Gulf Keystone Petroleum Ltd Corporate Overview
Building perimeter fence at HEK-3 well site GKN-1 well – presently producing c. 850 bopd
March 2007 1 Disclaimer
This presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities in Gulf Keystone Petroleum Limited (“GKP”), nor shall it or any part of it form the basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this presentation or on any other document or oral statement or on the completeness, accuracy or fairness of any such information and/or opinions. No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of GKP or any of its respective directors, employees or advisers, as to the accuracy or completeness of the information or opinions contained in this presentation, and (save in the case of fraud) no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise contained or referred to in this presentation.
The slides and the accompanying verbal presentation are confidential and the slides are being supplied to you solely for your information and may not be reproduced or distributed to any other person or published, in whole or in part, for any person.
The slides contain forward-looking statements, including in relation to GKP’s proposed strategy, plans and objectives. These forward looking statements speak only at the date of this presentation. Such forward looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of GKP that could cause the actual performance or achievements of GKP to be materially different from such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and GKP accepts no obligation to disseminate any updates or revisions to such forward-looking statements.
2 Corporate Overview
Founded by UAE, Kuwaiti and US private equity
Incorporated in Bermuda in 2001
Listed on the AIM Market of the London Stock Exchange in 2004
Current Market Capitalisation: US$335 million
Offices in London, Algiers and Hassi Massaoud
Present shareholder structure: Founders and Management: ca. 33.0% UK Institutions and UK private investors: ca. 63.0% Others: ca. 4.0%
Gulf Keystone is an independent oil and gas company operating in the Republic of Algeria 3 Company Overview - Capital Structure
33% Management and Top 15 Holders December 31 st 2006 % GKP Founders Gulf Keystone Petroleum Co (LLC) 40,000,000 14.52 Fidelity International (UK) 22,771,155 8.27 Directors Holdings 20,200,000 7.33 Gibca Ltd 20,000,000 7.26 Private Individuals 17,980,674 6.53 Oppenheimerfunds (US) 16,000,000 5.81 Number of common shares in Gartmore Investment Mgt 15,837,521 5.75 issue 275m with 500m authorised Artemis Investment Mgt 13,680,000 4.97 common shares Seymour PS Ellis Stockbrokers 11,809,543 4.29 Evolution Securities (MM) 10,893,578 3.95 AXA Framlington Group Ltd 10,012,750 3.63 Market Capitalisation of ca. BlackRock MLIM 9,520,200 3.46 US$335 Million (based on 63.0 Credit Suisse (MM) 8,905,956 3.23 Henderson Global Investors 7,000,000 2.54 pence as at close 12th January Morley Fund Mgt 6,024,197 2.19 2007)
GKP has strong management and institutional shareholder base 4 Company Overview – Management Team
Highly Experienced Commercial and Operational Management Team,
Non Executive Directors
Roger Parsons (2) Sheikh Sultan Al-Qassimi (1) (2) Chairman
Todd Kozel (1) (2) Bill Guest (2) Chief Executive Officer President
Executive Team
David Iain Patrick (1) Ibrahim Jon Cooper (2) Mackertich Ali Al Qabandi Director Alkhaldi (1) Finance E.V.P. E.V.P. Commercial/ Chief Operating Director Exploration/ Business Legal Affairs Officer Technical Development
(1) Original Founder (2) Board of GKP Ltd
GKP’s Management enhanced to take on next Phase of Growth 5 Executive Summary
NORTH AFRICA / MIDDLE EAST EXPLORATION PLAY Focus on proven hydrocarbon basins with material upside
Algeria – Portfolio Development Block 126a awarded in 1st International Bid Round 2001 Awarded 6 additional blocks in 5th International Bid Round 2005 Awarded 2 further onshore blocks through direct negotiation 2005
Regional Competitive Advantage at the Point of Access Excellent regional contacts through senior management and original Arabian Gulf Investors Strong historic relationship with Algerian government authorities - SONATRACH
Active Portfolio Management BG Group introduced as a strategic partner in Hassi Ba Hamou
Gulf Keystone has material exposure to high impact reserves 6 Why Algeria?
60% of country’s total area occupied by sedimentary basins.
Only 24% of the area has been licensed.
Strategically positioned as major, and growing, supplier of energy to world’s largest energy markets and is major exporter of gas and LNG.
Excellent Competitive Landscape:
Only 35 foreign oil companies in sector alongside SONATRACH.
Only 3 “smaller” (<$500mm Market Cap) independents.
Significant barriers to entry for new smaller independents.
Benign operating environment, good access to market
World class oil and gas province, still relatively under-explored. 7 Sedimentary Basins of Algeria
Mediterranean Sea SPAIN Kechabta Madjerda Basin Basin Basin Gulf Keystone Northern Blocks Cheliff Gulf Keystone tlas ian A Basin Tell n a Atlas i ellian s HBH Concession SudT i n n i u ns T aa SE Constantine i Hodna sB i n n i Plateau u s u T a Rif Basin ea B lat Melr Rharb Basin h P hir Tr Guercif Hig ough TUNISIATUNISIA as Atl ian Chotts Basin Atlas nis - Tu MOROCCO d n / Touggourt Uplift a ra l Mi aha gh a ur S rou k sso T k Me oud Tilrhemt Telemazene u Tadla Ben o Hassi Arch D s Djorfa Saddle Nafusa High High Atla Messaoud a aouir Oued - Namous El Biod Ess Bechar Allal Oued Mya Dome Arch Boudenis Basin High Basin Er Rachidia Ouarzazate Berkine Hamra Timimoun Basin ALGERIAALGERIA Anti - Atlas Basin Basin Ougarta Chain
I A d z LIBYA j GRJ figuresz to e be added Tindouf e S n r b e a Basin a n Dan Berhous a H e Mouydir i Atchan Gargaf Arch S g Saddle u h Basin b S Uplift - p n u sha Djoua r At Amguid dle Reggane Saddle ad Spur Illizi S Basin Basin
Reguibate Massif Tihemboka Murzuk A Basin Arch l Ahnet Basin 'A w a y n a t
Hoggar Massif T r o u g h
MALI
0 250 500 BasinalNIGER Areas MAURITANIA Km
Source : SONATRACH 8 Algeria – Current Concessions
Northern Blocks
HBH
Significant areas within SH Operated Blocks Algeria remain Foreign Oil Company unlicensed Operated Blocks Source : IHS Energy 9 Asset Review – Algerian Portfolio
Major acreage footprint in Oil prone Constantine Basin and gas prone Allal Dome - close to existing infrastructure 27,000sq km under licence in proven hydrocarbon bearing basins – oil and/or gas discoveries on each block
GK majority working interest holder in every block HBH 38.25% Block 129 75% - Operator 108/128 75% - Operator GRJ/GKN/GKS 60% - Operator
GKP has a strategic position in proven basins 10 Algeria – HBH Concession
Large (18,380 km2) gas prone concession – under-explored
Significant gas discovery (HBH) with ‘Contingent’ Recoverable Resources of 995 BCF and ‘high’ estimate of 1.7 TCF
Significant exploration potential
20Km Mean (un-risked) ‘mid case’ 1.9 TCF
Mean (un-risked) ‘high case’ 3.8 TCF High Resolution SPOT satellite image over sand dunes in Hassi Ba Hamou Block – Central Algeria
HBH – Proven Gas field & significant exploration potential 11 HBH Asset
Blocks 317b, 322b, 347b, 348 and 349 History Awarded April 2005, Presidential Decree August 2005 BG farms-in, August 2006 as operator
HBH BG deal completed January 2007 Commitments : 1st Period (3yrs): Planned 2D & 3D Seismic (2006/2007) 2000 km 2D Seismic (started Jan 2007) 500 km ² 3D Seismic (Feb 2007) Drilling (Q4 2007 onwards) 6 exploration and appraisal wells HBH Blocks WI GKP 38.25% Increased programme to US$57 million BG 36.75% reflects the company’s view of the SH 25% 20Km significant additional hydrocarbon prospectivity of the HBH concession and surrounding area
1 TCF recoverable reserves over 3.5 TCF exploration upside 12 HBH - BG Group Farm In
There was significant interest in Gulf Keystone’s HBH farm out process from companies looking to supply European gas market The introduction of BG Group as strategic partner allows GKP and SONATRACH to accelerate the exploration, appraisal and commercialisation of HBH gas BG recently signed an MOU with SONATRACH to co-operate across entire value chain BG’s rationale is a part of its larger LNG strategy to supply both US and European markets BG has acquired 49% of Gulf Keystone’s interest in the HBH concession In addition, Gulf Keystone and BG have established an AMI, which will look at the possibility of further co-operation opportunities for gas exploration, appraisal and development projects within Algeria Commercial terms of transaction required by Algerian authorities to be confidential The Presidential Decree approving the deal was published in the gazette dated 13th December 2006 and the deal completed on 12th January 2007
BG farm in demonstrates potential of the HBH portfolio 13 Asset Review – Algeria Gas in context Source: IEA, Merrill Lynch, BP Statistical Review
Norway Russia 76 bcm/yr 150 bcm/yr
60
50 Gas Reserves Available for European Pipeline 40 Market Tcm
30
20
10
0 Russia Algeria Norway Holland UK Libya Egypt Nigeria Algeria 4 bcm/yr 4 bcm/yr 12 bcm/yr 37 bcm/yr • Algeria is the 3rd largest gas exporter to Europe •2nd largest proven resource base available to European gas market • European gas demand continues to grow with indigenous production in permanent decline • 2 dedicated pipelines into southern Europe and 10 mton LNG capacity • 100bcm growth between 2005 and 2010 from 582bcm to 678bcm • SONATRACH major push to increase European market share to 85bcm by 2010
Algeria - an under utilised resource base for the European Gas market 14 Gulf Keystone – Northern Blocks
Constantine Basin – relatively under- explored with little application of focused technology Main phases of exploration - 1950’s, 1980’ Range of different play types from fractured carbonates to ‘conventional’ clastics No wells drilled using 3D seismic data No horizontal wells or fracture stimulation techniques undertaken Phase 1 production (Block 126a) expected Q2-Q3 2007 Active exploration / appraisal programme over the next 36 months
15 The Next Phase – Obtaining Production
20Km FERKANE BLOCK126a Block 126a Ferkane (Block 126a) GKP 60% SH 40% (GKP 60% Operator, SONATRACH 40%) History • Awarded 2001 • Encountered significant oil potential but productivity challenges
GKN, GKS & GRJ • Commercial (GKN, GKS) and potentially commercial Retained Areas discoveries (GRJ) Plans • Secure production licences for GKN/GKS oil discoveries
GKN-1 - Phase 1 – 1 additional Well on GKN, 1 additional OGZ-1 Trans GKN-2 -med Pipeline GKN-3 Trans Me d. Gas Pipeline GKN-4 Well on GKS, focussed 3D Seismic, gas injection GKS-3 FKN-1 GKS-2 FKN-1BIS GKS-1 - Further Phases – Dependent on Phase 1
RDL-1 H performance RTB Pipeline GRJ-1 GRJ-2 AMS-1 • Achieve Q2 2007 approval / gazetting and subsequent G K N - R a s T o u m b OP il ip e lin e BLOCK 108 RTB-8 production start-up OUM-1
RTB-3 BBA-1 RTB-5RTB-4 RTB-6 • Well test of GRJ-2 planned for Q1/Q2 2007 RTBW-1 RTB-7 Ras Toumb RTB-2 RTB-1 Facility • Potential re-application for remainder of Block 126a
ESF-1 depending on results of ongoing E&A BGH-1 BLOCK 128b
Commercial oil discoveries leading to early production 16 The Next Phase – Expanding Opportunities
Block 129 (4,368km²) Gafsa Fault separates Turonian / Block 129 TYA-1 (GKP: 75% operator, SONATRACH: 25%) Coniacian from Aptian Play GKP 75% SH 25% RES-1 BL-1 History BOTTENA BLOCK 129 ROA-1 • Awarded April 2005 FO DDN FO-4 DDN-1 FO-3 st FO-1 FO-2 Commitments 1 Period (3 Yrs)
BTN-1 BTS-1 • 380 km 2D, 500 sq km 3D seismic (complete)
e • 1 Exploration well lin ipe P as . G ed s M an Tr DK-11 DK-13 DK-10 DK-4 DK-2 Aptian KM-1 DK-8 DK-9 DK-5/DK-5 bis Plans DK-12 DK-1 DK-3 DK-14 DK-6 Dj. Onk Exclusion Boundary Play OGZ-1 GKN-1 • Explore Turonian Coniacian play (KRM, ODS, DDN)
Trans-medGKN-2 Pipeline GKN-3 GKN-4 GKS-3 • Explore Aptian play FKN-1 GKS-2 Turonian / FKN-1BIS HEK/HCZ GKS-1 RDL-1 • Appraise HEK, HCZ oil discoveries HEK-2 Coniacian HEK-3 HCZ-1 RTB Pipeline Ras Toumb GRJ-1 GRJ-2 HEK-1 Play • Well test of HEK-3 well planned for March / April 2007 AMS-1 Facility MAN-1
G KRa N - s T o u mO b il Pip e lin e RTB-8 BLOCK 108 OUM-1 RTB-3 RTB-5RTB-4 OSD-1 RTB-6
RTBW-1 BBA-1 RTB-7
RTB-2 RTB-1 Blocks 108/128b (4,641sq km) OSD RTB (GKP: 75% operator, SONATRACH 25%)
ESF-1 BGH-1 Block 108/128b History BLOCK 128b Ben Guecha GKP 75% SH 25% • Awarded through bi-lateral negotiation April 2005 • Gazetted 13th December 2006
HBS-1 Commitments 1st Period ( 3 Yrs) Turonian / Coniacian Play gives way to Triassic • 200 Km 2D seismic, 100 sq km 3D (complete) prospects towards the South 20Km • 1 Exploration and 1 Appraisal well
Bou Aroua 1 Existing 3D seismic Plans
Possible 2D acquisition • Appraise Ras Toumb oil Field Algeria Tunisia • Explore Ras Toumb & Douleb prospectivity in Block 108 • Explore additional prospectivity in Block 128
‘Northern Blocks’ - substantial oil exploration and appraisal potential 17 Asset Review – Reserves/Resources Distribution
Recoverable Volumes (“Mean Case” - MM BOE) Independent Review by RPS Ltd, May 2006
35.6 70.8 KEY (21.4) x: Gross Licence Volumes (x): GKP Net Working Interest Volumes (40.5) GKN 48.3 GKS Risked (29.0) GKN/GKS: “Reserves” Exploration GRJ: “Contingent Resources” GRJ HBH “Contingent Resources” Block 129: “Contingent Resources” 35.7 (26.8) 129 Exploration: “Risked Prospective Resources” HBH
GKP Net Mean Risked (124.5) Pre BG farm in Resources : (181mmboe) (63.5) Post BG farm in
166.0
Significant hydrocarbon potential has already been identified 18 Competitive Strengths
Strategic Position – Algeria Significant acreage footprint Operatorship/Infrastructure Majority working interest in all licences Strong Strategic Partner Oil and Gas discoveries with major exploration potential
COMPETITIVE Access to New Business STRENGTHS Regional Experience Barriers to entry for new players Middle East & North Africa in Algeria OECD Founder/Shareholder N.W. Europe relationships in Algeria and MENA United States Industry reputation/network Other International Highly experienced Management and Technical Team
19 International Market Overview : Past transactional Activity
Global Upstream M&A Activity by Region - Dollar Value Global Upstream M&A Activity by Region - # of Transactions 400 $180.0
$160.0 350
$140.0 300
$120.0 250
$100.0
$US BN 200
$80.0 150 # of # of Transactions $60.0 100 $40.0
50 $20.0
0 $0.0 2000 2001 2002 2003 2004 2005 2006 YTD 2000 2001 2002 2003 2004 2005 2006 YTD
Canada USA Africa Canada USA Africa Europe Asia South and Central America Europe Asia South and Central America Australia Multi-Region Russia Australia Multi-Region Russia North Sea Middle East North Sea Middle East
Historically, M&A and A&D activity in MENA has been very limited.
Massive potential for portfolio rationalisation and improved portfolio efficiency across the upstream sector within MENA.
Potential for Independents and the Service Sector to enter into innovative commercial arrangements with major IOC’s and state entities in respect of “Non-Material” assets. 20 Gulf Keystone Strategy
Current Status • Strategic “footprint” in Algeria • Strong financial position • Major opportunity set in MENA
Strategy (Market Drivers) • Increased Materiality / “Critical Mass” • Increased Market Liquidity • Selectively diversification
“Organic Growth” “Structural Growth”
• Major Algerian E&A program / Early Cash Flow A&D / M&A • Further build Algerian Portfolio • Exploit MENA asset “Food Chain” • Exploit niche strengths to access 2-3 other • Exploit consolidation of E&P sector MENA countries 21 Diversifying the Portfolio
Current Activities Focus areas
GKP will use Algerian business model to expand the E&P portfolio within
MENA 22 Appendix – Executive Management Team
Todd Kozel Co-Founded Gulf Keystone UAE in 2000 CEO 20 Years US / International E&P Management Texas Keystone 1995 – 2004 Co-Founded Falcon Drilling
Bill Guest Geologist by background President 30 Years experience in international oil and gas industry Royal Dutch Shell 1975 - 1989 Technical Director Monument Oil and Gas 1990 -1999
Iain Patrick Lawyer by background Commercial 25 years experience in the international oil and gas industry and Legal Commercial director Monument Oil and Gas 1990 – 1999 Director
Dr Jon Cooper Qualified Accountant by background Finance Experienced finance professional focussing on oil and gas Director industry 9 years oil and gas corporate finance with DrKW
Highly Experienced Management Team 23 Appendix – Executive Management Team
Ali Al Qabandi Extensive experience in the Kuwait oil industry (Founder) Numerous executive positions and committee directorships for the V.P. Business Kuwait Oil Company Development
Ibrahim Al- Khaldi (Co- Business development officer for MENA for Baker Atlas Founder) (Baker Hughes Subsidiary) Chief General field engineer for western Atlas Operating Officer
David Geologist, M.Sc Petroleum Geology, MBA Mackertich UK DTI 1988 to 1991, Amerada Hess 1991 to 2003 E.V.P. 19 years International Exploration & Business Development Exploration & Technical
Extensive technical, commercial & international experience 24