Thu Aug 5, 2010 5:31am EDT
* Further testing of Butmah section flows in line
* Shaikan well demonstrates flow capacity of 20,000 bopd
* Shares rise 7.6 pct (Adds detail, analyst comment, share price)
LONDON, Aug 5 (Reuters) - Oil explorer Gulf Keystone Petroleum (GKP.L) said further testing on its Shaikan-1 discovery well in Kurdistan confirmed estimated flow rates of oil at a certain depth, lifting its shares around 7.6 percent.
Gulf Keystone said on Thursday that the well, situated in Iraq's semi-autonomous Kurdistan region, has now shown it can flow with a capacity of over 20,000 barrels of oil per day (bopd), from only one part of the well, meaning the ultimate flow rate could be higher.
Shares in Gulf Keystone, which have outperformed the European oil and gas index .SXEP by 26 percent since the start of the year and are up 32 percent in the last month, rose 7.6 percent to 99.5 pence at 0928 GMT, a six month high.
"It confirms their earlier testing because doing one test on an oil field is never enough," said Daniel Stewart analyst Richard Nolan.
"This is confirmation that Shaikan is, or has the potential to be a very exciting discovery," he added.
Iraq's Kurdish region was little explored under Saddam Hussain's regime but a number of large oil discoveries have been made there in recent years and proven reserves in the region are of the order of about 20-25 billion barrels. [ID:nLDE62N1DE]
Gulf Keystone, which on Wednesday said it had started drilling at its Sheik Adi prospect nearby to Shaikan, in January raised its oil reserve estimates for Shaikan to a range of between 1.9 billion barrels of oil to 7.4 billion with a mean of 4.2 billion barrels in place. [ID:nSGE60D09U]
The latest test was carried out on the Butmah section of the Jurassic geological depth and saw production rates of 4,650 bopd, in line with the previously estimated rate.
(Reporting by Sarah Young; Editing by Victoria Bryan