6th Apr 2005 10:00
Gulf Keystone Petroleum Ld06 April 2005 6 April 2005 GULF KEYSTONE PETROLEUM LIMITED ("Gulf Keystone" or "the Company") Progress Report Gulf Keystone Petroleum, Ltd. (AIM-GKP), an independent oil exploration companyoperating in the Republic of Algeria, today provided the following progressreport on the Company's activities. Rig Mobilised and Drilling to Commence on GKS-3 The drilling rig contracted from Saipem S.p.A has been assembled, tested andmobilised, and is capable of drilling to a depth of 6,000 metres with a 5-inchdrill string. The re-entry and sidetrack of GKS-3 is expected to commence onThursday April 7, 2005 to complete the objective section that well logsindicated had better porosity and oil saturations than the GKS-2 well. Gulf Keystone is re-drilling the reservoir in order to employ a high volumecompletion technique, to better stimulate the well. This cannot be performed inthe original well bore. On completion of GKS-3, the rig will be moved to theGKS-2 well drilled by SONATRACH, which is the discovery well on Gulf Keystone'sGKS structure, for re-completion. GKS is estimated to contain 29.6 millionbarrels of oil equivalent (BOE) recoverable reserves net to Gulf Keystone, asper Scott Pickford Limited's Competent Persons Report, a full version of whichis published in the Company's AIM Admission Document. 3D Seismic Progress As announced in January, Gulf Keystone has signed a contract with E.NA.GEO (theAlgerian national seismic company) to conduct a 3D seismic survey on theCompany's Block 126a license, covering an area of 460 km2 over the south-westernportion of block 126a which includes the OBA, EKG, RTB-W and CEJ Triassicprospects. To date they have acquired approximately 110 km2 (24%) of the targetarea and expect completion of the seismic survey on the remaining area towardsthe end of June. Gulf Keystone believes the area has the potential for new discoveries onexploration prospects generated by the previous 2D surveys and may be on thestructural continuation of a nearby oil field discovered and produced bySONATRACH. This survey has two main purposes: - To more accurately map those exploratory prospects with significantreef potential that were indicated in the 2D survey - To better define the development drilling programme which thedirectors intend to commence following drilling of the Company's next plannedexploratory well RTBW-1, which the directors believe could be on a westerlyextension to SONATRACH's Ras Toumb Field in neighbouring Block 108 A further update on interpretation of the seismic data will be provided in duecourse. Todd Kozel, Chief Executive Officer and Vice President of Gulf Keystone said: "With the rig now operational, we are delighted to start the re-entry of GKS-3,to exploit the forecast upside potential. We are also very pleased with thelevel of seismic shot to date and look forward to completing the acquisition,processing and interpretation of the results later this year." Enquiries Evolution Securities 020 7071 4300 Stuart Andrews Citigate Dewe Rogerson 020 7638 9571 Martin Jackson/Kate Delahunty Notes to Editors Introduction Gulf Keystone has a Production Sharing Contract with SONATRACH, the AlgerianNational Oil Enterprise, for Block 126 in the north eastern area of Algeria nearto the Tunisian boarder. The Company has operated in the Algerian oil sectorsince 2001 and its management team has extensive experience in the NorthAfrican, Middle Eastern and United States operating and regulatory environments. Algeria Algeria is a member of OPEC (the Organisation of Petroleum Exporting Countries)and is estimated by an EIA Report to have proven reserves of 37.9 billion boe.These reserves are estimated to represent 0.9% of the world's crude oil reservesand 2.6% of the world's natural gas reserves. Algeria is the world's 16thlargest oil producer and the 6th largest gas producer, with its 2003 oilproduction totalling approximately 1.86 million bbl/d. Algeria is a majorexporter of oil and gas, and the National Council of Energy believes that thecountry contains vast undeveloped oil and gas reserves. Over the last fewyears, significant oil and gas discoveries have been made, largely by foreigncompanies in partnership with Sonatrach. Algeria's oil sector, unlike that ofmost OPEC countries, has been open to foreign investment for more than a decadeto assist with the development of its oil reserves. Business Block 126 is at an early stage of development. The Company intends to grow theproven and probable reserves by a programme of further drilling, testing andevaluation of the GKN field and the GKS, GRJ, OGZ and FKN discoveries. It isfurther intended to pursue the exploration drilling of identified prospects andleads. Block 126 had aggregate estimated remaining proven and probable reservesof approximately 221 MMboe of which Gulf Keystone's share is approximately 107MMboe. The Company considers that Block 126 has significant upside potential inpossible and lead prospective resources of 959.6 MMSTB and 2.6 Tcf of gas. Strategy Management intends to exploit its position as an independent exploration companyoperating in Algeria by continuing to drill exploratory wells on prospectsshowing strong perceived geophysical evidence of commercially viable oil and gasreserves. At the same time, it intends to continue to drill development wellsin fields containing proven reserves. Specifically, the Company currently intends to focus on (i) the development ofthe GKN field which contains a producing well; (ii) carrying out appraisal workon prospects GRJ, OGZ, GKS and FKN; (iii) conducting further exploration workson new prospects and leads on Block 126. The Company intends to participate infuture bid rounds to attempt to secure additional blocks in Algeria and toevaluate other oil and gas prospects in North Africa and the Middle East. Inaddition, the Company intends to seek opportunities to partner with new andexisting operators in Algeria such as SONATRACH. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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