“Tell me something that I don’t know” seems to be the challenge that GKP have set out to answer with SH-4 tests.
The company already knows that they have high quality oil reservoirs via the electric logs data and previous wells on the Shaikan block. The market knows this too as does any future buyer or farm in partner. So what else is down there? Tell us something that we don’t know? Well – today, we now know that SH-4 and potentially other wells on the licence can flow around 24kbopd from the lower / poorer quality zones.
The share price has been depressed recently after Takeover rumours of Exxon eased and politics stagnated. But the company continues to demonstrate just how stunning Shaikan is as a Kurdistan asset. Furthermore, just last week Afren announced a potentially ‘transformational’ discovery just a few clicks from the Shaikan licence boundary.
It certainly seems like the entire licence area and the surrounding areas are full of the black stuff.
With Iraq’s 4th Bidding round in the south set to begin in May – there might be a few super majors looking to the north and thinking better opportunities await them. Exxon have already made their move – what are the others going to do? Sit and watch? I very much doubt it.
All eyes on SH-5 and SH-6 for GKP investors as both drills near conclusion. BB-1 operated by Genel is also around the corner in timeframes and could deliver a few surprises.
In March the CEO went on record as stating that an admission to the FTSE was firmly in their minds and that he had hoped this could be concluded in April/May.
The company is doing an analyst presentation in Kurdistan (site visit) in May which would make for a fine precursor to a jump from AIM. Many still believe that the FTSE regs might be more difficult for a bermuda based company to hurdle at present and that progress could be slow.
The company is also in the process of selling their interests in the AB block operated by MOL. Investors will be keen to see a result from this in the coming weeks as if it takes too much longer – some will begin to question funding plans for the planned pipeline and ramp up in production. Total of France have been rumoured to be interested in taking GKP’s AB interests. They recently showed a lack of interest in the 4th bidding rounds planned in May suggesting to many that they have eyes firmly on Kurdistan.
If all goes well, the next couple of months could see GKP in the FTSE when the Early June reshuffle kicks in. An escape from AIM will be a huge relief to many investors who prefer the less lively and better regulated FTSE 250 and 100 indexes.
23 April 2012, Gulf Keystone Petroleum Ltd. (AIM: GKP)
Shaikan-4 Well Test Achieves 24,000 bopd
The Company has completed the testing programme for the Shaikan-4 deep appraisal well, drilled 6 km to the west of the Shaikan-1 discovery well in the Kurdistan Region of Iraq.
The extensive well testing programme commenced in December 2011 after Shaikan-4 had drilled to a total depth (“TD”) of 3,387 metres. Preliminary results of the Shaikan-4 drilling operations were a significant contribution to the new data used by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants, to calculate an addition of over 3 billion barrels of gross oil-in-place volumes for the Shaikan discovery announced in November 2011.
In the course of the Shaikan-4 well testing programme the Company has conducted seven well tests in all target formations in the Triassic (Kurre Chine-A, Kurre Chine-B and Kurre Chine-C), Jurassic (Butmah and Lower and Upper Sargelu) and Cretaceous (Chia Gara). Additionally, the Company has performed an acidization and retest of the Sargelu formation interval as part of the well completion process.
As a result of the Shaikan-4 well testing programme, the Company has achieved total maximum aggregate flow rates of 24,000 barrels of oil per day (“bopd”).
Following the Company’s decision not to test portions of the well that appeared to be high quality oil reservoir on the electric logs, and where proven commercial flow rates had been achieved by testing previous wells on the Shaikan block, most of the tests have been conducted in zones which looked marginal on the well logs.
Within the total maximum aggregate number of 24,000 bopd, flow rates of about 4,500 bopd have been achieved in a new zone in the Jurassic Upper Sargelu, previously untested by the Company, and producible oil has been established in the Cretaceous Chia Gara for the first time, albeit at relatively low rates (130 bopd).
Following the conclusion of the Shaikan-4 well testing programme, the well is being completed as a producer and will be tied to the Shaikan-1 and Shaikan-3 Extended Well Test facility.
The Discoverer-4 rig will move to the drilling location of the Sheikh Adi-2 exploration well, north of the Sheikh Adi-1 exploration well, which is expected to spud in June 2012.
Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively.
John Gerstenlauer, Gulf Keystone’s Chief Operating Officer commented:
“Shaikan-4 is our best well drilled to date in the Kurdistan Region of Iraq in terms of the total net pay. These results are particularly impressive because we decided to focus most of our testing on multiple zones of the reservoir, which looked marginal on the well logs. This was done in order to assess the actual log properties required to have a viable producing interval. We have been pleasantly surprised by achieving good flow rates in a new zone in the Upper Sargelu in the Jurassic and finding producible oil in the Chia Gara in the Cretaceous for the first time. In addition, we have more than doubled our initial flow rates in the tested Sargelu interval to over 14,000 bopd following its acidization and retest.
The total maximum aggregate flow rates of 24,000 bopd are very significant for Gulf Keystone as we look forward to completing our appraisal of this massive structure with the Shaikan-5 and Shaikan-6 wells and gradually increasing our test production volumes from Shaikan to above 10,000 bopd in 2012. Clearly, Shaikan-4 is another important step forward toward achieving our goal of fully realizing the potential of the giant Shaikan discovery.”