Gulf Keystone (LON:GKP) has said drilling is underway on the Shaikan-6 well in Kurdistan.
Work began on December 16 on this, the company’s fourth deep appraisal well and the tenth in total across all its projects in the semi-autonomous region of northern Iraq.
Chief operating officer John Gerstenlauer said: “This number of completed and current exploration and appraisal wells comfortably places Gulf Keystone among top three operators in the region.
“As part of our high impact drilling campaign, planned and funded through 2012, the Shaikan-5 and Shaikan-6 appraisal wells will provide us with better understanding of the flanks of the massive Shaikan structure and its yet untapped resources.
Shaikan is estimated to contain 8 billion barrels of crude calculated on a P90 basis – meaning the oil has a 90 per cent certainty of being produced. The P10 value is 13.4 billion barrels, giving a mean figure of10.5 billion barrels.
The world class nature of the block and the company’s other assets mean GKP is now being talked about as a potential bid target – so much so it was yesterday forced to deny takeover speculation swirling the Square Mile.
Shaikan is the company’s most advanced prospect and has the potential to be the world’s next super-giant oil find. The company currently holds a 75 per cent interest.
According to analysts the nearby Ber Bahr field could be even bigger.
It is operated by Turkish outfit Genel Energy, which has a 40 per cent interest, as has Gulf Keystone. The remainder is owned by the Kurdistan Regional Government.
Gulf Keystone has a 20 percent working interest in the Akri-Bijeel, which is operated by of MOL Group, which holds an 80 percent working interest in the block.
And it recently announced plans to sell its interest in this field to concentrate on other prospects.
Gulf Keystone has made remarkable progress in the last 18 months with a high impact drilling programme that wouldn’t look out of place at one of the larger independents.
A recent US$200 million share placing underlined the shareholder support the company enjoys and has allowed the explorer to move full throttle into the next phase of development.
In a research note published recently, American investment bank Citi said Kurdistan is set for a “major period of news flow” as independent exploration companies embark on ambitious drilling campaigns in the semi-autonomous region.
Based on data from the US Geological Society, Kurdistan could hold over 50 billion barrels of oil – which means it is comparable in scale to Libya.
Counterbalancing this excitement is uncertainty over the production sharing contracts being issued by Kurdistan, which are still being disputed by the authorities in Baghdad.
These concerns are further exacerbated by the news that some oil companies aren’t receiving full payment for their oil exports.
“Both issues are unlikely to be resolved until and Iraqi oil and gas law is ratified, in our view,” Citi said in the recent note penned by Michael Alsford and Mukhtar Garadagh.