Gulf Keystone upgrades reserve estimates

14th Sep 2011 10:22

Shares in Gulf Keystone, the AIM-listed oil and gas firm focused in the Kurdistan Region or Iraq, jumped on Wednesday after the group announced a significant increase in oil-in-place reserves in its half-year report.The company announced a 150% increase in proven reserves (P90) and a 45% increase in possible reserves (P10) for the Shaikan discovery, meaning that the range of reserves is now between 4.9bn - 10.8bn barrels (P90 - P10).Meanwhile, revenues doubled from $0.8m to $1.6m in the six months ended 30 June, driven by further crude oil sales from Shaikan-1 and Shaikan-3.However, pre-tax loss widened to $10.4m, from $3.1m, due to a significant increase in general and administrative expenses. These were driven by the 2010 share bonus awards, options awarded under the long-term incentive plan and the general ramp-up of operations. Loss per share increased from 0.57 cents to 1.37 cents.Executive chairman and chief executive officer Todd Kozel said, "During the first half of 2011 Gulf Keystone has overseen a number of major developments in its operations in the Kurdistan Region of Iraq. In addition to two remarkable sets of independently audited gross oil-in-place numbers for Shaikan and Sheikh Adi, we have seen significant progress in our ambitious exploration and appraisal programme across the four blocks in Kurdistan."By 30 June, the company had cash of $134.4m, which could be boosted by the decision to offload its 20% stake in the Akri-Bijeel block, which holds 2.4bn barrels of oil."This decision will facilitate an increased focus on the ambitious programme of appraisal and Extended Well Test production at Shaikan and the Shaikan pipeline project, as well as on the exploration and appraisal of Sheikh Adi and the drilling of the first exploration well on Ber Bahr."Analyst Richard Griffith from Evolution Securities said, "Progress has been swift and numbers look very encouraging, but the recent rapid rise in the share price suggests much has already been priced in."By 10:24, shares were trading 7.02% higher at 167.75p, 26% up over the last week.With a current market capitalisation of nearly £1.3bn, the firm said that intends to move on to the main market (FTSE 250). BC