Kurdistan

Gulf Keystone Petroleum Ld
07 November 2007

Not for release, publication or distribution in or into jurisdictions other than
 the United Kingdom and Bermuda where to do so would constitute a contravention
                   of the relevant laws of such jurisdiction




                        GULF KEYSTONE PETROLEUM LIMITED

                       ("Gulf Keystone" or the "Company")

                     PRODUCTION SHARING CONTRACT SIGNED WITH 
THE KURDISTAN REGIONAL GOVERNMENT ON SHAIKAN EXPLORATION BLOCK AND PARTICIPATION 
                    INTEREST IN AKRI-BIJEEL EXPLORATION BLOCK



Signature of interest in Shaikan Block



Gulf Keystone Petroleum Limited (AIM: GKP), an independent oil & gas exploration
company, today announces that, in partnership with Kalegran Ltd ("Kalegran"), a
subsidiary of MOL Hungarian Oil and Gas Public Limited Company ("MOL") and Texas
Keystone Inc. ("Texas Keystone"), its subsidiary Gulf Keystone Petroleum
International Limited ("GKPL") has signed a Production Sharing Contract ("PSC")
with the Kurdistan Regional Government ("KRG"), for the exploration, development
and production of hydrocarbon resources in the Shaikan Block in the Dihok area
of the Kurdistan Region in Northern Iraq.  The Shaikan Block is situated
approximately 85 kms North-West of Erbil and covers an area of 283 square kms.



The interests under the PSC are GKPL 75%, Kalegran 20% and Texas Keystone 5%.
Texas Keystone, a private American exploration and production company, initially
led the pursuit of opportunities in the Kurdistan Region and participated in the
successful signature of this PSC for the Shaikan Block.  In return for Texas
Keystone's continuing participation, Gulf Keystone will carry Texas Keystone's
5% share of initial costs and expenses prior to drilling the first well.



GKPL will operate the Shaikan Block.  The planned work programme includes the
acquisition, processing and interpretation of 100 kilometres of 2D seismic and
the drilling of one exploratory well.  The commercial terms of the PSC are in
line with the terms and conditions published by the Kurdistan Regional
Government on its website.





Participation interest in Akri-Bijeel Block



In consideration for introducing Kalegran into the Shaikan partnership, GKPL has
received a 20% interest, on a ground floor basis, in the MOL operated PSC
covering the Akri-Bijeel Block. The Akri-Bijeel Block is adjacent to the Shaikan
Block.  The interests in this PSC are Kalegran 80% and GKPL 20%.  The commercial
terms of the PSC are in line with the terms and conditions published by the
Kurdistan Regional Government on its website.  This exchange of acreage
participation between Kalegran and GKPL was carried out with the consent of the
Kurdistan Regional Government concurrently with the execution of the PSC
agreements.



In Akri-Bijeel, Kalegran plans to acquire some 200 line km of 2D seismic and has
an option to drill an exploration well within the first 3 year term.



Both the PSCs have a duration of 25 years, and an initial 3 year exploration
phase.  Gulf Keystone's expected total expenditure for these two blocks over the
next three years, given its current interests, is approximately US$53 million,
the majority of which is expected to be incurred over the next six months.  This
estimate includes GKP's share of general and administration costs, seismic
acquisition and processing, drilling costs and initial signature bonuses.





David Mackertich, Executive Vice President Exploration, said:



"Since the opening of our Erbil office, in January 2007, we have undertaken a
significant amount of technical work which has enabled us to identify the
potential opportunity that these two blocks offer.



The Shaikan structure appears to cover a significant portion of the block, and
the possibility exists for multiple reservoir targets as is common in many
fields across Iraq.  Our initial exploration programme will be targeted at
testing what is known as the Shaikan structure, which we believe resides in a
play fairway which we consider extends across the region and includes the recent
Tawke discovery.  The Tawke Field lies in the adjacent block and some 60 km to
the north-west of the Shaikan Block.



We plan to acquire our 2D seismic data in Q1/Q2 2008 and drill our first
exploration well later in that year.



We believe the Akri-Bijeel Block offers complementary prospectivity to that seen
in the Shaikan Block".





Todd Kozel, Chairman and Chief Executive Officer, commented:



"Gulf Keystone is delighted to have concluded the Shaikan PSC with the Kurdistan
Regional Government and its partners MOL and Texas Keystone.  We are looking
forward to commencing operations and getting the work programme underway in this
highly prospective area.  We are also pleased to be partnering with MOL on its
Akri-Bijeel Block which is adjacent to the Shaikan Block.  This will give Gulf
Keystone exposure to a wider portfolio of exploration opportunities within the
Kurdistan Region, and a further opportunity for close co-operation with its
partners in the Kurdistan Region."







Notes to Editors



Texas Keystone is an independent privately owned oil and gas company.  Texas
Keystone is a related party of Gulf Keystone because Mr Todd Kozel is a non
executive director of and a significant shareholder in Texas Keystone.







Enquiries:


Gulf Keystone Petroleum                                      [phone]
Todd Kozel
Ali Al-Qabandi


Citigate Dewe Rogerson                                        [phone]
Media enquiries: Martin Jackson
Analyst enquiries: Kate Delahunty


Hoare Govett Limited                                          [phone]
Andrew Foster
Stephen Bowler


Tristone                                                      [phone]
Simon Ashby-Rudd







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