Reserves Update

Gulf Keystone Petroleum Ld
15 May 2006


15 May 2006


                        Gulf Keystone Petroleum Limited
                       (the "Company" or "Gulf Keystone")


                                Reserves Update


Further to its announcement of 20 February 2006, Gulf Keystone Petroleum, Ltd.
(AIM-GKP), an independent oil and gas exploration company operating in the
Republic of Algeria, hereby provides a summary of the results of an independent
assessment of the Company's reserve and resource potential, carried out by RPS
Energy Limited ("RPS"). This is an update of the previous review of the
Company's reserves contained in the Competent Persons Report ("CPR") of
September 2004, set out in the Company's AIM admission document.


The methodology employed for this present evaluation, and the classification of
resources set out below, is in line with the guidelines contained in the 
"Guidance Note for Mining, Oil and Gas companies" issued by AIM in March 2006.
Consistent with these new guidelines and emerging industry practice, volumes
have been calculated on a probabilistic basis in contrast with the single
deterministic approach utilised in the above mentioned CPR.  This is regarded by
RPS as a more robust methodology for estimating hydrocarbon volumes as it
acknowledges the inherent uncertainties in such estimates.   The standard used
by RPS is the 2000 SPE/WPC/AAPG Petroleum Resources Classification System.


Block 126a

Following completion of the second Exploration Period in April 2006, and with
regard to the relinquishment obligations associated with completion of this
licence phase, the Company elected to formally apply for licence extensions only
in respect of the GKN, GKS and GRJ oil discoveries. The Company is presently in
active discussions with its partner Sonatrach regarding the forward programme on
its GKN and GKS oil discoveries. Recently updated legislation, focused on
reducing the flaring of gas, requires all oil development plans to incorporate a
plan for utilization of any associated or non-associated gas. Various options
for the utilization of associated gas from GKN and GKS are therefore currently
being examined jointly by the Company and Sonatrach.

The Company currently expects that production licences will be awarded for GKN
and GKS following agreement to a gas utilisation plan.  The Company has applied
for a licence extension in respect of the GRJ discovery in order to complete the
testing of well GRJ-2 which, in the case of success, the Company expects would
be the subject of a production licence application.

In assessing the remaining potential resources in GKN, GKS and GRJ full account
has been taken by RPS of the results of all drilling and testing activities
carried out since the issue of the CPR, revised expectations of required capital
investment and changes in product prices. RPS estimates reserves and resources
for these block 126a discoveries to be as follows:

Recoverable Reserves (mmboe)

                             Gross                                   Entitlement

         1P                    2P                  3P                    2P
        15.1                  35.6                72.0                  11.0


Contingent Recoverable Resources (mmboe)

                             Gross                                   Entitlement

         Low          Best  Estimate         High             Best Estimate 
        (P90)             (P50)              (P10)                (P50)

        25.8                  48.3                86.0                  13.3



Notes

1.            In respect of "Reserves" above, 1P refers to Proven, 2P refers to
Proven plus Probable and 3P refers to Proven plus Probable plus Possible.

2.            "Reserves" above include remaining recoverable oil volumes
associated with the GKN and GKS discoveries.

3.            "Contingent Resources" include recoverable hydrocarbon volumes
associated with the GRJ discovery which will remain Contingent pending the
testing of well GRJ-2. They also include recoverable gas volumes associated with
GKS and GKN which remain contingent pending completion of a gas utilisation
plan.

4.            "Gross" refers to the remaining recoverable reserves from the
licence.

5.            "Entitlement" means the Company's projected net share of Gross
Reserves as determined by the provisions of the relevant Production Sharing
Contract (PSC). Entitlement as a percentage of Gross reserves depends on, and is
particularly sensitive to, amongst other factors, total combined production from
the relevant block, the cumulative profitability of that block and the profiles
for recovering certain exploration and appraisal costs.


Other Licences


In respect of exploration and appraisal licences acquired by the Company in
2005, including its interests in blocks 129 located in the Constantine Basin,
and blocks 317b, 322b, 347b, 348 and 349b which together constitute the Hassi Ba
Hamou Perimeter, to the north of the In Salah gas field, RPS has restricted its
evaluation to an assessment of "Gross" recoverable resources from the licences.
Under the PSCs which govern these licences, the company holds a 75% interest and
Sonatrach a 25% interest.  The Company's Entitlement will vary according to the
specific provisions of each PSC (see note 5 above). The Company has also
identified a number of discoveries and prospects in blocks 108 and 128 in the
Constantine Basin, however, while contracts have been signed for these licences
(Company: 75% Sonatrach: 25%), these licences are yet to be published in the
Algerian official gazette.  Hence, these licences have not been included in the
RPS review.


RPS's estimates of the resources attributable to the above licences, excluding
108 and 128, are in aggregate, as follows:


Contingent Recoverable Resources (mmboe)
                                                   Gross Recoverable

                                                 Best Estimate (Mean)

                                                         201.7

Notes

1.            Contingent Resources include:

•              Certain oil discoveries on block 129 which are Contingent pending
further technical evaluation.

•              A gas discovery within the Hassi Ba Hamou licence which is
Contingent pending further appraisal and conclusion of a gas sales contract.


Prospective Resources


Prospective Resources relates to the exploration potential contained within the
Company's Algerian licences and includes certain exploration leads and prospects
within the Hassi Ba Hamou Perimeter (gas being the dominant phase) and blocks
126a (prospect GKS-B) and 129 (oil being the dominant phase).


Prospective Recoverable Resources (mmboe)

    Gross Unrisked Recoverable           Gross Risked Recoverable

       Best Estimate (Mean)                Best Estimate (Mean)

               473.1                               70.8


The information contained in this announcement has been reviewed by Francis
Boundy, Valuations Director of RPS Energy Limited, who has 15 years of
experience as a Petroleum Engineer.


Todd Kozel, Chief Executive Officer of Gulf Keystone Petroleum Ltd., commented:


"The Company is pleased to be able to provide the market with an updated and
independent view of its current resource position. We are excited with what we
now understand to be the hydrocarbon bearing potential of the licences that the
company acquired during 2005, in particular the gas potential of the Hassi Ba
Hamou licence, and we look forward to being able to crystalise early value from
these licences".


Glossary


1P or Proven Reserves                   those reserve volumes that are estimated to have a 90 per cent
                                        chance of being exceeded

2P or Proven plus Probable Reserves     those reserve volumes that are estimated to have a 50 per cent
                                        chance of being exceeded

3P or Proven plus Probable plus         those reserve volumes that are estimated to have a 10 per cent
Possible Reserves                       chance of being exceeded

Contingent Resources                    those quantities of petroleum which are estimated to be
                                        potentially recoverable from discovered accumulations but which
                                        are currently not demonstrated to be commercially recoverable.

Lead                                    a tentatively identified undrilled hydrocarbon trap that requires
                                        further technical evaluation prior to a decision to drill or not

mmboe                                   millions of barrels of oil equivalent

Prospect                                a specific undrilled hydrocarbon trap that has been sufficiently
                                        defined to allow volumes and risks to be estimated

Prospective Resources                   those quantities of petroleum which are estimated to be
                                        potentially recoverable from un-discovered accumulations

Reserves                                those quantities of petroleum which are estimated to be
                                        commercially recoverable from discovered accumulations



Enquiries

Gulf Keystone Petroleum: 020 7514 1400
Todd Kozel, CEO
Bill Guest, President
Jon Cooper, Finance Director


Evolution Securities: 020 7071 4300
Rob Collins


Citigate Dewe Rogerson: 020 7638 9571
Media enquiries: Martin Jackson / George Cazenove
Analyst enquiries: Nina Soon


or visit: www.gulfkeystone.com


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