Gulf Keystone Petroleum Ltd (GUKYF)

[JD400]

Competent Person's Report Update





2P Reserves stable and reservoir performance as expected for the Shaikan field, a world class asset





In connection with the publication of a Prospectus as part of the Balance Sheet Restructuring Transaction ("Restructuring"), Gulf Keystone today announces the release of an updated Competent Person's Report ("CPR"). The CPR is an independent third-party audit of the Company's Reserves, as at 30 June 2016. The CPR was again prepared by ERC Equipoise ("ERCE") and revises and updates the previous report dated September 2015.



Highlights



· With 12.4 million barrels produced in the period since the previous CPR, gross Shaikan 2P Reserves are effectively unchanged at 622 million barrels of oil

· GKP's net working interest Shaikan 2P Reserves have increased from 348 million barrels of oil to 360 million barrels, now reported on a 58% working interest basis subject to execution and consummation of the Second Amendment to the Shaikan Production Sharing Contract ("Second Shaikan Amendment"), as envisaged by the Bilateral Agreement between the Company and the MNR announced on 17 March 2016

· Inclusive of 2C Contingent Resources and Technically Recoverable Volumes, Shaikan has over 1 billion barrels of oil remaining

· With over 25 million barrels produced to date, the Company now has an increasingly confident understanding of the reservoir

· No unexpected changes in reservoir behaviour have been observed, demonstrating the stable and predictable performance of the field

· Contingent Resources totals now exclude volumes previously reported for the relinquished Sheikh Adi and Ber Bahr blocks







CPR Methodology



ERCE has audited the reserves assessment in compliance with PRMS/SPE reporting guidelines.

The table below represents the updated CPR's conclusions on Shaikan Reserves, Contingent Resources and Technically Recoverable Volumes(1) in comparison with the September 2015 CPR:

MMstb(2)


2P


2C


2P+2C


TRV(1)


2P+2C+ TRV(1)




Net diluted WI

to GKP - 2P

Sept 2015


639


239


878


142


1,020


348(3)

Aug 2016


622


239


861


150


1,011


360(4)


Notes

(1) Technically Recoverable Volumes ("TRV") are recognised in the production profile beyond the term of the Shaikan Production Sharing Contract

(2) MMstb: Million stock tank barrels

(3) Based on 54.4% Working Interest

(4) Based on a 58.0% Working Interest subject to the execution and consummation of the Second Shaikan Amendment, as envisaged by the Bilateral Agreement between the Company and the MNR announced on 17 March 2016



Sources: September 2015 ERC Equipoise CPR; August 2016 ERC Equipoise CPR







Commenting on the publication of the updated CPR, Jón Ferrier, CEO, said:


"With cumulative production now totalling more than 25 million barrels, we have continued to build on our understanding of the field's characteristics. This updated CPR, prepared as part of the Company's Restructuring, is highly positive as it reiterates our assumptions of last year about the quality of the Shaikan field, and reinforces its prominent position in the region. We thank the Kurdistan Regional Government's Ministry of Natural Resources for their ongoing support.



Our near term objective of restructuring the Company's balance sheet continues to be our primary focus, following which we will be armed with the leadership, knowledge, technical capability and funding to work with our partners to realise the field's full potential."



The latest CPR can be viewed on the Company's website: http://www.gulfkeystone.com/investor-centre/presentations-and-technical-reports

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