Gulf Keystone’s Shaikan-1 re-testing shows Mus section’s rates up 10-fold to 1,250bopd

Gulf Keystone Petroleum’s (LON:GKP)on-going testing of the Shaikan-1 discovery well continues to improve what is already a major oil discovery. In its re-testing of the Mus section of the Jurassic formation, the company has demonstrated a 10-fold increase in natural flow rates to 1,250bopd  (barrels of oil per day).

The company also highlighted that, by using a low-capacity electric submersible pump (ESP) the rates increased further to 2,250bopd.

"This retest of the Mus formation demonstrates that even this very low GOR zone is capable of substantial natural flow production rates when properly configured,” Gulf Keystone COO John Gerstenlauer said.
“In addition, it gives us further encouragement for future development, having demonstrated significantly increased production values even with a low capacity ESP."

The Mus re-test provided final, stable production rates - 1,250bopd of 19.7 degree API oil and a gas-to-oil ratio (GOR) of 10scf (standard cubic feet) per barrel of oil. Initial tests in 2009 demonstrated flow rates of just 128bopd.

The work-over rig will now begin operations to complete the Shaikan-1 well in the Sargelu section of the Jurassic formation and the well will be configured for long term production testing.

Production testing is expected to last for at least 18 to 24 months, and it will accumulate valuable data related to reservoir characteristics and oil recovery factors.

Last week, after the re-test results from the Butmah section of the Jurassic in Shaikan-1, Gulf Keystone said has now demonstrated aggregate capacity of more than 20,000bopd “from just a fraction” of the Shaikan discovery.

The Shaikan-1 discovery was the company’s first exploration well in Kurdistan, Iraq, and it provided GKP with its key operational highlight in 2009. Shaikan-1 has an independently assessed resource in the range of 1.9bn barrels to 7.4bn barrels, with further upside potential identified. To date, appraisal of the Shaikhan discovery has encountered this significant resource across several formations - the Cretaceous Sarmord, Jurassic Barsarin, Sargelu, Alan, Mus, Butmah, Baluti and Triasic Kurre Chine.

Back in May, Gulf Keystone raised US$165m, through a fully subscribed institutional placing, to fund the 2010 and early 2011 Kurdistan work programmes.

A significant proportion of these funds are being used to double the company’s interest in Kurdistan, by taking full control of its former joint venture operating subsidiary.

On Monday, the company confirmed that amendments to its original Production Sharing Contracts (PSC) have now been approved by the Kurdistan Regional Government (KRG), which effectively green-lights the transaction.

Back in March 2010, Gulf Keystone announced its plans to assume 100% control of its GKPI operating subsidiary, following a material default by the company’s investment partner in Kurdistan, ETAMIC. The amendments to the PSCs reflect this structural change of ownership.