REG - Gulf Keystone Petrol - Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

24/01/2022 07:05

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RNS Number : 3041Z  Gulf Keystone Petroleum Ltd.  24 January 2022

 

 

24 January 2022

 

 

Gulf Keystone Petroleum Ltd. (LSE: GKP)

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

 

Operational & Corporate Update

 

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 are pleased today to declare an additional interim dividend of $50
million, bringing distributions over the past eight months to $150 million in
line with our commitment to balance investment in growth with returns to
shareholders.

 

Since the beginning of 2022, gross production peaked at just over 50,000 bopd
and has averaged c.46,800 bopd, versus the 2021 average of 43,440 bopd.
However, the lower productivity of recently completed wells, SH-13 and SH-14,
and temporarily curtailed production from SH-12, have resulted in a delay in
gross production increasing to 55,000 bopd. 2022 gross average production is
expected to be 44,000 to 50,000 bopd.

 

GKP's substantial production base at current oil prices continues to generate
significant cash flow and value for Gulf Keystone's stakeholders. On approval
of our recently submitted Field Development Plan, we are well positioned to
achieve sustainable growth from the Shaikan Field, which has delivered close
to 100 MMstb, and has 489 MMstb of estimated 2P gross reserves remaining."

 

 

Operational

 

·     Continued strong focus on safety in 2021 despite one previously
reported lost time incident ("LTI"); currently no LTIs recorded for over 90
days

·     Gross average production for 2021 of 43,440 bopd, at the upper end
of guidance range; gross average production in 2022 year to date of c.46,800
bopd

·     Drilling of SH-15 progressing well; continue to expect start-up in
Q2 2022

·     Due to well productivity, the increase in gross production towards
55,000 bopd has been delayed

o  SH-13 & SH-14

§  Following completion of the acid stimulation programme on SH-13, and the
clean-up of SH-14, both wells were brought on stream in December 2021 and
their productivity has been below  expectations

§  An acid stimulation programme for SH-14 is currently ongoing

o  SH-12

§  Following the early appearance of trace quantities of water, production
from the well has been temporarily curtailed, in line with the Company's
prudent reservoir management strategy. The Company is investigating options to
maximise near-term production from the well

§  Water ingress is common in fractured carbonate reservoirs like the
Shaikan Field. Gulf Keystone has historically experienced trace amounts of
water in a few other wells and has been successfully optimising their
production levels. The Company continues to expedite plans to add water
handling to further optimise production

·     The Company does not expect any material impact on reserves or
medium-term production potential. Considering cumulative gross production of
c.99 MMstb, 2P gross reserves are estimated to be 489 MMstb at 31 December
2021, based on the 2020 Competent Person's Report adjusted for 2021 production

 

Financial

 

·     Following $100m of dividends distributed in 2021, Gulf Keystone is
pleased to announce that the Board has approved the declaration of an
additional interim dividend of $50 million, equivalent to 23.394 US cents per
Common Share of the Company

·     The interim dividend is expected to be paid on 25 February 2022,
based on a record date of 11 February 2022. The Company will disclose the
pounds sterling rate per share prior to the ex-dividend date of 10 February
2022

·      $283.2 million ($221.7 million net to GKP) received from the
Kurdistan Regional Government in 2021 for payments of crude oil sales and
recovery of outstanding arrears, with an additional $89.0 million ($69.7
million net to GKP) received in January 2022 for the combined September 2021
and October 2021 crude oil sales and arrears payments

·     The current outstanding arrears balance is $28.6 million net to
GKP related to the January and February 2020 invoices

·     Robust balance sheet, with a cash balance of $228 million as at 21
January 2022

 

Outlook

 

·     The Company expects gross average production for 2022 of 44,000 to
50,000 bopd, reflecting the anticipated production contribution from SH-15 and
benefits of well workover activities

·     Gulf Keystone continues to engage with the Ministry of Natural
Resources ("MNR") following the submission of a draft FDP in 2021. The Company
will revert to the market at an appropriate time with details on the FDP and
updated production guidance

·     With continuing strong oil prices and cash flow generation, there
may be opportunities to consider further distributions to shareholders and to
optimise the capital structure

 

 

 

 

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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