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GKP Receives Further Payment from KRG

By John Lee.

Gulf Keystone Petroleum (GKP) has confirmed that a gross payment of $19.7 million ($15.5 million net to GKP) has been received from the Kurdistan Regional Government (KRG) for Shaikan crude oil sales during March 2018.

(Source: GKP)

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GKP appoints new Non-Exec Chairman

Gulf Keystone Petroleum (GKP) has announced the appointment of Jacobus (“Jaap”) Huijskes as Non-Executive Chairman effective as of 11 April 2018, immediately following the announcement of the Company’s 2017 Full Year Results.  

Jaap Huijskes, who replaces Keith Lough as Chairman, joined the Board of Gulf Keystone in November 2017 as a Non-Executive Director.  Today’s news follows the January 2018 announcement of Mr Lough’s intention to step down from the Board.  Mr Huijskes selection was the result of a process undertaken by the Nominations Committee and was unanimously supported by the Board. 

Jaap Huijskes has had a distinguished career in the oil and gas sector, including relevant experience in the Kurdistan region of Iraq.  He was most recently a Director at OMV (AG:OMV), the largest listed Austrian oil and gas company, where he was responsible for Exploration and Production (E&P) and oversaw the Company’s expansion into new territories.  He also played a key role in OMV’s operations in the Kurdistan region of Iraq. 

Prior to this, Mr Huijskes held a number of senior positions at Shell, including Executive Vice President of Upstream Major Projects and Project Director at the Sakhalin Energy Investment Company, which was set up to develop the Sakhalin-II oil and gas project in Russia.  He holds a Masters in Mechanical Engineering from Delft University of Technology in The Netherlands. 

In addition to serving on the Board of Gulf Keystone, Mr Huijskes is currently Non-Executive Chairman of the Dutch state-owned integrated oil and gas company, Energie Beheer Nederland. He was a member of OMV’s Executive Board for E&P between 2010 and 2016.

Commenting on today’s announcement, Jaap Huijskes, said:

“I am delighted to have been selected to take on the Non-Executive Chairman role.  Gulf Keystone has a strong investment case, underpinned by a great asset and management team. 

“With recent positive progress, including the signing of the important Shaikan Crude Oil Sales Agreement, we are looking forward to recommencing investment into the field and generating value for our investors, as well as the Kurdistan Region of Iraq.  I look forward to leading the Board and supporting the Company at this exciting time.

“On behalf of the Board and everyone at GKP, I would like to thank Keith Lough for his leadership and significant contribution to the business over the past two years.  It was a challenging period for the Company and we are grateful for his hard work and wise counsel.  We wish him the very best for the future.”   

(Source: GKP)

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GKP to Invest Further in Shaikan

Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, is today providing an operational and corporate update.

This is in advance of the Company’s full year results for the period ended 31 December 2017 which are expected to be announced on Wednesday 11 April 2018. The information contained herein has not been audited and may be subject to further review and amendment. 

Operational Update

  • GKP has continued its strong safety performance in 2017 and into 2018 with no lost-time incidents at the Shaikan field. Operations in the area remain secure.
  • Plant uptime of 99% in 2017 helped contribute to an average gross production of 35,298 barrels of oil per day (“bopd”), in the middle of our guidance range of 32,000-38,000 bopd for the year.
  • Since 15 November 2017, the Kurdistan Regional Government’s (“KRG”) Ministry of Natural Resources (“MNR”) has resumed exporting the Shaikan crude via the export pipeline to Turkey. The Company sees the latest export development as confirmation of the suitability of the Shaikan crude within the Kurdish blend.
  • The Company was encouraged by the signature of the crude oil sales agreement announced on 16 January 2018. The Company is also in dialogue with the MNR on the terms of a potential 2nd PSC Amendment.
  • Subject to resolution of the commercial matters and the KRG continuing regular payment of monthly invoices, the Company currently intends on investing this year in wells and facilities to expand production capacity to 55,000 bopd.
  • Part of these investments would include the hook-up of a short (400m) spur pipeline from Production Facility 2 to the Atrush export line, which links to the main export oil line to Turkey.  This will reduce trucking requirements, HSE risk and improve netbacks.
  • Final investment plans for 2018 are under review and will be provided to the market in due course.
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Shaikan Payment Update

By John Lee.

Gulf Keystone Petroleum (GKP) has confirmed that a gross payment of $15.0 million ($12.0 million net to GKP) has been received from the Kurdistan Regional Government (KRG) for Shaikan crude oil export sales in August 2017.

(Source: GKP)

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GKP Confirms Shaikan Operating Securely

Gulf Keystone Petroleum (GKP) confirmed on Friday morning that its operations in Kurdistan continue safely and securely with the Company achieving average production of 34,525 bopd from Shaikan since the beginning of October 2017.

Shaikan is performing as expected with cumulative production from the field now at 42.4 million barrels, an average of 35,966 bopd in 2017. The Company is on track to meet gross production guidance of 32,000-38,000 bopd for the year.

In line with the Ministry of Natural Resource’s crude export strategy, Shaikan crude production is still being exported via trucks to Turkey. Trucking operations continue uninterrupted with approximately 200 trucks loaded daily.

Following the recent payment for the October 2017 Reinstated Notes coupon of $5 million, the Company’s current cash position is $147.2 million.

Gulf Keystone will keep the market appraised of any changes to its normal operations.

Commenting on today’s announcement, CEO, Jón Ferrier, said:

“We remain committed to ensuring safe and secure operations in Kurdistan, and we continue to monitor the geo-political situation closely. Despite the challenges facing the region, we are maintaining stable operations.”

(Source: Gulf Keystone)

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Turkey Threatens to Invade Iraq, Cut Off Oil Pipeline

By John Lee.

Turkish President Recep Tayyip Erdoğan (pictured) has threatened to invade Iraq, and said he could cut off the oil export pipeline from Iraq to the Turkish port of Ceyhan, following the vote supporting independence in Iraqi Kurdistan.

“We have the tap,” he said. “It is done once, we close the tap.”

The pipeline typically carries between 500,000 and 600,000 barrels of crude oil per day.

In a strongly-worded speech, Erdoğan said that fighting the Iraqi Kurdish bid for independence was “a matter of survival“.

His Prime Minister, Binali Yildirim, added that Ankara could take punitive measures involving borders and air space against the Kurdistan Regional Government (KRG).

Shares in Genel Energy fell 7 percent in early trading on Tuesday, but had recovered by lunchtime; Gulf Keystone Petroleum (GKP) was down 2 percent, while Norway’s DNO was 5 percent higher.

(Sources: The Independent, Alliance News, Reuters, Yahoo!)

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GKP Shares Down on Half-Year Results

Shares in Gulf Keystone Petroleum (GKP) were trading down 3 percent this morning following the announcement of its results for the half year ended 30 June 2017.

Reuters quotes analysts at Cenkos Securities as saying that further clarity on payment is required before GKP can commit to proper capital expenditure.

Highlights to 30 June 2017 and post reporting period

Operational

  • Gulf Keystone’s operations in the Kurdistan Region remained safe and secure throughout H1 2017 with plant uptime at PF-1 and PF-2 of over 99% with no lost-time incidents.
  • Shaikan achieved average daily production of 36,664 bopd.
  • Cumulative production from Shaikan has now exceeded 40 million barrels.
  • In March 2017, Shaikan-8 (“SH-8”) was brought back on-stream.
  • In April 2017, ERC Equipoise verified remaining gross Shaikan 2P reserves of 615 MMstb, as at 31 December 2016.
  • With gross production of c.35,350 bopd in Q3 2017 so far, gross production guidance for 2017 remains at 32,000-38,000 bopd.
  • Operational strategy for investment into Shaikan has been matured throughout 2017.

Financial

  • Cash flow positive through H1 2017.
  • The Group has continued to receive regular payments from the Ministry of Natural Resources (“the MNR”) of $15 million gross ($12 million net to GKP) with cash receipts of $84 million net to GKP year to date.
  • Continued cost control with gross operating costs per barrel of $3/bbl (H1 2016:$4/bbl).
  • Profit after tax of $0.7 million (H1 2016 (as restated): loss after tax of $232.6 million).
  • As at 30 June 2017, the Group estimates an unrecognised revenue receivable of $33 million net to GKP with regards to unpaid export sales (December 2016: $25 million) and $76 million net to GKP for the past costs associated with the Shaikan Government Participation Option (December 2016: $71 million).
  • Cash balance at 30 June 2017 of $118.8 million against $100 million debt principal.
  • Cash balance at 18 September of $133.8 million.
  • April 2017, decision taken to pay Reinstated Notes coupon of $5.1 million at 10% interest rate. The decision regarding the October 2017 coupon will be communicated to the market in due course.

Outlook

  • The Company is progressing in its ongoing discussions with the MNR regarding commercial and contractual conditions, in particular those around regular payments conforming to the Shaikan Production Sharing Contract (“PSC”) and crude marketing arrangements.
  • GKP is preparing to make further investments to maintain plateau production at the nameplate capacity of 40,000 bopd with a view to increasing to 55,000 bopd, and beyond, subject to MOL and MNR approvals, a regular payment cycle from the MNR and a commercially acceptable investment environment.

Jón Ferrier (pictured), Gulf Keystone’s Chief Executive Officer, said:

“The first half of the year was a period of solid operational delivery, which has seen the Shaikan field continue to perform in line with expectations.

“The Company continues its dialogue with the MNR with the objective of achieving contractual and commercial clarity. Whilst continuing to maintain a rigorous and disciplined approach to its cost base, Gulf Keystone remains cash flow positive and well placed to continue to invest in increasing production from Shaikan.”

Full results here.

(Sources: Gulf Keystone Petroleum, Reuters, Yahoo!)