REG-Gulf Keystone Petroleum Ltd Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

09/08/2023 07:00

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   Gulf Keystone Petroleum Ltd (GKP)
   Operational & Corporate Update

   09-Aug-2023 / 07:00 GMT/BST

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   9 August 2023

                                        

                                        

                    Gulf Keystone Petroleum Ltd. (LSE: GKP)

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

                                        

                         Operational & Corporate Update

                                        

    

   In advance of the publication of its  2023 Half Year Results on 31  August
   2023, Gulf Keystone, a  leading independent operator  and producer in  the
   Kurdistan Region of  Iraq (“KRI”  or “Kurdistan”), is  today providing  an
   update on operational and corporate activity.

    

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

   “While no official timeline has been announced, we continue to believe the
   suspension of Kurdistan crude exports will  be temporary and that the  KRG
   will resume oil sales  payments in due  course. As political  negotiations
   continue, we remain focused on what is within our control to preserve  and
   bolster liquidity. We are  pleased to have commenced  local sales in  July
   and partially restarted Shaikan Field production, increasing gross average
   sales volumes to 11,700 bopd in August to date while receiving payments in
   advance. We are  actively pursuing additional  local sales  opportunities,
   although pricing and volumes  remain unpredictable. At  the same time,  we
   are continuing to reduce our costs, pursue inventory sales and proactively
   manage our accounts payable. We look forward to providing a further update
   on progress at our half year results later this month.”

    

   Following the  shut-in  of the  Iraq-Turkey  pipeline on  25  March  2023,
   exports from the Shaikan Field remain  suspended and no further oil  sales
   payments have been received from the Kurdistan Regional Government (“KRG”)
   since the payment of the September 2022 invoice of $26.9 million net on  9
   March 2023. Outstanding receivables  of $151 million net  are owed to  the
   Company for the months of October 2022  to March 2023 on the basis of  the
   KBT pricing mechanism.

    

   While no official timeline  has been announced,  GKP continues to  believe
   that the suspension  of exports will  be temporary and  that the KRG  will
   resume payments  to GKP  and other  International Oil  Companies  (“IOCs”)
   operating in Kurdistan in due course.

    

   In particular, the Company notes that:

    

     • Discussions between the  KRG, the  Iraqi Ministry of  Oil and  Turkish
       authorities  regarding  the  restart  of  pipeline  operations  remain
       ongoing
     • The approval of the 2023-2025 Iraqi budget marks significant  progress
       towards creating a new framework for KRG production that is recognised
       by Baghdad in return for budget transfers

          ◦ While there is the potential for budget transfers to broadly
            cover the KRG’s monthly expenditures, including ongoing IOC
            receivables, certain aspects to fully implement the budget and
            determine monthly transfer amounts remain unclear and are the
            subject of ongoing negotiations between Kurdistan and Iraq

     • The KRG Prime Minister Masrour Barzani has assured GKP and other  IOCs
       operating in  Kurdistan  that  production sharing  contracts  will  be
       honoured and outstanding receivables will be repaid

   In the  interim, GKP  remains focussed  on preserving  and bolstering  its
   liquidity by  exploring  opportunities  to  increase  local  crude  sales,
   further reduce  costs,  pursue  inventory  sales  and  proactively  manage
   accounts payable:

    

     • On 19 July 2023,  the Company commenced sales  to the local market  by
       restarting production and trucking  operations from PF-1. Crude  sales
       averaged around 4,900  bopd gross for  the period from  19 July to  31
       July. Since  the beginning  of August,  volumes have  increased,  with
       gross average  sales  of  around  11,700 bopd.  Volumes  are  sold  at
       realised prices in line with  the local market, with advance  payments
       received in accordance with production sharing contract entitlements
     • The Company is actively pursuing additional opportunities to  increase
       local sales further. While a number of parties have expressed interest
       in purchasing Shaikan crude oil,  the outlook for volumes and  pricing
       remains difficult to predict
     • The Company  continues to  aggressively reduce  all costs  across  the
       business and remains focused on maintaining net capital  expenditures,
       operating costs and G&A  expenses at a monthly  run rate of around  $6
       million from July 2023,  in line with  previous guidance. The  Company
       continues to explore options to further reduce costs
     • The Company’s cash balance as at 8 August 2023 was $80 million with no
       outstanding debt

    

    

   Enquiries:

   Gulf Keystone:                          +44 (0) 20 7514 1400  
   Aaron Clark, Head of Investor Relations  1 aclark@gulfkeystone.com
                                            
   FTI Consulting                          +44 (0) 20 3727 1000
   Ben Brewerton
                                            2 GKP@fticonsulting.com
   Nick Hennis

    

   or visit:  3 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  4 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.:  263256
   EQS News ID:   1699005


    
   End of Announcement EQS News Service

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References

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