GKP launches second Share Buyback Programme

Gulf Keystone Petroleum (GKP) has provided an operational and corporate update. 

Operational

  • Average gross production for the year up to 30 November 2019 of 32,127 barrels of oil per day (“bopd”).
  • November gross production averaged 40,582 bopd, with current production rates from the field at c.42,000 bopd.
  • GKP is therefore on track to meet its original gross production guidance for 2019 of 32,000-38,000 bopd.
  • The first well of the drilling campaign, SH-12 came onstream on 13 November. During commissioning, the well produced at rates up to 4,600 bopd, in line with expectations and is currently producing at c.4,000 bopd. 
  • The second well in the drilling campaign, SH-9 is a crucial part of the long-term field gas management plan and is designed to assess the gas reinjection potential of the Jurassic formation. The well, which was spudded on 19 October, encountered a faulted section requiring the well to be side-tracked to the Jurassic reservoir target.
  • The SH-9 side-track necessitates a revision to the drilling schedule. Assuming a duration of one month for the side-track, the Company now expects to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.
  • The planned maintenance and debottlenecking shutdown at PF-2 was completed safely during October.
  • The PF-1 export pipeline is complete. Full oil export operations are expected to commence in the next 24 hours marking the end of export by trucking from the Shaikan Field.
  • Operations at Shaikan remain safe and secure, with no Lost Time Incidents (“LTI”) recorded in over 500 days.

Corporate

  • Cash balance of $206 million as at 9 December 2019.
  • With a robust cash position and the Company’s confidence in its delivery of the Shaikan project, a second share buyback programme for a further $25 million has been approved and an initial tranche of $15 million will be initiated today.

Jón Ferrier, CEO, commented:

The Company has made significant progress on a number of fronts; with the successful addition of SH-12 to the PF-2 production inventory and drilling of the gas appraisal well SH-9 where operations continue.  The imminent start of export through the PF-1 pipeline means all production from Shaikan will now be exported directly via pipeline, benefitting safety, reducing environmental impact and improving netbacks. 

“We are pleased to confirm that we are on track to achieve our initial average production guidance for 2019, and whilst the need to side-track SH-9 has slightly impacted our timing guidance for delivering 55,000 bopd, we remain on course to achieve further significant production growth in 2020.  

We are also pleased to announce the launch of a second $25 million share buyback programme, which is in line with our focus on returning value to shareholders, whilst retaining the capital necessary to grow the business.

(Source: GKP)

GKP appoints new Chief Financial Officer

By John Lee.

Gulf Keystone Petroleum (GKP) has announced the appointment of Ian Weatherdon as Chief Financial Officer (“CFO”).

Mr Weatherdon has over 25 years’ experience in the international oil and gas industry and joins GKP from Sino Gas & Energy Holdings Limited where he was CFO.  Sino Gas is an energy company focused on developing natural gas assets in China and was an Australian listed Company (ASX:SEH) until acquired by a private equity firm.

Prior to this, he held various executive roles, including; Vice President of Finance & Planning for the Asia-Pacific region, and Vice President of Investor Relations for Talisman Energy Inc., the Canadian exploration and production company which was acquired by Repsol in 2015.  He also held the CFO role at Equión Energía Limited, a Colombian joint venture between Talisman Energy Inc. and Ecopetrol SA.

Mr Weatherdon was educated at the University of Calgary before qualifying as a Chartered Accountant from the Chartered Professional Accountants of Canada.

Mr Weatherdon will join the Board of GKP and assume the CFO role on 13th January 2020.  As previously announced, Sami Zouari will step down as CFO and a Director of the Company on 2nd December 2019, but will assist Mr Weatherdon for a short handover period.

Jaap Huijskes, Chairman of the Company, said:

Following a thorough search process, I am very pleased to announce the appointment of Ian Weatherdon as CFO.  Ian brings a wealth of highly relevant finance experience within the sector to the management team, and to the Board.  We look forward to him joining the team and to his contribution.  

“On behalf of the Company, I would like to again thank Sami Zouari for his outstanding contribution to Gulf Keystone, since joining the Company in 2015. We wish him all the best for the future.

Save as disclosed below there is no further information to be disclosed pursuant to sections LR 9.6.11, LR 9.6.12 or LR 9.6.13 of the Listing Rules, FCA Handbook.

Previous Directorships/Partnerships:

  • Talisman SAE Pte Ltd
  • Sino Gas and Energy Holdings
  • Daily Glory Investment Limited
  • Lucky Asia Industrial Limited

(Source: GKP)

GKP Report on Payments to Govts for 2018

Report on Payments to Governments for 2018

This report sets out details of the payments made to governments by Gulf Keystone Petroleum Ltd and its subsidiary undertakings (“Gulf Keystone”) for the year ended 31 December 2018 as required under Disclosure and Transparency Rule 4.3A issued by the UK’s Financial Conduct Authority (“DTR 4.3A”) and in accordance with The Reports on Payments to Governments Regulations 2014 (as amended in 2015) (“the UK Regulations”) and our interpretation of the Industry Guidance on the UK Regulations issued by the International Association of Oil & Gas Producers.

DTR 4.3A requires companies listed on a stock exchange in the UK and operating in the extractive industry to publicly disclose payments to governments in the countries where they undertake exploration, prospection, discovery, development and extraction of oil and natural gas deposits or other materials.

This report is available to download on the Company’s website: http://www.gulfkeystone.com/investor-centre/presentations-and-reports.

Basis for preparation

Total payments below £86,000 made to a government are excluded from this report, as permitted under the UK Regulations.

All of the payments made in relation to the Shaikan Production Sharing Contract (“Shaikan PSC”) in the Kurdistan Region of Iraq have been made to the Ministry of Natural Resources (“MNR”) of the Kurdistan Regional Government (“KRG”).

Production entitlements

Production entitlements are the host government’s share of production during the reporting period from the Shaikan Field operated by Gulf Keystone. The figures reported have been produced on an entitlement basis, rather than on a liftings basis. Production entitlements are paid in-kind and the monetary value disclosed is derived from management’s calculation of estimated revenue.

Royalties 

Royalties represent royalties paid in-kind to governments during the year for the extraction of oil. The terms of the royalties are described within the Shaikan PSC. Royalties have been calculated on the same basis as production entitlements.

Taxes

Taxes include taxes levied on the income, production or profits of companies, excluding taxes levied on

consumption such as value added taxes, personal income taxes or sales taxes.

Bonuses

Bonuses include signature, discovery and production bonuses.

Licence fees

These include licence fees, rental fees, entry fees, capacity building payments, security fees and other considerations for licences or concessions.

Infrastructure improvement payments 

These include payments for infrastructure improvements, whether contractual or otherwise, such as roads, other than in circumstances where the road is expected to be primarily dedicated to operational activities throughout its useful life.

Summary of payments

KRG

Production entitlements in-kind (1) (mboe (3) )

3,877

Production entitlements in-kind (1) (2) ($ ‘000)

190,077

Royalties in-kind (1) (mboe (3) )

926

Royalties in-kind (1) (2) ($ ‘000)

45,419

Taxes in-kind (4) ($ ‘000)

2,838

Bonuses ($ ‘000)

16,000

Licence fees in-kind (5) ($ ‘000)

12,566

Infrastructure improvement payments ($)

430

Total (mboe (3) )

4,803

Total ($)

267,330

 

Notes

(1)   All of the crude oil produced by Gulf Keystone was sold by the KRG. All proceeds of sale were received by or on behalf of the KRG, out of which the KRG then made payment for cost oil and profit oil in accordance with the Shaikan PSC to Gulf Keystone, in exchange for the crude oil delivered to the KRG. Under these arrangements, payments were made by or on behalf of the KRG to Gulf Keystone, rather than by Gulf Keystone to the KRG. However, for the purposes of the reporting requirements under the UK Regulations, we are required to characterise the value of the KRG’s production entitlements under the Shaikan PSC (for which the KRG receives payment directly from the market) as a payment to the KRG.

(2)   The realised prices for crude oil sales remain subject to audit and reconciliation.

(3)   Barrels of oil.

(4)   Per the Crude Oil Sales Agreement (dated 10 January 2018), road tax is payable on export sales of Shaikan crude oil transported by road from 15 November 2017 until 31 December 2018 at $7/ton. The road tax was paid in kind, as the value of the road tax was deducted in calculating the value of production entitlements payable by the KRG to Gulf Keystone.

(5)   No cash payments were made by Gulf Keystone to the KRG. Instead, the value of these fees has been accrued and will be settled with the KRG upon finalisation of the second PSC amendment.

(Source: GKP)

GKP announces Share Buyback

By John Lee.

Gulf Keystone Petroleum (GKP) has announced its intention to commence a share buyback programme, using the company’s existing cash resources to make market purchases of Gulf Keystone common shares for a maximum consideration of US$25 million, with the first stage of that programme being initiated now to purchase Gulf Keystone shares for an initial amount of US$15 million.  

The buyback programme is aligned with the company’s focus on capital allocation and will be an accretive use of funds whilst not impacting the company’s ability to continue the execution of its existing investment programme.  It will be executed in accordance with the company’s general authorities to make on market purchases which was approved by shareholders at the company’s AGM on 21 June 2019.

The company has entered into an agreement with its brokers Canaccord Genuity Limited and Peel Hunt LLP to carry out purchases of the Initial Amount under the buyback programme on its behalf on an irrevocable and non-discretionary basis.

(Source: GKP)

Genel Energy changes Organisational Structure

Genel Energy has announced the appointment of Mike Adams (pictured) as Technical Director, and PDMR, with immediate effect.

The appointment follows a repositioning of the role of Chief Operating Officer (‘COO’), which is now split into ‘pre-production’ and ‘on production’ business lines. Reporting to the Chief Executive Officer, Mike is responsible for all pre-production activities including exploration, appraisal, and new asset acquisitions.

Mike has 28 years of experience in the oil and gas industry in a wide variety of exploration, exploitation and global business development roles. Prior to joining Genel in 2012, Mike worked in a series of technical and leadership positions for companies including British Gas, Amerada Hess, Gulf Keystone Petroleum, and Sterling Energy.

Genel expects to appoint a new COO in due course, who will be responsible for the performance of operated and non-operated producing assets.

Mike has joined Genel’s Executive Committee, along with Vrijesh Kumar (‘VK’) Gupta, who has been appointed Head of HSE and Risk Management. VK joined Genel in 2014 as Head of HSSE. There has not been a lost time incident at Genel/TTOPCO operations since 2015, constituting over eight million working hours, and Genel hit its target of zero losses of primary containment in 2018. TTOPCO has also achieved a five star grading from the Five Star Occupational Health and Safety Audit, which was conducted by the British Safety Council.

VK has 30 years of experience in oil and gas industry. Immediately prior to joining Genel, he was Vice President for HSSE for BG Group, UK, and has worked with ONGC and Enron Oil & Gas.

Bill Higgs, Chief Executive of Genel, said:

As Genel’s operations expand we are growing capability across the Company. Work is beginning at both Sarta and Qara Dagh, which Mike was integral in bringing into the portfolio, and he and his team will work with Chevron to optimise the development of these assets. He will also drive our ongoing work to strengthen the Company through value-enhancing acquisitions. VK has done a great job in leading the development of our safety culture at Genel, and will continue to ensure that our focus remains on world-class performance.

“I am pleased to have them both join our Executive Committee, bringing their years of industry experience as we progress our growth plans.

(Source: Genel Energy)

GKP CFO Steps Down

Gulf Keystone Petroleum (GKP) has announced that Sami Zouari (pictured), Chief Financial Officer (CFO), will be stepping down as CFO and a Director of the Company during the second half of the year, and will leave the business by no later than 2 December 2019.

Mr Zouari has been CFO of GKP since January 2015 overseeing both financial and commercial activities in the company.  Since joining, he has played a key role in the strategic turnaround of the business, in particular leading the 2016 implementation of a new capital structure, materially strengthening the Company’s balance sheet and bringing about a significant debt reduction.  In addition, he has overseen the $100 million bond refinancing completed in 2018, and, most recently, was instrumental in the introduction of the Company’s maiden dividend policy.

In addition to remuneration in respect of his six-month notice period which will run from the date of this announcement, Mr Zouari will remain eligible to receive a pro rata bonus under the Executive Bonus Scheme for the 2019 financial year.  With respect to Mr Zouari’s current outstanding options held under the 2016 Value Creation Plan (VCP), these will be retained by Mr Zouari and will vest according to the rules and normal operation of the VCP, subject to performance conditions being attained.

A leading search firm will be appointed to find Mr Zouari’s successor and the process is expected to be concluded over the coming months.  A further announcement will be made in due course.

Jaap Huijskes, Chairman of the Company, said:

“On behalf of the Board, I would like to thank Sami for his substantial positive contribution over the past four and a half years.  He has played a pivotal role in bringing Gulf Keystone back from the brink of collapse and helping to shape it into the profitable company it is today.

“We wish Sami well for the future and look forward to an orderly handover to his successor over the coming months.”

Jón Ferrier, Chief Executive Officer, said: 

It has been a privilege to work with Sami who has been key in the overall turnaround of the company.  His legacy will be the strong financial position GKP enjoys today, which is in marked contrast to the Company he joined in early 2015. 

“I look forward to continuing to work closely with him over the coming months, at what remains an important time for us as we materially build production from the Shaikan Field.

“I echo the Chairman’s thanks for his important contribution to the Company throughout his tenure as CFO, and have no doubt that he will be employing his intellect, strategic grasp and leadership skills in his future endeavours.

(Source: GKP)

GKP Maintains Production Guidance; Shares Up

Shares in Gulf Keystone Petroleum (GKP) were trading up 3 percent on Monday after the company provided an operational and corporate update on its operations in Iraqi Kurdistan.

Analyst Peel Hunt has reportedly re-issued its “Buy” rating during the morning.

Operational

  • Operational activity continues at the Shaikan Field (pictured) to complete the debottlenecking programme in 2019, in order to achieve the near-term production target of 55,000 bopd in Q1 2020
  • Progress is continuing with the export pipeline from PF-1 to the main export pipeline, which remains on schedule to become operational mid-year, at which point trucking of crude oil will be eliminated
  • The SH-1 workover to replace the existing tubing with larger bore tubing, has now been successfully concluded.  The result was positive with an increase in production from the well of approximately 50% to over 6,500 bopd
  • The IOT Rig 1 has been demobilised.  It will now complete a short workover for another operator nearby before returning to Shaikan for the remaining workovers in the 55,000 bopd expansion programme.  This will include the SH-3 tubing change-out, along with installation of Electric Submersible Pumps (“ESPs”) in wells SH-5, SH-10 and SH-11
  • DQE’s Rig 40 is currently being prepared ahead of the imminent Jurassic drilling campaign, which remains on schedule to be mobilised for the SH-H well later this month

Corporate

  • A renewal of the crude oil sales agreement has been signed between Gulf Keystone Petroleum International Ltd and the Kurdistan Regional Government (“KRG”)
    • The KRG will purchase Shaikan crude oil directly injected at PF-2 into the Atrush export pipeline at the monthly average Dated Brent oil price minus a total discount of c.$21 per barrel for crude
    • Until the PF-1 pipeline is completed, the KRG will continue to purchase crude oil delivered by truck at a discount of c.$22 per barrel
    • The above discounts account for quality, domestic and international transportation costs
    • The agreement is effective from 1 January 2019 until 31 December 2020
  • The Company has received final clearance from Sonatrach in relation to the Ferkane Permit (Block 126). This officially marks Gulf Keystone’s exit from its Algerian operations.
    • This positive development will allow the Company to release $10 million of past liabilities

Outlook

Despite Q1 production having been affected by SH-1 being offline for the workover, and the export system being shut-down for maintenance for a week earlier this month, the Company maintains its 2019 gross average production guidance in the range of 32,000 – 38,000 bopd

 (Sources: GKP, Yahoo!, Financial Headlines)

GKP to Increase Production; Shares Rise

Shares in Gulf Keystone Petroleum (GKP) closed 4.3 percent higher on Wednesday after the company provided an operational and corporate update.

Operational

  • Production operations, underpinned by strong performance of the Shaikan Jurassic reservoir, continue in line with expectations. Average gross production of 31,563 barrels of oil per day (“bopd”) was achieved in 2018, at the upper end of the 27,000 – 32,000 bopd guidance.
  • The plant debottlenecking programme required to expand gross production capacity to 55,000 bopd from PF-1 and PF-2 remains on schedule for completion towards the end of 2019.
  • GKP has signed an agreement with Independent Oil Tools to use ‘Rig 1’ during the Company’s workover programme to replace tubing on SH-1 and SH-3 wells and install downhole pumps (“ESPs”) on three other existing wells. The rig has been mobilised and is currently performing a workover on the SH-1 well to install larger bore tubing to increase productivity.
  • GKP has also signed an agreement with the rig operator, DQE, to use ‘Rig 40’ for its upcoming drilling campaign, due to start in March 2019, with the first four wells (needed for the 55,000 bopd target) expected to be completed in Q1 2020.
  • Since July 2018, all production from PF-2 has been exported via the Atrush export pipeline which connects to the main Kurdish export pipeline. Additional pumps along with a temporary unloading facility have now been installed at PF-2 which allows the majority of production from PF-1 to be trucked to PF-2 and exported via pipeline. Today, only ca.3,000 bopd are exported by truck via Fishkhabour which lowers HSSE exposure.
  • Further progress has been made, including delivery of all 16″ pipeline to the field, on the installation by KAR Group of the pipeline also connecting PF-1 to the Atrush export pipeline. This remains on schedule to be brought into service mid-2019, at which point the residual trucking of crude oil will be eliminated.
  • GKP and its partner MOL have agreed on a staged investment programme to increase gross production up to 110,000 bopd by 2024. The revised Field Development Plan was submitted for approval to the Ministry of Natural Resources in October 2018. The current expansion to 55,000 bopd is already underway.

Corporate

  • GKP has continued to receive regular oil payments from the Kurdistan Regional Government, with cash receipts of $225 million net to GKP during 2018.
  • Cash balance of $294 million as at 15 January 2019. The Company remains fully funded to complete the expansion to 55,000 bopd.
  • Gross capital expenditure guidance for the total 55,000 bopd project phase remains unchanged at $200 million to $230 million.
  • Of the 2018 approved gross budget of $91 million, ca.$40 million has been transferred to early 2019 which was primarily driven by delays in delivery of drilling and well completion equipment.

Outlook

  • Given the active 2019 investment programme, particularly in new wells and workovers, the Company anticipates improved production levels this year and expects gross average production guidance to be in the range of 32,000 – 38,000 bopd.
  • The above guidance takes account the latest drilling and project schedules, but also the temporary plant shut-downs required in 2019 for the tie-in of new facilities and wells being offline while workovers are taking place.
  • 55,000 bopd production target moved to early 2020 due to delays in the delivery of equipment, affecting the start date of the drilling campaign, originally January, now March 2019.
  • The Company intends to host a Capital Markets Day in the first quarter of 2019. Further details will be announced at a later date.

Commenting, Jón Ferrier, CEO, said:

Having successfully laid the foundations for our expansion plans in 2018, we are very pleased to have now initiated our new investment programme at Shaikan.

“We continue to make considerable operational headway as we look to safely increase production to 55,000 bopd, in line with our strategy. 2019 is set to be another important year for Gulf Keystone and we look forward to keeping our stakeholders updated on our ongoing progress.”

(Source: GKP)

GKP appoints new Non-Executive Director

Gulf Keystone Petroleum (GKP) has announced the appointment of Kimberley Wood as a Non-Executive Director with effect from 01 October 2018.

Kimberley Wood is a legal professional with 18 years’ experience and a specialist in the oil and gas sector.  Most recently she was Head of the Oil and Gas for EMEA at Norton Rose Fulbright LLP and remains a Senior Consultant for the firm. Throughout her career she has advised a wide range of companies in the sector, from small independents through to super majors.

Ms. Wood was a Partner at Vinson & Elkins RLLP from February 2011 to April 2015, and was previously at Dewey & LeBoeuf LLP. She was included as an expert in Energy and Natural Resources in the 2018 “Expert Guide” series and Women in Business Law, 2018 and is a member of the Advisory Board to the City of London Geological Forum.

Ms. Wood is currently a Non-Executive Director of Africa Oil Corp., an E&P company listed on the TSX (Canada) and Nasdaq OMX (Stockholm), with assets in Kenya and Ethiopia and a member of the Lundin Group.

Following Ms. Wood’s appointment, the Board will review the composition of the Board Committees.

Jaap Huijskes, Gulf Keystone’s Non-Executive Chairman, said:

“We are pleased to welcome Kimberley to the Board of Gulf Keystone Petroleum. She is a highly respected legal practitioner who has been counselling Boards for the past two decades.  We very much look forward to Kimberly’s contribution, in particular in this exciting phase of investment and of markedly increasing production from Shaikan.”

(Source: GKP)