REG-Gulf Keystone Petroleum Ltd Operational update and launch of up to $10 million share buyback programme

Gulf Keystone PetroleumAnnouncement

13/05/2024 07:00

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   Gulf Keystone Petroleum Ltd (GKP)
   Operational update and launch of up to $10 million share buyback programme

   13-May-2024 / 07:00 GMT/BST

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   13 May 2024    

                                        

                                        

                    Gulf Keystone Petroleum Ltd. (LSE: GKP)

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

                                        

   Operational update and launch of up to $10 million share buyback programme

                                        

   Gulf  Keystone,  a  leading  independent  operator  and  producer  in  the
   Kurdistan Region  of Iraq,  today provides  an operational  update and  is
   pleased to  announce  the launch  of  a  share buyback  programme  of  the
   Company's Common Shares for up to a maximum aggregate consideration of $10
   million.

    

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

   “Local sales  have continued  to be  robust in  recent weeks,  with  gross
   average sales in 2024  year to date of  c.37,000 bopd and realised  prices
   recently increasing to c.$27/bbl. As a result, our liquidity position  has
   continued to  improve. While  we remain  focused on  retaining  sufficient
   liquidity in the current operating environment and ensuring we are able to
   unlock significant potential value from the restart of Kurdistan  exports,
   we recognise the importance of  distributing excess cash to  shareholders.
   Given GKP’s  weak  share price,  which  the  Board believes  trades  at  a
   significant discount to the intrinsic value of the Shaikan Field and  does
   not adequately reflect the near-term  cash flow generation potential  from
   local sales, the Board has decided  to initiate a share buyback  programme
   of up to $10 million.”

    

   Operational update

    

     • Local sales of Shaikan  Field crude continue to  be robust with  gross
       average sales in 2024 year to 11 May of c.37,000 bopd

     ◦ Following strong sales in March of c.44,100 bopd, April sales were
       down slightly to c.38,900 bopd due to the temporary impact of Eid
       celebrations on truck availability. Volumes have since recovered, with
       sales in May to date averaging c.48,300 bopd 
     ◦ Realised prices have recently increased from c.$25/bbl to c.$27/bbl,
       reflecting continued strong local market demand

     • GKP’s liquidity position  has continued to  improve and the  Company’s
       cash balance was $98 million as at 10 May 2024
     • Looking ahead,  while  local  market  demand  is  expected  to  remain
       variable in 2024, the  Company sees strong local  sales demand in  the
       near term, enabling continued free cash flow generation

     ◦ Cash flow is supported by the Company’s minimal 2024 work programme
       and expected monthly aggregate net capex, operating costs and other
       G&A of c.$6 million
     ◦ At current realised prices and 36% net entitlement, the Company’s free
       cash flow breakeven is at gross sales of c.20,500 bopd

     • Subject to local  sales demand and  considering the Company’s  limited
       capital programme,  gross production  potential is  currently  between
       45,000  –  48,000   bopd  following  recent   optimisations  to   well
       performance

    

   Buyback Programme launch

    

     • The Company  remains focused  on  conserving sufficient  liquidity  to
       manage the  current operating  environment and  ensure it  is able  to
       unlock significant  potential  value  from the  restart  of  Kurdistan
       exports, which  it  continues  to  push for  in  its  engagement  with
       government stakeholders
     • The Board recognises that the distribution of excess cash is important
       to reward shareholders,  in line  with the Company’s  track record  of
       shareholder distributions
     • The Board  believes  that  GKP’s  current  share  price  trades  at  a
       significant discount to the intrinsic  value of the Shaikan Field  and
       does not adequately  reflect the near-term  free cash flow  generation
       potential from local sales
     • The Board  has decided  to  initiate a  share buyback  programme  (the
       “Buyback Programme”)  of the  Company's Common  Shares of  $1.00  each
       (“Shares”) for up to a maximum aggregate consideration of $10  million
       (the “Maximum Amount”)
     • The  Board  will  keep  under  review  the  Company’s  capability   to
       distribute excess cash  by way  of dividends  or additional  buybacks,
       considering the  operating  environment and  the  Company's  liquidity
       position

    

   Buyback Programme execution

    

   The Buyback Programme will  be executed in  accordance with the  Company's
   authority to  make on-market  purchases of  Shares which  was approved  by
   shareholders at the Company's AGM on 16 June 2023. The Company expects  to
   propose the renewal of  the shareholder authority  to carry out  on-market
   purchases at the  2024 AGM so  that this option  remains available to  the
   board as part of the future overall shareholder return strategy.

    

   The Company  has entered  into an  agreement with  its brokers,  Canaccord
   Genuity Limited  ("Canaccord Genuity")  and Peel  Hunt LLP  ("Peel  Hunt")
   (together the "Brokers"), to carry out on-market purchases of Shares up to
   the  Maximum  Amount  within  agreed  parameters  on  an  irrevocable  and
   non-discretionary basis. Purchases of Shares will be made on the Company's
   behalf in accordance with the agreement with the Brokers and may  continue
   independently of and uninfluenced by the Company during any closed  period
   to which  the  Company  is  subject  and/or  if  the  Company  comes  into
   possession of  inside  information. The  Company  has agreed  the  Buyback
   Programme will  commence  immediately  and  run  to  the  earlier  of  its
   completion or the Company’s 2024 AGM on 21 June 2024.

    

   So long as the Company  is not in a closed  period to which it is  subject
   nor in possession of inside information (an "Open Period") the Company may
   elect to  terminate  the  non-discretionary nature  of  the  mandate.  The
   Company may subsequently choose to reinstate the non-discretionary mandate
   of the Buyback Programme provided that the Company is in an Open Period at
   that time.

    

   The Buyback Programme will be carried out on the London Stock Exchange and
   will be implemented within certain agreed parameters, including the  price
   parameters  under  the  relevant  shareholder  authority  and,  except  as
   disclosed in this announcement, the safe harbour provisions set out in the
   Market Abuse Regulation (EU) 596/2014 (as it forms part of UK law pursuant
   to the European Union (Withdrawal)  Act 2018) (the "Regulations") and  the
   applicable laws and regulations of the London Stock Exchange.

    

   A buyback of Shares on any trading day may represent a significant portion
   of the daily  trading volumes  in the  Shares and  may exceed  25% of  the
   average daily trading volume specified  in the safe harbour provisions  of
   the Regulations  dealing  with  buyback  programmes  and  accordingly  the
   Company may  not  benefit from  the  exemption  in Article  5(1)  of  that
   regulation.

    

   The sole purpose of the Buyback Programme is to reduce the capital of the
   Company. As such, all Shares purchased under the Buyback Programme will be
   cancelled.

   The Company will make announcements and publish on its website details  of
   any Share repurchases.

    

   The information contained within this announcement is deemed to constitute
   inside  information  as  stipulated   under  the  Regulations.  Upon   the
   publication  of  this  announcement,   this  inside  information  is   now
   considered to be  in the public  domain and the  Company confirms that  it
   currently has no inside information.

    

    

   Enquiries:

    

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

   & Corporate Communications               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.:  320910
   EQS News ID:   1900847


    
   End of Announcement EQS News Service

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References

   Visible links
   1. mailto:aclark@gulfkeystone.com
   2. mailto:GKP@fticonsulting.com
   3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=8d526d3701dabe9a2ff9507b71394df8&application_id=1900847&site_id=reuters~~~6aa99418-46f7-48b9-89fd-959a8d2e4912&application_name=news
   4. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=6965f2bb1ddcf50ad2dd09b21a93cfc7&application_id=1900847&site_id=reuters~~~6aa99418-46f7-48b9-89fd-959a8d2e4912&application_name=news


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