Operational Summary - Post Period End
Kurdistan Region of Iraq:
Shaikan Block
· Ryder Scott's independent evaluation confirmed DGA's previous assessments with estimated gross total PIIP between 1.52 billion barrels (P90) and 7.52 billion barrels (P10), with a mean of 4.04 billion barrels
· Shaikan-3 well evaluated the Cretaceous Garagu formation, with estimated oil-in-place of 0.2 billion barrels (P50) to 2.2 billion barrels (P10), and after drilling deeper into the Sargelu formation was completed as a Jurassic producer achieving a rate of 9,800 bopd after acid treatment. The well, along with Shaikan-1, is tied into the Extended Well Test facilities. Improved flow on Shaikan-1 following a similar acid treatment was also achieved. Due to facility constraints the measurement of a combined flow rate from Shaikan-1 and 3 wells over a consistent time period is not currently possible, but Gulf Keystone believes this will be up to a potential 20,000 bopd
· Shaikan-2 tested 26 degree API oil in the first Jurassic zone encountered at a rate of 8,064 bopd
· Net entitlement to oil sales since beginning of year is 24,008 barrels. The Company awaits guidance from the Kurdistan Regional Government on further domestic sales
· Studies to upgrade facilities to meet increased well capability, increase storage, and process oil to export specification and to select a pipeline route are underway
· Shaikan-5 deep appraisal well location completed
Akri-Bijeel Block
· Bekhme-1 exploration well spudded in March
Sheikh Adi Block
· Sheikh Adi-1 exploration well operations ongoing
· 215 km² 3D seismic acquisition completed
Ber Bahr Block
· The Operator has selected a location and is in the process of procuring long lead items and building the rig pad in preparation for the first exploration well in late summer 2011
Corporate Developments
· On 7 February 2011 Gulf Keystone announced the grant of i) Long Term Incentive Performance Share Options and ii) Executive Bonus for 2010
· Following the exercise of options by employees Gulf Keystone issued 1,000,507 new common shares raising gross proceeds of £636,054 at an average price of 63.57 pence per share
· On 8 April 2011 Gulf Keystone and two of its subsidiaries obtained an injunction in the English Commercial Court restraining Excalibur from pursuing the ICC arbitration proceedings instituted against Gulf Keystone and two of its subsidiaries on 17 December 2010. The injunction continues until final determination of the English Commercial Court proceedings or until further order. The English Court will decide whether Gulf Keystone and its two subsidiaries are bound by the Agreement that Excalibur seek to rely on
Todd Kozel, Executive Chairman and Chief Executive Officer of Gulf Keystone said:
"2010 was a year of unprecedented activity for Gulf Keystone as we continued to work hard and fast to capture the full potential of our world class acreage in the Kurdistan Region of Iraq. Our ongoing exploration and appraisal campaign, spanning all four of our blocks, is amongst the most aggressive of any company active in the Kurdistan Region of Iraq today. The resulting progress that has been made, in a relatively short timeframe, has been remarkable by any standards.
Since the year end the momentum has continued and 2011 has begun with further significant operational milestones. With a strengthened balance sheet we are fully funded for the current work programme and are highly confident of continuing to create value for our shareholders and to help the Kurdistan Region of Iraq develop its natural energy resources."
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