http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

big drilling update on rns ...... synopsis below

Gulf Keystone today provides an update on its ongoing exploration and appraisal programme in the Kurdistan Region of Iraq, which includes the Shaikan block, a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels calculated on the P90 to P10 basis, with a mean value of 10.5 billion barrels ................ John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented: "We believe that these new results of the ongoing Shaikan-4 well testing programme are excellent, confirming our early understanding that this well may prove to be our best one to date in the Kurdistan Region of Iraq. We anticipate that future test production from Shaikan-4 will significantly increase our existing production level, which reached 6,970 gross barrels of oil per day on 4 March 2012. In parallel to the continuing increase in the test production of the Shaikan crude, our work on the Shaikan export pipeline project is progressing. In addition to a number of important operational developments on the Shaikan block, we are pleased to report on the progress in the Ber Bahr-1 exploration well drilling activities and to present results of an independent report by Dynamic Global Advisors on estimated resources for the Aqra/ Bekhme anticline on the Akri-Bijeel block. The substantial remaining potential of the Akri-Bijeel block is currently being targeted by the Operator's 2012/13 wide-ranging exploration, appraisal and early development programme."

12 March 2012



Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")



Kurdistan Operational Update

Gulf Keystone today provides an update on its ongoing exploration and appraisal programme in the Kurdistan Region of Iraq, which includes the Shaikan block, a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels calculated on the P90 to P10 basis, with a mean value of 10.5 billion barrels.

Shaikan-4 Appraisal Well



The well testing programme for the Shaikan-4 appraisal well, drilled 6 km to the west of the Shaikan-1 discovery well, remains ongoing, with six out of seven planned tests completed to date. Portions of major intervals, such as the Kurre Chine, Butmah, Mus, Alan and Sargelu formations will continue to be tested and so far aggregate flow rates in excess of 14,000 barrels of oil equivalent per day ("boepd") have been achieved. Portions of the well that appear to be high quality oil reservoir on the electric logs, and where proven commercial flow rates were achieved by testing previous wells, will not be tested.



The first five tests have been conducted in the northern "footwall" - on the lower side of the inclined fault bounding the Shaikan structure. This is the first occurrence of flow from the footwall and proves an extension of the Triassic and Jurassic reservoirs outside the central part of the structure. The latest test (Test 6) is being conducted in the "hanging wall" (the upper side of the inclined fault) from a new reservoir in the uppermost Sargelu formation which had not been previously flow tested. The test is ongoing and rates in excess of 4,000 boepd have been recorded.



Shaikan-5 Appraisal Well



After drilling the Shaikan-5 appraisal well, 6 km to the north-east of the Shaikan-2 appraisal well, to the depth of 1,876 metres in the Jurassic, it became necessary to drill a sidetrack due to a portion of the drill string becoming stuck in the hole. The sidetrack operations were successfully performed at the depth of 1,370 metres, after which the Shaikan-5 drilling operations have resumed below 1,730 metres, to continue drilling to the estimated total depth ("TD") of 3,500 metres, subject to technical conditions.



Shaikan-6 Appraisal Well



The Shaikan-6 appraisal well, 9 km to the east of the Shaikan-2 appraisal well, is currently drilling a 12.25" hole at the depth of 2,058 metres in the Jurassic. The well will drill to the estimated TD of 3,800 metres subject to technical conditions.



Shaikan-7 Exploration Well



The tendering process has commenced for a rig to drill the Shaikan-7 exploration well, which will target the lower Triassic and the Permian, the deepest prospective undrilled horizons of the Shaikan structure.



Shaikan Extended Well Test



As part of the ongoing Extended Well Test ("EWT") on the Shaikan block, the output from the Shaikan-1 & 3 EWT facility reached 137,060 gross barrels of oil between 1 January and 6 March 2012. Due to unprecedented cold weather and poor visibility, combined with work required to connect an additional 20,000 barrel storage tank, the average test production between 1 January and 25 February was 2,077 gross barrels of oil per day ("bopd"). Since 25 February test production has averaged 5,641 gross bopd.



Shaikan Field Export Pipeline Project



On 6 March 2012, Gulf Keystone initiated a tendering process for the export pipeline site construction and installation for the Shaikan field export pipeline project.



As part of the ongoing tendering process for the materials procurement for the Shaikan field export pipeline project, which was announced on 12 January 2012, bids are currently being received with the technical and commercial evaluation to follow.

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.

Akri-Bijeel Block: Aqra/ Bekhme Anticline Resources



Following the completion of the Bekhme-1 exploration well testing programme in December 2011, after the well reached TD at 5,000 metres in the Triassic, Gulf Keystone has received results of an independent evaluation of estimated petroleum resources for the Aqra/Bekhme anticline on the Akri-Bijeel block by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants.



The DGA report, based on the Bekhme-1 wireline logging data and 2D seismic data, while recognizing the fact that no hydrocarbons had been produced to surface, has indicated a significant range of between 2.5 billion barrels and 5.4 billion barrels of gross oil-in-place volumes calculated on the P90 to P10 basis, with the mean resource estimate for the reservoirs in the Aqra/ Bekhme anticline of 3.9 billion barrels. While this range of resource estimate is significant, a considerable portion of the oil resource is likely to comprise heavy oil. Further evaluation would be required as to whether the oil is commercially recoverable.



DGA's previous assessments of assets on behalf of Gulf Keystone included independent evaluation of the Shaikan discovery, including two major upgrades of the gross oil-in-place volumes announced in April and November 2011, as well as a preliminary evaluation of the Sheikh Adi resources (1 billion barrels to 3 billion barrels calculated on the P90 to P10 basis) announced in August 2011.



Akri-Bijeel Block: Aqra-1 Appraisal Well



The first appraisal well to assess the Bijell discovery on the Akri-Bijeel block, is being drilled 8 km to the north-west of the Bijell‑1 discovery well and 26 km to the west-northwest of the Bekhme-1 exploration well. After reaching the depth of 989 metres, the Aqra-1 drilling operations have been temporarily halted in order to repair the rig following a lightning strike. Once the drilling operations have resumed, Aqra-1 will drill to an estimated TD of over 4,700 metres in the Triassic subject to technical conditions.



Gulf Keystone has a 20 per cent working interest in the Akri-Bijeel block, operated by Kalegran Ltd., a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc., which holds 80 per cent working interest in the block. The Operator's P50 resource estimate for the Bijell discovery is 2.4 billion barrels of oil-in-place, while the ongoing 2012/13 exploration and appraisal programme is targeting existing and identified hydrocarbon prospects in the Akri-Bijeel block.



Ber Bahr-1 Exploration Well



After the setting of 7" casing at the depth of 3,343 metres in the Triassic, the first exploration well on the Ber Bahr block is drilling at the depth of 3,347 metres.



Gulf Keystone has a 40 per cent working interest in the Ber Bahr block, operated by Genel Energy, which holds a 40 per cent working interest in the block. The Kurdistan Regional Government has a 20 per cent carried interest in the Ber Bahr Production Sharing Contract. The Operator's resource estimate for the Ber Bahr block is 1.5 billion barrels of oil equivalent-initially-in-place.



John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:



"We believe that these new results of the ongoing Shaikan-4 well testing programme are excellent, confirming our early understanding that this well may prove to be our best one to date in the Kurdistan Region of Iraq. We anticipate that future test production from Shaikan-4 will significantly increase our existing production level, which reached 6,970 gross barrels of oil per day on 4 March 2012. In parallel to the continuing increase in the test production of the Shaikan crude, our work on the Shaikan export pipeline project is progressing. In addition to a number of important operational developments on the Shaikan block, we are pleased to report on the progress in the Ber Bahr-1 exploration well drilling activities and to present results of an independent report by Dynamic Global Advisors on estimated resources for the Aqra/ Bekhme anticline on the Akri-Bijeel block. The substantial remaining potential of the Akri-Bijeel block is currently being targeted by the Operator's 2012/13 wide-ranging exploration, appraisal and early development programme."

One thing is for sure regardless of today's update is that there is a phenomenal amount of oil here....and it's only a matter of time before somebody makes a move to buy this out !.

and so the sp goes down........again. still wouldn't want to be out of these.,.

Lightning strike on a rig isn't likely to push up the sp, imo!!! (Might push up their bp! ;o)

Just up,so takung note of other more knowledgable pi's,here's ZENGES's summing up.


ZENGAS -

Very, very good update.

First time i have seen oil attributed to Aqra and Bechme of between 2.9 - 5.4 billion barrels in place with a mean range of 3.9 billion bls. It's heavy but still a significant amount and although not appraised for commercial recovery, it could be open to steam recovery as was stated in the amount attributed to the very shallow part of Shaikan (which is not included in the Shaikan figures). So that makes significant oil found in EVERY well/structure drilled to completion on all GKPs blocks to date.

Bijeel discovery being appraised and 2.4 billion bls in place.

Shaikan 4 well - best well to date with new productive zones which appears to be a series of flow tests of 14,000 boepd from these new zones.

New oil found in the Shaikan field footwall as a result of Shaikan 4 - "PROVES AN EXTENSION OF THE TRIASSIC AND JURRASSIC RESERVOIRS OUTSIDE THE CENTRAL PART OF THE STRUCTURE" - Also a NEW reservoir testing (TEST-6) in excess of 4,000 boepd in the 'hanging wall'. Imo we should see a new OIP upgrade in due course.

Test prpoduction has averaged 5641 bopd since 25th February but has now reached 6790 bopd on 4th March - should be over 5000 (75% basis) going to GKP and at $50/b average domestic = $7.5m/month. They also sate they expect this production to increase.

"We anticipate that future test production from Shaikan-4 will **SIGNIFICANTLY** increase our existing production level, which reached 6,970 gross barrels of oil per day on 4 March 2012. Possibly achieve $10m/month net in domestic oil sales if as they say they expect it to rise significantly.

Full production would achieve rates close to 100000 barrels a day perhaps.....if so...incredible...that's from all zones at a guess...

http://www.proactiveinvestors.co.uk/companies/news/40085/gulf-keystone-describes-shaikan-4-results-as-excellent-40085.html

how many pipe lines would be needed for 100000 barrels aday??

One...but a big one......how would I know ?....just guessing....and like you say the sp drops.....I'm telling you :.... sack all your workforce and your stock will rise.....

(:((

March is a bad month normally, as you guessed it, earlier this month we moved into the 30 day period from tax year end.

So lots of selling for tax reasons and then "stay out" for the mandatory 30 days before buying back in.

Things will get better once 30 days from the big fall day recently has passed, until then expect plenty of people taking their profits for tax year end.

Every man and his dog who knows the markets knows this - forget the muppets saying conspiracy and manipulation, its March, its coming up to tax year end and people are selling and many will not buy back in for 30 days from when they sell.

pi's stampeding for the lifeboats

I'm not playing this right....not sure what to do...

saying put myself, must admit pro did the right thing at 450p but i would have been back in at £3 something.,.

RF - if you are not over-exposed, then logic is stay put ..... if otherwise, then indeed something of a conundrum, but prob best call would be to reduce

? I think the pont made of the political risks will have made many more cautious,but todays RNS is just part of an ongoing picture being played out?Some dumpong on news and with the end of tax year in sight,i expect many are exercising their allowence,back in 30 days?

Disappointing that this is not above 300p at least....

After the initial negative reaction,SP recovering to 276p. Off out now.

Think that ends takeover rumours and hype then :


Seymour Pierce:

Gulf Keystone Petroleum 1 (BUY) - Operational update
GKP (287p, Target price 524p) Market cap: £2.5bn
The company has provided a comprehensive update on its operations in Kurdistan, primarily on its core assets Shaikan. GKP has now completed six of the seven planned tests at the Shaikan-4 appraisal well which have flowed at an aggregate rate of 14,000bopd. The current test is ongoing and producing at a rate of c.4,000bopd.

At Shaikan-5, due to a section of the drill string becoming stuck in the hole a sidetrack was required. This was successfully completed and the well is drilling ahead to 3,000m. No timing for completion was stated, but is subject to technical conditions. The Shaikan-6 well is also drilling ahead and is currently at 2,058m with a target total depth of 3,800m planned.

GKP has started the tendering process for the Shaikan-7 exploration well. No estimates for initiation of drilling were stated.

Finally at Shaikan, the extended well test has averaged 5,641bopd since 25th February 2012, this is in line with our expectations. Production prior to this date was 2,077bopd due to cold weather conditions as well as the requirement to connect a new 20,000 barrel storage tank into existing infrastructure. GKP has received bids as part of the tendering process for the Shaikan export pipeline and these are being evaluated.

Due to the rig being hit by lightening, the Aqra-1 appraisal well has ceased operations whilst repairs are made. No timing was stated for the restart of this well.

Finally, the Ber Bahr-1 well continues to drill ahead. We forecast that this well will be completed later this month.

Overall these are a mixed set of operational results for the company today. The company is clearly making progress at Shaikan, but we had been expecting more of an update at Ber Bahr-1 which may result in the market being slightly disappointed this morning.

We also note that CEO Todd Kozel was interviewed on CNN this weekend where he discussed the independence of the company. He stated that in the short to medium term GKP would remain independent, but also stated that in the longer term that this may not continue to be the case.

Dr. Dougie Youngson | Oil & Gas Research | 020 7107 8068 | dougieyoungson@seymourpierce.com