Oil & Gas Corporate News
Gulf Keystone (BUY, £2.00) (GKP, 155.75p, ? (1.11%)) provided an update on its operations in the Kurdistan Region of Iraq. The recently constructed production test facilities near the location of the Shaikan-1 discovery well in the Shaikan Block are being commissioned. Initial flow rates are low to allow facility commissioning and will be kept low, pending receipt of oil assay results which will assist in determining a domestic sales price and allow finalisation of the oil sales contracts. Facility commissioning, assay finalisation and sales contract negotiation are expected to take several weeks. Test operations are well on track to reach the previously announced year end target production rate of 8,000-10,000bopd. The 18-24 month production test of the top-most reservoir in the Jurassic age section of Shaikan-1 will provide valuable information on production characteristics, market logistics and oil sales procedures within Kurdistan. In addition, these prefabricated production facilities will serve as a model for future testing and production of other potential oil accumulations on the acreage. Testing and evaluation are continuing on the MOL operated Bijeel-1 well in the Akri-Bijeel Block. The previous announcement of a 3,200 bopd test already makes this one of the more significant discoveries in Kurdistan. Additional testing and evaluation work are still ongoing. However, the initial indication of the oil-water contact in this well is supportive of the concept of a single regional aquifer; this further supports the upside oil volume scenario for all four blocks in which GKP has an interest. In addition, it appears that the Bijeel structure could be a southern extension of the much larger Bekhme structure. The Bekhme exploration well is planned for late 2010 or early 2011. On Sheikh Adi-1, following the sticking of the bottom hole assembly at a depth of 450m and the necessary sidetrack to drill around the obstruction, the well is now at 500m which is the 20" casing point. On the shallow Shaikan-3 appraisal well, near the site of Shaikan-1, the well is drilling ahead at 837m with the next casing point expected at 900m and the first zones of interest expected to be encountered soon after that.
Comment: All proceeding broadly according to plan, albeit with continuous delays at Bijeel-1. However the indication that the Bijeel-1 tests support the concept of a single regional aquifer and showing the Bijeel structure as an extension of the much larger Bekhme…
