Progress Report

Gulf Keystone Petroleum Ld
10 January 2005



10 January 2005


                        GULF KEYSTONE PETROLEUM LIMITED
                       ("Gulf Keystone" or "the Company")

                                Progress Report

Gulf Keystone Petroleum, Ltd. (AIM-GKP), an independent oil exploration company
operating in the Republic of Algeria, today provided the following progress
report on the Company's activities.


Acquisition of 3D Seismic

Gulf Keystone announces that it has signed a contract with E.NA.GEO (the
Algerian national seismic company) to conduct two 3D seismic surveys on the
Company's Block 126a license in northern Algeria.  These surveys will build on
the results of a 2D seismic survey that the Company conducted in 2004.


The first survey is to start in mid-January 2005.  It will cover an area of 460
km2 over the southwestern portion of the license and include the OBA, EKG, RTB-W
and CEJ Triassic prospects.  Gulf Keystone believes the area has potential for
new discoveries on exploration prospects generated by the previous 2D surveys
and is on the structural continuation of a nearby oil field discovered and
produced by Sonatrach, the Algerian national oil company.  This survey has two
main purposes.  Firstly, to more accurately map those exploratory prospects with
significant reef potential that were indicated in the 2D survey.  Secondly, to
better define the development drilling programme expected to follow on from the
Company's next exploratory well, the RTBW-1, which the directors believe to be a
westerly extension to Sonatrach's Ras Toumb Field in neighboring Block 108.


The second 3D survey, which is expected to commence in May 2005,  will cover a
430 km2 area in the central, currently productive portion of Block 126a.  The
primary purpose of this survey is to attempt to maximize the appraisal/
development drilling success rate, and oil production results in this area,
beyond what can reasonably be expected relying solely on the existing 2D seismic
grid.  This survey will concentrate on Gulf Keystone's planned 2005 and 2006
exploitation of the OGZ and GKS structures which have already successfully
tested oil, but have not yet been evaluated through further appraisal/
development drilling.


Saipem Drill Rig 5832 Commissioning

On 11 October 2004, Gulf Keystone announced the signing of a contract with
drilling contractor Saipem S.p.A. for Saipem's Drilling Rig 5832.   The rig,
which has now arrived in Algeria is currently being assembled under Gulf
Keystone's supervision in Hassi Messaoud, Algeria and undergoing commissioning
tests, is expected to be operational shortly.  The rig will then be moved onto
location with the spudding of the first well GKS-3S.  Gulf Keystone will make an
announcement when rig 5832 mobilizes to location and an exact spud date is
confirmed.


Rig 5832 is capable of drilling to a depth of 6,000 metres with a 5-inch drill
string.  The contract covers work over and drilling with a guarantee of 365 days
of work plus the option of two six month extensions.


Todd Kozel, Chief Executive Officer and Vice President of Gulf Keystone said:


"This is the start of an exciting year for Gulf Keystone.  With a drilling rig
about to move on location and two blocks of 3D seismic about to shoot, we can
now begin the job of exploiting the significant upside potential of our Block
126a."


Enquiries


Citigate Dewe Rogerson         020 7638 9571

Martin Jackson

George Cazenove


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            The company news service from the London Stock Exchange