Gulf Keystone announces spudding of Sheikh Adi-2 exploration well

Source: Gulf Keystone Petroleum

Gulf Keystone is pleased to announce that the Sheikh Adi-2 exploration well spudded on the Sheikh Adi block in the Kurdistan Region of Iraq. The Sheikh Adi block is located immediately to the west of the Company's Shaikan block, which is a major discovery.

Sheikh Adi-2, the second exploration well on the block, is being drilled 1.45 km to the north of the Sheikh Adi-1 exploration well, which was drilled to a total depth ("TD") of 3,800 metres in August 2011. Based on the Sheikh Adi-1 well log results from the Cretaceous, Jurassic and the upper Triassic formations, gross oil-in-place resources of 1 billion to 3 billion barrels (P90 to P10 estimates) with a mean estimate of 1.9 billion barrels were assigned to the western part of the Sheikh Adi field by Dynamic Global Advisors, the independent Houston-based exploration consultants.

Sheikh Adi-2 will target prospective intervals in the Jurassic formation and has a planned TD of approximately 2,450 metres. The well is being drilled in the northern part of the Sheikh Adi structure with the Discoverer-4 rig, which had previously drilled the Shaikan-4 appraisal well. Based on detailed analysis of 215 km² of 3D data, which was fully processed in November 2011, this part of the structure appears to be more tightly folded and therefore the Board believes that it is more likely to have a well-developed system of natural fractures.

Gulf Keystone is the Operator of the Sheikh Adi block with an 80 per cent working interest, while the Kurdistan Regional Government has a 20 per cent carried interest.

John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:

"Sheikh Adi-2 is a significant addition to our extremely active 2012/2013 drilling programme in the Kurdistan Region of Iraq. To date, we have completed or are currently drilling 13 exploration and appraisal wells across the four blocks in the region in which we have interest. The location for this well has been carefully selected and we believe that with Sheikh Adi-2 we are targeting a section of the reservoir which is potentially more naturally fractured and much more similar to the Shaikan discovery. Our present goal is to prove up the impressive preliminary resource estimates for the Sheikh Adi block of 1 to 3 billion barrels of gross oil-in-place (P90 to P10 estimates), which were assigned by Dynamic Global Advisors as a result of the Sheikh Adi-1 drilling. In the future, this well will benefit from its proximity to the available infrastructure on the adjacent Shaikan block."

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