Gulf Keystone Petroleum Ltd

A gulf in class

An independent oil and gas exploration and production company operating within the Kurdistan Region of Iraq, Gulf Keystone Petroleum Ltd. (Gulf Keystone) was incorporated in Bermuda in 2001 and listed on the Alternative Market of the London Stock Exchange in 2004 (AIM: GKP).

The company has offices in Erbil in the Kurdistan Region of Iraq, Algiers and London. Through its wholly owned subsidiary Gulf Keystone Petroleum International, the company holds Production Sharing Contracts (PSCs) for four exploration blocks in the Kurdistan Region of Iraq. The first two of these contracts, for the Shaikan and Akri- Bijeel blocks, were signed in November 2007, with the PCSs for the Sheikh Adi and Ber Bahr blocks following in July 2009.

“Over the last year the company has overseen a number of major developments and highlights,” says Ewen Ainsworth, Gulf Keystone’s finance director. “The most significant news would have to be the upward revision in the estimated gross oil-in-place volumes for the Shaikan field. The figures announced in April 2011 are in the vicinity of 7.5 billion barrels of oil, representing a big jump from the previous estimated number, which was 4.18 billion, both numbers calculated on the P50 basis representing at least 50 per cent probability that the quantities of oil determined to be in place will equal or exceed the mid estimate.”

The updated figure of the Shaikan gross oilin- place volumes calculated on the P90 basis, representing at least 90 per cent probability of oil recovery, is just below 11 billion barrels, potentially making Shaikan one of the most significant discoveries made in the world over the last ten years. “All these new facts and figures obviously add to Gulf Keystone’s optimism for the work it is carrying out in the Kurdistan Region of Iraq, and they further prove the world class nature of the Shaikan discovery,” Ewen continues.

The last time Ewen spoke to European Oil and Gas, in October 2010, Gulf Keystone had just begun commissioning Shaikan processing facilities in preparation for the imminent production of oil that would then be sold domestically: “In the time since Gulf Keystone has successfully completed two wells, Shaikan-1 and Shaikan-3, both of which are linked to the company’s extended well test facilities. After the company commenced test production, it received a request from the Kurdistan Regional Government to ready itself for the preparation and export of 5000 barrels of oil per day (bopd). This is clearly a huge breakthrough for not just the company, but also the region as a whole, and one that has taken Gulf Keystone into a commissioning phase where it is undertaking all the necessary legal, logistical and operational preparations before commencing oil exports.”

The prosperity of the Kurdistan Region of Iraq, and its seemingly untapped resources, is not the only reason for Gulf Keystone’s success over the past few years, as Ewen explains: “Gulf Keystone, as a company, is clearly very comfortable operating within the Kurdistan Region of Iraq. The company’s operations have in no way been affected by the political unrest occurring in some parts of the Middle East, as a matter of fact Kurdistan remains one of the most stable areas in the region at this time. The company has always maintained extremely good relations with the local government and the Ministry of Natural Resources, and Gulf Keystone believes that these mutually beneficial relationships represent just one of a host of key strengths that help the company achieve its full potential.”

In July 2009, Gulf Keystone announced its intention to gradually exit Algeria, its primary operational location for its first six years in existence. With its work in Kurdistan going from strength-to-strength, the full focus of the company, now and for the future, has turned solely to the Kurdistan Region of Iraq: “The company’s exit from Algeria is progressing very well and Gulf Keystone now finds itself ahead of the pack of operators within Kurdistan, who make up approximately 40 different international oil and gas companies. Gulf Keystone has a lead over most of these companies, including the most recent entrants to the region, as a result of its ambitious exploration appraisal programme, which is supported by considerable investment, something that truly highlights the healthy financial state of the company,” Ewen points out.

The Kurdistan Region of Iraq has set a preliminary oil production target of one million bopd to be reached in 2014. As Ewen emphasises, this target proves beyond a shadow of a doubt that Gulf Kesytone’s plans to commence oil exports at a rate of 5000 bopd, before increasing to 10,000 bopd, are very much in line with the overall ambitions of the Kurdistan authorities: “A dedicated team is currently working on a detailed development plan for the Shaikan block, with the goal being to discover how the full potential of Shaikan can be unlocked.

“While the short term goal is to increase the level of oil production to 10,000 bopd, Gulf Keystone hopes that within two years it can take this higher to 35,000 bopd, which is quite a significant figure for any independent operator. With the future of the company looking ever more exciting, Gulf Keystone will continue to raise its profile as a leading operator in this part of the world. In November 2011 the company will act as the lead event sponsor at the Kurdistan – Iraq Oil and Gas Conference, just one of many opportunities it will have to showcase its expertise in the field and the success it has had, particularly with the Shaikan block, which is undoubtedly the jewel in Gulf Keystone’s crown.”

Gulf Keystone Petroleum Ltd.
Services: Exploration and production