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Image courtesy of Gulf Keystone.

Gulf Keystone said Wednesday it will ramp up production at its Shaikan field in the Kurdistan Region of Iraq after receiving a $26 million gross payment for future crude sales.

The London listed company said it has resumed production and truck loading operations at its two production facilities at Shaikan, PF-1 and PF-2, after receiving a payment on February 25.

The payment was made by a third party and approved by the Kurdistan Regional Government, Gulf Keystone told PGN.

Gulf Keystone said it will now ramp up production ” to levels consistent with the installed capacity of 40,000 barrels of oil per day.”

The company netted $20.8 million from the February payment and will receive another payment that is “expected to stabilize a payment cycle for current and future Shaikan production,” Gulf said.

Gulf Keystone said the Shaikan-10 well, the company’s first development well and ninth producer, has shown “excellent productivity from the limited flow data gained to date.”

An additional well at the field,  Shaikan-11, has also been completed from the same surface location and 1.2 miles subsurface from Shaikan-10.

Shaikan-11 will provide PF-2 with additional production capacity and was drilled nine days ahead of time and under budget.

“The losses observed during drilling point to Shaikan-11 being a potentially prolific producer,” Gulf Keystone said.

The Shaikan-8 well has also been fully connected and is now able to produce into PF-1.

“Over recent weeks we have maintained a flexible and prudent approach, ensuring that we can maximize revenues from Shaikan. We remain confident of a regular payment cycle for Shaikan crude being established in the near term,”Gulf Keystone CEO John Gerstenlauer said.

Gulf Keystone is the operator of the Shaikan Block with a working interest of 75 percent.

MOL Kalegran Limited, a full owned subsidiary of MOL Hungarian Oil and Gas, holds a 20 percent interest.

Pennsylvania-based Texas Keystone holds a 5 percent interest in trust for Gulf Keystone, pending transfer of its interest to the copmany.