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Independent oil and gas explorer and producer, Gulf Keystone Limited (LSE:GKP) said it now has gross oil in place of about 12.4 billion barrels from its Shaikan block in the Kurdistan region in Iraq.
The latest report is the fourth revision of the P90 estimates, indicating an increase of about 4.4 billion barrels from the 8 billion the company previously announced.
The deposit at the Shaikan block, one of the four licences GKP has in the said region, now has a mean value of 13.7 billion barrels with P10 estimates of about 15 billion gross oil in place.
Gas in place volume was also revised from 3.5 trillion cubic feet (tcf) to 4.9 tcf, the company said.
The news was released hours before the Annual General Meeting to be held today and lifted the shares of the FTSE AIM 100 company by 3.9% to 220.50 pence at 10:53 AM GMT, valuing the company at £1.9 billion.
What the Report Means
The information released by GKP this morning is the result of the most recent analysis of the Iraqi Shaikan oil field conducted by Dynamic Global Advisors. The findings announced this morning are the results of the fourth resource evaluation conducted by DGA since the discovery of the Shaikan reservoir in 2009. Each of the subsequent evaluations has indicated the presence of more reserves than the previous. The most recent analysis was conducted in November 2011.
The report results now confirm that the field has proven reserves of 12.4 to 15 billion barrels of oil, and possible reserves at a 15 billion with a mean value of 13.7 billion. The update information was derived from a combined analysis of geological reports, mud logs, well logs, well tests, and core reports as well numbers five and six, in addition to a broader reassessment of the entire reservoir that included re-mapping and revised data from GPK’s other appraisal wells.
The dynamic results from the Shaikan field are almost unheard of in the oil exploration industry. The company is progressing toward production of over 400,000 bopd based on current assessment, and has yet to confirm the reserves at the Triassic and Permian layers. These are the kind of results that could either turn the corner for GKP’s organic growth or make them an even more attractive takeover target.
GKP’s COO, John Gerstenlauer, said, “Sometimes people get complacent about our operational track record. This latest upgrade, which now includes results from the Shaikan discovery well and five appraisal wells, is a timely reminder about Gulf Keystone’s stellar drilling performance in the Kurdistan Region of Iraq. The field, which is giant by any measure . . . undoubtedly, remains the jewel in the (GKP) crown.”
GKP share price closed at 221.00 on 19 July 2012, up 8.75 pence.
Company Profile
Gulf Keystone Petroleum was founded in 2001 by private equity partners from the US, the UAE, and Kuwait. It was listed on the LSE AIM in 2004. It currently operates in the Kurdistan Region of Iraq where it is conducting exploration, appraisal, and production. Whilst GPK holds Production Sharing Contracts for four exploration blocks, it is also the Operator of the Shaikan project. The company currently employs about 150 people, the majority of which are in operational or technical roles.
