By John Lee.

Gulf Keystone has announced the commencement of the Company’s drilling campaign to explore deeper, yet untested horizons of the world class discovery at the Shaikan field, which the Company operates.

Shaikan-7, the first deep exploration well on the Shaikan block, is targeting the mid to lower Triassic and, potentially, Permian horizons, spudded late on Sunday 16 June 2013. The well is being drilled with the Weatherford Rig 319 (3000HP) close to the crest of the Shaikan structure, approximately 1 km east of the Shaikan-1 discovery well.

Shaikan-7 is being drilled to the lower Triassic to evaluate the potential for significant quantities of light oil and identify commerciality of the deeper Triassic reservoir. The well is then expected to penetrate the Permian, the deepest undrilled horizon to date on the Shaikan structure.

This vertical well is planned to reach a total depth below 4,500m in the Permian and the drilling is expected to take about 9 months.

Commenting on today’s announcement, John Gerstenlauer (pictured), Chief Operating Officer, said:

“As we are about to commence implementation of our Field Development Plan for the Shaikan discovery and start Jurassic production from the newly constructed Shaikan production facility, the spudding of our first deep exploration well adds a new and exciting dimension to Gulf Keystone’s work programme in 2013.

“With Shaikan-7, we hope to confirm our expectations of major reservoirs beneath the deepest horizon drilled to date and add to what is already recognised as one of the world’s largest onshore conventional oil & gas developments.“

(Source: GKP)

Gulf Keystone (GKP) and Genel Energy announced a commercial oil discovery at the Ber Bahr-1 exploration well on the Ber Bahr block in the Kurdistan Region of Iraq.

Shares in GKP were up more than 5 percent on the day, with Genel Energy up 1.2 percent.

Genel Energy, as operator, made the following statement:

“The Ber Bahr 1 well original TD was 3933m in the upper Permian Chia Zairi formation. It encountered good oil shows over a c.300m interval in the Jurassic. Two drill stem tests over this interval failed to flow.

“The original well has now been successfully side tracked and in several tests, conducted over a period of days, achieved a sustainable flow rate of 2100 STB/day of 15 API oil from the Middle Jurassic age Sargelu Formation.“

The operator has also stated their intention to begin a phased development of the field in the second half of this year.

Gulf Keystone and Genel Energy both hold a 40 per cent working interest in the Ber Bahr block. The Kurdistan Regional Government has a 20 per cent carried interest in the Ber Bahr Production Sharing Contract.

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

“This is another significant discovery and the fifth across the four blocks the Company has an interest in. It comes during an exciting year for the Company as we move towards becoming a significant producer in the region.“

Dr John Hurst (pictured), head of Exploration of Genel Energy, said:

“The Ber Bahr well adds a further commercial oil discovery to Genel’s already significant KRI resource base. We plan to begin a phased development of the field in the second half of this year.“

(Sources: Gulf Keystone, Genel Energy, Yahoo!)

Gulf Keystone Petroleum (GKP) has provided an update on its intention to move from AIM to the Premium Segment of the Official List of the London Stock Exchange.

The Company will initially make an application for the Common Shares of the Company to be admitted to the Standard Segment of the Official List. The Company intends to apply for a Premium Segment Listing when it meets all the necessary regulatory requirements.

As part of the previously announced proposed move to the Official List, and in keeping with the corporate governance best practice of the Official List, the Board of Gulf Keystone has decided to split the roles of Chairman and Chief Executive Officer. A search process has commenced for an Independent Non-Executive Chairman of the Board, as well as for at least one other Independent Non-Executive Director.

Todd Kozel (pictured), Executive Chairman and CEO, commented:

“AIM has served Gulf Keystone well, however, for some time we have been of a size where we would be better suited to the Main Market. Consequently the splitting of my role as CEO with that of an Independent Non-Executive Chairman further signals Gulf Keystone’s continuing commitment to high standards of corporate governance in preparation for our previously announced proposed move to the Official List.

“We look forward to keeping shareholders posted on our proposed Board changes and welcoming a new Chairman over the coming months.“

(Source: GKP)

Gulf Keystone has provided an update on its four blocks in the Kurdistan Region of Iraq, including the world class discoveries at Shaikan and Sheikh Adi, as well as Akri-Bijeel and Ber Bahr:

Background

With the Shaikan commercial discovery alone, Gulf Keystone has one of the world’s largest onshore conventional oil & gas developments with a Pmean 13.7 billion barrels of gross oil-in-place as set out by Dynamic Global Advisors, independent Houston-based exploration consultants. A recent report by Goldman Sachs highlights the scale of the Shaikan development and the fact that in 2015 the global production increase will in part come from the Shaikan field*. The Company continues to be highly active with the drill bit, in order to further prove the value of its blocks.

Today Gulf Keystone is on the verge of moving into a phase of significant production, with the capacity to produce up to 40,000 barrels of oil per day (“bopd”) from Shaikan in the coming months and up to 400,000 bopd in the coming years. The Company will be a key contributor in meeting the Kurdistan Regional Government’s oil production targets of 1 million bopd in 2015 and 2 million bopd by 2019.

Considerable progress is being made on the regional pipeline infrastructure development and the Company’s increasing production will be matched by the available export capacity. The size and quality of the Company’s fields is now increasingly recognised and a number of the world’s largest oil companies, including ExxonMobil, Chevron and Total, are now following Gulf Keystone’s lead and commencing active work programmes in the Kurdistan Region of Iraq.

*Goldman Sachs: April 12, 2013 – “380 projects to change the world. From resource constraint to infrastructure constraint”

Commenting on today’s announcement, Todd Kozel (pictured), Executive Chairman and CEO, said:

“As one of the first companies to see the potential of the region, over the last five years Gulf Keystone has drilled or participated in nearly 20 wells and remains one of the most active operators in the Kurdistan Region of Iraq. Shaikan is the largest onshore development worldwide today not in the hands of a major operator. However, we believe that we have only scratched the surface of the true value of our blocks and our ongoing exploration and appraisal activity is expected to result in further upside.

“The Company is encouraged by recent reports from a variety of sources, including political spokespersons, regarding the close and burgeoning ties between the Kurdistan Region of Iraq and Turkey, which the Company believes presents further transformational progress for the region. In this context, Gulf Keystone will play a major role as a co-host of the 2nd International Energy Arena Conference in Erbil on 30 May, a meeting place for key political and industry decision makers on the energy cooperation between the Kurdistan Region of Iraq and Turkey.

“I therefore strongly believe that there is considerable momentum in the development of Kurdistan’s vast natural resources and Gulf Keystone is in a prime position to benefit as the region moves to this next stage.

“Our remarkable journey continues and I remain indebted to our hosts in the Kurdistan Regional Government and to the outstanding team within our Company.  We have never been more excited about the future.“

Gulf Keystone notes today’s update by MOL Hungarian Oil and Gas Plc., the operator of the Akri-Bijeel Block in the Kurdistan Region of Iraq (in which Gulf Keystone has a 20 per cent working interest), on its extensive exploration and appraisal programme.

Bakrman-1 Exploration Well Discovery

Bakrman-1, the first exploration well to target the Bakrman structure on the Akri-Bijeel Block, has made a new Triassic discovery. This is the second discovery on the block following the Bijell discovery made in 2010.

Bakrman-1 spudded in May 2012, 32 km to the north-west of the Bijell-1 discovery well. The well was drilled to a total depth of 4,100 metres in the Kurra Chine B formation in the Triassic, following which a well testing programme commenced, targeting reservoir zones in the Jurassic and Triassic. Two open hole tests and three cased hole tests have been performed to date. According to the operator, the second open hole well test performed at 3,930-4,100 metres MD (measured depth) in the Kurra Chine B formation in the Triassic resulted in calculated daily flow rates of approximately 2,616 barrels of light (32 to 35 degrees API gravity) oil per day and a gas rate of approximately 5.86 million standard cubic feet per day. The well testing programme is ongoing and is expected to be completed in April 2013.

Gulak-1 Exploration Well

Gulak-1, the fourth exploration well to be drilled on the Akri-Bijeel block and the first exploration well to target the Gulak anticline, spudded in July 2012 and has been drilled 21 km to the east from the Bijell-1 discovery well and 5 km to the south from the Bekhme-1 exploration well to a total depth of 3,641 metres in the Kurra Chine B formation in the Triassic. The well test programme, consisting of five tests, has now been completed. In the course of the DST#4 performed at 2,385-2,420 metres MD in the Sargelu and Naokelekan formations in the Jurassic, minor inflows of between 22-30 degrees API oil were encountered. Following the completion of the DST#5, it is proposed that the well will be suspended.

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were up 3% on Monday morning on the London Stock Exchange following an update from the company on the progress of a litigation case:

On 15 February 2013, the English Commercial Court [pictured] in London ordered Excalibur Ventures LLC (“Excalibur”) to make a payment of £4,700,000 into Court within 21 days as additional security for the costs of Gulf Keystone and two of its subsidiaries (the “Companies”) of defending the legal action commenced by Excalibur in December 2010.

The English Commercial Court also ordered Excalibur to make a payment of £3,300,000 into Court within 21 days as additional security for the costs of Texas Keystone Inc.

In addition, Excalibur was ordered to pay costs of the 15 February 2013 hearing to the Companies and Texas Keystone Inc. and is required to make interim payments on account of £50,000 to the Companies and £40,000 to Texas Keystone Inc. within 14 days.

The Companies continue vigorously to dispute and contest the allegations and claims asserted by Excalibur.

The trial in the English Commercial Court of all the claims asserted by Excalibur is scheduled to be completed at the end of February or in early March 2013. The Judge will give his decision in a written Judgment once the trial has been completed. According to the English Commercial Court, due to the size of the case completion of the Judgment may take in excess of three months.

The Board of Gulf Keystone will provide further updates in due course.

(Sources: Gulf Keystone, Yahoo)

By John Lee.

Genel Energy has started shipping crude oil directly into Turkey from its Taq Taq oil field (pictured) in Iraqi Kurdistan, two weeks after exports from the region were halted, reports Bloomberg.

According to the report, the KRG won’t resume exports through the central government pipeline network until the federal authorities pay the 350 billion dinars ($300 million) dues owed to international companies working in the Kurdish area.

Gulf Keystone Petroleum (GKP), which also has production in the semi-autonomous area, isn’t exporting crude and sells only in the domestic market, as does Norway’s DNO International.

Kurdish authorities plan to complete oil and gas pipelines running directly to Turkey within the next two years.

(Source: Bloomberg)

By John Lee.

Shares in Gulf Keystone closed up 5.5% on Thursday following the announcement that it has struck oil at the Sheikh Adi block in Iraqi Kurdistan.

The notification of the discovery follows the completion of a well testing programme of the Sheikh Adi-2 exploration well on the block, located immediately to the west of the Company’s Shaikan Block, which is a major commercial discovery.

Sheikh Adi-2 spudded in May 2012, 1.45 km to the north of the Sheikh Adi-1 exploration well, and was drilled to a total depth of 2,754 metres in September 2012. In the course of the Sheikh Adi-2 well testing programme the Company has successfully tested four reservoir zones at measured depths of between 1,420 metres and 1,700 metres, achieving total stabilised aggregate flow rates of 4,235 barrels of oil per day across the Upper Butmah, Adaiyah, Mus and Sargelu formations in the Jurassic. Provisional results indicate the oil gravity is similar to that found in the same formations in the Shaikan Block namely 15-18 API.

In line with the Sheikh Adi PSC, following the notification of discovery, the Operator will submit a Discovery Report to the Sheikh Adi Block Management Committee within 30 days.

Gulf Keystone is the Operator of the Sheikh Adi Block with an 80 per cent working interest, while the Kurdistan Regional Government has a 20 per cent carried interest.

Todd F. Kozel (pictured), Gulf Keystone’s Executive Chairman and Chief Executive Officer commented:

“We are very pleased with the outcome of the second exploration well on the Sheikh Adi Block, which is in on trend with Shaikan, our major commercial discovery declared earlier this year. This most recent exploration success points to the significant potential for further growth and future synergies across our world-class acreage in the Kurdistan Region of Iraq.“

(Sources: GKP, Yahoo)