Gulf Keystone reaches production target in Kurdistan

Oil producer Gulf Keystone Petroleum (GKP) said that its existing production facilities in Shaikan are now producing from seven wells.

The Kurdistan-focused company said that production at its PF-1 and PF-2 facilities on its main producing asset in the region reached the group's 40,000 gross barrels of oil per day target on 27 December.

“Our immediate focus is to ensure a stable daily production rate of 40,000 gross barrels of oil per day, which is a base for future production growth, whilst maintaining a regular payment cycle for Shaikan export oil sales by truck and to finalise a pipeline access solution for Shaikan," said group chief executive John Gerstenlauer.

Meanwhile, an additional well, labelled Shaikan-8, is expected to begin production in January 2015, the company said, adding that it had spudded Shaikan-11, an additional producer, which will be tied to PF-2 through the 11 km flowline already in place.

"Today’s announcement represents an important milestone for the company and its shareholders," analysts at Cantor Fitzgerald said in a note on Monday.

"We believe that reaching its challenging production rate (a rarity in the mid cap subsector) demonstrates that GKP can successfully develop Shaikan into a material producer in the Kurdish region."

The broker reiterated its 'buy' recommendation for the stock.

Gulf Keystone shares were down 3.63% to 65.05p at 11:01 on Monday.