- Shares in Gulf Keystone (LON:GKP) rose after it gave a detailed update on its ongoing exploration and appraisal programme in the Kurdistan region of Iraq.

This includes the Shaikan block, a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels calculated on the P90 to P10 basis with a mean value of 10.5 billion barrels.

Gulf Keystone says it continues a well testing programme for the Shaikan-4 appraisal well, drilled 6 km to the west of the Shaikan-1 discovery well, targeting several formations in the Jurassic and Triassic.

One well test in the Triassic has been completed and six further tests are planned. Once the testing programme has been completed in all target formations the Company will make the appropriate announcement.

The Shaikan-5 appraisal well, 6 km to the north-east of the Shaikan-2 appraisal well, is currently drilling at a measured depth of 1,008 metres.

After slower than expected drilling progress due to temporary hole stability issues encountered in the shallow formations, the well is now drilling ahead to the estimated total depth of 3,500 metres subject to technical conditions. 

The Shaikan-6 appraisal well, 9 km to the east of the Shaikan-2 appraisal well, has drilled to a measured depth of 362 metres and 26-inch casing has been set. 

The well will drill to the estimated TD of 3,800 metres subject to technical conditions. 

The company says that as part of the ongoing extended well test on the Shaikan block, the output from the Shaikan-1 and 3 EWT facility has been at an average level of 2,520 barrels gross of oil per day from the latter part of November through to the end of 2011, totalling 103,328 barrels gross as of 31 December. 

At the end of 2011, Shaikan test production levels were in excess of 4,000 barrels gross of oil per day and are due to increase further after the ongoing upgrade of the Shaikan-1 and 3 EWT facility has been completed and additional test production facilities have been designed and built. 

The upgraded and additional EWT facilities will allow test production of Shaikan crude to export specification and a subsequent ramp-up of the company's export operations. 

Gulf Keystone is the operator of the Shaikan block with a working interest of 75% and is partnered with Kalegran Ltd, a subsidiary of MOL Hungarian Oil and Gas, and Texas Keystone Inc which have working interests of 20% and 5% respectively. 

Gulf Keystone says that according to the operator's Akri-Bijeel block operational update and 2012 outlook issued on 28 December, the exploration and appraisal programme will continue with two exploration wells (Barkman-1 and Gulak-1) and four appraisal wells (Aqra-1, Bijell-2, Qalati-1 and Qandagul-1) to be drilled in 2012. 

Following the completion of the Bekhme-1 exploration well testing programme, after the well reached TD at 5,000 metres in the Triassic, the rig is currently moving to the Aqra-1 appraisal well drilling location with the well expected to be tested in the second half of 2012. 

While no commercial inflow of hydrocarbons was encountered in Bekhme-1, new data gained during the well testing programme is a significant contribution to the continuously improving knowledge of this unexplored region, decreasing uncertainty for the remaining Akri-Bijeel prospects.

In addition to the envisaged acquisition of a significant amount of 3D seismic data over the Bijell discovery area, an extended well test is planned for the Bijell-1 discovery well in 2012, similar to the ongoing successful Shaikan-1 & 3 extended well test. 

The operator plans to build a surface facility with 10,000 barrels of oil equivalent gross capacity and a 30,000 barrels storage capacity by the third quarter of 2012. 

Gulf Keystone has a 20% working interest in the Akri-Bijeel block operated by Kalegran.

Gulf Keystone says the first exploration well on the Ber Bahr block is drilling at a measured depth of 2,418 metres in the Triassic to the estimated TD of 3,000 metres subject to technical conditions. 

Gulf Keystone has a 40% working interest in the Ber Bahr block operated by Genel Energy.