REG - Gulf Keystone Petrol - 2022 AGM & Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

24/06/2022 07:00

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RNS Number : 0408Q  Gulf Keystone Petroleum Ltd.  24 June 2022

 

 

24 June 2022

 

 

Gulf Keystone Petroleum Ltd. (LSE: GKP)

("Gulf Keystone", "GKP" or "the Company")

 

2022 AGM & Operational & Corporate Update

 

Ahead of today's 2022 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:

"Following a year of strong operational and financial performance in 2021, our
leverage to the oil price, low-cost production base and focus on capital
discipline have continued to drive significant cash flow generation from the
Shaikan Field in 2022. We have declared sector-leading dividends of $190
million year to date, $75 million of which is subject to shareholder vote at
today's AGM, while continuing to invest in the high growth potential of the
Shaikan Field. We also remain focused on maintaining a robust balance sheet
and today we are pleased to announce our intention to call the $100 million
outstanding bond, leaving the Company debt free.

 

Year to date production has averaged c.44,900 bopd. We are prudently managing
our wells to avoid traces of water and, as a result, we are tightening 2022
gross production guidance to 44,000 - 47,000 bopd. The installation of water
handling facilities will unlock upside production potential and we continue to
explore acceleration options in a supply constrained market. In the near-term,
we continue to progress our well workover and intervention programme to
optimise production. While timing of approval remains uncertain, we also
continue to make positive progress on the FDP as we prepare to resume drilling
and ramp up production.

 

Ahead of our AGM later today, I would like to thank our shareholders,
employees and other stakeholders in Kurdistan for their continued commitment
and support. Together, we are focused on safely delivering the significant
value of the Shaikan Field."

 

 

Operational

 

·      Continued strong focus on safety, with no Lost Time Incident
("LTI") recorded for over 240 days

·      Gross average production in 2022 year to date of c.44,900 bopd;
gross average production in June of c.45,900 bopd, as at 22 June 2022

·      Year to date gross average production impacted by:

o  SH-12 reperforated and brought back online in June at a reduced rate after
being shut-in at the beginning of the year

o  SH-14 production remains constrained following acid stimulation earlier in
the year

o  SH-15 brought online in April after being drilled in record time and is
currently producing towards the lower end of the anticipated range

·      While the industry is currently experiencing equipment lead time
pressures in a supply constrained market, we are continuing to review options
to accelerate installation of water handling facilities that would enable
further production ramp up from existing wells

·      Progressing well workover and intervention programme to optimise
near-term production

 

Financial

 

·      Significant cash flow generation in 2022 year to date, with
$348.8 million ($273.1 million net to GKP) received from the Kurdistan
Regional Government ("KRG") for crude oil sales and revenue arrears. The
outstanding arrears balance has been fully recovered

·      $190 million of dividends declared in 2022, a sector-leading
dividend yield of 26% based on GKP's closing price on 22 June 2022

o  $115 million paid to shareholders to date; additional $75 million,
including the previously declared ordinary and special dividends, to be paid
in July following approval at AGM

·      Robust balance sheet, with a cash balance of $247.0 million at 23
June 2022

 

Outlook

 

·      Tightened 2022 gross average production guidance to 44,000 -
47,000 bopd

·      Gross Opex guidance of $2.9-$3.3/bbl remains unchanged

·      Net capital expenditure guidance of $85-$95 million remains
unchanged

·      While timing of FDP approval remains uncertain, we continue to
progress towards sanction with the MNR. The Company is preparing to resume
drilling to ramp-up production from the Jurassic reservoir and will update
capital expenditure guidance in due course

·      We continue to monitor the long running dispute between the
Federal Iraqi Government and the KRG on the management of oil and gas assets
in Kurdistan. Our operations currently remain unaffected and we continue to
work closely with the KRG, our advisers and other stakeholders to protect the
Company's interests

·      Remain focused on balancing investment in growth with shareholder
returns, while preserving adequate liquidity:

o  Intention to call $100 million bond after the step down in July 2022 of
the call premium from 4% to 2% of principal

o  Assuming timely payment of invoices and strong oil prices, we expect
continuing robust cash flow generation in 2022 providing flexibility to
consider further shareholder distributions and an increase in capital
expenditure to resume drilling

 

2022 AGM

 

Gulf Keystone is today hosting its 2022 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:
meetnow.global/gkplagm2022
(https://apps.computershare.com/MeetingsShareholderWeb/Home?Code=gkplagm2022&Invitation=&Locale=en)
. Joining instructions are available on Gulf Keystone's website:
https://www.gulfkeystone.com/investors/agm/
(https://www.gulfkeystone.com/investors/agm/) .

 

The AGM will be hosted by Jaap Huijskes, Non-Executive Chairman, and 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
(https://www.gulfkeystone.com/investors/presentations
(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.

 

Update on ordinary and special dividend per share rate

 

Gulf Keystone will be seeking shareholder approval at today's AGM to pay total
dividends of $75 million, comprising the $25 million annual ordinary dividend
declared on 30 March 2022 and the $50 million special dividend declared on 25
May 2022.

 

·      The annual ordinary dividend of $25 million is equivalent to
11.56 US cents per Common Share of the Company and is expected to be paid on
15 July 2022, based on a record date of 1 July 2022

·      The special dividend of $50 million is equivalent to 23.12 US
cents per Common Share of the Company and is expected to be paid on 29 July
2022, based on a record date of 15 July 2022

 

The Company will disclose the pounds sterling rate per share for both
dividends prior to their payment dates.

 

Update on Iraqi Federal Supreme Court ("FSC") Ruling

 

Further to Gulf Keystone's disclosure in its Annual Report and Accounts for
the year ended 31 December 2021 regarding the FSC ruling, the Iraqi Ministry
of Oil recently commenced legal proceedings with respect to the validity of
Production Sharing Contracts ("PSCs") issued under the Kurdistan Region of
Iraq Oil and Gas Law, an escalation in the long running dispute between the
Federal Iraqi Government and the KRG on the management of oil and gas assets
in Kurdistan. The Company has been advised that the Iraqi Ministry of Oil has
raised a case in the Baghdad Commercial Court against several IOCs, including
Gulf Keystone. Gulf Keystone also understands that the Iraqi Ministry of Oil
has also written to contractors and service providers requesting them to cease
working in Kurdistan.

 

Gulf Keystone notes the KRG's public assertion that the actions taken by the
Iraqi Ministry of Oil are unlawful and that "it will take all constitutional,
legal, and judicial measures to protect and preserve all contracts made in the
oil and gas sector". Further, on 4 June 2022, the Judicial Council of the
Kurdistan Region of Iraq stated that the Kurdistan Region of Iraq Oil and Gas
Law "remains in full force" and that the Iraq Federal Supreme Court "lacks the
constitutional authority" to invalidate the Law. Also, on 13 June 2022, the
Ministry of Natural Resources stated that "the contracts entered into between
the IOCs and the Kurdistan Regional Government are entirely in accordance with
the 2007 Oil and Gas Law". The Company notes that the KRG has itself launched
criminal and civil lawsuits which seek to protect the validity of the PSCs.

 

The Company continues to work closely with the KRG, its advisers and other
stakeholders to protect its interests and will provide further updates on the
matter as and when it is able and necessary to do so, recognising that this is
a live legal matter and Gulf Keystone is not party to the resolution
discussions between the Federal Iraqi Government and the KRG.

 

Gulf Keystone's operations currently remain unaffected.

 

 

This announcement contains inside information for the purposes of the UK
Market Abuse Regime.

 

Enquiries:

 

 Gulf Keystone:                           +44 (0) 20 7514 1400
 Aaron Clark, Head of Investor Relations  aclark@gulfkeystone.com

 Celicourt Communications:                + 44(0) 20 8434 2754
 Mark Antelme                             GKP@Celicourt.uk

 Jimmy Lea

 

 

or visit: www.gulfkeystone.com (http://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 www.gulfkeystone.com
(http://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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