REG-Gulf Keystone Petroleum Ltd Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

13/12/2023 07:15

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   Gulf Keystone Petroleum Ltd (GKP)
   Operational & Corporate Update

   13-Dec-2023 / 07:00 GMT/BST

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   13 December 2023

                                        

                                        

                    Gulf Keystone Petroleum Ltd. (LSE: GKP)

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

                                        

                         Operational & Corporate Update

                                        

      Gross average sales of c.28,800 bopd since last market update on 25
                                   September

      Local sales continuing to cover monthly costs despite fluctuation in
                                    volumes

    

   Gulf  Keystone,  a  leading  independent  operator  and  producer  in  the
   Kurdistan Region  of Iraq,  today provides  an operational  and  corporate
   update. 

    

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

   “We remain  focused on  preserving liquidity  by maximising  local  sales,
   maintaining strict cost control and proactively managing accounts payable.
   We have  continued to  more than  cover  our monthly  costs of  around  $6
   million and while local market demand remains difficult to predict and  we
   have seen  volumes  fluctuate,  we continue  to  pursue  opportunities  to
   increase sales. There remains  no official timeline  for the reopening  of
   the Iraq-Turkey Pipeline but political and commercial negotiations between
   the  Kurdistan  Regional  Government  and  the  Government  of  Iraq   are
   progressing and we believe the situation will be resolved. As an industry,
   we are emphasising the  importance of payment surety  for past and  future
   oil exports  and  the  preservation  of  our  current  Production  Sharing
   Contract economics.”

    

   Operational

    

     • Rigorous focus on safety maintained

          ◦ No lost time incidents for over 330 days

     • Local sales of  Shaikan Field  crude continue in  absence of  pipeline
       exports

          ◦ Gross average sales of c.28,800 bopd via trucking and pipeline
            between the date of our last market update, 25 September, and 11
            December, reflecting: c.30,000 bopd in September, c.37,200 bopd
            in October, c.21,500 bopd in November and c.21,900 bopd between
            1-11 December
          ◦ Fluctuation in volumes primarily reflects competition with
            increased supply from other producers in the region, associated
            refinery capacity constraints and seasonal effects on crude
            demand
          ◦ Realised prices have continued to average around $30/bbl, in line
            with local market pricing, while the Company is receiving advance
            payments for its net entitlement of 36% of gross sales revenue

    

   Financial

    

     • Current local sales volumes and realised prices continue to enable GKP
       to more than cover its estimated monthly costs of around $6 million in
       H2 2023 (breakeven at gross sales of c.18,500 bopd and $30/bbl)
     • Cash balance of $85 million at 12 December 2023 with no debt

    

   Outlook

    

     • The Company  remains focused  on  preserving liquidity  by  maximising
       local sales, maintaining strict cost control and proactively  managing
       accounts payable
     • Opportunities  to  increase  local  sales  continue  to  be   pursued;
       nonetheless, local market demand remains variable
     • Estimated monthly net capex, operating costs and other G&A in H2  2023
       remain around $6 million, in line with expectations
     • Expect to  maintain monthly  capex  and cost  run  rate of  around  $6
       million into 2024
     • The Company continues to believe that pipeline exports will restart:

          ◦ Political and commercial negotiations between the Government of
            Iraq (“GOI”) and the Kurdistan Regional Government (“KRG”) are
            ongoing
          ◦ The Association of the Petroleum Industry in Kurdistan
            (“APIKUR”), of which GKP is a founding member, continues to
            engage with the KRG and has recently met with the GOI
          ◦ We continue to emphasise the importance of payment surety for
            past and future oil exports and that the current economics of the
            Production Sharing Contracts (“PSCs”), which are governed by
            English Law, must be preserved

    

   Board composition

   The  Board  remains   committed  to  meeting   the  required  targets   on
   independence and diversity  under the 2018  UK Corporate Governance  Code,
   which the Company  voluntarily adheres  to, and  UK Listing  Rules. It  is
   currently engaged in an independent non-executive director search  process
   to ensure compliance. However, the pace of the process has been controlled
   to reflect the  Company’s current  focus on cost  reduction and  liquidity
   preservation.

    

   2023 AGM shareholder consultation

    

   The Company has conducted a shareholder consultation following the  voting
   at the 2023  AGM. The summary  of the consultation  is available on  GKP’s
   website:  1 www.gulfkeystone.com/investors/agm/.

    

    

    

   Enquiries:

    

   Gulf Keystone:                          +44 (0) 20 7514 1400  
   Aaron Clark, Head of Investor Relations

   & Corporate Communications               2 aclark@gulfkeystone.com

    
   FTI Consulting                          +44 (0) 20 3727 1000
   Ben Brewerton
                                            3 GKP@fticonsulting.com
   Nick Hennis

    

   or visit:  4 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  5 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: MSCH
   TIDM:          GKP
   LEI Code:      213800QTAQOSSTNTPO15
   Sequence No.:  291537
   EQS News ID:   1795511


    
   End of Announcement EQS News Service

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