 28,593
 Long term financial assets     – – 16,078 16,078
     75,518 2,607 16,078 94,203
Current assets
 Trade and other receivables     11,154 – – 11,154
 Cash and cash equivalents     34,611 – (16,078) 18,533
     45,765 – (16,078) 29,687
Total assets     121,283 2,607 – 123,890
Liabilities
Current liabilities
 Trade and other payables     6,672 – – 6,672
 Provision for decommissioning     2,512 8,440 – 10,952
     9,184 8,440 – 17,624
Non-current liabilities
 Deferred tax liabilities     1,932 – – 1,932
 Provision for decommissioning     9,475 7,349 – 16,824
     11,407 7,349 – 18,756
Total liabilities     20,591 15,789 – 36,380
Net assets     100,692 (13,182) – 87,510
Equity
Capital and reserves attributable to equity holders
 Share capital     11,997 – – 11,997
 Share premium     79,389 – – 79,389
 Share-based payments reserve     1,733 – – 1,733
 Merger reserve     11,709 – – 11,709
 Retained losses     (4,136) (13,182) – (17,318)
Total equity     100,692 (13,182) – 87,510
Note that the adjustments required to restate the depletion, impairment charges and decommissioning liabilities in (i) and (ii) above are not 
practicable to separate and are aggregated in the presentation above. 60
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
Consolidated balance sheet
As at 31 December 2006
     As originally   As 
     stated (i) and (ii) (iii) restated 
     $’000 $’000 $’000 $’000
Assets
Non-current assets
 Property, plant and equipment     46,247 5,093 – 51,340
 Intangible assets     15,097 – – 15,097
 Long term financial assets     – – 12,897 12,897
 Deferred tax asset     176 – – 176
     61,520 5,093 12,897 79,510
Current assets
 Trade and other receivables     9,629 – – 9,629
 Cash and cash equivalents     26,724 – (12,897) 13,827
     36,353 – (12,897) 23,456
Total assets     97,873 5,093 – 102,966
Liabilities
Current liabilities
 Trade and other payables     12,717 – – 12,717
 Provision for decommissioning     3,319 4,308 – 7,627
 Oil and gas price derivatives     101 – – 101
     16,137 4,308 – 20,445
Non-current liabilities
 Provision for decommissioning     8,420 10,094 – 18,514
     8,420 10,094 – 18,514
Total liabilities     24,557 14,402 – 38,959
Net assets     73,316 (9,309) – 64,007
Equity
Capital and reserves attributable to equity holders
 Share capital     11,047 – – 11,047
 Share premium     56,506 – – 56,506
 Share-based payments reserve     851 – – 851
 Merger reserve     11,709 – – 11,709
 Retained losses     (6,797) (9,309) – (16,106)
Total equity     73,316 (9,309) – 64,007
Note that the adjustments required to restate the depletion, impairment charges and decommissioning liabilities in (i) and (ii) above are not 
practicable to separate and are aggregated in the presentation above.
30. Restatement of previous period financial statements continued 61
Gulfsands Petroleum Plc
Annual report and accounts 2008
Consolidated cash flow statement
For the year ended 31 December 2007
     As originally   As 
     stated (i) and (ii) (iii) restated 
     $’000 $’000 $’000 $’000
Cash flows from operating activities:
Operating profit     5,503 (3,520) – 1,983
Depreciation, depletion and amortisation     5,034 1,507 – 6,541
Impairment charge     947 471 – 1,418
Decommissioning costs paid in excess of provision     – 1,640 – 1,640
Share-based payment charge     882 – – 882
Non-cash bonus     252 – – 252
Loss on disposal of assets     2 – – 2
Increase in receivables     (2,266) 1 – (2,265)
(Decrease)/increase in payables     (5,399) 1 – (5,398)
Net cash from operations     4,955 100 – 5,055
Interest received     1,190 – – 1,190
Taxation paid     (356) – – (356)
Net cash from operating activities     5,789 100 – 5,889
Investing activities
Exploration and evaluation expenditure     (13,511) 1 – (13,510)
Oil and gas properties expenditure     (5,175) (100) – (5,275)
Other capital expenditures     (45) (1) – (46)
Change in long term financial assets     – – (3,181) (3,181)
Decommissioning costs paid     (2,752) – – (2,752)
Net cash used in investing activities     (21,483) (100) (3,181) (24,764)
Financing activities
Cash proceeds from issue of shares     23,831 – – 23,831
Share issue costs     (250) – – (250)
Net cash from financing activities     23,581 – – 23,581
Increase/(decrease) in cash and cash equivalents     7,887 – (3,181) 4,706
Cash and cash equivalents at beginning of year     26,724 – (12,897) 13,827
Cash and cash equivalents at end of year     34,611 – (16,078) 18,533
Note that the adjustments required to restate the depletion, impairment charges and decommissioning liabilities in (i) and (ii) above are not 
practicable to separate and are aggregated in the presentation above. 62
Gulfsands Petroleum Plc
Annual report and accounts 2008
Notes to the consolidated financial statements continued
For the year ended 31 December 2008
30. Restatement of previous period financial statements continued
Consolidated cash flow statement
For the year ended 31 December 2006
     As originally   As 
     stated (i) and (ii) (iii) restated 
     $’000 $’000 $’000 $’000
Cash flows from operating activities:
Operating profit/(loss)     5,540 (10,747) – (5,207)
Depreciation, depletion and amortisation     4,716 6,977 – 11,693
Impairment charge     1,334 2,801 – 4,135
Decommissioning costs paid in excess of provision     – 969 – 969
Share-based payment charge     851 – – 851
Increase in receivables     (3,888) – – (3,888)
Increase in payables     7,441 – – 7,441
Net cash from operations     15,994 – – 15,994
Interest received     1,193 – – 1,193
Taxation paid     (1,111) – – (1,111)
Net cash from operating activities     16,076 – – 16,076
Investing activities
Exploration and evaluation expenditure     (9,375) – – (9,375)
Oil and gas properties expenditure     (17,896) – – (17,896)
Purchase of minority interest     (277) – – (277)
Other capital expenditures     (234) – – (234)
Change in long term financial assets     – – 1,691 1,691
Decommissioning costs paid     (2,062) – – (2,062)
Net cash used in investing activities     (29,844) – 1,691 (28,153)
Financing activities
Cash proceeds from issue of shares     3,931 – – 3,931
Net cash from financing activities     3,931 – – 3,931
(Decrease)/increase in cash and cash equivalents     (9,837) – 1,691 (8,146)
Cash and cash equivalents at beginning of year     36,561 – (14,588) 21,973
Cash and cash equivalents at end of year     26,724 – (12,897) 13,827
Note that the adjustments required to restate the depletion, impairment charges and decommissioning liabilities in (i) and (ii) above are not 
practicable to separate and are aggregated in the presentation above. 63
Gulfsands Petroleum Plc
Annual report and accounts 2008
63
Gulfsands Petroleum Plc
Annual report and accounts 2008
Glossary
2D seismic  Seismic data, obtained using a sound 
source and receivers placed in a straight 
line on the surface of the earth, that is 
processed to provide a graphic 
representation of a vertical cross-section 
through the subsurface rock layers 
(“seismic line”). In a 2D seismic survey, 
several seismic lines are recorded and the 
cross-sections are interpolated to yield 
subsurface maps on which exploration 
prospects can be delineated 
2P Proved and probable reserves
3D seismic  In a 3D seismic survey, multiple closely 
spaced seismic lines are recorded and the 
high density of cross sections are 
interpolated to yield detailed subsurface 
maps on which exploration prospects can 
be delineated
Appraisal well  An appraisal well is drilled to assess the 
characteristics (e.g. flow rate) of a proven oil 
and gas accumulation
bbl Barrel of oil
bcf Billion cubic feet of gas
bfpd Barrels of fluid per day
boe  Barrels of oil equivalent where the gas 
component is converted into an equivalent 
amount of oil using a conversion rate of 
6mcf to one barrel of oil 
boepd Barrels of oil equivalent per day
bopd Barrels of oil per day
CSR Corporate Social Responsibility
Development well  A development well is drilled within the 
proved area of an oil or gas reservoir to the 
depth of the stratigraphic horizon known to 
be productive
DPC Dijla Petroleum Company.
Exploration well  An exploration well is drilled to find and 
produce oil or gas in an unproved area, to 
find a reservoir in a field previously found to 
be productive of oil or gas in another 
reservoir, or to extend a known reservoir 
Km
2
 Square kilometres
KPI Key Performance Indicators
mcf Thousand cubic feet of gas
mmbbl Millions of barrels of oil
mmboe Millions of barrels of oil equivalent
NGLs Natural Gas Liquids
NGO Non-governmental organisation
OMB  The Oil Marketing Bureau of the 
Government of the Syrian Arab Republic
P+P Proved and probable reserves
Probable reserves  Probable reserves are those unproved 
reserves which analysis of geological and 
engineering data suggests are more likely 
than not to be recoverable. In this context, 
when probabilistic methods are used, there 
should be at least a 50% probability that 
the quantities actually recovered will equal 
or exceed the sum of estimated proved plus 
probable reserves
Proved reserves  Proved reserves are those quantities of 
petroleum which, by analysis of geological 
and engineering data, can be estimated 
with reasonable certainty (normally over 
90% if measured on a deterministic basis) 
to be commercially recoverable, from a 
given date forward, from known reservoirs 
and under current economic conditions, 
operating methods, and government 
regulations
PSC Production Sharing Contract
psi Pounds per square inch (pressure)
SPC Syrian Petroleum Company
SPE Society of Petroleum Engineers
WPC World Petroleum Council 64
Gulfsands Petroleum Plc
Annual report and accounts 2008
64
Gulfsands Petroleum Plc
Annual report and accounts 2008
Corporate information
Corporate headquarters
2–4 Cork Street
London W1S 3LG
www.gulfsands.com
info@gulfsands.com
Secretary and registered office
John Bottomley
Sprecher Grier Halberstam LLP
1 America Square
Crosswall
London EC3N 2SG
Regional offices – Syria
Building No 653 – First floor
Sahnaya Highway – Ashrafet Sahnaya
PO Box 81, Damascus
Syria
Regional offices – USA
3050 Post Oak Boulevard
Suite 1700
Houston
Texas 77056 USA
Company number
5302880
Nominated advisor and broker
RBC Capital Markets
71 Queen Victoria Street
London
EC4V 4DE
Auditors
UHY Hacker Young LLP
Quadrant House
17 Thomas More Street
London E1W 1YW
Solicitors
Lang Michener LLP
1500–1055 West Georgia Street
PO Box 11117
Vancouver, British Columbia
Canada VGE 4N7
Field Fisher Waterhouse LLP
35 Vine Street
PO Box 11117
London EC3N 2AA
Registrars
Capita IRG
Beaufort House
34 Beckenham Road
Kent BR3 4TU
Stock Exchange Listing
AIM market of London Stock Exchange
Symbol: GPX 01 2008 Highlights
02 Gulfsands at a glance
05 Chairman’s statement
08 Chief executive’s report
10 Operations review
14 Reserves and contingent resources
16 Financial review
20 Our people
22 Board of directors
24 Corporate social responsibility
27 Directors’ report
31 Corporate governance report
32 Directors’ remuneration report
34 Independent auditors report
35 Consolidated income statement
36 Consolidated balance sheet
37 Company balance sheet
38 Consolidated statement of changes in equity
39 Company statement of changes in equity
40 Consolidated cash flow statement
41 Company cash flow statement
42 Notes to the consolidated financial statements
63 Glossary
64 Corporate information
Gulfsands Petroleum Plc is an independent oil and 
gas exploration and production company, incorporated 
in the United Kingdom, whose shares are traded on the 
Alternative Investment Market (“AIM”) of the London 
Stock Exchange (symbol: GPX). The Group’s major 
focus is on the Middle East, where it has oil exploration 
and development projects in the Syrian Arab Republic 
and upstream and midstream oil and gas business 
development activities in Iraq. Gulfsands also produces 
oil and gas from a portfolio of properties in the USA, 
offshore Gulf of Mexico.
Gulfsands’ vision is to become one of the pre-eminent 
independent exploration and production companies in 
the Middle East and to be viewed as a preferred 
operator and partner.
Early production facility at Khurbet East, 
Block 26, Syria. Pantone colours:
Blue:   P 2756C
Green: P 364C
Gulfsands Petroleum Plc  Annual Report and Accounts 2008
Gulfsands Petroleum Plc
Annual Report and Accounts 2008