The Kurdistan-focused explorer, which has a 75 percent stake in the Shaikan block, started drilling the Shaikan-2 well in December and said it hoped for a significant increase in its resource estimates.
“(The oil find) is very much a qualitative thing at this point where people are probably leaning toward the higher estimates more so than the lower estimates,” analyst David Hart of Westhouse Securities told Reuters.
On a P90 scale, which indicates a 90 percent chance of finding oil, the company had resource estimates of 1.9 billion barrels of oil at the Shaikan discovery.
Gulf Keystone is currently conducting a test to assess oil flow rate and quality of oil at the site.
“The fact that the oil is flowing also shows that in terms of viscosity it has some good properties. So, all in all, it is a good result,” analyst Lionel Therond of Fox Davies Capital said.
Therond, who raised his price target on the stock to 220 pence from 200 pence, gave a positive outlook on Gulf Keystone’s near-term prospects, given the company’s exploration portfolio.
The company, which also has operations in Algeria, said smoke and oil flares were seen at a considerable distance from the Shaikan-2 well, indicating the presence of a considerable amount of oil flow at the site.
In January, Gulf Keystone said it had found substantial volumes of oil at the licence at shallower depths than a previous discovery.
Later, Chief Operating Officer John Gerstenlauer said it was likely that the company would become a takeover target as the political situation improves between Iraq and the Kurdish region.
The London-listed company is currently contesting claims made against it by Excalibur Ventures over an interest of up to 30 percent in its Kurdistan blocks.
Gulf Keystone’s shares, which have lost nearly a quarter of their value over the last month on concerns over the unrest in the Middle East and North Africa, were up 25.5 percent, making it one of the top gainers on the London Stock Exchange.
