The Kurdistan Regional Government of Iraq (KRG) has awarded Gulf Keystone's subsidiary Gulf Keystone Petroleum International Limited (GKPI) significant interests in two Production Sharing Contracts (PSCs) for the exploration, development and production of hydrocarbon resources in the Sheikh Adi and Ber Bahr blocks of the Kurdistan Region of Northern Iraq.

Sheikh Adi

The Sheikh Adi block is situated north east of Dihok and lies to the west and on trend with the Shaikan structure. The block covers an area of 180 square kilometres. GKPI will operate and have an 80% interest in the Sheikh Adi PSC, which has an initial three year exploration phase commencing in July 2009. The Company believes that the block has hydrocarbon potential at multiple levels from Cretaceous, Jurassic, Triassic and Permian levels and has a mapped defined undrilled surface anticline covering approximately 32 square kilometres covered by modern seismic data.

Ber Bahr

The Ber Bahr block covers an area of 350 square kilometres and lies to the north of Dihok and on trend with the Shaikan and Sheikh Adi blocks. The Ber Bahr PSC is operated by Genel Energy International Limited and has an initial two year exploration phase which commenced in March 2009. Gulf Keystone has a 40% interest in the Ber Bahr PSC. The Company believes that the block has hydrocarbon potential at Jurassic, Triassic and Permian levels. The block has a mapped undrilled surface anticline covering an area of approximately 45 square kilometres in 2 lobes and is covered by a modern 2D seismic grid.

The work programmes for both blocks include the drilling of one exploratory well on each block using current, existing and to be acquired data. Both PSCs are subject to a 20% KRG carry and no third party back in rights.

Gulf Keystone's technical team anticipates that the potential combined prospective resources of both blocks will be in excess of a billion barrels of oil in place. GKPI will be working towards an accelerated drilling programme with a possible well spud in 2010.

These two new PSCs are in addition to GKPI's existing PSCs, Shaikan (75% interest, operated by Gulf Keystone and on which exploration well Shaikan-1 is currently drilling) and Akri Bijeel (20% interest, operated by MOL).

Tags: Gulf Keystone Petroleum