Kurdistan Operational Update on several wells and

exporting 5000bopd
I:\IRAQ FIELDS and PSC BLOCKS\KURDISTAN BLOCKS\Shaikan - Gulf Keystone
I:\IRAQ FIELDS and PSC BLOCKS\KURDISTAN BLOCKS\Sheikh Adi – Genel
I:\IRAQ FIELDS and PSC BLOCKS\KURDISTAN BLOCKS\Akri-Bijeel – Kalegran
I:\__OTHER OPERATORS\Gulf Keystone

23 May 2011
 Gulf Keystone Petroleum Ltd. (AIM: GKP)

Gulf Keystone today provides an update on its activities in the Kurdistan Region of Iraq.
Shaikan-2
Further to the Company's announcement on 22 March 2011, the Shaikan-2 deep appraisal well has now
drilled to a depth of 2,655 meters. The well is now in the top most section of the Triassic age formations
and the Company is running casing. 
Further to the announced testing of the Sargelu/Alan section, which achieved the stabilised flow rate of
8,064 bopd, logs and cores have now been obtained in the Mus and Butmah Jurassic sections.
Four cores totaling almost 30 meters have been recovered from the Mus formation, 23 meters of which
had excellent oil shows. An open hole test resulted in a significant flow, although a reliable oil
measurement could not be obtained due to technical limitations of the down hole tools. A similar zone
on Shaikan-1 achieved 2,250 bopd.
Five cores totaling almost 47 meters have also been recovered from the Butmah formation, 26 meters of
which had excellent oil shows. A similar zone on Shaikan-1 achieved 4,650 bopd on test.
This combination of core, log and flow test data indicates extensive oil columns and an impressive
similarity between the Jurassic section in Shaikan-2 and the same formations in Shaikan-1 (which
achieved a cumulative test rate of over 20,000 bopd from various geological horizons).
The forward plan is to drill through the Triassic section and possibly into the Permian.
After drilling of the well is complete cased hole flow tests in the Jurassic may be undertaken, a practice
which worked well on Shaikan-1 during the summer of 2010. This would allow an optimized testing
programme to be designed which will benefit from all of the information gathered during drilling of the
well and equipment to be sourced which will overcome the current technical limitations of the open
hole test tools. A similar approach may also be undertaken in the deeper zones but does not preclude
earlier open hole testing.
Sheikh Adi-1
The Sheikh Adi-1 exploration well has reached the Triassic and has cut a core in the Kurre Chine A at a
depth of 3,293 meters. The core of the Kurre Chine A contains good oil shows and a flow test is to be
undertaken shortly.
Prior to reaching the Triassic, logs and cores were obtained in the Jurassic sections, which show
hydrocarbon saturations and where 45 meters of net pay have been calculated. Gulf Keystone obtained
the following from the Jurassic net pay zones of interest:
A core totaling almost 13 meters was recovered from the Barsarin/ Sargelu Jurassic section which had
moderate oil shows. A test of this zone of interest recovered oil but no reliable flow rate measurement
could be obtained due to limited permeability.
·      A core of just over 12 meters was also obtained in the Butmah containing good oil shows.
In addition, log data indicates moveable oil in the Sargelu/ Alan (obtained in sections deeper than the
test zone), Mus and Butmah, all of which would be the target of a future potential test programme.
This recent Sheikh Adi-1 well data, along with early results of the 3D seismic interpretation, indicates
that the natural fracture system that makes the wells in the Jurassic intervals at Shaikan such prolific oil
producers, is significantly less extensive on the footwall of the Sheikh Adi structure. The main
significance of this is that the wells in this part of the structure, which are likely to flow oil at low rates,
may benefit from acid treatment and artificial fracturing in order to improve well productivity. The
Company has already demonstrated with Shaikan-1 and Shaikan-3 that small scale acid treatments can
lead to significantly improved production rates.   
Similar to Shaikan-2 an extensive cased hole testing program is currently being considered for the
Jurassic section of Sheikh Adi-1 after drilling of the well is complete, which may include limited artificial
fracturing, depending on equipment availability. This would allow an optimized testing programme to be
designed which will benefit from all of the information gathered during drilling of the well and
equipment to be sourced which will overcome the current technical limitations of the open hole test
tools. A similar approach may also be undertaken in the deeper zones but does not preclude earlier
open hole testing (as currently being progressed in the Kurre Chine A).
Gulf Keystone analysis indicates that due to the intense flexure of the Sheikh Adi structure a more
extensive natural fracture system is likely to be found on the other side of a major reverse fault, to the
north of the current well location. A well into this area is being considered.
 Shaikan-4
Shaikan-4, second deep appraisal well, 6 kilometers to the north-west of the Shaikan-1 discovery well, is
targeted to drill to the top of the Permian. The drilling rig is currently 98% rigged up at the well site, and
is expected to spud before the end of May.
Bekhme-1
Bekhme-1, second exploration well on the Akri-Bijeel block operated by Kalegran Ltd. (a 100% subsidiary
of MOL), is drilling ahead with 12.25 inch hole at a depth of 1,776 meters, in the upper sections of the
Jurassic.
Oil Export
Following a request from the Ministry of Natural Resources of the Kurdistan Regional Government
("KRG"), the Company is preparing to export up to 5,000 barrels of oil per day (bopd) from its Extended
Well Test ("EWT") facility at Shaikan. A number of operational, commercial and legal preparations are
required in order to be able to implement this request which the Company is currently undertaking.
Commencement of the export of oil is still subject to final approval of the KRG.
John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:
"We will soon have four exploration/appraisal wells underway in Kurdistan with further wells expected
to spud before the end of the summer. The Company's steady progress in the Shaikan-2 and Sheikh Adi-
1 drilling is highly encouraging and we look forward to obtaining more results from these two wells
soon. The Company views the recent announcement by the Kurdistan Regional Government confirming
release of the first oil export payment to the KRG as an extremely positive development for all the oil
producers in the Kurdistan Region of Iraq. This is especially good news for Gulf Keystone since we are
preparing to meet the KRG's request to begin oil export at an initial volume of up to 5,000 bopd of
crude".