Gulf Keystone Received notifications of Algerian Licence Ratification

Gulf Keystone Petroleum, Ltd. has received notifications that two Production Sharing Contracts ("PSC's") have now been ratified, having both been approved by Presidential Decrees. These two PSC's cover the blocks that Gulf Keystone was awarded in the sixth Algerian international licensing round which was concluded in Algiers on 23 April 2005. They are the Hassi Ba Hamou contract perimeter comprising blocks 317b, 322b3, 347b, 348 and 349b in the Bechar Oused Namous basin, and one block on the Bottena perimeter in the South East Constantine Basin, block 129.

The contracts are for the research, appraisal, development and exploration of hydrocarbons within the contract areas.

The Hassi Ba Hamou perimeter covers an area of 18,380 square kilometres and contains one existing gas field, HBH, which Sonatrach's engineers estimate contains over 1 trillion cubic feet of gas in place. The HBH Field was discovered in 1965 before the existence of the gas pipeline that now crosses the block, and, thus, has never been developed and put into production. The HBH-1 discovery well flowed at an initial rate of approximately 3 million cubic feet per day from porous sands above 3,200 feet depth. Sonatrach's interpretation of the previously acquired 4,069 kilometres of 2D seismic has identified eight additional prospects and leads with combined exploratory potential of an additional 4.4 trillion cubic feet of gas in place. Gulf Keystone plans to appraise the existing discovery, HBH-1, drill two exploration wells, acquire 100 square kilometres of 3D seismic and 400 kilometres of 2D seismic during the first three year phase of the contract.

The Bottena perimeter covers an area of 4,368 square kilometres and is situated next to the eastern border of Gulf Keystone's Block 126a extending eastward to the Tunisian border. The license area contains the Djebel Onk Field, which is excluded from the license, and the Hassi El Kerma (HEK) Field which was discovered in 2001 and which Sonatrach identifies as containing 178 million barrels of oil in place (27 million barrels defined as proven and probable). This is more than 2.5 times larger than the resources they attribute to Djebel Onk which to date has produced nine million barrels of oil. Sonatrach recently drilled two additional structures on the permit area, DDN (2000) and HCZ (2002). Sonatrach have estimated that these structures contain a combined 182 million barrels of oil in place. Using its 5,300 kilometres of 2D seismic, Sonatrach has mapped an additional two prospects and 21 leads that they assign estimated oil in place resources to of more than 750 million barrels.

Finally, Sonatrach has drilled four wells on what was the first hydrocarbon discovery in the basin (1954), the Djebel Foua Field. Sonatrach has previously tested gas at rates greater than eight million cubic feet per day from depths above than 3,000 feet. This field is only 20 kilometres from the Trans-Mediterranean Pipeline. Gulf Keystone intends to appraise the discoveries Hassi El Kerma and Djebel Foua, drill one exploration well and acquire additional 2D and 3D seismic on the Bottena Perimeter.