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Market:	AIM
Sector:	Oil and Gas Exploration and Production
EPIC:	GKP
Latest Price:	315.25 (1.37% )
52-week High:	324.75
52-week Low:	100.75
Market Cap:	2,695.01M

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Gulf Keystone Petroleum Ltd. Full Gulf Keystone Petroleum Ltd. profile here

Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company focused on exploration in the Kurdistan Region of Iraq. It holds a majority working interest in the Shaikan, Sheikh Adi and Ber Bahr exploration blocks and a further interest in the Akri-Bijeel block. Gulf Keystone is the Operator of the Shaikan and Sheikh Adi Production Sharing Contracts. Following a major discovery at Shaikan in 2009 and a discovery at Akri-Bijeel in 2010, the Company is undertaking an ambitious 2011-2012 exploration and appraisal programme across the four adjacent blocks. Gulf Keystone is also focused on continuing domestic oil sales and increasing oil export operations in order to move towards the Company’s production target of over 5,000 barrels of oil per day (“bopd”), increasing to 10,000 bopd thereafter.

Gulf Keystone spuds Shaikan-3 appraisal well

Friday, September 03, 2010

Gulf Keystone Petroleum (LON:GKP) has begun work on the Shaikan-3 appraisal well, which will test shallow Cretaceous age intervals for producible oil volumes.

The well will be drilled to 1,100m, near the Shaikan-1 well - which discovered the giant Shaikan oil field last August.

The Shaikan-1 discovery was the company’s first exploration well in Kurdistan, Iraq, and it provided GKP with its key operational highlight in 2009.

Shaikan-1 has an independently assessed resource in the range of 1.9bn barrels to 7.4bn barrels, with further upside potential identified.

In Shaikan-1, the shallow intervals could not be completely logged, tested or evaluated, but the company believes that a large percentage of the intervals are saturated with various hydrocarbons such as tar and heavy oil.

Shaikan-3 is designed to further evaluate these hydrocarbon volumes, and determine if they are capable of commercial production.

The company expects drilling and testing to take two months.

Gulf Keystone highlighted that the total pore volume of the Cretaceous age interval is very large.

If Shaikan-3 successfully determines the presence of readily producible hydrocarbons, it could significantly add to the 1.9-7.4bn barrels of oil-in-place already discovered, in the deeper Jurassic and Triassic formations, the company said.

In a recent research note, Daniel Stewart’s oil and gas analyst Richard Nolan emphasised that up-coming drilling could add 500 million barrels of oil from shallow zones. According to Nolan the ‘mere addition’ of 500 million barrels - which would otherwise represent a significant find all by itself - shows the “sheer scale” of the Shaikan discovery.

Crucially, Nolan added that further drilling may provide a substantial increase to the Shaikan resource, to between 18bn and 20bn barrels - should the company determine an oil/water contact point at 2,230m - a level suggested by pressure data.

Nolan estimates that the Shaikan-2 well will target the oil-water contact point in Q1 2011, and provide more clarity on his investment thesis.

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