Gulf Keystone has been agreed that pursuant to the provisions of the Production Sharing Contract regarding the Shaikan Block as amended and the Production Sharing Contract regarding the Akri-Bijeel Block as amended, the Third Party Assignment Options held by the Kurdistan Regional Government of Iraq under the terms of Article 4 of the respective Production Sharing Contracts remain valid and exercisable.

After the Government of the Kurdistan Region of Iraq has exercised its Third Party Assignment Option in the Shaikan and Akri-Bijeel Production Sharing Contracts (PSCs), the respective PSCs will be further amended and Gulf Keystone will issue an appropriate announcement.

Gulf Keystone is the Operator of the Shaikan Block with a working interest of 75 per cent and is partnered with Kalegran (a 100 per cent subsidiary of MOL Hungarian Oil and Gas) and Texas Keystone Inc, which have working interests of 20 per cent and 5 per cent respectively. Texas Keystone holds its 5 per cent interest in trust for Gulf Keystone pending the transfer of its interest to the Company. Shaikan is a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels calculated on the P90 to P10 basis with a mean value of 10.5 billion barrels.

Gulf Keystone has a 20 per cent working interest in the Akri-Bijeel Block operated by Kalegran, a 100 per cent subsidiary of MOL Hungarian Oil and Gas, which holds 80 per cent working interest in the block. Operator's P50 resource estimate for the Akri-Bijeel block is 2.4 billion barrels of oil-in-place.

The Kurdistan Regional Government (KRG) is a party to the four PSCs signed by Gulf Keystone in relation to its assets in the Kurdistan Region of Iraq. According to the PSCs regarding the Shaikan block and the Akri-Bijeel block, the KRG has a right to exercise the Third Party Assignment Option, i.e. to nominate a Third Party Participant and assign the Third Party Interest. In addition, the KRG has back-in-rights in both the Shaikan block and the Akri-Bijeel block. Should the KRG exercise these rights in full, it is anticipated that the Company's interest in the Shaikan and the Akri-Bijeel blocks will be 51 per cent and 12.8 per cent respectively.

Pursuant to the provisions of the respective PSCs, the Company's past costs in relation to the Third Party Interest will be reimbursed to Gulf Keystone by the nominated Third Party Participant.

Tags: Gulf Keystone Petroleum