Shares in Gulf Keystone Petroleum (AIM: GKP) jumped 6.4% on Tuesday following a major upgrade of the gross oil-in-place volumes for the Shaikan discovery in the Kurdistan Region of Iraq.
The revised gross oil-in-place volumes for the Shaikan discovery, as calculated by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants, are a P90 value of 8 billion barrels to a P10 value of 13.4 billion barrels of oil-in-place with a mean value of 10.5 billion barrels.
This is the second very significant upgrade of the Shaikan resources estimates in 2011 and it revises the previously announced range of 4.9 to 10.8 billion barrels of gross oil-in-place with a mean value of 7.5 billion barrels. This upgrade is based on the data acquired since the last resource evaluation of the Shaikan discovery by DGA issued in April 2011 and is a third successive upward revision by DGA since the Shaikan discovery was announced in August 2009.
DGA's conclusions are based on the new data acquired as a result of:
- Preliminary results from the Shaikan-4 appraisal well, which is currently being drilled 6 km to the west of the Shaikan-1 discovery well to an expected total depth of 3,400 meters and will be followed by an extensive testing programme
- Results of the processing and interpretation of the 3D seismic data acquired for the Shaikan (599km²) and Sheikh Adi (215km²) blocks, including an indication of a larger Shaikan structure (by 5-10%) than originally mapped based on the earlier 2D seismic data
- A new Triassic discovery made with the Shaikan-2 appraisal well in the Kurre Chine C zone and a subsequent testing programme of the well, drilled 9 km to the south-east of the Shaikan-1 discovery well, in the Triassic (Kurre Chine B) and Jurassic (Butmah), which is still ongoing
- Shaikan-1 and Shaikan-3 extended well test production
This upgrade of the Shaikan mean oil resources from 7.5 to 10.5 billion of barrels of gross oil-in-place is a result of the increase in the lowest known oil areas for each reservoir. DGA's latest estimates are an evidence of the progressive evolution of the understanding of the Shaikan field and of the increased certainty in the continuously improving resource estimates.
Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively.
John Gerstenlauer, Gulf Keystone's Chief Operating Officer, commented:
"Once again, the Company's management and Board of Directors are delighted to validate our world-class discovery at Shaikan in the Kurdistan Region of Iraq. This third successive upgrade of the Shaikan gross oil-in-place range by Dynamic Global Advisors is a new step towards completing our understanding of this exceptional asset. The process of assessing Shaikan started on 6 August 2009, when we announced our first significant discovery in Kurdistan. This assessment is far from being concluded as we have just spudded Shaikan-5 and prepare to drill Shaikan-6 in early 2012.These additional appraisal wells will provide us with valuable information about the flanks of the massive Shaikan structure, while the Shaikan-7 well will target the Permian, the deepest undrilled horizon of the structure. The Shaikan appraisal programme is being completed in parallel with the ongoing work on the Shaikan Field Development Plan."