Gulf Keystone provided an update on its ongoing exploration and appraisal program for the Shaikan block in the Kurdistan Region of Iraq. Shaikan is 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-2 Well Test Update
The Company has completed the testing program for the Shaikan-2 appraisal well, drilled nine km to the south-east of the Shaikan-1 discovery well.
Following a new Triassic discovery in the Kurre Chine C zone announced in August, the Company has conducted nine well tests in all target formations in the Triassic and Jurassic, with the maximum aggregate flow rate of 18,900 barrels of oil per day ("bopd").
Preliminary results of the Shaikan-2 testing program formed part of the new data used by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants, to calculate the most recent significant upgrade of the gross oil-in-place volumes for the Shaikan discovery announced in November.
Following the conclusion of the Shaikan-2 testing program the well will be completed as a producer and tied to an additional Extended Well Test ("EWT") facility which the Company plans to build and install in 2012.
The Shaikan-2 WDI 842 rig is currently moving to the location of the Shaikan-6 appraisal well, nine km to the east of the Shaikan-2 appraisal well, which is due to spud later in 2011 and will drill to an estimated total depth of 3,800 meters subject to technical conditions.
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.
John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented, "Following these successful well tests at Shaikan-2 and in anticipation of equally positive results from the Shaikan-4 appraisal well, we plan to design and build an additional testing and production facility for Shaikan-2 capable of producing a minimum of 20,000 bopd. The completion of the ongoing upgrade of the existing Shaikan-1 & 3 EWT facilities will lead to an initial production of 20,000 bopd of Shaikan crude to export specifications by mid-2012. The Shaikan-2 facility will increase this production target to 40,000 bopd by the end of 2012. With Shaikan being one of the three major producing oil fields in the Kurdistan Region of Iraq today, we look forward to making a significant contribution to the mid-term regional production and export targets recently announced by the Kurdistan Regional Government."
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