Gulf Keystone Petroleum Ltd provides an operational update on the preparations for its 2010 drilling campaign in the Kurdistan Region of Iraq (Kurdistan).

Gulf Keystone also announces that it has completed a fully subscribed placing (the "Placing") of 20,915,034 new common shares of $0.01 (the "Placing Shares") at a placing price of 76.5p per share (the "Placing Price") raising gross proceeds of approximately £16 million ($24 million). These shares were placed by the Company and broker Fox-Davies Capital Limited with existing and new institutional shareholders. The net proceeds will be utilised towards funding the Company's ongoing operations in Kurdistan. Further funding will be required during the course of 2010 and the Company is considering its best funding strategy with its advisers.

Seismic surveys Gulf Keystone plans to commence the acquisition of 3D seismic over the Shaikan structure during the first quarter of 2010. This work will be conducted by Terraseis.

The acquisition of 3D seismic over the Sheikh Adi structure is planned in the event of a successful Sheikh Adi exploration well and following on from the seismic programme on Shaikan.

Shaikan-1 well work-over Gulf Keystone plans to deploy a work over rig on Shaikan-1 to conduct short term tests of several previously tested Jurassic targets, using an electric submersible pump. In addition, Gulf Keystone will perform a long term, extended well test (18 to 24 months) in order to deliver production from the initial, upper Jurassic discovery zone in Shaikan-1. Based on the current evaluated data, the Company believes that this extended well test will provide for the production and sale of approximately 8,000 to 10,000 bopd into the domestic Kurdistan oil market.

The bidding process for the work over rig on Shaikan-1 and the construction of oil production and truck loading facilities near the Shaikan-1 well site has been finalised and it is expected that these contracts will be awarded shortly.

Shaikan-2 appraisal well As previously announced, the Shaikan-2 appraisal well is planned to evaluate the Cretaceous, Jurassic and all zones in the Triassic in which total oil in place volumes of 1.9 (P90) to 7.4 (P10) billion barrels with a mean value of 4.8 billion barrels were discovered. The casing and wellhead design has been modified to allow the evaluation of all these zones including the upper Permian which lies immediately below the Triassic and which contains the high pressure zone that forced a halt to Shaikan-1 drilling.

Construction of the well location has been completed at a site 9km to the east southeast of Shaikan-1. Current plans are to spud this well in the second quarter of 2010. This well is expected to be drilled by the same Weatherford 842 rig that drilled Shaikan-1 and that is currently drilling the Bijeel-1 well on the Akri Bijeel block.

Tags: Gulf Keystone Petroleum