Gulf Keystone Gains on New Drilling

Shares in Gulf Keystone  Petroleum (LSE: GKP) gained 4% this morning following the commencement of drilling at the Shaikan-2 appraisal well.

The text of the company’s announcement follows:

Gulf Keystone announces the commencement of drilling operations on its Shaikan-2 appraisal well, on December 1, 2010. This is the first deep appraisal well to be drilled on the Company’s substantial Shaikan oil discovery. Gulf Keystone has an effective 75 percent working interest in the Block and is partnered with the MOL subsidiary, Kalegran, which has 20 percent and Texas Keystone International has the remaining 5 percent.

The well design for Shaikan-2 has been modified to drill through the geopressured sections of the Triassic age rocks. This high pressure interval forced the cessation of drilling on Shaikan-1, when the well experienced the inflow of significant volumes of oil and gas from a section of the middle Triassic. The Shaikan-2 well is designed to drill through the Cretaceous, Jurassic and the Triassic, to a planned total depth in the Permian, depending on well results, of 5,000 meters. Drilling and testing is expected to take six months.

John Gerstenlauer, Gulf Keystone’s Chief Operating Officer (pictured) commented:

We are very excited to finally be spudding our first deep appraisal well on the Shaikan structure. In the success case, we hope for, as a minimum, a significant increase in our current P90 volume of 1.9 billion barrels of oil in place, thus narrowing the possible range of oil in place numbers. In the upside case, we would, of course, also hope for a further upward movement of our P10 volume which is currently independently estimated at 7.4 billion barrels of oil in place.

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