Gulf Keystone Petroleum (LON:GKP) has raised US$165m (£114.2m) through a fully subscribed institutional placing, to fund the remainder of its 2010 and early 2011 work programmes in the Kurdistan region in Iraq.

The group flagged it would be seeking to raise more funds later in the year when it announced a £16 mln fundraising in March to fund its ongoing activities in Kurdistan.

After receiving positive results from the early stages of its drilling campaigns, the company intends to follow-up with an extended production test and three new appraisal wells in the Shaikan block, drill an exploration well in the Sheikh Adi block, and complete its on-going seismic acquisition.

"The sums raised secure our development and appraisal program across Gulf Keystone's assets in Kurdistan for the coming months”, Gulf Keystone Chairman and CEO Todd Kozel commented. “The results of the early stages of GKP's 2010 work programme have been very positive and we do not want to lose this momentum.

“We have already made two discoveries and still have two blocks and a number of appraisal wells to drill. While we still have a lot of work ahead of us, we are very excited about our prospects," he added.

Gulf Keystone issued 152.3 million shares with existing and new institutional shareholders, at 75p each. The shares were placed by Mirabaud Securities, Renaissance Capital, Fox-Davies Capital and Madison Williams & Company. The company expects the new shares to be admitted to the AIM market on 28 May 2010.

The company also updated investors on its current progress in Kurdistan, and its upcoming work schedule. At the Shaikan-1 well, where Gulf Keystone initially discovered the oil structure in 2009, the company intends to carry-out a number of production tests.

A work-over rig, contracted from Arar Petrol Ve Gaz Arama Uretim Pazarlama, is scheduled to arrive at the beginning of June. Firstly, Gulf Keystone will conduct short term production testing of several previously tested Jurassic targets - DST zones 2 and 3 - using an electric submersible pump.

Subsequently, an extended well test will be performed in the initial upper Jurassic discovery zone (DST-1). The company noted that, based on current evaluated data, this zone believed to be capable of a flow-rate of approximately 8,000 to 10,000 barrels of oil per day (bopd).

A temporary production facility is currently under construction, and the facility will receive the hydrocarbon flows from the tests. Gulf Keystone said that the first shipment of equipment for the facility is expected to be dispatched from Canada this month, and production expected to commence in August 2010.

Gulf Keystone highlighted that the Shaikan structure has an estimated total oil-in-place volumes of 1.9-7.4bn barrels, with a mean value of 4.2bn barrels.

The first appraisal well drilled on the Shaikan structure, Shaikan-2, will evaluate the Cretaceous, Jurassic and all zones in the Triassic through to the Permian. Located 9km to the east of Shaikan-1, the well will be drilled by the WDI rig-842 which is expected to arrive from the Akri-Bijeel Block towards the end of this month.

The second appraisal well, Shaikan-4, will be drilled 6km to the west of Shaikan-1 and it will will appraise all zones down to and including the upper Triassic, with an option to extend down to the Permian. Shaikan-4 is scheduled for ‘spudding’ in Q4 2010. Shaikan-3, to be drilled near Shaikan-1, will target the shallow Cretaceous zone. The well will be drilled by the work-over rig, currently operating at SH-1B, and it is expected to spud in Q3 2010.

The Sheikh Adi-1 exploration well will explore all zones down to and including the upper Permian and is on schedule to spud in the third quarter of 2010. The company also noted that the Bijeel-1 exploration well, which is being operated by its Akri Bijeel JV partner MOL, is very near final target depth, and MOL is still conducting operations to test and evaluate recent drilling results.

The on-going 3D seismic acquisition over the Shaikan structure began in April, to date 14% of the 530km2 survey has been completed. Gulf Keystone expects the survey will be completed by September 2010. Additionally the company noted that it may extend the seismic survey to cover the Sheikh Adi block, in the event of encouraging early results from the planned exploration well.

Daniel Stewart and Co featured Gulf Keystone in its 'Morning Notes', saying it expects the news to be welcomed by the market, as it removes the risks of funding and timing. The broker also noted that the funds may also be used for any future increase in the group's interests in Kurdistan assets.

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