Gulf Keystone Half-Year Report To June 2012

Gulf Keystone, an independent oil and gas exploration and production company with operations in the Kurdistan Region of Iraq, today announces its results for the six months ended 30 June 2012.


Operational - to 30 June 2012 and post period end

Shaikan (75% working interest; Operator) [Shaikan-2 is pictured.]

· 83% increase in gross oil-in-place numbers (PMean) for the Shaikan discovery with a new range of 12.4 billion (P90) to 15.0 billion (P10) barrels, with a mean value of 13.7 billion barrels, following independent evaluation by Dynamic Global Advisors ("DGA") in July 2012
· Completion of the agreed five-well appraisal programme of the Shaikan field with the drilling of the Shaikan -4, -5 and -6 appraisal wells and testing of Shaikan -4 and -6
· Submission of the Declaration of Commercial Discovery for the Shaikan field with effect from
1 August 2012
· Spudding of Shaikan-8, the first post-appraisal well
· Ongoing work on the Shaikan Field Development Plan to be submitted within 180 days following the Declaration of Commercial Discovery
· Construction of two new early production facilities (PF -1 and -2, formerly known as EWT -1 and -2) is nearing completion, with the first unit due to become operational in January 2013 and the second by the end of the first quarter 2013
· Following completion of the preliminary design work, awaiting confirmation of the final route of the Shaikan export pipeline

Sheikh Adi (80% working interest; Operator)

· Sheikh Adi-2, the second exploration well on the block, spudded in May 2012 and has been drilled to a measured depth of 2,754 metres, with a plan to conduct a well testing programme across 7 target zones

Akri-Bijeel (20% working interest)

· Based on the Bekhme-1 exploration well's log data, DGA calculated a range of 2.5 billion (P90) to 5.4 billion (P10) barrels of gross oil-in-place resources for the Aqra/Bekhme anticline
· Bijell-3 well, spudded in January 2012 to appraise the Bijell discovery of 2.4 billion (P50) barrels of gross oil-in-place, as calculated by the operator of the block. The well is currently drilling at a measured depth of 4,974 metres and, given good preliminary results of the logs and cores, will be followed by a well testing programme
· An early production facility for the Bijell discovery is being constructed to be installed by the end of 2012
· Bakrman-1 exploration well spudded in May 2012 and is currently approaching the planned 7 inch casing point at 3,637 metres and, given good preliminary results of the logs and cores, will be followed by a well testing programme
· Gulak-1 exploration well spudded in July 2012 and is currently drilling in the upper Jurassic below a measured depth of 1,600 metres

Ber Bahr (40% working interest)

· Ber Bahr-1, the first exploration well on the block, was drilled to a total depth ("TD") of 3,930 metres and encountered a 300 metres oil column in the Jurassic. The well has been temporarily suspended while a work over rig is moved to the location to conduct a further well test with results expected in the fourth quarter 2012

Financial - as at 30 June 2012

· Loss after tax: $31.4 million (1H11: $10.3 million)
· Loss per share: 3.68 cents (1H11: 1.37 cents)
· Cash, cash equivalents and liquid investments of $136.9 million as at 30 June 2012 (30 June 2011: $137.6 million; 31 December 2011: $237.6 million)

Corporate development

· The Nominations Committee of the Board was formed in February 2012 (Lord Guthrie, Chairman) and the Remuneration and Appointments Committee was renamed the Remuneration Committee (Mehdi Varzi, Chairman)
· Lord Truscott retired by rotation from his position as the Company's Non-Executive Director
· Mr Adnan Samarrai retired from his position as the Company's Country Manager moving to a senior position within the Ministry of Natural Resources of the Kurdistan Region of Iraq. Mr Umur Eminkahyagil, previously Development and Production Manager, has been appointed the Company's Country Manager in the Kurdistan Region of Iraq


· Complete and submit the Shaikan Field Development Plan by the end of January 2013, select development concept, and move to the large-scale staged development in 2013 with the goal of achieving 150,000 bopd by 2015 and full plateau production thereafter
· Commission the two Shaikan early production facilities to increase production to 30,000 - 40,000 bopd by mid-2013
· Confirm the final route and make a decision on the construction of an export pipeline to connect Shaikan's increasing production to international markets
· Explore undrilled horizons in the Shaikan block, with the Shaikan-7 well targeting the deeper Triassic and the Permian
· Continue aggressive exploration and appraisal of the Akri-Bijeel, Sheikh Adi and Ber Bahr blocks to prove up resource base
· Evaluate the ongoing process of the sale of the Company's 20% interest in the Akri-Bijeel block, taking into consideration forthcoming results of the three wells currently being drilled and planned early production from the Bijell discovery
· Successfully remove the uncertainty caused by the claims asserted by Excalibur
· Move from AIM to the premium segment of the Official List of the London Stock Exchange as part of establishing the Company as one of the major independent exploration and production players listed on the London Stock Exchange

Todd F Kozel, Executive Chairman and CEO of Gulf Keystone, commented:

"As an independent explorer and operator in the Kurdistan Region of Iraq, we are proud of our outstanding operating record to date with 15 wells drilled or currently being drilled across the four blocks and ambitious targets consistently being met. Since mid-July, we have announced another major upgrade of Shaikan's gross oil-in-place volumes following independent evaluation, completed a very successful appraisal programme of this world-class discovery and declared the field commercial. Gulf Keystone is now in transition from the exploration and appraisal phase to the large-scale staged development and production of the Shaikan field, which will be both challenging and exciting".

Following the release of Gulf Keystone's results for the six months ended 30 June 2012, the management will be hosting a meeting with equity analysts. For details contact Pelham Bell Pottinger.

Copies of the presentation will be available on the Company's website at from 10.00 a.m. (UK time).


Gulf Keystone Petroleum:
+44 (0) 20 7514 1400
Todd Kozel, Executive Chairman and
Chief Executive Officer

Ewen Ainsworth, Finance Director

Strand Hanson Limited

+44 (0) 20 7409 3494
Simon Raggett / Rory Murphy / James Harris

Mirabaud Securities LLP

+44 (0) 20 7878 3362
Peter Krens

Pelham Bell Pottinger

+44 (0) 20 7861 3232
Mark Antelme / Henry Lerwill

or visit:

John Gerstenlauer, the Company's Chief Operating Officer, who has 33 years of relevant experience within the sector and meets the criteria of a qualified person under the AIM note for mining, oil and gas companies, has reviewed and approved the technical information contained in this announcement. Mr. Gerstenlauer is a member of the Society of Petroleum Engineers.

Comments are closed.