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.