REG-Gulf Keystone Petroleum Ltd Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

11/12/2024 07:00

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   Gulf Keystone Petroleum Ltd (GKP)
   Operational & Corporate Update

   11-Dec-2024 / 07:00 GMT/BST

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   11 December 2024

                                        

                                        

                    Gulf Keystone Petroleum Ltd. (LSE: GKP)

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

                                        

                         Operational & Corporate Update

                                        

    

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

    

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

   “2024 has  been  a  positive  year for  Gulf  Keystone,  characterised  by
   excellent  safety  performance  and   strong  operational  and   financial
   delivery, despite the  challenging operating environment.  Our success  in
   returning to  consistently  strong  production  levels  while  maintaining
   capital and cost discipline has enabled us to generate free cash flow from
   the  local  sales  market  in  Kurdistan,  facilitating  the  restart   of
   shareholder distributions and  the preservation of  our debt-free  balance
   sheet. Looking ahead,  we remain focused  on maximising shareholder  value
   from local sales, with a sustained commitment to capital and cost  control
   while safely maintaining the production capacity of the Shaikan Field.  We
   also continue to  engage with  government stakeholders, as  a company  and
   industry, to unlock an exports restart solution.”

    

   Operational

     • Strong safety performance continues, with zero Lost Time Incidents for
       over 695 days
     • Gross average production of c.40,200 bopd in 2024 year to date:

          ◦ October gross average production of c.34,300 bopd, reflecting
            temporary impact of road closures and subsequent disruption to
            truck availability around the Kurdistan parliamentary elections
            on 20 October, which has since eased
          ◦ November gross average production of c.29,500 bopd due to the
            planned PF-1 shutdown, which was completed successfully at the
            beginning of December
          ◦ Following the gradual ramp up of PF-1, gross production is
            currently c.46,000 bopd, with December to date gross average
            production of c.34,500 bopd
          ◦ Realised prices have remained stable at c.$27-28/bbl

     • The Shaikan Field reservoir continues to perform well, with a low-cost
       work programme  of well  interventions,  maintenance and  PF-1  safety
       upgrades executed to maintain and enhance production capacity

    

   Financial

    

     • The Company’s  continued  focus on  capital  and cost  discipline  has
       underpinned sustained free  cash flow generation,  despite the  recent
       temporary disruptions to production and local sales
     • Improving liquidity has enabled the Company to declare $55 million  of
       aggregate dividends  and share  buybacks  in the  year to  date  while
       maintaining a strong, debt-free balance sheet

          ◦ $35 million of dividends paid and $10 million of share purchases
            completed
          ◦ Ongoing share buyback programme of up to $10 million

     • The Company’s cash balance was $95 million as at 10 December 2024

    

   Outlook

    

     • The near-term  local  sales  outlook is  strong  although  the  market
       remains difficult to predict in the longer term
     • The  Shaikan  Field’s  production  capacity  remains  around   current
       production levels in the current investment constrained environment

          ◦ The Company continues to optimise well production rates to avoid
            traces of water and manage field declines estimated at 6-10% per
            year

     • 2024 capital and cost guidance confirmed

          ◦ Expected 2024 monthly average net capital expenditure, operating
            costs and other G&A run rate unchanged at c.$7 million, including
            annual net capex of c.$20 million

     • The Company is finalising its work  programme for 2025 and expects  to
       provide capital  and  cost  guidance  as  part  of  an  Operational  &
       Corporate Update announcement in January 2025

          ◦ Expect disciplined and flexible programme focused on safety,
            reliability and maintaining the production capacity of existing
            wells, with activity levels similar to 2024

     • Gulf  Keystone  remains   committed  to  returning   excess  cash   to
       shareholders via dividends or share buybacks, subject to the liquidity
       needs of the business and its operating environment

          ◦ The Company is today extending its ongoing share buyback
            programme of up to $10 million, which will run to the earlier of
            its completion or the 2024 Full Year Results on 20 March 2025
            (previous expiry: 31 December 2024)
          ◦ The programme will continue to be executed in accordance with the
            Company's authority to make on-market purchases and in accordance
            with the terms announced on 8 October 2024
          ◦ As announced previously, the Board plans to review the Company's
            capacity to declare an interim dividend on a semi-annual basis
            around its Full Year and Half Year Results, with the next review
            taking place in March 2025

     • The Company continues to engage with government stakeholders regarding
       a solution to enable  the restart of  Kurdistan crude exports  through
       the Iraq-Turkey Pipeline

          ◦ In November 2024, the Iraqi Council of Ministers approved an
            amendment to the Iraqi 2023-2025 Budget Law regarding
            compensation for Kurdistan’s oil production and transportation
            costs
          ◦ As reported in the media, the amendment remains subject to
            approval by the Iraqi Parliament, which is expected to return
            from recess in early January 2025
          ◦ While the Company believes the amendment is a positive step
            towards the resumption of exports, a number of key details remain
            outstanding regarding payment surety for future oil exports, the
            repayment of outstanding receivables and the preservation of
            current contract economics
          ◦ Gulf Keystone, along with other International Oil Companies in
            Kurdistan, remains ready to engage with the Government of Iraq
            and Kurdistan Regional Government to clarify key terms and
            finalise written agreements prior to resuming oil exports

    

    

    

    

   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.:  364336
   EQS News ID:   2048429


    
   End of Announcement EQS News Service

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References

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