Competent Person's Report Update

RNS Number : 8346A

Gulf Keystone Petroleum Ltd.

01 October 2015

 



Not for release, publication or distribution, directly or indirectly, in whole or in part in or into the United States or any jurisdiction other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws or regulations of such jurisdiction.  This announcement (and the information contained herein) does not contain or constitute an offer to sell or the solicitation of an offer to purchase, nor shall there be any sale of securities in any jurisdiction where such offer, solicitation or sale would constitute a contravention of the relevant laws or regulations of such jurisdiction.

1 October 2015

Gulf Keystone Petroleum Ltd. (LSE: GKP)

("Gulf Keystone" or "the Company")

Competent Person's Report Update

Significant de-risking: Shaikan 2P Reserves more than double to 639 million barrels

Gulf Keystone today announces the release of an updated independent third-party audit of the Company's Reserves, Contingent Resources and Prospective Resources for its oil & gas interests in the Kurdistan Region of Iraq, including the Shaikan and Sheikh Adi fields operated by Gulf Keystone.  

Today's updated Competent Person's Report ("CPR") was again prepared by ERC Equipoise ("ERCE") and follows the first report published in March 2014. The updated CPR is available on the Company's website at http://www.gulfkeystone.com/investor-centre/presentations-and-technical-reports.

The focus on the Shaikan field has evolved from oil-in-place to recoverable reserves and the updated CPR highlights the enhanced understanding of the field.  With over 15 million barrels now produced from the Jurassic, the substantial production and reservoir data acquired over the last 18 months have given a much improved understanding of the field's recovery mechanism. The Company now has greater certainty in its ability to develop the increased 2P Reserves - fewer wells and reduced capex per barrel will feature in the updated Shaikan Field Development Plan ("FDP").

Shaikan

·      1P Reserves have increased by 55% compared to the March 2014 1P estimate from 198 to 306 million barrels gross, which is greater than the original 2P estimate

·      2P Reserves increased by 114% from 299 to 639 million barrels gross, significantly de-risking the field's commerciality

·      The field's recovery mechanism, now recognised as being by solution gas rather than a water drive, results in greater predictability of field performance, increased reserves per well and lower capex per barrel

      Sheikh Adi

·      Work on an FDP for the appraisal area is underway

·      FDP approval is expected to lead to a future re-classification of 2C Resources (currently at 112 million barrels gross) to 2P Reserves

·      A new prospect in the north-west of the block identified with 169 million barrels gross of Prospective Resources

CPR Methodology

ERCE has audited the reserves assessment in compliance with PRMS/SPE reporting guidelines.

The table below represents the updated CPR's conclusions on Shaikan Reserves, Contingent Resources and Technically Recoverable Volumes⁽¹⁾ in comparison with the March 2014 CPR:

CPR (mmstb)(2)	1P	% increase	1C	1P+1C	TRV(1)	1P+1C+ TRV	Net diluted WI to GKP - 1P(3)
March 2014	198		244	442	0	442	108
Sept 2015	306	55%	85	391	90	481	166
CPR (mmstb)	2P		2C	2P+2C	TRV	2P+2C+ TRV(1)	Net diluted WI to GKP -  2P
March 2014	299		702	1,001		1,001	163
Sept 2015	639	114%	239	878	142	1,020	348
CPR (mmstb)	3P		3C	3P+3C	TRV	3P+3C+ TRV	Net diluted WI to GKP -  3P
March 2014	389		1,626	2,015	0	2,015	212
Sept 2015	982	152%	862	1,844	232	2,076	534
Notes:
(1) Technically Recoverable Volumes ("TRV") are reserves recognised in the production profile beyond the term of the Production Sharing Contract. Work is ongoing to accelerate these reserves to within the licence period (2)  mmstb: Million stock tank barrels (3)  WI: Working interest; GKP WI in Shaikan is 80%, inclusive of Texas Keystone's 5% (undiluted) holding, and is subject to third party and KRG back-in rights; GKP net diluted WI in Shaikan is 54.4%, inclusive of Texas Keystone's 5% (diluted) holding
Source: September 2015 ERC Equipoise CPR

Commenting on the publication of the updated CPR, Jón Ferrier, CEO, said:

"Today's announcement is a further independent endorsement of the calibre of Shaikan as a world-class field. With cumulative production to date of over 15 million barrels, the Company benefits from a vastly increased dataset and a far greater understanding of the reservoir."

"Our technical confidence has markedly improved. In what was already a low production cost operation in the Kurdistan Region, the Company is working on an updated FDP to develop the increased 2P Reserves with fewer wells, lower capex per barrel and greater reserves per well."

A live webcast of the presentation to analysts will be available at 11am (BST) today on the Company's website www.gulfkeystone.com 

Enquiries:

Gulf Keystone Petroleum:	[phone]
Jón Ferrier, CEO
Sami Zouari, CFO
Anastasia Vvedenskaya, Head of Investor Relations	[phone]
Celicourt Communications:	[phone]
Mark Antelme Jimmy Lea

or visit: www.gulfkeystone.com

Notes to Editors:

·           Gulf Keystone Petroleum Ltd. (LSE: GKP) is an independent oil and gas exploration and production company with operations in the Kurdistan Region of Iraq.

·           Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four exploration blocks in Kurdistan, the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.

·           GKPI is the operator of the Shaikan block, which is a major commercial discovery, with a working interest of 75% and is partnered with MOL Kalegran Limited (a 100% subsidiary of MOL Hungarian Oil and Gas plc.) and Texas Keystone Inc., which have working interests of 20% and 5% respectively. 

·           Following the establishment of a regular payment cycle for all oil sales and arrears, Gulf Keystone plans to move into the large-scale phased development of the Shaikan field targeting 100,000 bopd of production capacity during Phase 1 of the Shaikan Field Development Plan.

Disclaimer

This announcement contains certain forward-looking statements.  These statements are made by the Company's Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent uncertainties, including both economic and business factors, underlying such forward-looking information.  This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.

 

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