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Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")

2011 Results Announcement

Gulf Keystone, an independent oil and gas exploration and production company with operations in the Kurdistan Region of Iraq, today announces its results for the year ended 31 December 2011.


Operational - to 31 December 2011 and post year end

Shaikan (75% working interest; Operator)

· 420% (P90) / 181% (P10) increase in gross oil-in-place numbers for the Shaikan discovery with a range of 8.0 billion (P90) to 13.4 billion (P10) barrels, following independent evaluation by Dynamic Global Advisors ("DGA") in November 2011

· 599 km² of 3D seismic data processed and evaluated

· Strong flow rates of 9,800 barrels of oil per day ("bopd") achieved from the Shaikan-3 shallow appraisal well, with both Shaikan-1 and -3 presently tied to the Extended Well Test production facility ("EWT")

· New Triassic reservoir discovery following the drilling of the Shaikan-2 appraisal well to a total depth ("TD") of 3,300 metres, which tested at a maximum rate of 4,450 bopd of 36 degrees API oil

· Shaikan-4 appraisal well drilled to a TD of 3,387 metres with log and core data indicating a significant oil column with net pay intervals of 278 metres in the mid to upper Jurassic. The well achieved maximum aggregate flow rates of over 24,000 bopd in the course of the testing programme

· Shaikan-5 and -6 appraisal wells, which will complete the appraisal programme of the Shaikan field, are currently being tested after reaching TD in May 2012

· A dedicated development team was recruited and preparation of the Shaikan Field Development Plan commenced during 2011, which will be submitted to the Kurdistan Regional Government of Iraq within six months after the completion of the Shaikan appraisal programme

· Preliminary design has been prepared and a route survey is ongoing for a 36-inch diameter, 122 km pipeline to connect the Shaikan field with the existing Kirkuk-Ceyhan oil export line, capable of transporting a minimum of 440,000 bopd

Sheikh Adi (80% working interest; Operator)

· The first preliminary evaluation for the Sheikh Adi block calculated by DGA with a range of 1.0 billion (P90) to 3.0 billion (P10) barrels of gross oil-in-place

· Sheikh Adi-1 exploration well reached TD at 3,800 metres with the gross pay interval of 2,790 metres, 35% increase on Shaikan-1

· Sheikh Adi-2 exploration well spudded on 23 May 2012 at a more optimal location selected after detailed analysis of the 3D seismic data

Akri-Bijeel (20% working interest)

· Bekhme-1 exploration well spudded, reached TD and was tested in December 2011. While no hydrocarbons flowed to surface, based on the Bekhme-1 log data, DGA calculated a significant range of 2.5 billion (P90) to 5.4 billion (P10) barrels of gross oil-in-place resources for the Aqra/Bekhme anticline

· Bijell-3 (Aqra-1) well spudded in January 2012 to appraise the Bijell discovery of 2.4 billion (P50) barrels of gross oil-in-place, as calculated by the operator of the block

· Bakrman-1 exploration well spudded in May 2012

· EWT for the Bijell discovery is planned for 2012

Ber Bahr (40% working interest)

· Ber Bahr-1, the first exploration well on the block spudded in October 2011; after reaching a TD of 3,930 metres in April 2012, the well is being tested with results expected by the end of Q2 2012

Financial - as at 31 December 2011

· Loss after tax $62.4 million (2010: $26.0 million)

· Loss per share $0.08 (2010: $0.04)

· Cash, cash equivalents and liquid investments $237.6 million (2010: $211.4 million) as at 31 December 2012. Cash and cash equivalents and liquid investments of approximately $183 million as at 1 May 2012

Corporate developments

· Successfully raised $200 million through a fully subscribed placing of 91,120,000 new common shares in September 2011

· Further strengthening of the Board with the appointment of two additional Non-Executive Directors in October and November 2011

· Gulf Keystone and two of its subsidiaries ("the Companies") obtained an injunction in the English Commercial Court restraining Excalibur Ventures LLC ("Excalibur") from pursuing the International Chamber of Commerce Arbitration proceedings, and an interim payment on account of costs was made to the Companies by Excalibur in July 2011 as directed by the Court. October 2012 has been set as a date for a trial in the English Commercial Court of all the claims asserted by Excalibur

· Continued progress made towards achieving the goal of a gradual strategic exit from Algeria by transferring Gulf Keystone's right, title and interest for nil consideration in the HBH Permit to BG Group and Sonatrach in January 2012

· Sale process for the Company's 20% interest in the Akri-Bijeel block initiated and negotiations are ongoing with several interested bidders

Forward Strategy

· Complete appraisal programme of the Shaikan field and explore deep undrilled horizons with Shaikan-7

· Increase Shaikan EWT production facilities output to 30,000 - 40,000 bopd to ramp up export and domestic sales and generate steady revenues

· In the course of the Shaikan EWT, manage associated gas through re-injection at Shaikan-8, the first gas injection well to be drilled in 2012

· Design and construct a pipeline to bring increasing Shaikan production to international markets

· Complete and submit the Shaikan Field Development Plan, select development concept, obtain required approvals and prepare to move to the large-scale staged development in 2013 with the goal of achieving 400,000+ bopd plateau production

· Continue aggressive exploration and appraisal of the Sheikh Adi, Ber Bahr and Akri-Bijeel blocks to prove up resource base with test production from the Bijell discovery to follow in 2012

· Complete the ongoing process of the sale of the Company's 20% interest in the Akri-Bijeel block

· Successfully remove the uncertainty caused by the claims asserted by Excalibur

· Move from AIM to the premium segment of the Official List of the London Stock Exchange as part of establishing the Company as one of the major independent exploration and production players listed on the London Stock Exchange

Todd F Kozel, Executive Chairman and CEO of Gulf Keystone, commented:

"We have enjoyed another outstanding year in 2011 as we continue to develop our world class asset portfolio. Our ongoing operational success has allowed us to make significant progress in further proving up the value of our business. In particular we were delighted to report the two major independently audited upgrades of the gross oil-in-place volumes for Shaikan, which now has a mean value of 10.5 billion barrels. We have also enjoyed significant operational success at our Sheikh Adi block having completed the first exploration well and identified a location for the second, which spudded on 23 May 2012.

Furthermore, we believe the existing numbers for the Shaikan discovery remain conservative and look forward to completing the appraisal programme and targeting Shaikan's untapped resources. As 2012 looks set to be another fantastic year for the Company, we look forward to reporting further operational success as we achieve our goal of developing our world class acreage, thereby creating further value for our shareholders."

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