UPDATE: Gulf Keystone Shares Soar On Renewed Deal Speculation

Shares in oil exploration firm Gulf Keystone Petroleum PLC (GKP.LN) soared Tuesday afternoon after a press statement about third-party development licenses stoked renewed speculation that oil supermajor Exxon Mobil Corp. (XOM) may be interested in buying the company or becoming involved with its oil field development.

Shares in the company, listed on London's junior AIM market, closed up just over 22% at 270 pence, having earlier traded up by as much as 25% in London.

The latest round of speculation followed a statement Tuesday in which Gulf Keystone reaffirmed that the government of Iraq's semi-autonomous Kurdish region has the right to acquire a portion of its Shaikan and Akri-Bijeel oil fields, or nominate a third party to acquire an interest in them.

"After the government of the Kurdistan region of Iraq has exercised its third party assignment option...Gulf Keystone will issue an appropriate announcement," the statement said.

Gulf Keystone issued the statement Tuesday to notify shareholders that new amendments to the production sharing contracts for the Shaikan and Akri-Bijeel had extended the right of the Kurdish Government to acquire a portion of the licenses beyond the original term, a person familiar with the matter said.

A spokesman for the company declined to comment on the sudden spike in the company's shares.

Shares in Gulf Keystone have risen by as much as 90% in the past three months, and it has been the repeated subject of takeover rumors after Exxon Mobil became the first major Western oil company to enter Kurdistan.

Gulf Keystone operates the huge Shaikan oil field, which is estimated to contain billions of barrels of oil, but will require a large investment to commercialize. Many industry analysts expect a large company, such as Exxon Mobil, to eventually acquire Gulf Keystone in order to fund this large development.

The company itself has acknowledged this is likely. "If the big boys come in and all [oil license] blocks were taken, they're going to buy stuff," John Gerstenlauer, chief operating officer for Gulf Keystone said in November. "There's a good chance we'll get bought," he said.

In December Gulf Keystone was forced to issue a statement denying that it was close to being acquired by the oil giant. A report in the Independent on Sunday claimed that Exxon Mobil had "sounded out" Gulf Keystone and was close to offering 800 pence per share for the company, valuing it at GBP7 billion. The report said rival oil majors including China's Sinopec and California-based Chevron Corp. (CVX) were also "monitoring the situation."

Gulf Keystone said at the time it was "not in discussions with regard to a sale of the company.

Gulf Keystone isn't the only Kurdistan-focused exploration company to have seen its shares rise on speculation about opportunities in the region. Oslo-based DNO International ASA (DNO.OSL) saw its shares rise this week when it released a new estimate of an oil field which it operates in Kurdistan.

Shares in DNO International closed up in Osl Tuesday by nearly 11%.

-By Jessica Hodgson and James Herron, Dow Jones Newswires; [phone]; [e-mail];