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Gulf Keystone Petrol (GKP)


Thursday 02 May, 2013

Gulf Keystone Petrol

Gulf Keystone set for production growth

RNS Number : 8143D
Gulf Keystone Petroleum Ltd.
02 May 2013

Not for release, publication or distribution in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.



2 May 2013


Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")



Gulf Keystone set for Significant Production Growth


Gulf Keystone, a leading independent E&P operator in the Kurdistan Region of Iraq, is pleased to provide an update on its four blocks in the Kurdistan Region of Iraq, including the world class discoveries at Shaikan and Sheikh Adi, as well as Akri-Bijeel and Ber Bahr.




With the Shaikan commercial discovery alone, Gulf Keystone has one of the world's largest onshore conventional oil & gas developments with a Pmean  13.7 billion barrels of gross oil-in-place as set out by Dynamic Global Advisors, independent Houston-based exploration consultants.  A recent report by Goldman Sachs highlights the scale of the Shaikan development and the fact that in 2015 the global production increase will in part come from the Shaikan field*.  The Company continues to be highly active with the drill bit, in order to further prove the value of its blocks. 


Today Gulf Keystone is on the verge of moving into a phase of significant production, with the capacity to produce up to 40,000 barrels of oil per day ("bopd") from Shaikan in the coming months and up to 400,000 bopd in the coming years.  The Company will be a key contributor in meeting the Kurdistan Regional Government's oil production targets of 1 million bopd in 2015 and 2 million bopd by 2019.


Considerable progress is being made on the regional pipeline infrastructure development and the Company's increasing production will be matched by the available export capacity.  The size and quality of the Company's fields is now increasingly recognised and a number of the world's largest oil companies, including ExxonMobil, Chevron and Total, are now following Gulf Keystone's lead and commencing active work programmes in the Kurdistan Region of Iraq.


*Goldman Sachs: April 12, 2013 - "380 projects to change the world. From resource constraint to infrastructure constraint"


Commenting on today's announcement, Todd Kozel, Executive Chairman and CEO, said:


"As one of the first companies to see the potential of the region, over the last five years Gulf Keystone has drilled or participated in nearly 20 wells and remains one of the most active operators in the Kurdistan Region of Iraq.  Shaikan is the largest onshore development worldwide today not in the hands of a major operator.  However, we believe that we have only scratched the surface of the true value of our blocks and our ongoing exploration and appraisal activity is expected to result in further upside."


"The Company is encouraged by recent reports from a variety of sources, including political spokespersons, regarding the close and burgeoning ties between the Kurdistan Region of Iraq and Turkey, which the Company believes presents further transformational progress for the region.  In this context, Gulf Keystone will play a major role as a co-host of the 2nd International Energy Arena Conference in Erbil on 30 May, a meeting place for key political and industry decision makers on the energy cooperation between the Kurdistan Region of Iraq and Turkey." 


"I therefore strongly believe that there is considerable momentum in the development of Kurdistan's vast natural resources and Gulf Keystone is in a prime position to benefit as the region moves to this next stage."


"Our remarkable journey continues and I remain indebted to our hosts in the Kurdistan Regional Government and to the outstanding team within our Company.  We have never been more excited about the future."




Production & Development 

·      Significant operational progress made in the last 3.5 years between the Shaikan-1 discovery in 2009 and the submission of the Shaikan Field Development Plan ("FDP") in early 2013, which is currently being reviewed by regulatory authorities

·      Two new production facilities at Shaikan (PF-1 & PF-2) nearing completion

·      2013 production capacity of 40,000 bopd, expected to increase to 150,000 bopd in  2015



·      Gulf Keystone's ramp up in production fully aligned with the region's ongoing infrastructure development

·      Alternative transport options exist for Gulf Keystone's crude whilst the Shaikan pipeline is constructed, including the ability to truck and accessing growing pipeline infrastructure, including a planned oil pipeline with initial capacity of 300,000 bopd to the Fishkabur pump station on the border with Turkey expected to complete in 2013


Exploration & Appraisal

·      Extensive drilling campaign continues with the Company's 18th and 19th wells: Shaikan-7 deep exploration well & Shaikan-10 development well to spud in Q2 2013

·      Following recent success of the Sheikh Adi-2 well, appraisal drilling is planned for the 1.9 billion barrel Sheikh Adi field (independently audited P50 gross oil-in place estimate), as well as further exploration work on the block

·      Extensive exploration and appraisal programme is ongoing on the Akri-Bijeel block with two discoveries, Bijell-1 and Bakrman-1, made to date



·      Fully funded for the 2013 work programme and aiming to achieve additional revenues through significant production growth



·      The Company will play a major role at the 2nd International Energy Arena Conference co-hosted by The Strategic Technical Economic Research Center (STEAM) and Gulf Keystone. Todd Kozel will participate in the Mapping the Future session led by the Minister of Natural Resources of KRG, H.E Dr. Ashti Hawrami and the Minister of Energy and Natural Resources of Turkey, H.E Taner Yildiz. The Prime Minister of the Kurdistan Regional Government, H.E Nechirvan Barzani, will also be in attendance. The conference will be held in Erbil on 30 May 2013. 


Operational Update


Shaikan Field Development Plan


On 27 January 2013, Gulf Keystone, as operator, submitted a Field Development Plan ("FDP") to the Shaikan Block Management Committee.  The Company is in constructive talks with the appropriate regulatory authorities concerning their feedback on the proposed way forward for the development of the Shaikan field, which was declared a major commercial discovery in August 2012.


Shaikan PF-1 and PF-2


Following approval of the Shaikan FDP, Gulf Keystone will be ready to step up its production operations through the commissioning of two new production facilities at Shaikan ("PF-1 and PF-2").  The Company is planning to complete mechanical assembly and connection works on the Shaikan PF-1 by the end of Q2 2013, which will be followed by a period of start-up, commissioning and ramping-up of production to a target of 20,000 bopd, increasing to a capacity of 40,000 bopd in the coming months following the commissioning of the Shaikan PF-2.


Delivery of equipment modules for the Shaikan PF-2 is progressing and the construction of the Shaikan PF-2 site has been completed.  The assembly works will commence following the completion of the Shaikan PF-1.


Shaikan-7 and Shaikan-10


The Company plans to spud Shaikan-7, the first deep exploration well, targeting the mid to lower Triassic and, potentially, Permian horizons, and Shaikan-10, the first development well, in May and June 2013 respectively.


Akri-Bijeel Block


Extensive exploration and appraisal programme is ongoing on the Akri-Bijeel block. The Bakrman-1 exploration well testing programme is nearing completion and the Bijell-2 and Bijell-7 wells are being drilled to appraise further the Bijell discovery. The construction of an Extended Well Test facility for the Bijell discovery is nearing completion.


Ber Bahr Block


Re-testing of the Ber Bahr-1 exploration well continues.


Sheikh Adi Appraisal Programme


After making a Jurassic discovery with the Sheikh Adi-2 exploration well in November 2012, the Company and the Kurdistan Regional Government, its partner in the block unanimously agreed to move to an appraisal programme to appraise Jurassic targets and evaluate the Triassic upside at the 3,500 metres projected depth with the Sheikh Adi-3 appraisal well.  Furthermore, we plan to target two additional exploration leads, comprising potential extensions of the Atrush and Swara Tika discoveries, following acquisition of 70 km of additional 2D seismic data.  The Company is enthusiastic about the forthcoming appraisal and additional exploration work as it is the Company's belief that the Shaikan field shows signs of a significant extension into the Sheikh Adi block.


Full Year Results, Investor Day & AGM


The Company will announce full year results for the period ended 31 December 2012 on Thursday, 20 June 2013.  The Company will hold an Investor Day on Thursday, 4 July 2013 in London.  The Company's Annual General Meeting is to be held on Thursday, 25 July 2013 in Bermuda.





Gulf Keystone Petroleum:

+44 (0) 20 7514 1400

Todd Kozel, Executive Chairman and Chief Executive Officer

Ewen Ainsworth, Finance Director

Anastasia Vvedenskaya, Investor Relations

Strand Hanson Limited

+44 (0) 20 7409 3494

Simon Raggett / Rory Murphy / James Harris

Mirabaud Securities LLP

+44 (0) 20 7878 3362

Peter Krens

Pelham Bell Pottinger

+44 (0) 20 7861 3232

Mark Antelme / Henry Lerwill


John Gerstenlauer, the Company's Chief Operating Officer, who has 35 years of relevant experience within the sector and meets the criteria of a qualified person under the AIM note for mining, oil and gas companies, has reviewed and approved the technical information contained in this announcement.  Mr. Gerstenlauer is a member of the Society of Petroleum Engineers.


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Notes to Editors:


§ 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.

§ The Company's shares have traded on the AIM market of the London Stock Exchange since listing on 8 September 2004.

§ Gulf Keystone Petroleum Limited is registered in Hamilton, Bermuda with further offices in Erbil, Kurdistan (Iraq), Algiers, Algeria and London, UK.

§ Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for fourexploration blocks in Kurdistan, including 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 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.  Texas Keystone Inc. holds its interest in trust for Gulf Keystone, pending transfer of its interest to the Company.


Not for release, publication or distribution, directly or indirectly, in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.  This announcement (and the information contained herein) does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.  The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.  No public offering of the securities will be made in the United States.


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