Gulf Keystone Petroleum Regulatory News (GKP)

7 Nov 2007 07:01

Gulf Keystone Petroleum Ld07 November 2007 Not for release, publication or distribution in or into jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction GULF KEYSTONE PETROLEUM LIMITED ("Gulf Keystone" or the "Company") PRODUCTION SHARING CONTRACT SIGNED WITH THE KURDISTAN REGIONAL GOVERNMENT ON SHAIKAN EXPLORATION BLOCK AND PARTICIPATION INTEREST IN AKRI-BIJEEL EXPLORATION BLOCK Signature of interest in Shaikan Block Gulf Keystone Petroleum Limited (AIM: GKP), an independent oil & gas explorationcompany, today announces that, in partnership with Kalegran Ltd ("Kalegran"), asubsidiary of MOL Hungarian Oil and Gas Public Limited Company ("MOL") and TexasKeystone Inc. ("Texas Keystone"), its subsidiary Gulf Keystone PetroleumInternational Limited ("GKPL") has signed a Production Sharing Contract ("PSC")with the Kurdistan Regional Government ("KRG"), for the exploration, developmentand production of hydrocarbon resources in the Shaikan Block in the Dihok areaof the Kurdistan Region in Northern Iraq. The Shaikan Block is situatedapproximately 85 kms North-West of Erbil and covers an area of 283 square kms. The interests under the PSC are GKPL 75%, Kalegran 20% and Texas Keystone 5%.Texas Keystone, a private American exploration and production company, initiallyled the pursuit of opportunities in the Kurdistan Region and participated in thesuccessful signature of this PSC for the Shaikan Block. In return for TexasKeystone's continuing participation, Gulf Keystone will carry Texas Keystone's5% share of initial costs and expenses prior to drilling the first well. GKPL will operate the Shaikan Block. The planned work programme includes theacquisition, processing and interpretation of 100 kilometres of 2D seismic andthe drilling of one exploratory well. The commercial terms of the PSC are inline with the terms and conditions published by the Kurdistan RegionalGovernment on its website. Participation interest in Akri-Bijeel Block In consideration for introducing Kalegran into the Shaikan partnership, GKPL hasreceived a 20% interest, on a ground floor basis, in the MOL operated PSCcovering the Akri-Bijeel Block. The Akri-Bijeel Block is adjacent to the ShaikanBlock. The interests in this PSC are Kalegran 80% and GKPL 20%. The commercialterms of the PSC are in line with the terms and conditions published by theKurdistan Regional Government on its website. This exchange of acreageparticipation between Kalegran and GKPL was carried out with the consent of theKurdistan Regional Government concurrently with the execution of the PSCagreements. In Akri-Bijeel, Kalegran plans to acquire some 200 line km of 2D seismic and hasan option to drill an exploration well within the first 3 year term. Both the PSCs have a duration of 25 years, and an initial 3 year explorationphase. Gulf Keystone's expected total expenditure for these two blocks over thenext three years, given its current interests, is approximately US$53 million,the majority of which is expected to be incurred over the next six months. Thisestimate includes GKP's share of general and administration costs, seismicacquisition and processing, drilling costs and initial signature bonuses. David Mackertich, Executive Vice President Exploration, said: "Since the opening of our Erbil office, in January 2007, we have undertaken asignificant amount of technical work which has enabled us to identify thepotential opportunity that these two blocks offer. The Shaikan structure appears to cover a significant portion of the block, andthe possibility exists for multiple reservoir targets as is common in manyfields across Iraq. Our initial exploration programme will be targeted attesting what is known as the Shaikan structure, which we believe resides in aplay fairway which we consider extends across the region and includes the recentTawke discovery. The Tawke Field lies in the adjacent block and some 60 km tothe north-west of the Shaikan Block. We plan to acquire our 2D seismic data in Q1/Q2 2008 and drill our firstexploration well later in that year. We believe the Akri-Bijeel Block offers complementary prospectivity to that seenin the Shaikan Block". Todd Kozel, Chairman and Chief Executive Officer, commented: "Gulf Keystone is delighted to have concluded the Shaikan PSC with the KurdistanRegional Government and its partners MOL and Texas Keystone. We are lookingforward to commencing operations and getting the work programme underway in thishighly prospective area. We are also pleased to be partnering with MOL on itsAkri-Bijeel Block which is adjacent to the Shaikan Block. This will give GulfKeystone exposure to a wider portfolio of exploration opportunities within theKurdistan Region, and a further opportunity for close co-operation with itspartners in the Kurdistan Region." Notes to Editors Texas Keystone is an independent privately owned oil and gas company. TexasKeystone is a related party of Gulf Keystone because Mr Todd Kozel is a nonexecutive director of and a significant shareholder in Texas Keystone. Enquiries: Gulf Keystone Petroleum +44 207 514 1400Todd KozelAli Al-Qabandi Citigate Dewe Rogerson +44 207 638 9571Media enquiries: Martin JacksonAnalyst enquiries: Kate Delahunty Hoare Govett Limited +44 207 678 8000Andrew FosterStephen Bowler Tristone +44 207 355 5800Simon Ashby-Rudd This information is provided by RNS The company news service from the London Stock Exchange