Gulf Keystone provides an update on its ongoing exploration and appraisal programme in the Kurdistan Region of Iraq, which includes the Shaikan block, 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-4 Appraisal Well
The well testing programme for the Shaikan-4 appraisal well, drilled 6 km to the west of the Shaikan-1 discovery well, is ongoing with two well tests in the Triassic having been completed to date. Five further tests are planned in the Jurassic and Triassic.

In the course of the first well test conducted in the Kurre Chine C formation, Shaikan-4 achieved a flow rate of 563 barrels of oil per day (bopd) and 3.65 mmscf/d of gas at a 328 psi flowing wellhead pressure.

In the course of the second well test, Shaikan-4 tested a thin zone at the bottom of the Kurre Chine B formation achieving a flow rate of 4,970 bopd and 7.0 mmscf/d of gas at a 1,101 psi flowing wellhead pressure with initial results indicating a 39 degree API fluid.

Shaikan-5 Appraisal Well
The Shaikan-5 appraisal well, 6 km to the north-east of the Shaikan-2 appraisal well, is currently drilling at a measured depth of 1,571 metres in the lower Cretaceous to the estimated total depth ("TD") of 3,500 metres subject to technical conditions.

Shaikan-6 Appraisal Well
The Shaikan-6 appraisal well, 9 km to the east of the Shaikan-2 appraisal well, has drilled to a measured depth of 844 metres in the Cretaceous and 20" casing has been set. The well will drill to the estimated TD of 3,800 metres subject to technical conditions.

Aqra-1 Appraisal Well Spudding
On 17 January 2012, the Operator of the Akri-Bijeel block spudded Aqra-1, the first appraisal well to assess the Bijell discovery with the Operator’s current P50 estimate of 2.4 billion barrels of oil in place. The well is being drilled 8 km to the north-west of the Bijell‑1 discovery welland 26 km to the west-northwest of the Bekhme-1 exploration well to an estimated TD of over 4,700 metres in the Triassic subject to technical conditions.

According to the Operator’s Akri-Bijeel block operational update and 2012 outlook dated 28 December 2011, the Aqra-1 appraisal well, which is expected to be tested in H2 2012, will be followed in 2012 by two exploration wells (Bakrman-1 and Gulak-1) and three additional appraisal wells (Bijell-2, Qalati-1 and Qandagul-1), as well as by two further appraisal wells in 2013. In addition, an extended well test is planned for the Bijell-1 discovery well in 2012, similar to the ongoing successful Shaikan-1 & 3 extended well test.

Gulf Keystone has a 20 per cent working interest in the Akri-Bijeel block operated by Kalegran Ltd., a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc., which holds 80 per cent working interest in the block. Operator’s P50 resource estimate for the Akri-Bijeel block is 2.4 billion barrels of oil-in-place.

Ber Bahr-1 Exploration Well
The first exploration well on the Ber Bahr block is drilling at a measured depth of 2,778 metres in the Triassic to the estimated TD of 3,000 metres subject to technical conditions.

Gulf Keystone has a 40 per cent working interest in the Ber Bahr block operated by Genel Energy, which holds a 40 per cent working interest in the block. The Kurdistan Regional Government has a 20 per cent carried interest in the Ber Bahr Production Sharing Contract. The Operator’s resource estimate for the Ber Bahr block is 1.5 billion barrels of oil equivalent-initially-in-place.

John Gerstenlauer, Gulf Keystone’s Chief Operating Officer commented:
"Initial results of the Shaikan-4 well testing programme are very encouraging with logging results indicating that Shaikan-4 may be the best well which Gulf Keystone has logged to date in the Kurdistan Region of Iraq. We look forward to adding to our already outstanding drilling success in the region by completing further Shaikan-4 well tests, which will be followed by more results from the Shaikan-5 and Shaikan-6 appraisal wells before the appraisal programme of the Shaikan world-class discovery is completed. Initial results from the Ber Bahr-1 exploration well and progress in the 2012 wide-ranging exploration, appraisal and early development programme of the Akri-Bijeel block are also highly anticipated."