REG-Gulf Keystone Petroleum Ltd 2023 AGM, Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

16/06/2023 07:15

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   Gulf Keystone Petroleum Ltd (GKP)
   2023 AGM, Operational & Corporate Update

   16-Jun-2023 / 07:00 GMT/BST

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   16 June 2023

                                        

                                        

                    Gulf Keystone Petroleum Ltd. (LSE: GKP)

                   (“Gulf Keystone”, “GKP” or “the Company”)

                                        

                    2023 AGM, Operational & Corporate Update

    

   Ahead of today's  2023 Annual  General Meeting ("AGM"),  Gulf Keystone,  a
   leading independent operator and producer in the Kurdistan Region of Iraq,
   provides an operational and corporate update.

    

   Jon Harris, Gulf Keystone's Chief Executive Officer, said:

   “Gulf Keystone entered  2023 following  a year of  strong operational  and
   financial  performance  and  continued  delivery  against  the   Company’s
   disciplined  strategy  of  investing  in  profitable  production   growth,
   sustainable shareholder returns  and maintaining a  strong balance  sheet.
   Following the suspension of Kurdistan crude  exports on 25 March 2023  and
   continued  delays  to  oil  sales  payments,  our  focus  has  shifted  to
   aggressively reducing all costs  to preserve liquidity, while  maintaining
   safe operational  readiness  to quickly  restart  production. We  are  now
   exploring potential options to sell our crude to local buyers.

   While no timeline has been publicly announced, we continue to believe  the
   suspension of exports will be temporary and that the KRG will resume  more
   normalised payments. We are encouraged  by the ongoing engagement  between
   the KRG, Iraq and Turkey  and note the approval  earlier this week of  the
   Iraqi Federal  budget, which  is a  step in  the right  direction  towards
   formal recognition of Kurdistan production  by Iraq and potentially  paves
   the way for monthly budget transfers  from Iraq to the Kurdistan  Regional
   Government (“KRG”). We continue to closely monitor the situation.

    

   Operational

    

     • Production from  the  Shaikan  Field  remains  shut-in  following  the
       suspension of exports and  closure of the  Iraq-Turkey Pipeline on  25
       March 2023

          ◦ The suspension has resulted in a gross production deferment to
            date of around 4.3 million barrels, or approximately 11,800 bopd
            on a full-year basis (2023 gross average production guidance
            prior to suspension: 46,000 - 52,000 bopd)

     • Almost all operational activity in the Shaikan Field has stopped since
       the pipeline closure in order to preserve liquidity

          ◦ Production facilities currently ready to resume production
          ◦ All drilling and well workover activity halted, with the drilling
            rig released following the completion and hook-up of SH-18
          ◦ All expansion activity suspended, including the installation of
            water handling
          ◦ Progressing critical safety upgrades and maintenance activity
          ◦ No Lost Time Incidents for over 150 days

     • Currently exploring opportunities to sell Shaikan Field crude to local
       buyers

          ◦ Potential opportunities to initially sell a portion of PF-1
            production at prices in line with the local market
          ◦ Logistics in place to quickly restart trucking operations

    

   Financial

    

     • The Company continues  to engage  with the  KRG regarding  outstanding
       receivables for the  months of  October 2022 to  March 2023  totalling
       $151 million net on the basis of the KBT pricing mechanism
     • Net capital expenditures to the end of May 2023 are estimated at $49
       million, including completion of SH-17 and SH-18, well workovers, well
       pad preparation, long lead items and expansion of production
       facilities
     • Cash balance of $93 million at 15 June 2023

    

   Outlook

    

     • The Company continues to believe  that the suspension of exports  will
       be temporary and that the KRG will resume more normalised payments

          ◦ While no official timeline to restart pipeline operations has
            been announced, the Company understands that discussions between
            the KRG, the Iraqi Ministry of Oil and the Turkish authorities
            remain ongoing
          ◦ The KRG announced that it had reached an agreement with the Iraqi
            government on measures to allow the resumption of oil exports
            through Turkey, and also reported that Iraq's State Oil Marketing
            Organization (“SOMO”) had officially requested Turkish
            authorities to allow Kurdistan’s oil exports via the country's
            Ceyhan port
          ◦ Iraq’s parliament recently approved the 2023-2025 Federal Iraqi
            budget, a step towards formal recognition of Kurdistan production
            by Iraq and potentially paving the way for monthly budget
            transfers from Iraq to Kurdistan
          ◦ The Company continues to monitor the situation and is currently
            ready to resume production

     • The Company remains focussed on preserving liquidity while proactively
       managing existing accounts payable
     • Lowering net  capital  expenditures,  operating costs  and  G&A  to  a
       monthly run rate of around $6 million net from July 2023

          ◦ 2023 net capex currently estimated at $70-$75 million (previously
            revised guidance of $80-$85 million)

               ▪ Estimated $49m net capex Jan-May 2023; estimated $20-$25m of
                 safety critical and contractual commitments remaining for
                 Jun-Dec 2023

          ◦ 20% deferral of Executive Director salaries & Non-Executive
            Director fees and reduced staffing and contractor levels
          ◦ Final 2022 ordinary annual dividend of $25 million cancelled, as
            announced on 23 May 2023, with the reinstatement of distributions
            to be considered once regular KRG payments resume

     • Continuing to  review additional  liquidity options,  including  local
       crude and inventory sales and further cost reductions

    

   2023 AGM

    

   Gulf Keystone is today  hosting its 2023 AGM  at 10am CET via webcast.  It
   will not be possible  to attend the meeting  in person but all  registered
   Gulf Keystone  shareholders  are  invited  to  view  the  webcast  at  the
   following link:  1 http://meetnow.global/gkpagm2023. Joining  instructions
   are           available            on           Gulf            Keystone's
   website:  2 https://www.gulfkeystone.com/investors/agm/.

    

   The AGM  will  be hosted  by Jaap  Huijskes, Non-Executive  Chairman,  and
   Martin Angle, incoming Non-Executive Chairman and current Deputy  Chairman
   and Senior Independent  Director. It  will include  a presentation  by Jon
   Harris, Chief  Executive  Officer,  and Ian  Weatherdon,  Chief  Financial
   Officer. A  copy of  the presentation  will be  available to  view on  the
   Investors       section       of       Gulf       Keystone's       website
   ( 3 https://www.gulfkeystone.com/investors/presentations). A recording  of
   the presentation will also be available to view on the same page later  in
   the day following the conclusion of the AGM.

    

    

    

   Enquiries:

    

   Gulf Keystone:                          +44 (0) 20 7514 1400  
   Aaron Clark, Head of Investor Relations  4 aclark@gulfkeystone.com
                                            
   FTI Consulting                          +44 (0) 20 3727 1000
   Ben Brewerton
                                            5 GKP@fticonsulting.com
   Nick Hennis

    

    

   or visit:  6 www.gulfkeystone.com

    

   Notes to Editors:

    

   Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading independent  operator
   and producer in the Kurdistan Region of Iraq. Further information on  Gulf
   Keystone is available on its website  7 www.gulfkeystone.com

    

   Disclaimer

    

   This announcement  contains certain  forward-looking statements  that  are
   subject to  the risks  and uncertainties  associated with  the oil  &  gas
   exploration and production  business.  These  statements are  made by  the
   Company and its Directors in good faith based on the information available
   to them up to  the time of  their approval of  this announcement but  such
   statements should  be  treated with  caution  due to  inherent  risks  and
   uncertainties, including both economic and business factors and/or factors
   beyond the Company's control  or within the  Company's control where,  for
   example, the  Company decides  on  a change  of  plan or  strategy.   This
   announcement has been prepared solely to provide additional information to
   shareholders to assess the Group's strategies and the potential for  those
   strategies to succeed.  This announcement should  not be relied on by  any
   other party or for any other purpose.

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   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:          BMG4209G2077
   Category Code: MSCM
   TIDM:          GKP
   LEI Code:      213800QTAQOSSTNTPO15
   Sequence No.:  251300
   EQS News ID:   1658553


    
   End of Announcement EQS News Service

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