Gulf Keystone Petroleum provided an update on its operations in the Kurdistan Region of Iraq this morning.
The shares are down 3% in early trading, but have more than doubled in the past three months, partly on rumours of a take-over.
Shaikan Long Term Test Facilities
The recently constructed production test facilities near the location of the Shaikan-1 discovery well in the Shaikan Block (75% GKP working interest) are being commissioned. Initial flow rates are low to allow facility commissioning and will be kept low, pending receipt of oil assay results which will assist in determining a domestic sales price and allow finalisation of the oil sales contracts. Facility commissioning, assay finalisation and sales contract negotiation are expected to take several weeks. Test operations are well on track to reach the previously announced year end target production rate of 8,000 to 10,000 barrels of oil per day ("bopd").
John Gerstenlauer (pictured), Chief Operating Officer for Gulf Keystone said: "This marks the end of a seven month accelerated design and construction project to install the 18,000 bopd capacity facility and the beginning of a long term (18 to 24 month) production test of the top most reservoir in the Jurassic age section of the Shaikan well. This extended test of the upper portion of the Jurassic will give us valuable information on production characteristics, market logistics and oil sales procedures within Kurdistan. In addition, use of these prefabricated production facilities will serve as a model for future testing and production of other potential oil accumulations on our acreage."
Testing and evaluation are continuing on the MOL operated Bijeel-1 well in the Akri-Bijeel Block (20% GKP working interest). The previous announcement of a 3,200 bopd test already makes this one of the more significant discoveries in Kurdistan. Additional testing and evaluation work are still ongoing. However, the initial indication of the oil-water contact in this well is supportive of the concept of a single regional aquifer; this further supports the upside oil volume scenario for all four blocks in which GKP has an interest. In addition, it appears that the Bijeel structure could be a southern extension of the much larger Bekhme structure. The Bekhme exploration well is planned for late 2010 or early 2011.
On Sheikh Adi-1, following the sticking of the bottom hole assembly at a depth of 450 metres and the necessary sidetrack to drill around the obstruction, the well is now at 500 metres which is the 20" casing point.
On the shallow Shaikan-3 appraisal well, near the site of Shaikan-1, the well is drilling ahead at 837 metres with the next casing point expected at 900 metres and the first zones of interest expected to be encountered soon after that.
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