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Gulf Keystone shares rally as it restarts Shaikan operations

Gulf Keystone shares advanced as the Kurdistan based oil firm revealed it has restarted production and trucking operations at the Shaikan field.


Gulf Keystone Petroleum (LON:GKP) shares advanced more than 10% after the Kurdistan-based oil firm restarted production and trucking operations at the Shaikan field.

The restart follows a recent agreement to pre-sell US$26mln worth of crude from the field.

Gulf Keystone told investors that it anticipates a further similar payment will be received, and this is expected to stabilise a payment cycle for current and future Shaikan production.

Shaikan production will now ramp back up to 40,000 barrels per day, which is its current installed capacity.

"We are pleased to have resumed production and truck loading operations at Shaikan," said chief executive John Gerstenlauer.

"Over recent weeks we have maintained a flexible and prudent approach, ensuring that we can maximise revenues from Shaikan.

"We remain confident of a regular payment cycle for Shaikan crude being established in the near term."

Gulf Keystone also revealed today that the recently drilled Shaikan-10 well, its ninth producer, has shown excellent productivity albeit in limited flow data.

Additionally, the Shaikan-11 well has now been completed and this well will provide production to the Shaikan's production facilities ahead of time and budget.

The company said Shaikan could be a prolific producer - based on the amount of oil that was 'lost' during drilling.

Gerstenlauer added: "Shaikan is performing well and we are encouraged by the initial results from Shaikan-10 and the recently completed Shaikan-11 well."

Gulf Keystone shares gained 5p, 13%, on Wednesday to trade at 43p each.

It comes after uncertainties over oil sales and the company's liquidity position forced the Gulf Keystone share price to recent lows of 35p.

Gulf Keystone is currently in talks with its lenders to make changes to the terms of a US$250mln worth of loan notes, and it has also been engaged with potential buyers of the company.

Quick facts: Gulf Keystone Petroleum Limited

Price: 171.8 GBX

Market: LSE
Market Cap: £361.42 m

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