Gulf Keystone Petroleum Regulatory News (GKP)

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23 May 2011

Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")

Kurdistan Operational Update

Gulf Keystone today provides an update on its activities in the Kurdistan Region of Iraq.

Shaikan-2

Further to the Company's announcement on 22 March 2011, the Shaikan-2 deep appraisal well has now drilled to a depth of 2,655 meters. The well is now in the top most section of the Triassic age formations and the Company is running casing.

Further to the announced testing of the Sargelu/Alan section, which achieved the stabilised flow rate of 8,064 bopd, logs and cores have now been obtained in the Mus and Butmah Jurassic sections.

Four cores totaling almost 30 meters have been recovered from the Mus formation, 23 meters of which had excellent oil shows. An open hole test resulted in a significant flow, although a reliable oil measurement could not be obtained due to technical limitations of the down hole tools. A similar zone on Shaikan-1 achieved 2,250 bopd.

Five cores totaling almost 47 meters have also been recovered from the Butmah formation, 26 meters of which had excellent oil shows. A similar zone on Shaikan-1 achieved 4,650 bopd on test.

This combination of core, log and flow test data indicates extensive oil columns and an impressive similarity between the Jurassic section in Shaikan-2 and the same formations in Shaikan-1 (which achieved a cumulative test rate of over 20,000 bopd from various geological horizons).

The forward plan is to drill through the Triassic section and possibly into the Permian.

After drilling of the well is complete cased hole flow tests in the Jurassic may be undertaken, a practice which worked well on Shaikan-1 during the summer of 2010. This would allow an optimized testing programme to be designed which will benefit from all of the information gathered during drilling of the well and equipment to be sourced which will overcome the current technical limitations of the open hole test tools. A similar approach may also be undertaken in the deeper zones but does not preclude earlier open hole testing.

Sheikh Adi-1

The Sheikh Adi-1 exploration well has reached the Triassic and has cut a core in the Kurre Chine A at a depth of 3,293 meters. The core of the Kurre Chine A contains good oil shows and a flow test is to be undertaken shortly.

Prior to reaching the Triassic, logs and cores were obtained in the Jurassic sections, which show hydrocarbon saturations and where 45 meters of net pay have been calculated. Gulf Keystone obtained the following from the Jurassic net pay zones of interest:

·; A core totaling almost 13 meters was recovered from the Barsarin/ Sargelu Jurassic section which had moderate oil shows. A test of this zone of interest recovered oil but no reliable flow rate measurement could be obtained due to limited permeability.

·; A core of just over 12 meters was also obtained in the Butmah containing good oil shows.

In addition, log data indicates moveable oil in the Sargelu/ Alan (obtained in sections deeper than the test zone), Mus and Butmah, all of which would be the target of a future potential test programme.

This recent Sheikh Adi-1 well data, along with early results of the 3D seismic interpretation, indicates that the natural fracture system that makes the wells in the Jurassic intervals at Shaikan such prolific oil producers, is significantly less extensive on the footwall of the Sheikh Adi structure. The main significance of this is that the wells in this part of the structure, which are likely to flow oil at low rates, may benefit from acid treatment and artificial fracturing in order to improve well productivity. The Company has already demonstrated with Shaikan-1 and Shaikan-3 that small scale acid treatments can lead to significantly improved production rates.

Similar to Shaikan-2 an extensive cased hole testing program is currently being considered for the Jurassic section of Sheikh Adi-1 after drilling of the well is complete, which may include limited artificial fracturing, depending on equipment availability. This would allow an optimized testing programme to be designed which will benefit from all of the information gathered during drilling of the well and equipment to be sourced which will overcome the current technical limitations of the open hole test tools. A similar approach may also be undertaken in the deeper zones but does not preclude earlier open hole testing (as currently being progressed in the Kurre Chine A).

Gulf Keystone analysis indicates that due to the intense flexure of the Sheikh Adi structure a more extensive natural fracture system is likely to be found on the other side of a major reverse fault, to the north of the current well location. A well into this area is being considered.

Shaikan-4

Shaikan-4, second deep appraisal well, 6 kilometers to the north-west of the Shaikan-1 discovery well, is targeted to drill to the top of the Permian. The drilling rig is currently 98% rigged up at the well site, and is expected to spud before the end of May.

Bekhme-1

Bekhme-1, second exploration well on the Akri-Bijeel block operated by Kalegran Ltd. (a 100% subsidiary of MOL), is drilling ahead with 12.25 inch hole at a depth of 1,776 meters, in the upper sections of the Jurassic.

Oil Export

Following a request from the Ministry of Natural Resources of the Kurdistan Regional Government ("KRG"), the Company is preparing to export up to 5,000 barrels of oil per day (bopd) from its Extended Well Test ("EWT") facility at Shaikan. A number of operational, commercial and legal preparations are required in order to be able to implement this request which the Company is currently undertaking. Commencement of the export of oil is still subject to final approval of the KRG.

John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:

"We will soon have four exploration/appraisal wells underway in Kurdistan with further wells expected to spud before the end of the summer. The Company's steady progress in the Shaikan-2 and Sheikh Adi-1 drilling is highly encouraging and we look forward to obtaining more results from these two wells soon. The Company views the recent announcement by the Kurdistan Regional Government confirming release of the first oil export payment to the KRG as an extremely positive development for all the oil producers in the Kurdistan Region of Iraq. This is especially good news for Gulf Keystone since we are preparing to meet the KRG's request to begin oil export at an initial volume of up to 5,000 bopd of crude".

Enquiries:

or visit: www.gulfkeystone.com

John Gerstenlauer, the Company's Chief Operating Officer, who has 31 years of relevant experience within the sector and meets the criteria of a qualified person under the AIM note for mining, oil and gas companies, has reviewed and approved the technical information contained in this announcement. Mr. Gerstenlauer is a member of the Society of Petroleum Engineers.

Notes to Editors:

§ Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company with operations in the Kurdistan Region of Iraq.

§ Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for fourexploration blocks in Kurdistan.

§ The Company's shares have traded on the AIM market since listing on 8th September 2004.

§ Gulf Keystone Petroleum Limited is registered in Hamilton, Bermuda with further offices in Erbil, Kurdistan Region of Iraq, Algiers, Algeria and London, UK.

Not for release, publication or distribution, directly or indirectly, in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction. This document (and the information contained herein) does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available. No public offering of the securities will be made in the United States.