Iraq Revenues to Exceed $150 Billion

By John Lee.

A financial advisor to the Iraqi Prime Minister has said he expects Iraq's revenues this year to exceed $150 billion.

Speaking to the state-controlled Iraqi News Agency (INA), Mudhar Muhammad Salih said sustained high oil prices, combined with non-oil revenues of "no less than $8-10 billion", will result in total revenues for whole of Iraq (including the Kurdistan Region) of at least $150 billion.

His estimates were based on IMF assumptions, including an average oil price of  $104, and daily exports of crude oil from the Baghdad-controlled region of 3.4 million barrels per day.

(Source: INA)

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Iraq Oil Export Volumes hit 2-Year High

By John Lee.

Iraq's Ministry of Oil has announced preliminary oil exports for April of 101,390,662 barrels, giving an average for the month of 3.380 million barrels per day (bpd), up from the 3.244 million bpd exported in March.

This is the highest daily export rate since the 3.438 million barrels per day achieved in April 2020.

The exports from the oilfields in central and southern Iraq amounted to approximately 98,100,042 barrels, while exports from the Kirkuk fields through the port of Ceyhan amounted to 2,991,060 barrels.

While not explicitly stated by the Ministry, these figures seem to imply that exports by road to Jordan have resumed as planned, and totalled 299,560 barrels for the month.

Revenues for the month were $10.55 billion, at an average price of $104.091 per barrel.

March's export figures can be found here.

(Source: Ministry of Oil)

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GKP outlines Payments to Govts for 2021

By John Lee.

Gulf Keystone Petroleum (GKP) has just published details of its payments to governments for the year 2021:

Introduction

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 2021 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 minerals, oil, natural gas deposits or other materials.

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 based on the monthly oil sales invoices.

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.

Licence fees and capacity building payments

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 infrastructure is expected to be primarily dedicated to operational activities throughout its useful life.

KRG

Production entitlements in-kind (1) (mboe (2))

5,151

Production entitlements in-kind (1)  ($ '000)

255,763

Royalties in-kind (1) (mboe (2))

1,255

Royalties in-kind (1) (2) ($ '000)

62,320

Licence fees and capacity building payments in-kind (3) ($ '000)

17,385

Infrastructure improvement payments (4)

342

Total (mboe (2))

6,406

Total ($ '000)

355,811

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)  Thousand barrels of oil.

(3)  Capacity building payments are deducted from the monthly crude oil sales invoice, no direct payment is made to the KRG. The value of licence, rental and security fees has been accrued and is not expected to be paid, but rather offset against revenue due from the KRG related to pre-October 2017 oil sales, which have not yet been recognised in the financial statements.

(4)  Drilling of water well, construction of water supply network and purchase of generators.

(Source: Gulf Keystone Petroleum)

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Iraq Finalises March Oil Exports

By John Lee.

Iraq's Ministry of Oil has announced finalised oil exports for March of 100,579,612 barrels, giving an average for the month of 3.244 million barrels per day (bpd), down slightly from the 3.314 million bpd exported in February.

The exports from the oilfields in central and southern Iraq amounted to approximately 99,130,677 barrels, while exports from the Kirkuk fields through the port of Ceyhan amounted to 1,488,935 barrels.

Revenues for the month were $10.913 billion, at an average price of $108.503 per barrel. According to the Ministry, this is the highest monthly oil revenue in Iraq since 1972.

February's export figures can be found here.

(Source: Ministry of Oil)

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Iraq Oil Revenues hit 50-Year High

By John Lee.

Iraq's Ministry of Oil has announced preliminary oil exports for February of 100,563,999 barrels, giving an average for the month of 3.244 million barrels per day (bpd), down slightly from the 3.314 million bpd exported in February.

The exports from the oilfields in central and southern Iraq amounted to approximately 99,115,064 barrels, while exports from the Kirkuk fields through the port of Ceyhan amounted to 1,488,935 barrels.

Revenues for the month were $11.07 billion, at an average price of $110.090 per barrel. This is the highest monthly oil revenue in Iraq since 1972.

February's export figures can be found here.

(Source: Ministry of Oil)

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Genel Energy outlines Payments to Govts for 2021

By John Lee.

Genel Energy has just published details of its payments to governments for the year 2021:

Introduction and basis for preparation

This report sets out details of the payments made to governments by Genel Energy plc and its subsidiary undertakings ('Genel') for the year ended 31 December 2021 as required under the Disclosure and Transparency Rules of the UK Financial Conduct Authority (the 'DTRs') and in accordance with our interpretation of the Industry Guidance issued for the UK's Report on Payments to Governments Regulations 2014, as amended in December 2015 ('the Regulations'). The DTRs require companies in the UK and operating in the extractives sector to publically disclose payments made to governments in the countries where they undertake exploration, prospection, development and extraction of oil and natural gas deposits or other materials.

Governments

All of the payments made in relation to licences in the Kurdistan Region of Iraq ('KRI') have been made to the Ministry of Natural Resources of the Kurdistan Regional Government ('KRG').

Production entitlements

Production entitlements are the host government's share of production during the reporting period from projects operated by Genel. Production entitlements from projects that are not operated by Genel are not covered by this report. 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 revenue from the field.

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 our Production Sharing Contracts and can vary from project to project. Royalties have been calculated on the same barrels of oil equivalent basis as production entitlements.

Materiality threshold

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

Payments to governments - 2021

Country/Licence KRI Total (1) Taq Taq (2)
Production entitlement (bbls) 1,234,564.87 1,234,564.87
Royalties in kind (bbls) 216,930.95 216,930.95
Total (bbls) 1,451,495.82 1,451,495.82
Value of production entitlements ($ million) 78.52 78.52
Value of royalties ($ million) 13.74 13.74
Capacity building payments ($ million) (3) 1.25 1.25
Total ($ million) 93.51 93.51
  1. Under the lifting arrangements implemented by the KRG, the KRG takes title to crude at the wellhead and then transports it to Ceyhan in Turkey by pipeline. The crude is then sold by the KRG into the international market. All proceeds of sale are received by or on behalf of the KRG, out of which the KRG then makes payment for cost and profit oil in accordance with the PSC to Genel, in exchange for the crude delivered to the KRG. Under these arrangements, payments are in fact made by or on behalf of the KRG to Genel, rather than by Genel to the KRG. For the purposes of the reporting requirements under the Regulations however, we are required to characterise the value of the KRG's entitlement under the PSC (for which they receive payment directly from the market) as a payment made to the KRG. Therefore, estimated value in $millions is not paid to the KRG, and is calculated to meeting the reporting requirements under the regulations
  2. The amount reported for Taq Taq, is the gross payment made to the KRI by the operating company (TTOPCO), Genel's share of these payments is equal to 55% (with the exception of capacity building payments)
  3. Capacity building payments reported are payments made by Genel directly to the KRI in cash as required by the PSC.

(Source: Genel Energy)

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GKP Revenues Triple

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) closed up nearly 13 percent on Wednesday after the company announced that revenue for 2021 had almost tripled.

In its results for the full year ended 31 December 2021, Jon Harris, Gulf Keystone's Chief Executive Officer, said:

"I am pleased to report a year of strong operational and financial delivery in 2021. With a 19% increase in gross average production to 43,440 bopd, our leverage to the recovery in oil prices and continued cost and capital discipline, we generated substantial revenue and free cash flow.

"We continued to deliver on our strategy of balancing investment in sustainable growth and shareholder returns, as we resumed drilling activities and submitted a draft Field Development Plan to the Ministry of Natural Resources while also returning $100 million of dividends to our shareholders in 2021. Following the $50 million dividend that we paid in February 2022, we are pleased to announce today the declaration of an additional $90 million of dividends. This brings aggregate shareholder distributions declared since 2019 to $340 million.

"Looking ahead to the remainder of 2022, we remain focused on delivering gross annual production of 44,000-50,000 bopd by bringing SH-15 online in Q2 2022 and optimising production with well interventions and workovers. While constructive engagement continues with the MNR on the FDP, timing of approval remains uncertain and further progress is required before we fully execute FDP activity.

"Following my first year as GKP's CEO, I would like to personally thank the Company's teams in Kurdistan and the UK for all of their efforts. We are in a strong position and I am excited about safely delivering the significant growth potential of the Shaikan Field to drive sustainable value for all of our stakeholders."

Highlights to 31 December 2021 and post reporting period

Operational

  • Continued strong focus on safety in 2021 despite one previously reported lost time incident ("LTI"); currently no LTIs recorded for  over 160 days  
  • Third consecutive year of production growth with 2021 gross average production of 43,440 bopd, towards the upper end of our tightened guidance range of 42,000-44,000 bopd and a 19% increase versus 2020
  • 2022 YTD gross average production of c.45,500 bopd, following milestone achievement in February 2022 of 100 MMstb cumulative production since inception
  • Successfully restarted drilling activities in June, resulting in two new wells, SH-13 and SH-14, coming online towards the end of the year
  • After acid stimulations, current SH-13 production in line with expectations while we continue to explore options to further increase SH-14 production
  • Following the early appearance of trace quantities of water, SH-12 is currently shut-in while we investigate near-term production options ahead of installation of planned water handling facilities  
  • Spudded SH-15, which is currently being hooked up ahead of targeted start-up in Q2 2022

Draft Shaikan Field Development Plan ("FDP")

  • Submitted draft FDP to Ministry of Natural Resources in November 2021 comprising plan to increase Phase 1 gross production plateau to between 85,000-95,000 bopd while eliminating routine flaring and significantly reducing carbon intensity
  • While final timing of approval remains uncertain due to the complexity of the project, we are providing today an interim update on progress to date on Phase 1 of the draft FDP. As we continue to review opportunities to further optimise the project, final details and cost estimates may vary and we expect to provide an update upon FDP approval
  • Expected components of Phase 1 of draft FDP:
    • Expand Jurassic gross production plateau up to 85,000 bopd
    • Test Triassic reservoir, targeting gross production plateau of up to 10,000 bopd
    • Concurrently, execute Gas Management Plan to eliminate routine flaring through gas reinjection, underpinning target of more than halving scope 1 and 2 emissions per barrel by 2025
  • From FDP approval, expected duration of Phase 1 Jurassic and Triassic projects is 36 to 42 months and the Gas Management Plan is 18 to 24 months
  • Total Phase 1 gross Capex currently estimated to be $800-$925 million, up c.$160 million from previous FDP with the objective of increasing production towards 95,000 bopd through project optimisations

Financial

  • Strong free cash flow generation of $122.2 million (2020: $(22.9) million)
  • Total dividends of $100 million paid in 2021, including a 2020 annual dividend of $25 million, a special dividend of $25 million and an interim dividend for 2021 of $50 million. An additional $50 million interim dividend was paid to shareholders in February 2022
  • Revenue almost tripled to $301.4 million (2020: $108.4 million), contributing to a return to profit after tax of $164.6 million (2020: $47.3 million loss)
  • Adjusted EBITDA increased by almost four times to $222.7 million (2020: $56.7 million) driven by higher gross production, leverage to the recovery in oil prices and the Company's continued strict control of costs:
    • Gross average production increased 19% to 43,440 bopd (2020: 36,625 bopd)
    • Realised price more than doubled to $49.7/bbl (2020: $20.9/bbl)
    • Gross Opex per barrel of $2.7/bbl (2020: $2.6/bbl), in line with 2021 guidance of $2.5-$2.9/bbl
  • Revenue receipts of $221.7 million in 2021 from the KRG for crude oil sales related to the December 2020 to August 2021 invoices and partial repayment of arrears related to the outstanding November 2019 to February 2020 invoices
  • Since the beginning of 2022, the Company has received a further $106.4 million net to GKP for crude oil sales and arrears related to the September 2021 to November 2021 invoices. As at 29 March 2022, the outstanding arrears balance is $21.9 million net to GKP
  • Net Capex of $50.8 million (2020: $45.9 million), primarily related to the completion of the SH-13 and SH-14 wells and debottlenecking of PF-2
  • Robust cash balance of $182.7 million at 29 March 2022

Outlook

  • Remain focused on delivering 2022 gross average production of 44,000-50,000 bopd reflecting the anticipated production contribution from SH-15 and the benefits of well intervention and workover activities
  • 2022 net capital expenditure guidance of $85-$95 million:
    • Includes completion of SH-15 drilling, well interventions and workovers, and activity that enables us to expedite the FDP following approval 
    • With progress on the FDP, the Company expects to resume drilling and increase 2022 capital guidance
  • Gross Opex guidance of $2.9-$3.3/bbl, driven by increased operational activity and the continued catch up of previously scheduled work programmes deferred due to COVID-19
  • Today declaring $90 million of dividends, representing further delivery against GKP's strategic commitment of balancing investment in sustainable growth with shareholder returns:
    • $25 million final 2021 ordinary dividend subject to approval at AGM on 24 June 2022
    • $65 million interim dividend, expected to be paid on 13 May 2022, based on a record date of 29 April 2022 and ex-dividend date of 28 April 2022
    • The Company will disclose the US dollar and pounds sterling rate per share for both dividends prior to their ex-dividend dates
  • Assuming timely payment of invoices and continuing strong oil prices, we are expecting strong cash flow generation in 2022. This would provide flexibility to fund a potential increase in capital expenditure, with progress on the FDP, and the opportunity for further distributions to shareholders, while preserving adequate liquidity and maintaining a robust balance sheet

More here.

(Source: GKP)

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Iraq Finalises February Oil Exports

By John Lee.

Iraq's Ministry of Oil has announced finalised oil exports for February of 92,790,173 barrels, giving an average for the month of 3.314 million barrels per day (bpd), up from the 3.203 million bpd exported in January.

The exports from the oilfields in central and southern Iraq amounted to approximately 91,314,828 barrels, while exports from the Kirkuk fields through the port of Ceyhan amounted to 1,475,345 barrels. Although not stated explicitly, this implies there were no exports to Jordan by truck.

Revenues for the month were $8.809 billion, at an average price of $94.936 per barrel.

January's export figures can be found here.

(Source: Ministry of Oil)

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Iraq Achieves Highest Oil Revenue in 8 Years

By John Lee.

Iraq's Ministry of Oil has announced that the average daily exports and revenues generated from the export of crude oil for February 2022 are the highest in eight years.

The Minister of Oil, Ihsan Abdul-Jabbar Ismail, said that the Ministry, despite the economic and security challenges, fluctuations in global oil markets and the restriction of national production within OPEC+ agreement, managed to achieve a daily export rate of about 3.314 million barrels and financial revenues of more than $8.5 billion, the highest in eight years.

(Source: Ministry of Oil)

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Iraq Oil Exports Rise to $8.5bn in February

By John Lee.

Iraq's Ministry of Oil has announced preliminary oil exports for February of 92,790,173 barrels, giving an average for the month of 3.314 million barrels per day (bpd), up from the 3.203 million bpd exported in January.

The exports from the oilfields in central and southern Iraq amounted to approximately 91,314,828 barrels, while exports from the Kirkuk fields through the port of Ceyhan amounted to 1,475,345 barrels. Although not stated explicitly, this implies there were no exports to Jordan by truck.

Revenues for the month were $8.54 billion, at an average price of $92.083 per barrel.

January's export figures can be found here.

(Source: Ministry of Oil)

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