Gulf Keystone Petroleum Ltd.
Not for release, publication or distribution, directly or indirectly, in or into the United States or any jurisdiction other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws or regulations of such jurisdiction. This announcement (and the information contained herein) does not contain or constitute an offer to sell or the solicitation of an offer to purchase, nor shall there be any sale of securities in any jurisdiction where such offer, solicitation or sale would constitute a contravention of the relevant laws or regulations of such jurisdiction.
13 March 2014
Gulf Keystone Petroleum Ltd. (AIM: GKP)
("Gulf Keystone" or "the Company")
Third-Party Audit of the Company's Kurdistan Reserves and Contingent Resources
Baseline indication of 12.5 billion barrels of gross oil in place and 1.2 billion barrels of oil of combined gross 2P and 2C recoverable reserves and resources
Gulf Keystone today announces the release of the first third-party evaluation of the Company's Reserves, Contingent Resources and Prospective Resources for the Shaikan field and its other petroleum interests in the Kurdistan Region of Iraq. The release of the Competent Persons Report ("CPR") is a key component in the Company's planned move from AIM to the standard segment of the Official List of the United Kingdom Listing Authority (the "Official List") and is an important step in Gulf Keystone's transition from an independent oil and gas exploration company to an exploration and production company.
The CPR was prepared by ERC Equipoise Limited and is available on Gulf Keystone's website at http://www.gulfkeystone.com/investor-centre/presentations-and-technical-reports.
Gulf Keystone is pleased to announce that the CPR identifies 12.5 billion barrels of gross oil in place and 1.2 billion barrels of oil of combined gross 2P and 2C recoverable reserves and resources across the Company's portfolio in the Kurdistan Region of Iraq, comprising the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.
All 2P reserves and the majority of 2C contingent resources have been identified within the Company-operated assets of Shaikan and Sheikh Adi, and most of these reserves and resources, based on current information, are in the Jurassic formation. 299 million barrels of gross 2P oil reserves in the Jurassic formation of the Shaikan field have been assigned on the basis of the planned 26 development wells of the Shaikan FDP Phase 1, which is fewer than 25% of approximately 109 wells currently envisaged for the Shaikan full field development.
Todd Kozel, Gulf Keystone's Chief Executive Officer commented:
"The release of this Competent Person's Report marks a significant milestone in the evolution of Gulf Keystone. We commenced commercial production at the Shaikan field in July 2013 and now, with the release of our first audited, third-party estimate of our reserves and contingent resources, we have a baseline in place against which to measure future progress.
This report represents a conservative estimate based solely on reserves which are being targeted with 26 wells representing less than 25% of all wells currently envisaged for the Shaikan development. The CPR does not take into account undrilled and untested horizons and we see a clear route for unlocking the upside to these 2P and 2C numbers through drilling more wells and thus obtaining a better understanding of the oil water contact levels and the actual fracture porosity. Meanwhile, conversion from 2C to 2P will be driven by approval of the next phase of the Shaikan development."
The table below represents the CPR's conclusions on the Oil in Place, 2P reserves and 2C contingent resources on a gross as well as a net basis:
|
|
GKP WI (diluted) |
Gross |
Net, diluted WI to GKP |
|
|
|
Oil (mmbbls) |
Gas (bcf) |
Total (mmboe)(1) |
Oil (mmbbls) |
Gas (bcf) |
Total (mmboe)(1) |
|
|
STOIIP (Best) |
|
|
|
|
|
|
|
|
|
Shaikan |
54.4% |
9,215 |
988 |
9,380 |
5,013 |
537 |
5,103 |
|
|
Sheikh Adi |
80.0% |
2,256 |
- |
2,256 |
1,805 |
- |
1,805 |
|
|
Ber Bahr |
40.0% |
656 |
- |
656 |
262 |
- |
262 |
|
|
Bijel |
12.8% |
371 |
- |
371 |
47 |
- |
47 |
|
|
Bakrman |
12.8% |
8 |
- |
8 |
1 |
- |
1 |
|
|
Total |
|
12,506 |
988 |
12,671 |
7,129 |
537 |
7,218 |
|
|
2P reserves |
|
|
|
|
|
|
|
|
|
Shaikan |
54.4% |
299 |
- |
299 |
163(2) |
- |
163 |
|
|
2C resources |
|
|
|
|
|
|
|
|
|
Shaikan |
54.4% |
702 |
575 |
798 |
382 |
313 |
434 |
|
|
Sheikh Adi |
80.0% |
152 |
36 |
158 |
122 |
29 |
127 |
|
|
Ber Bahr |
40.0% |
22 |
4 |
23 |
9 |
2 |
9 |
|
|
Akri Bijeel |
12.8% |
41 |
10 |
43 |
5 |
1 |
5 |
|
|
Bakrman |
12.8% |
2 |
3 |
3 |
- |
- |
- |
|
|
Total |
|
919 |
628 |
1,024 |
518 |
345 |
576 |
|
|
2P + 2C |
|
1,218 |
628 |
1,323 |
681 |
345 |
739 |
|
|
Overview of GKP blocks and working interest |
|
|
|
Blocks |
WI |
Diluted |
|
WI: Working interest |
|
|
Shaikan(2) |
80%(3) |
54.4%(3) |
|
mmbbls: Million barrels |
|
|
Sheikh Adi |
80% |
80% |
|
mmboe: Million barrels oil equivalent |
|
|
Ber Bahr |
40% |
40% |
|
bcf: Billion cubic feet |
|
|
Bijeel/Bakrman(2) |
20% |
12.8% |
|
|
|
Note: Reserves and resources as at 1 January 2014 |
(1) 6bcf of gas = 1mmboe (2) GKP holding subject to third party and KRG back-in rights (3) Inclusive of Texas Keystone's 5% (undiluted) holding in Shaikan held in trust for GKP |
Source: March 2014 ERC Equipoise CPR |
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The CPR establishes an NPV valuation using a 10% discount rate of US$1,004 million nominal based on the Company's net entitlement and a 'base case' oil price scenario. The assumptions dealing with the derivation of the 2P valuation are contained in the CPR Section 9 'Shaikan Fiscal Terms' and should be referred to in order to understand the basis of calculation.
The Company calculates that the 163 million barrels of Working Interest 2P oil reserves, representing the Company's 54.4% working interest in Shaikan, would equate to 10% NPV of US$6.16 per barrel. The CPR has not made a separate valuation of the 2C or prospective resources, which as noted above substantially exceed the 2P reserves at this early stage of development. Any valuation of the working interest barrels of the 2C or prospective resources cannot be simply derived from using the CPR 2P 10% NPV $6.16 per barrel and would require a further computation and application of the various PSC terms.
The CPR is an important baseline indication of resources and reserves, with potential for future increases through the implementation of Phase 1 of the Shaikan Field Development Plan and its further project phases, which will include the drilling of a substantial number of development wells, acquisition of additional production data from the existing and additional production facilities and further exploration drilling in and development of the Cretaceous, Triassic and potentially Permian formations.
The company will host a presentation to analysts on the CPR at 11.30 a.m. today. A webcast of the presentation will be available on the Company's website at http://www.gulfkeystone.com/.
Enquiries:
Gulf Keystone Petroleum: |
+44 (0) 20 7514 1400 |
Simon Murray, Non-Executive Chairman |
|
Todd Kozel, Chief Executive Officer |
Anastasia Vvedenskaya, Investor Relations |
|
|
|
Strand Hanson Limited |
+44 (0) 20 7409 3494 |
Stuart Faulkner / Rory Murphy / James Harris |
|
|
|
Mirabaud Securities LLP |
+44 (0) 20 7878 3362 |
Peter Krens |
|
|
|
Bell Pottinger |
+44 (0) 20 7861 3232 |
Mark Antelme / Henry Lerwill |
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John Gerstenlauer, the Company's Chief Operating Officer, who has over 36 years of relevant experience within the sector and meets the criteria of a qualified person under the AIM note for mining, oil and gas companies, has reviewed and approved the technical information contained in this announcement. Mr. Gerstenlauer is a member of the Society of Petroleum Engineers.
or visit: www.gulfkeystone.com
Notes to Editors:
· Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company focused on exploration in the Kurdistan Region of Iraq.
· Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four exploration blocks in Kurdistan, including the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.
· GKPI is the Operator of the Shaikan Block, which is a major commercial discovery, with a working interest of 75% and is partnered with Kalegran Ltd. (a 100% subsidiary of MOL Hungarian Oil and Gas plc.) and Texas Keystone Inc., which have working interests of 20% and 5% respectively. Texas Keystone Inc. holds its interest in trust for Gulf Keystone, pending transfer of its interest to the Company.
· Gulf Keystone is moving into the large-scale phased development of the Shaikan field targeting 100,000 barrels of oil per day of production during Phase 1, following the approval of the Shaikan Field Development Plan in June 2013.
Disclaimer
This announcement contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent uncertainties, including both economic and business factors, underlying such forward-looking information. This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. This announcement should not be relied on by any other party or for any other purpose.
Not for release, publication or distribution, directly or indirectly, in or into the United States or any jurisdiction other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws or regulations of such jurisdiction. This announcement (and the information contained herein) does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States or any jurisdiction where to do so would constitute a contravention of the relevant laws or regulations of such jurisdiction. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available. No public offering of the securities will be made in the United States.
