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GKP Shares Rally on Half-Year Results

By John Lee.

Shares in Gulf Keystone Petroleum (GKP), a leading independent operator and producer in the Kurdistan Region of Iraq, were trading 12 percent higher today after the company announced its results for the half year ended 30 June 2021.

Jon Harris (pictured), Gulf Keystone’s Chief Executive Officer, said:

“I am pleased to report strong operational and financial performance in the first half of 2021, despite the continuing challenges of the COVID-19 pandemic. Our leverage to the recovery in oil prices, combined with safe and reliable production towards the top end of our guidance range and a continued sharp focus on costs, has resulted in significant cash flow generation. With continued strong production performance from the Shaikan Field, we are tightening the 2021 production guidance range to 42,000 – 44,000 bopd.

“We continue to deliver against our commitment to balance investment in growth and returns to shareholders. Today, we are pleased to declare an interim dividend for 2021 of $50 million, bringing total dividends this year to $100 million.

“The early restart of the drilling campaign in June enables us to maintain production growth momentum and to drill an additional well, SH-G, in 2021 after completion of SH-14, the final well in the 55,000 bopd investment programme. SH-14 is expected to come onstream in Q4 2021, while we expect SH-G to come onstream in Q1 2022.

“We continue to work closely with the MNR and our partner on the preparation of the Shaikan FDP and expect to submit the FDP to the MNR in Q4 2021 for approval.“

Highlights to 30 June 2021 and post reporting period

Operational

  • Remain focused on safe and reliable operations with No Lost Time Incident (“LTI”) recorded for over 600 days and no recordable incidents for around 550 days
  • Continuing to manage the challenges presented by COVID-19 to protect the health of staff and contractors
  • Strong average gross 2021 production to 31 August 2021 of c.42,900 bopd, up 18% from the corresponding period in 2020 and towards the top end of 2021 guidance; gross production on 31 August 2021 was 42,842 bopd
  • Drilling activities progressing well following early restart in June; SH-13 expected to come onstream imminently ; drilling of SH-14 underway with completion and hook-up expected in Q4 2021
  • Capitalising on early restart of drilling and opportunity to maintain a continuous drilling programme, planning to spud SH-G in Q4 2021, after completion of SH-14. SH-G is expected to commence production in Q1 2022
  • SH-G, the first well after the 55,000 bopd expansion programme, is an opportunity to maintain growth and momentum while we prepare the Shaikan Field Development Plan (“FDP”)
  • Completed debottlenecking of PF-2, increasing total field processing capacity to c.57,500 bopd

Financial

  • H1 2021 revenue up 162% to $130.7 million (H1 2020: $49.9m) contributing to a return to profit after tax of $64.8 million (H1 2020: $33.1 million loss)
  • Adjusted H1 2021 EBITDA of $93.8 million, more than triple $27.5 million in H1 2020, driven by the Company’s strong leverage to the recovery in oil prices, increase in production and low-cost base:
    • Realised price up 129% to $43.7/bbl (H1 2020: $19.1/bbl)
    • H1 2021 gross average production up 17% to 43,516 bopd (H1 2020: 37,159 bopd)
    • H1 2021 gross Opex per barrel of $2.4/bbl, below 2021 guidance range of $2.5-$2.9/bbl
  • Net Capex of $14.1 million (H1 2020: $38.5 million), with the restart of the 55,000 bopd expansion programme
  • Total dividends of $50 million paid to date, including an annual dividend of $25 million and a special dividend of $25 million
  • Robust cash balance of $177.4 million at 1 September 2021

Outlook 

  • Tightening 2021 average gross production guidance range from 40,000 – 44,000 bopd to 42,000 – 44,000 bopd
  • Maintaining 2021 gross Opex per barrel guidance of $2.5 to $2.9/bbl
  • The addition of SH-G increases 2021 net Capex guidance from $55-$65 million to $75-$85 million
  • With continued constructive engagement with the Ministry of Natural Resources (“MNR”) and the Company’s partner Kalegran B.V. (a subsidiary of MOL Hungarian Oil & Gas plc) (“MOL”), Gulf Keystone is expecting to submit an FDP in Q4 2021 to the MNR for approval
    • The FDP includes the continued ramp-up of Jurassic oil production, appraisal of the Triassic reservoir and a Gas Management Plan
    • We continue to optimise the scope, schedule and cost of the FDP
  • Developing Gulf Keystone’s sustainability strategy, with the primary environmental focus on more than halving CO2 per barrel by 2025 by eliminating flaring
  • In line with the Company’s strategy of balancing investment in growth and returns to shareholders, Gulf Keystone is pleased to declare an interim dividend for 2021. The 2021 interim dividend is $50 million to be paid on 8 October 2021 based on a record date of 24 September 2021
  • Following payment of the interim dividend, the Company will have distributed $100 million of dividends in 2021
  • With continuing strong oil prices and cash flow generation, there may be opportunities to consider further distributions to shareholders and to optimise the capital structure

More here.

(Sources: GKP, Yahoo!)

The post GKP Shares Rally on Half-Year Results first appeared on Iraq Business News.

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GKP Shares Rise on Corporate Update

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) ended the day up more than 6 percent on Friday, as the Kurdistan-focused oil producer gave an operational and corporate update:

Jon Harris (pictured), Gulf Keystone’s Chief Executive Officer, said:

“We continue to safely navigate a challenging operating environment due to COVID-19, with gross average year-to-date production of c.43,600 bopd, up almost 20% from 2020 annual average gross production. Today, we are pleased to announce that we have restarted work to complete SH-13, marking the resumption of drilling activities ahead of schedule.

“As a result, we now expect to increase gross production towards 55,000 bopd in Q4 2021 and to be at the upper end of 2021 guidance (40,000-44,000 bopd) as we continue to develop and realise the value of the Shaikan Field’s substantial reserves and resources for the benefit of all stakeholders.“

 55,000 bopd investment programme

  •  Successful restart of drilling activities, with commencement of SH-13 completion ahead of the previously announced schedule of Q3 2021.
  • After SH-13, SH-I will be drilled and electric submersible pumps will be installed in two existing wells.
  • Gross production is now expected to increase towards 55,000 bopd in Q4 2021, versus previous guidance of Q1 2022.

Operational

  • Continued strong safety performance, with no Lost Time Incident (“LTI”) recorded for over 530 days.
  • Continuing to effectively manage the impact of COVID-19 on production operations and the resumption of drilling activities despite continued challenges on the ground.  
  • Gross average production from the field in 2021 to date of c.43,600 bopd, in line with 2021 guidance.

Financial

  • $100.8 million ($78.9 million net to GKP) received from the Kurdistan Regional Government in 2021 to date for payments of crude oil sales and recovery of outstanding arrears. 
  • As previously announced, proposing a $25 million annual dividend and $25 million special dividend, both for approval at next week’s Annual General Meeting as we continue to balance investment in growth and returns to shareholders.
  • Retain a robust balance sheet, with a cash balance of $195 million as at 10 June 2021.

Outlook 

  • Expect 2021 average gross production guidance to be towards the upper end of the 40,000 to 44,000 bopd guidance range following early resumption of drilling activities.
  • 2021 guidance of $55-$65 million net capex and $2.5 to $2.9/bbl gross unit Opex remains unchanged.
  • Continuing to progress the preparation of the Field Development Plan, including the Gas Management Plan, through engagement with the Ministry of Natural Resources and other stakeholders; we will provide updates as this work progresses.

(Sources: GKP, Google)

The post GKP Shares Rise on Corporate Update first appeared on Iraq Business News.

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Gulf Keystone announces Special Dividend

Gulf Keystone Petroleum (GKP) has announced that its Board has approved the declaration of a special dividend of $25 million.

Jon Harris (pictured), Gulf Keystone’s Chief Executive Officer, said:

“Given continuing strong oil prices, improving macroeconomic conditions and our robust financial position, we are pleased to deliver on our commitment to consider further shareholder distributions and declare a $25 million special dividend, bringing total dividends for shareholder approval at the upcoming AGM to $50 million.

“We will continue to balance investment in growth and returns to shareholders as we develop and realise value from the Shaikan Field for the benefit of all stakeholders.”

Following the previously announced resumption of the Company’s annual dividend policy and declaration of a $25 million dividend, Gulf Keystone will be seeking shareholder approval at the Annual General Meeting (“AGM”) on 18 June 2021 to pay total dividends of $50 million, comprising the $25 million annual dividend and today’s announced $25 million special dividend.

The annual dividend of $25 million is expected to be paid on 2 July 2021, based on a record date of 25 June 2021. The special dividend of $25 million is expected to be paid on 6 August 2021, based on a record date of 30 July 2021.

Both dividends will be payable in pounds sterling and converted from dollars at the spot rate prevailing on the relevant record dates.

As at 12 May 2021, the Company had a cash balance of $179 million.

(Source: GKP)

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GKP Shares Rally following Update

By John Lee.

Shares in Gulf Keystone Petroleum, have rallied more than 20 percent after the company issued an operational and corporate update on Tuesday:

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

“We have made significant operational strides in recent months, ensuring we remain on-track to achieve our revised targets for the year. I am pleased to update stakeholders on further success in executing the previously reported, low-cost, high-impact investments that have so far increased gross production to 42,000 bopd, in excess of the initially targeted increase of 5,000 bopd.

“The Shaikan Field recently achieved an important milestone of cumulative production of 80 million stock tank barrels. This is a clear testament to not only the quality of the asset, from which there remains significant untapped potential, but also the professionalism and dedication of the team. We look forward to updating the market on further progress early in 2021.“

Operational

  • Following on from the successful work over of the SH-12 well, the Company has progressed the previously announced low-cost, high-impact investments to further increase field production.
  • The SH-9 well, on which activity was suspended in March 2020 due to COVID-19, has now been successfully tied-in to PF-1 and is on production. PF-1 is now operating at its current maximum processing capacity of c.27,500 bopd. Debottlenecking activities at PF-1 remain on-track to further increase production capacity to over 30,000 bopd during Q1 2021.
  • Gross Shaikan production is currently at c.42,000 bopd, c.20% above the November 2020 average rate.
  • Average gross production for the year is expected to be at, or slightly above, 36,000 bopd, the top end of the guidance range.

Financial

  • The Company remains on track to achieve targeted G&A and Opex savings of at least 20% compared to 2019 and 30% on a run-rate basis.
  • Net capex for 2020 is expected to be at or slightly exceed the top end of the guidance range of $48 million, following the $3 million investment in high-impact projects.
  • The Kurdistan Regional Government (“KRG”) has maintained regular payments for eight months, including the recent October receipt.
  • The Company has extended its hedging programme, establishing a H1 2021 floor price of $35/bbl on c.60% of production, based on current production levels.
  • As at 14 December 2020, the Company had a cash balance of $142 million.

Outlook

  • With completion of the debottlenecking of PF-1, GKP is expected to deliver a further increase in production in Q1 2021.
  • In line with the KRG’s commitment to review the outstanding November 2019 to February 2020 invoices totalling $73.3m (net) when oil prices reached $50/bbl, we are pleased to confirm receipt of a proposal to repay the arrears. We look forward to further engaging with the KRG on this matter and will provide an update in due course.
  • GKP is well positioned to restart its drilling programme to achieve 55,000 bopd when circumstances permit.
  • The Company remains committed to maintaining its strong financial position and aims to return to a balance of production growth and shareholder distributions, as conditions continue to improve.
  • The search process to identify a successor for CEO, Jón Ferrier, is ongoing.

AGM Update

In accordance with the 2018 UK Corporate Governance Code, the Company can confirm that following the Annual General Meeting held on 19 June 2020, where three of the proposed Resolutions did not attain the support of 80% of the votes, members of the Board and executive management team have consulted with several of the Company’s large shareholders. Mr Garrett Soden has been reappointed to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria, GKP’s largest shareholder. The Company continues to actively engage with its shareholders.

(Source: GKP)

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Soden Re-joins GKP Board

Further to the recent announcement that Garrett Soden was to be re-appointed to the Board of Gulf Keystone Petroleum (GKP) as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria GmbH, the Company is pleased to confirm that the formal appointment process has now been completed and as such welcomes Mr Soden back to the Board of Gulf Keystone.

Garrett Soden has extensive experience as a senior executive and board member of various public companies in the natural resources sector. He is currently President and CEO of Africa Energy Corp., a Canadian oil and gas exploration company focused on South Africa, and is also a Non-Executive Director of Etrion Corporation, Noble Group Holdings Limited and Panoro Energy ASA. Mr Soden has undertaken to conform to UK corporate governance standards in respect of external appointments.

Directorships held within the past five years:

Phoenix Global Resources plc

Gulf Keystone Petroleum Ltd

Petropavlovsk plc

PA Resources AB

RusForest AB

(Source: GKP)

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Ferrier Steps Down as CEO of GKP

Gulf Keystone Petroleum (GKP) has announced that Jón Ferrier (pictured), Chief Executive Officer, has informed the Board of his intention to retire from the Company upon appointment of a successor and after a period of handover.

The Company is now commencing a formal, externally facilitated, search process and will provide an update as and when appropriate.

Jaap Huijskes, Chairman of the Company, said:

“Jón Ferrier took the helm five years ago, immediately leading the Company through its financial restructuring and breathing new life into GKP as an attractive investment proposition.  He has brought us the experience he gained over a long and distinguished career, resulting in GKP meeting the highest standards across all aspects of its business. 

“Today, Gulf Keystone is a highly respected and successful E&P Company, for which Jón deserves considerable credit.  On behalf of the Board and everyone within the Company I would like to thank Jón for his leadership and resolute commitment over the past five years.  We will be sad to see him step down when a successor is found and wish him all the best for his retirement.”   

(Source: GKP)

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GKP to Cut Workforce by 40%

By John Lee.

Gulf Keystone Petroleum (GKP) has provided an operational and corporate update in advance of Friday’s Annual General Meeting:

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

“In response to the unprecedented COVID-19 pandemic and macroeconomic conditions, we took decisive actions to preserve liquidity and safeguard the long-term health of the business. We are now well placed to weather the current environment and are able to move quickly back to growth at the right time. 

“Our cost reduction initiatives have been thorough, and I am grateful to our staff and contractors for their commitment and support.  Whilst uncertainty around the timing of the end of the crisis persists, the partial oil price recovery gives us some grounds for optimism about the future and our return to delivering the significant untapped value in Shaikan.“

Operational

  • Maintaining strong focus on safety with zero LTIs recorded in 2020.
  • In order to protect all personnel, the Company continues to actively manage its working practices in light of the COVID-19 pandemic observing all of the appropriate protection measures.
  • Despite the challenges presented by COVID-19, production operations continue at c.36,000 bopd (gross). Average gross production for the year to date is 37,232 bopd.
  • DQE’s Rig 40 has been stacked on site at zero cost, which will aid the timely resumption of drilling activities, when appropriate.
  • During this period of reduced activity, the Company continues to optimise its plans for a quick and effective restart of the 55,000 bopd expansion project.

Financial

  • As a result of a continued rationalisation of the organisation, expenditures, and contract renegotiations, the Company remains on track to achieve its previously announced target of Opex and G&A savings in excess of 20% in 2020 compared to 2019. On a run-rate basis, we are targeting to achieve savings of c.30%.
    • The Company is introducing 2020 guidance for Opex of $2.7 to $3.1 per barrel (vs $3.9 per barrel in 2019).
    • The workforce is in the process of being reduced by c.40%, including over 60% of expatriates, due to the reduction in the work programme.
  • Capex for 2020 remains in the range $40 – $48 million (net), a 50% reduction compared to 2019, of which $30 million (net) had been spent by the end of April 2020.
  • Cash balance of $144 million as at 17 June 2020.
  • Payments by the Kurdistan Regional Government to GKP are in line with the peer group, with invoices from March 2020 onwards being settled the following month. There is an ongoing dialogue relating to the payment of invoices for November 2019 to February 2020, aggregating $73 million (net).

Corporate

  • Garrett Soden is to be welcomed back to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria.
  • Mr Soden will be formally appointed following completion of the appointment process and will bring valuable financial and industry experience.  Mr Soden was a Non-Executive Director between 2016 and 2019 and he has undertaken to conform to UK corporate governance standards in respect of external appointments.

Outlook

  • With the Company’s ongoing prudent approach to managing its financial position and the decisive measures taken to reduce its cost structure to preserve liquidity, GKP remains financially resilient to manage through the current macro environment.
  • Despite a partial recovery in oil price, the Company closely monitors market dynamics and will continue to take the appropriate actions to preserve value in Shaikan.
  • GKP looks forward to resuming investment and shareholder distributions when conditions allow.

(Source: GKP)

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GKP Shares up 10% on Results

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were up around 10 percent on Thursday morning, following the company’s announcement of its results for the year ended 31 December 2019.

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

“2019 saw a step change in activity at Shaikan; we delivered production and controlled expenditures in line with guidance, returned just under $100 million to our shareholders, and maintained a strong balance sheet with cash of $164 million at 22 April 2020. 

“The current oil price and macro-economic uncertainty continues to have profound, far-reaching effects. We have taken concrete steps to protect value and assure the viability and financial strength of our business, both for today and the longer-term. As previously announced, we have suspended guidance and, while we were on-track to achieve 55,000 bopd in Q3 2020, we have stopped further expansion activity and are currently demobilising the team until circumstances improve. While we have secured ongoing production operations, we continue to closely monitor market dynamics and will take appropriate further actions to preserve value.

“We continue to focus on strict financial discipline and maintaining our strong balance sheet.  GKP remains underpinned by Shaikan, which continues to perform in line with expectations, and we look forward to resuming expansion activity and delivering the underlying value of the field for all stakeholders upon resolution of the outstanding payments from the Kurdistan Regional Government (“KRG”) and an improvement in economic conditions.”

 Highlights to 31 December 2019 and post reporting period

Operational

  • Robust safety performance during a period of increased operational activity.
  • GKP remains committed to the welfare of all personnel and the safety of our operations. To limit the risk and transmission of COVID-19, only location essential personnel are working at GKP sites and offices.  
  • Average gross production in 2019 of 32,883 bopd, in line with original guidance.
  • Gross production from the field in 2020 to date of c.38,000 bopd.
  • As a result of COVID-19, the focus on cost control and overdue payments from the KRG, operations have been reduced to focus on minimum safety critical activities required for production.
  • Once macro conditions improve, including resolution of outstanding payments from the KRG, the Company will restart expansion activity to increase production to 55,000 bopd.

Financial

  • In 2019, the Company achieved its production, capital expenditures, operating costs and G&A costs guidance.
  • Profit after tax of $43.5 million (FY 2018: $79.9 million) and revenue of $206.7 million (FY 2018: $250.6 million) were down, as Brent oil prices averaged $64 per barrel in 2019 compared to $71 per barrel in 2018.
  • Net capital investment in Shaikan of $90.0 million (FY 2018: $35.4 million).
  • Maiden dividend and share buyback programmes returned $79 million in 2019. Subsequent completion of the share buyback programme brought total returns to $99 million.
  • Cash balance of $190.8 million at year end (2018: $295.6 million).

Outlook

  • The Company is actively focused on maintaining a robust financial position and is targeting a major reduction of costs across the business, while maintaining a strong focus on safety and long-term asset reliability. These actions are being taken in response to the current oil price environment and in anticipation of a protracted recovery:
    • net Capex for 2020 include expenditures incurred to date and remaining firm commitments andare expected to be $40-$48 million ($50-$60 million gross), a c.50% reduction compared to 2019;
    • targeted Opex and G&A savings of at least 20%; and
    • in process of reducing expatriate workforce by c.60%.
  • The KRG has committed to paying for monthly production by the 15th day of each following month starting with March 2020, for which payment was recently received.  Dialogue with the KRG is continuing relating to payment of outstanding invoices for November 2019 to February 2020 aggregating $93.7 million gross ($73.3 million net to GKP).
  • Guidance for 2020 suspended until the outlook becomes clearer.
  • Resumption of distributions is dependent on an improvement in macro-economic conditions, resolution of outstanding payments from the KRG and a clear operational outlook.
  • With a strong balance sheet, limited capital commitments and an existing low-cost production base, GKP is well placed to navigate through these challenging conditions and, if necessary, to withstand a lower oil price throughout 2020 and 2021.

The Company’s 2019 Full Year Results presentation is available on the investor relations section of the website: https://www.gulfkeystone.com/

(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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Shaikan Crude Oil Sales Agreement Signed

Gulf Keystone Petroleum (GKP) has announced that a crude oil sales agreement has been signed between Gulf Keystone Petroleum International Ltd (“GKPI”), on behalf of the Shaikan contractors, and the Kurdistan Regional Government (KRG).

Under the agreement, the KRG will purchase Shaikan crude oil at the monthly average Dated Brent oil price minus a total of c.$22 per barrel for quality discount, as well as domestic and international transportation costs. This discount is based on the same variables contained within other oil sales agreements in the Kurdistan Region of Iraq. 

The majority of the Shaikan crude oil is currently being transported by truck from the Shaikan field to Fishkhabour, where it has been injected into the export pipeline to Turkey gradually since 15 November 2017, while the remainder is sold domestically. 

The agreement is effective from 1 October 2017 until 31 December 2018.  GKPI will now invoice the KRG for oil sales for the months from October 2017 onwards on the basis of the realised netback price and net entitlement volumes in accordance with the Shaikan Production Sharing Contract, as amended by the 1st PSC Amendment in 2010 (“Shaikan PSC”).

The Company continues its discussions with the KRG’s Ministry of Natural Resources (“MNR”) on the terms of a potential 2nd PSC Amendment.  The Company will inform the market of any material developments in this regard.

(Source: GKP)