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Gulf Keystone (AIM: GKP), an independent oil exploration company operating in Algeria and Kurdish Region of Iraq, announces the following operational update in respect of the Hassi Ba Hammou Perimeter ("HBH Permit") licence, which covers 18,380 km2 in the Allal Dome of Central Algeria.

Hassi Ba Hammou Gas Field - Appraisal Well and 3D seismic programme

The HBH Permit contains the significant Hassi Ba Hamou gas field that was discovered by SONATRACH in 1965 and confirmed by a third well, drilled by SONATRACH, HBH-3, in January 2005.

The first well of a six well programme on the HBH Permit, HBH-4, will be an appraisal well on the Hassi Ba Hamou gas field, to evaluate the extent of the field and continuity of the gas accumulation. It is anticipated that this well will spud during mid-December 2007 once commissioning and acceptance of the rig is completed.

The 3D seismic programme which is being shot over the Hassi Ba Hamou gas field is 96% complete (512km² of 533km²). It is currently estimated that the 3D seismic programme, which began in July 2007, will be completed by the end of 2007.

HBH Permit - 2D seismic programme completed

The HBH Permit wide 2D seismic programme targeting prospects and leads over the licence was completed on the 4th December 2007 with 2047km of seismic having been acquired to fulfil the 2000km commitment. The preliminary results are currently under evaluation.

Early indications from the 2D seismic interpretation are that a number of promising leads have been identified over the HBH Permit, three of which the partners have agreed to prioritise as drill targets.

Six Well Drilling Programme

The HBH-4 field appraisal well is the first well of the six well commitment on the Hassi Ba Hamou Permit. Three appraisal and three exploration wells will be drilled and tested back to back in the first exploration phase of the licence which expires in September 2008.

Licensees of the HBH Permit are Gulf Keystone 38.25%, BG Group 36.75% and Sonatrach 25%. Gulf Keystone farmed out 36.75% of the HBH Permit to BG Group effective September 2006. BG Group is operator.

Todd Kozel, Chairman and Chief Executive Officer, commented:

"The completion of the HBH Permit 2D seismic acquisition programme marks significant progress for Gulf Keystone in the exploration of this licence. Early interpretation of both the 2D and 3D seismic data, over the Hassi Ba Hamou Permit and the Hassi Ba Hamou gas discovery, has revealed a number of promising leads and we are excited to be commencing drilling with the first of a six well programme due to spud imminently."

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