Gulf Keystone Petroleum says that Gulf Keystone Petroleum International (50% GKP, 50% ETAMIC) has made a significant discovery at the Shaikan-1 exploration well. The well is located in the Shaikan Block, situated near the city of Dihok, approximately 85 kilometres North-West of Erbil in the Kurdistan region of Northern Iraq.

The well has encountered oil in the Sargelu formation at a depth of 1,450 to 1,510 meters. Shallow zone live oil shows within the formation were announced on 24 June 2009 on initial drilling. Preliminary test rates indicate 5,000 to 8,000 barrels of 21 to 22 degree API oil per day with wellhead pressures of 380 to 295 pounds per square inch. The measured oil properties for this section are comparable to the oil now being produced at the Tawke Field, located to the north west of the Shaikan Block.

Gulf Keystone will use this new data along with existing seismic and geological data to evaluate the potential resources discovered in this formation. GKP is currently using 300 to 500 million barrels of oil in place as a preliminary estimate for the tested interval.

In addition to these well test results, it should be noted that the primary zones of interest for the Shaikan-1 exploration well are the underlying Alan and Mus formations, in which we are targeting potential further oil bearing zones with possible oil in place values in excess of 1.5 billion barrels. Indications are that these formations will yield additional oil-bearing zones as we drill ahead to our next casing point at approximately 2,500 metres, following the current well test, before subsequently reaching final target depth at 3,200 to 3,500 metres, depending on well results.

Todd Kozel, Executive Chairman of Gulf Keystone, said, "We are excited by this initial discovery, the first ever successful oil flow test from the Sargelu formation in Iraq.

We are also encouraged by the implications of this initial discovery for the prospectivity of the remaining portion of the Shaikan-1 well, and the two recently acquired blocks to the west of Shaikan, especially the Sheik Adi Block (80% GKPI). These initial results offer an early validation of the company's decision to redefine its strategic focus on the Kurdistan Region of Iraq."

Tags: Gulf Keystone Petroleum