By John Lee.

US-based investment giant BlackRock has increased its shareholding in Gulf Keystone Petroleum (GKP) to 5 percent, up from 4.89 percent.

Shares in the company have risen 35 percent since the start of the year.

In 2016, GKP announced that it was in default on its debt obligations, which led to a restructuring in which bondholders took control of the company.

(Source: GKP)

Shares in Gulf Keystone Petroleum (GKP) were trading up 3 percent on Monday after the company provided an operational and corporate update on its operations in Iraqi Kurdistan.

Analyst Peel Hunt has reportedly re-issued its “Buy” rating during the morning.

Operational

  • Operational activity continues at the Shaikan Field (pictured) to complete the debottlenecking programme in 2019, in order to achieve the near-term production target of 55,000 bopd in Q1 2020
  • Progress is continuing with the export pipeline from PF-1 to the main export pipeline, which remains on schedule to become operational mid-year, at which point trucking of crude oil will be eliminated
  • The SH-1 workover to replace the existing tubing with larger bore tubing, has now been successfully concluded.  The result was positive with an increase in production from the well of approximately 50% to over 6,500 bopd
  • The IOT Rig 1 has been demobilised.  It will now complete a short workover for another operator nearby before returning to Shaikan for the remaining workovers in the 55,000 bopd expansion programme.  This will include the SH-3 tubing change-out, along with installation of Electric Submersible Pumps (“ESPs”) in wells SH-5, SH-10 and SH-11
  • DQE’s Rig 40 is currently being prepared ahead of the imminent Jurassic drilling campaign, which remains on schedule to be mobilised for the SH-H well later this month

Corporate

  • A renewal of the crude oil sales agreement has been signed between Gulf Keystone Petroleum International Ltd and the Kurdistan Regional Government (“KRG”)
    • The KRG will purchase Shaikan crude oil directly injected at PF-2 into the Atrush export pipeline at the monthly average Dated Brent oil price minus a total discount of c.$21 per barrel for crude
    • Until the PF-1 pipeline is completed, the KRG will continue to purchase crude oil delivered by truck at a discount of c.$22 per barrel
    • The above discounts account for quality, domestic and international transportation costs
    • The agreement is effective from 1 January 2019 until 31 December 2020
  • The Company has received final clearance from Sonatrach in relation to the Ferkane Permit (Block 126). This officially marks Gulf Keystone’s exit from its Algerian operations.
    • This positive development will allow the Company to release $10 million of past liabilities

Outlook

Despite Q1 production having been affected by SH-1 being offline for the workover, and the export system being shut-down for maintenance for a week earlier this month, the Company maintains its 2019 gross average production guidance in the range of 32,000 – 38,000 bopd

 (Sources: GKP, Yahoo!, Financial Headlines)

Shares in Gulf Keystone Petroleum (GKP) closed 4.3 percent higher on Wednesday after the company provided an operational and corporate update.

Operational

  • Production operations, underpinned by strong performance of the Shaikan Jurassic reservoir, continue in line with expectations. Average gross production of 31,563 barrels of oil per day (“bopd”) was achieved in 2018, at the upper end of the 27,000 – 32,000 bopd guidance.
  • The plant debottlenecking programme required to expand gross production capacity to 55,000 bopd from PF-1 and PF-2 remains on schedule for completion towards the end of 2019.
  • GKP has signed an agreement with Independent Oil Tools to use ‘Rig 1’ during the Company’s workover programme to replace tubing on SH-1 and SH-3 wells and install downhole pumps (“ESPs”) on three other existing wells. The rig has been mobilised and is currently performing a workover on the SH-1 well to install larger bore tubing to increase productivity.
  • GKP has also signed an agreement with the rig operator, DQE, to use ‘Rig 40’ for its upcoming drilling campaign, due to start in March 2019, with the first four wells (needed for the 55,000 bopd target) expected to be completed in Q1 2020.
  • Since July 2018, all production from PF-2 has been exported via the Atrush export pipeline which connects to the main Kurdish export pipeline. Additional pumps along with a temporary unloading facility have now been installed at PF-2 which allows the majority of production from PF-1 to be trucked to PF-2 and exported via pipeline. Today, only ca.3,000 bopd are exported by truck via Fishkhabour which lowers HSSE exposure.
  • Further progress has been made, including delivery of all 16″ pipeline to the field, on the installation by KAR Group of the pipeline also connecting PF-1 to the Atrush export pipeline. This remains on schedule to be brought into service mid-2019, at which point the residual trucking of crude oil will be eliminated.
  • GKP and its partner MOL have agreed on a staged investment programme to increase gross production up to 110,000 bopd by 2024. The revised Field Development Plan was submitted for approval to the Ministry of Natural Resources in October 2018. The current expansion to 55,000 bopd is already underway.

Corporate

  • GKP has continued to receive regular oil payments from the Kurdistan Regional Government, with cash receipts of $225 million net to GKP during 2018.
  • Cash balance of $294 million as at 15 January 2019. The Company remains fully funded to complete the expansion to 55,000 bopd.
  • Gross capital expenditure guidance for the total 55,000 bopd project phase remains unchanged at $200 million to $230 million.
  • Of the 2018 approved gross budget of $91 million, ca.$40 million has been transferred to early 2019 which was primarily driven by delays in delivery of drilling and well completion equipment.

Outlook

  • Given the active 2019 investment programme, particularly in new wells and workovers, the Company anticipates improved production levels this year and expects gross average production guidance to be in the range of 32,000 – 38,000 bopd.
  • The above guidance takes account the latest drilling and project schedules, but also the temporary plant shut-downs required in 2019 for the tie-in of new facilities and wells being offline while workovers are taking place.
  • 55,000 bopd production target moved to early 2020 due to delays in the delivery of equipment, affecting the start date of the drilling campaign, originally January, now March 2019.
  • The Company intends to host a Capital Markets Day in the first quarter of 2019. Further details will be announced at a later date.

Commenting, Jón Ferrier, CEO, said:

Having successfully laid the foundations for our expansion plans in 2018, we are very pleased to have now initiated our new investment programme at Shaikan.

“We continue to make considerable operational headway as we look to safely increase production to 55,000 bopd, in line with our strategy. 2019 is set to be another important year for Gulf Keystone and we look forward to keeping our stakeholders updated on our ongoing progress.”

(Source: GKP)

Shares in Gulf Keystone Petroleum (GKP) closed 4.3 percent higher on Wednesday after the company provided an operational and corporate update.

Operational

  • Production operations, underpinned by strong performance of the Shaikan Jurassic reservoir, continue in line with expectations. Average gross production of 31,563 barrels of oil per day (“bopd”) was achieved in 2018, at the upper end of the 27,000 – 32,000 bopd guidance.
  • The plant debottlenecking programme required to expand gross production capacity to 55,000 bopd from PF-1 and PF-2 remains on schedule for completion towards the end of 2019.
  • GKP has signed an agreement with Independent Oil Tools to use ‘Rig 1’ during the Company’s workover programme to replace tubing on SH-1 and SH-3 wells and install downhole pumps (“ESPs”) on three other existing wells. The rig has been mobilised and is currently performing a workover on the SH-1 well to install larger bore tubing to increase productivity.
  • GKP has also signed an agreement with the rig operator, DQE, to use ‘Rig 40’ for its upcoming drilling campaign, due to start in March 2019, with the first four wells (needed for the 55,000 bopd target) expected to be completed in Q1 2020.
  • Since July 2018, all production from PF-2 has been exported via the Atrush export pipeline which connects to the main Kurdish export pipeline. Additional pumps along with a temporary unloading facility have now been installed at PF-2 which allows the majority of production from PF-1 to be trucked to PF-2 and exported via pipeline. Today, only ca.3,000 bopd are exported by truck via Fishkhabour which lowers HSSE exposure.
  • Further progress has been made, including delivery of all 16″ pipeline to the field, on the installation by KAR Group of the pipeline also connecting PF-1 to the Atrush export pipeline. This remains on schedule to be brought into service mid-2019, at which point the residual trucking of crude oil will be eliminated.
  • GKP and its partner MOL have agreed on a staged investment programme to increase gross production up to 110,000 bopd by 2024. The revised Field Development Plan was submitted for approval to the Ministry of Natural Resources in October 2018. The current expansion to 55,000 bopd is already underway.

Corporate

  • GKP has continued to receive regular oil payments from the Kurdistan Regional Government, with cash receipts of $225 million net to GKP during 2018.
  • Cash balance of $294 million as at 15 January 2019. The Company remains fully funded to complete the expansion to 55,000 bopd.
  • Gross capital expenditure guidance for the total 55,000 bopd project phase remains unchanged at $200 million to $230 million.
  • Of the 2018 approved gross budget of $91 million, ca.$40 million has been transferred to early 2019 which was primarily driven by delays in delivery of drilling and well completion equipment.

Outlook

  • Given the active 2019 investment programme, particularly in new wells and workovers, the Company anticipates improved production levels this year and expects gross average production guidance to be in the range of 32,000 – 38,000 bopd.
  • The above guidance takes account the latest drilling and project schedules, but also the temporary plant shut-downs required in 2019 for the tie-in of new facilities and wells being offline while workovers are taking place.
  • 55,000 bopd production target moved to early 2020 due to delays in the delivery of equipment, affecting the start date of the drilling campaign, originally January, now March 2019.
  • The Company intends to host a Capital Markets Day in the first quarter of 2019. Further details will be announced at a later date.

Commenting, Jón Ferrier, CEO, said:

Having successfully laid the foundations for our expansion plans in 2018, we are very pleased to have now initiated our new investment programme at Shaikan.

“We continue to make considerable operational headway as we look to safely increase production to 55,000 bopd, in line with our strategy. 2019 is set to be another important year for Gulf Keystone and we look forward to keeping our stakeholders updated on our ongoing progress.”

(Source: GKP)

Gulf Keystone Petroleum (GKP) has announced the appointment of Kimberley Wood as a Non-Executive Director with effect from 01 October 2018.

Kimberley Wood is a legal professional with 18 years’ experience and a specialist in the oil and gas sector.  Most recently she was Head of the Oil and Gas for EMEA at Norton Rose Fulbright LLP and remains a Senior Consultant for the firm. Throughout her career she has advised a wide range of companies in the sector, from small independents through to super majors.

Ms. Wood was a Partner at Vinson & Elkins RLLP from February 2011 to April 2015, and was previously at Dewey & LeBoeuf LLP. She was included as an expert in Energy and Natural Resources in the 2018 “Expert Guide” series and Women in Business Law, 2018 and is a member of the Advisory Board to the City of London Geological Forum.

Ms. Wood is currently a Non-Executive Director of Africa Oil Corp., an E&P company listed on the TSX (Canada) and Nasdaq OMX (Stockholm), with assets in Kenya and Ethiopia and a member of the Lundin Group.

Following Ms. Wood’s appointment, the Board will review the composition of the Board Committees.

Jaap Huijskes, Gulf Keystone’s Non-Executive Chairman, said:

“We are pleased to welcome Kimberley to the Board of Gulf Keystone Petroleum. She is a highly respected legal practitioner who has been counselling Boards for the past two decades.  We very much look forward to Kimberly’s contribution, in particular in this exciting phase of investment and of markedly increasing production from Shaikan.”

(Source: GKP)

Gulf Keystone Petroleum (GKP) has announced its results for the half year ended 30 June 2018.

Highlights to 30 June 2018 and post reporting period

Operational

  • Gulf Keystone’s operations in the Kurdistan Region of Iraq remained safe and secure throughout H1 2018 with plant uptime at Production Facility 1 (“PF-1”) and Production Facility 2 (“PF-2”) of over 99% during H1 2018 and one lost-time incident (the first for three years) in July 2018.
  • Shaikan achieved gross average production of 31,861 bopd for H1 2018 and 31,399 bopd for July and August. Our guidance for the full year remains unchanged at 27,000-32,000 bopd.
  • Cumulative production from Shaikan since inception exceeded 50 million barrels in June 2018.  Production and well     behaviour continues to match our expectations and increase our confidence in the Company’s geological model of the field.
  • PF-2 was tied-in to the export pipeline and the export of crude oil via the pipeline commenced during July 2018, leading to reduced operating costs and HSSE risk.
  •  Agreement reached in June 2018 with Ministry of Natural Resources (“MNR”) of the Kurdistan Regional Government (“KRG”) and our partner, MOL Hungarian Oil & Gas plc (“MOL”), in relation to investment plans to increase production at Shaikan to 55,000 bopd during the second half of 2019.
  • Construction work for the investment programme has started, equipment procurement and contract tendering are underway and overall activity is on schedule.
  • The scope of work for the 55,000 bopd project has been expanded to include opportunities to accelerate the production  increase and tie-in PF-1 to the export pipeline. While capex guidance for the original scope remains unchanged, the required capex for the project has been revised to between $200 million and $230 million gross to account for the acceleration of those additional opportunities.
  • The revised Field Development Plan (“FDP”) has been drafted and is being finalised prior to submission later in 2018.

Financial

  • Record profit after tax of $26.7 million (H1 2017: profit after tax of $0.7 million).
  • Continued disciplined cost control with underlying cash operating costs stable at $14.1m (H1 2017: $14.1m) and underlying cash operating costs per barrel of $3.0/bbl (H1 2017: $2.7/bbl).
  • The Group has continued to receive regular oil sales payments since 1 September 2015, with cash receipts of $107 million net to GKP during the half year and $147 million net to GKP during the eight months to 31 August 2018.
  • Net cash generated in operating activities of $61.2 million (H1 2017: $30.1 million).
  • Cash balance of $219 million at 30 June 2018 and $240 million at 7 September 2018 against $100 million debt principal.
  • Debt refinanced in July 2018, with $100 million Reinstated Notes redeemed and replaced by $100 million New Notes with five-year maturity and 10% interest rate.
  • Signing the Crude Oil Sales Agreement in January 2018 was a key milestone for the Company

Corporate

  • Jaap Huijskes appointed Non-Executive Chairman in April 2018.
  • Martin Angle appointed Senior Independent Non-Executive Director in July 2018.

Outlook

  • With construction work underway, the Company remains on track to increase production at Shaikan to 55,000 bopd in the second half of 2019.
  • GKP plans to carry out workovers on SH-1 and SH-3 wells by the end of the year, subject to rig availability.
  • The Company has begun work to tie-in PF-1 to the export pipeline which is anticipated to be complete mid-2019, leading to further reduced operating costs and HSSE risk.
  • The Company continues to make progress with the MNR and MOL to achieve further contractual and commercial clarity in relation to amendments of the Shaikan PSC, which it anticipates being concluded during Q4 2018.

Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said:

It is pleasing to note that over the course of the year a number of key milestones have been achieved, leading to the recommencement of investment into Shaikan and the anticipated growth in production from the field. 

“The signing, and successful implementation, of the Shaikan crude oil export sales agreement at the start of the year paved the way for the commercial progress that has been achieved, including the investment plans but also regarding the amendment to the Shaikan PSC. Once the revised FDP is submitted to the MNR and there is clarity around the PSC, we look forward to providing further details to investors, including capital strategy.

“Once again, Shaikan has continued to perform well from an operational perspective, and in line with our strategic priority, this has been achieved whilst maintaining our strong safety track record.  With a clear path to future growth, underpinned by a healthy balance sheet and an outstanding asset, we can look to the future with confidence”.

More details here.

(Source: GKP)