Gulf Keystone Petroleum (LON:GKP) told investors that the Bijeel-1 tests in the Kurdistan region in Iraq have been completed and the results have confirmed the Akri Bijeel oil discovery.
The company’s joint venture partner, MOL Hungarian Oil & Gas, successfully tested the discovery well with a series of flow tests returning as much as 3,743 barrels of oil and 618,826 standard cubic feet of gas per day.
Gulf Keystone said the result support its belief that the Bijeel-1 well is on the possible southern flank of the potentially significant Bekhme structure.
Crucially the Weatherford 842 drilling rig is now available for the drilling of the eagerly anticipated Shaikan-2 well.
"Today's announcement by MOL brings the testing of the Bijeel-1 well to a successful conclusion and highlights the clear potential of the Akri Bijeel block”, chief operating officer John Gerstenlauer said.
“The Weatherford 842 drilling rig will now be able to be moved to the nearby Shaikan-2 location, as part of the ongoing Shaikan appraisal programme."
Shaikan-2 could prove pivotal for Gulf Keystone. The well is the company’s first deep appraisal well on the Shaikan structure.
It is following up the initial Shaikan-1 oil discovery which propelled Gulf Keystone to become one of the most followed and talked about companies on London’s AIM market.
The well is targeting the reservoirs that it believes lie beyond the depths of Shaikan-1, which encountered a significant resource across several formations.
Analysts believe that Shaikan-2 may confirm the depth of the oil-water contact point on the structure at around 2,230 metres - a result that could turn the already impressive 4.2 billion barrel resource estimate to an eye-watering 18 - 20 billion barrels.
On Akri-Bijeel block, Gulf Keystone own a 20 percent stake in a joint venture that is operated by MOL.
Bijeel-1 struck oil in March 2010. Since then MOL encountered a number of technical set-backs whilst carrying out testing operations.
Previously in June, Bijeel-1 produced 3,200 barrels of oil and 933,000 standard cubic feet of gas per day, from the Jurassic formation between 3,804 and 3,967 meters. The test ran into problems before completing the tests.
Subsequently it side-tracked and re-tested the Jurassic formations.
This morning MOL announced that the well produced oil at 2,700 barrels per day from between 3,804 and 3,967 metres
A joint test was performed, testing intervals between 3,729 and 3,967 metres, to produce 3,743 barrels of oil and 618,826 standard cubic feet of gas per day.
MOL is now planning an appraisal programme for Akri-Bijeel.
In a fairly mixed write-up Fox-Davies oil analyst Lionel Therond said: “The good news is that charge has been proven in the block, and despite being a different sort of structure than Shaikan, any resources found are additional to current Shaikan estimates.”
“It also highlights the potential for two other structures in the Akri Bijeel Block, similar to Shaikan-1.”
“[The] two structures are surface-exposed anticlines likely to exhibit the same level of folding and fractures as Shaikan, hence resulting in better reservoir characteristics for the entire carbonate section all the way down to the Permian.”
“Such reservoirs are likely to contain moveable hydrocarbons.”
“The not-so-good news is that it is heavier oil that in Shaikan, flow rates are not spectacular and no lighter oil seem to have been encountered in the deeper section, as was the case in Shaikan-1,” Therond added.
“Hence Bijeel-1 is a discovery but it is not likely to be a material one”.