REG-Gulf Keystone Petroleum Ltd Operational & Corporate Update

Gulf Keystone PetroleumAnnouncement

23/01/2025 07:15

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   Gulf Keystone Petroleum Ltd (GKP)
   Operational & Corporate Update

   23-Jan-2025 / 07:00 GMT/BST

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   23 January 2025

                                        

                                        

                    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. The information contained  in this announcement has  not
   been audited and may be subject to further review.

    

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

   “Local sales  have remained  strong since  our previous  market update  in
   December 2024, with 2025 year to date gross average production of c.47,900
   bopd. If current demand persists in the local market, our disciplined  and
   flexible work programme, combined with our stable low costs, should enable
   us to deliver gross  average production in the  range of 40,000 to  45,000
   bopd in  2025  and generate  material  free cash  flow,  underpinning  our
   ongoing commitment  to return  excess cash  to shareholders.  At the  same
   time, we continue  to proactively engage  with government stakeholders  to
   unlock an exports restart solution.”

    

   Operational

     • Zero Lost Time Incidents (“LTIs”) for  over two years, with more  than
       3.4  million  working  hours  since  the  last  LTI,  underlining  the
       Company’s continued commitment to high standards of safety
     • 2024 gross average production of  40,689 bopd, an 86% increase  versus
       the prior year (2023: 21,891 bopd)

          ◦ Reflects a full year of local sales in 2024 following the impact
            of the suspension of pipeline exports in 2023
          ◦ Despite temporary disruptions to truck availability during
            regional holidays and elections and the impact of the planned
            PF-1 shutdown in November, strong underlying local market demand
            from Q2 2024 onwards enabled the return to production at full
            well capacity in several months
          ◦ Average realised price for 2024 sales of c.$27/bbl, with prices
            stabilising in a range of c.$27-$28/bbl in H2 2024

     • 2025 year to 21 January gross average production of c.47,900 bopd:

          ◦ Continued strong local market demand and robust prices since the
            beginning of the year

    

   Financial

    

     • 2024 revenue of $151  million, 22% higher relative  to the prior  year
       (2023: $124 million)
     • Rigorous  focus  on  capital  and   cost  discipline  in  2024   while
       maintaining and enhancing production capacity:

          ◦ 2024 net capex of $18 million (2023: $58 million) in line with
            guidance, primarily reflecting safety critical upgrades at PF-1,
            maintenance and production optimisation expenditures
          ◦ 2024 operating costs of $52 million (2023: $36 million), with
            gross Opex per barrel reducing to $4.4/bbl (2023: $5.6/bbl),
            reflecting higher production
          ◦ 2024 other G&A of $11 million (2023: $11 million)
          ◦ 2024 monthly average capex and costs, including net capital
            expenditure, operating costs and other G&A, below $7 million, in
            line with guidance

     • Free  cash   flow  enabled   the   Company  to   restart   shareholder
       distributions while maintaining a robust balance sheet:

          ◦ $45 million of shareholder distributions in 2024 consisting of
            $35 million of dividends and $10 million of share purchases
            completed under the buyback programme launched in May 2024
          ◦ 2024 year-end cash balance of $102 million (31 December 2023: $82
            million) and no debt

    

   Outlook

    

     • The near-term  local  sales  outlook is  strong,  although  visibility
       remains limited beyond  the Company’s monthly  contract renewals  with
       buyers
     • Should local  market  demand persist  at  current levels,  2025  gross
       average production is expected to be in the range of 40,000 to  45,000
       bopd

          ◦ Reflects the Company’s assumptions around plant downtime
            associated with the planned PF-2 shutdown, the estimated impact
            of regional holidays on truck availability and field declines of
            6-10% per year
          ◦ Should there be any significant unforeseen disruptions to local
            market demand or the restart of pipeline exports, the Company
            will update its production expectations as necessary

     • Estimated 2025 net  capex of $25-$30  million, reflecting  disciplined
       and  flexible  work  programme  focused  on  safety,  reliability  and
       maintaining the capacity of existing wells:

          ◦ c.$20 million: Safety upgrades at PF-2 and maintenance, scheduled
            for Q4 2025 and expected to require the shut-in of the facility
            for c.3 weeks, similar to PF-1 in 2024
          ◦ $5-$10 million: Production optimisation programme consisting of
            low cost, quick payback well interventions
          ◦ Exploring a range of additional plant initiatives to enhance
            production, including water handling, with planned reviews later
            in 2025 based on the Company’s liquidity position and operating
            environment

     • Stable low costs, with expected operating costs of $50-$55 million and
       other G&A below $10 million in 2025
     • The Company remains committed to returning excess cash to shareholders
       via dividends and / or share buybacks, subject to the liquidity  needs
       of the business and the operating environment

          ◦ Following launch on 8 October 2024, the Company’s current share
            buyback programme of up to $10 million remains ongoing, running
            to the earlier of its completion or the 2024 Full Year Results
            on 20 March 2025
          ◦ 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

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

          ◦ Monitoring the progress of a potential amendment to the Iraqi
            2023-2025 Budget Law regarding compensation for Kurdistan’s oil
            production and transportation costs
          ◦ While Iraqi Parliament approval of the amendment could be an
            important 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 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

    

   Investor presentation

    

   Jon Harris, CEO, is presenting today at Pareto Securities’ 20th annual E&P
   Independents Conference. The presentation slides will be made available on
   the Company’s website:

    

    1 https://www.gulfkeystone.com/investors/presentations/ 

    

    

   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: MSCM
   TIDM:          GKP
   LEI Code:      213800QTAQOSSTNTPO15
   Sequence No.:  372192
   EQS News ID:   2072951


    
   End of Announcement EQS News Service

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