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)

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were trading up more than three percent on Thursday morning after the company proposed issuing $50-million in dividends this year.

The company, which produces oil at the Shaikan field (pictured) in Iraqi Kurdistan, issued the following statement as part of its 2018 Full Year Results:

Financial

  • Record revenue of $250.6 million (FY 2017: $172.4 million)
  • EBITDA of $149.3 million (FY 2017: $104.3 million)
  • Profit after tax of $79.9 million (FY 2017: $14.1 million)
  • Net capital investment in Shaikan of $35.7 million (FY 2017: $8.1 million)
  • Cash balance of $295.6 million at year end (2017: $160.5 million)
  • The Company anticipates being fully funded for all phases of the Shaikan expansion
    programme under its current set of assumptions
  • $100 million bond refinancing in July 2018

Dividend

  • The Board confirms a dividend policy to shareholders, which will comprise an annual dividend on the ordinary shares of the Company of no less than $25 million per financial year
  • The Company is therefore pleased to announce its intention to pay an ordinary dividend on the ordinary shares of $25 million in 2019 and, given its current financial strength, the Board is also proposing to complement the ordinary dividend in 2019 with a $25 million supplemental dividend to shareholders on the ordinary shares
  • The total dividend of $50 million will be subject to approval at the next AGM in June 2019.  One third of the total dividend will be paid following approval at the Company’s AGM, with the balance payable following release of the Company’s half-year results

Operational

  • Full year gross average production of 31,563 bopd (2017: 35,298), at the upper end of guidance
  • GKP and its partner MOL reached agreement with the MNR in June 2018 to recommence investment into Shaikan, towards an initial production target of 55,000 bopd by Q1 2020
  • Common vision for a phased development that will grow gross Shaikan production to 110,000 bopd
  • The development vision described by the revised Field Development Plan (“FDP”) was submitted in October 2018. This revision has not been accepted by the MNR, specifically due to a request for additional assurances on the timing and commitment to eliminate gas flaring. As the parties aim to progress this matter and reach an agreement, investment on the ground continues as per the initial phases of this plan
  • On target to achieve plant de-bottlenecking by year-end and tie-in of the pipeline from PF-1 to the export system mid-year
  • GKP internal review indicates an upgrade in Proven (1P) reserves and no material changes to Probable reserves (2P). A revised Competent Person’s Report to be released following FDP approval
  • Robust HSSE performance with one LTI in 2018, the first in three years

Corporate

  • Signature of Crude Oil Sales Agreement in January 2018 normalised payments in line with oil prices and production.  Renewed in February 2019 through to 2020 providing certainty over payments for the foreseeable future
  • Further strengthening of the Board in 2018 with Jaap Huijskes appointed as Non-Executive Chairman, Martin Angle as Senior Independent Non-Executive Director and Kimberley Wood as Non-Executive Director

Outlook

  • On track for material uplift in production to 55,000 bopd in Q1 2020
  • In 2019, gross Capex associated with 55,000 bopd phase of between $130 million and $150 million, in addition to $20 million to $45 million associated with the subsequent development phase
  • Dividend distribution from 2019 onwards
  • Gross production guidance for 2019 unchanged at 32,000 – 38,000 bopd

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

Throughout 2018, our focus was on laying the foundations for the delivery of the Company’s phased growth plans, which envisages a step change in production profile.  The Company is on track to achieve its near-term production target of 55,000 bopd in Q1 2020, and with our partner MOL continues to work towards delivering the staged investment programme. The remarkable Shaikan reservoir presents a straightforward, low-cost onshore development opportunity with unrivalled near-term upside.

The new dividend policy represents another major milestone for the Company. It crystallises returns to shareholders while we preserve the ability to fully fund the Shaikan development and maintain a strong balance sheet; our platform for growth.

More details here.

(Sources: GKP, Yahoo!)

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)

Shares in Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in Iraqi Kurdistan, were trading up 10 percent on Friday after the company issued an operational and corporate update.

Highlights

  • Agreement with the Kurdistan Regional Government’s (“KRG”) Ministry of Natural Resources (“MNR”) and MOL Hungarian Oil & Gas plc (“MOL”) has been reached in relation to the investment plans to increase gross production capacity to 55,000 barrels of oil per day (“bopd”) in the next 12 to 18 months.
  • Gulf Keystone has initiated contracting and procurement activities to implement the 2018 approved capital expenditure of approximately $91 million gross ($73 million net to GKP), which includes workovers in existing wells (electric submersible pumps (“ESPs”) and tubing replacements), drilling of a new well, facilities improvement and plant debottlenecking.
  • The remainder of the required capital expenditure which is currently estimated to be between $175 million to $215 million gross (as previously set out in the 2017 Full Year Results) to achieve 55,000 bopd gross production capacity is expected to be part of the 2019 investment plan (which will also include activities related to the further development of the field).
  • The Company continues to work on the revised Field Development Plan, which is expected to be submitted to the MNR in Q3 2018. The Company will provide an update on the details of the investment plans for the 75,000 bopd and up to 110,000 bopd phases when finalised.
  • Safety performance remains strong with over 3 million man hours without a lost-time incident achieved since 2015.
  • Plant uptime between 1 January 2018 and 31 May 2018 has been outstanding at over 99%, leading to an average gross production of 32,138 bopd for the period, just above the upper end of our 27,000-32,000 bopd guidance for 2018. Full-year guidance for 2018 remains unchanged.
  • A major milestone has been achieved with cumulative production from the Shaikan Field reaching 50 million barrels. As a result, in line with the terms of the Shaikan Production Sharing Contract (“Shaikan PSC”) and our previous disclosure, a production bonus in the amount of $20 million ($16 million net to GKP) is now payable to the KRG.
  • Hook-up of the 400m spur pipeline from Production Facility 2 to the Atrush export line is in its final stage and expected to be operational shortly. This will eliminate trucking requirements for a significant share of Shaikan production which will reduce HSE exposure and is expected to improve netbacks to the Company. Pipeline tie-in of Production Facility 1 will be part of the 2019 investment plan.
  • Payments from the KRG have been received on a regular basis throughout the year. The Company has received gross payments of $136.7 million ($107.3 million net to GKP) year to date.
  • The Company had cash amounting to $222 million as at 21 June 2018.
  • The Company continues its dialogue with the MNR and MOL in order to achieve further contractual and commercial clarity in relation to amendments of the Shaikan PSC which it anticipates being concluded in Q3 2018.

Commenting, Jón Ferrier, CEO, said:

“We are very pleased with the progress we have made in recent months on key commercial and operational matters and are delighted that Gulf Keystone is now back to investment mode, with the objective of achieving 55,000 bopd production capacity in the next 12 to 18 months; an important step towards the development of the full potential of the Shaikan field.”

(Source: GKP)

Shares in Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, closed up more than 4 percent on Wednesday following the announcement of its results for the year ended 31 December 2017.

Highlights to 31 December 2017 and post reporting period

Operational

  • Strong safety performance during 2017; 3 million man-hours without a Lost Time Incident achieved.
  • Average gross production of 35,298 barrels of oil per day (“bopd”) – in the middle of 32,000-38,000 bopd guidance for the year.
  • Plant uptime of 99% in 2017.
  • Shaikan production for Q1 2018 averaged 31,588 bopd.
  • Gross production guidance for 2018 is set at 27,000-32,000 bopd. 

Financial

  • Signing of the Crude Oil Sales Agreement, which was announced in January 2018, represents a key milestone for the Company.
  • Moved to a more transparent invoicing mechanism with the MNR; payment now linked to international oil price and total production at Shaikan.
  • Profit for the first time since entry to Kurdistan – net profit of $14.1 million (2016: net loss of $17.4 million).
  • Revenue of $172 million (2016: $194 million).
  • The cash component of revenue increased by 28% to $157 million from $122 million in 2016.
  • Positive cash flow driven by steady operating activities, payments from KRG and limited investment.
  • 11 payments received during 2017 from the KRG amounting to $132 million net (2016: $114 million net to GKP).
  • Cash balance of $160 million as at 31 December 2017 (2016: $93 million).
  • Continued cost optimisation, with additional initiatives to lower costs achieved against stable production.
  • Reduction of operating costs per barrel year-on-year to $2.8/bbl (2016: $3.5/bbl).
  • Further reduction of G&A to $21.3 million from $25.5 million in 2016.
  • GKP has received payments in Q1 2018 from the KRG totalling $75.1 million gross ($59.3 million net).
  • Robust financial position as at 10 April 2018, with cash balance of $203 million against $100 million of debt.

Corporate developments

  • Jaap Huijskes assumes the role of Non-Executive Chairman, as of today.
  • Updated KPIs were introduced in 2017, as part of GKP’s continued efforts to achieve high standards of corporate governance.

Outlook

  • The Crude Oil Sales Agreement is an important commercial event and moves the business closer to finalising commercial negotiations with the MNR
  • Subject to finalising certain commercial and contractual matters, the Company is ready to resume investment into Shaikan in 2018.

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

We are pleased to have reported a net profit for the year of $14.1 million, compared with a net loss of $17.4 million in 2016.  We made considerable commercial progress during the year and into 2018, with the signing of the Shaikan Crude Oil Sales Agreement being a key milestone for the Company. 

“We were pleased to achieve average gross production of 35,298 bopd at Shaikan, in the middle of our target guidance of 32,000-38,000 bopd for 2017.  We are confident that once we are able to restart investment into Shaikan we will be able to lift production towards our near-term target of 55,000 bopd, a step towards the full field development.

“I would like to thank our shareholders for their support, our hosts the Kurdistan Region of Iraq, and all Gulf Keystone employees, for their commitment and professionalism during 2017.  I would also like to welcome our incoming new Chairman, Jaap Huijskes, and reiterate our thanks to his predecessor, Keith Lough.

More here.

(Sources: GKP, Yahoo)

Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, is today providing an operational and corporate update.

This is in advance of the Company’s full year results for the period ended 31 December 2017 which are expected to be announced on Wednesday 11 April 2018. The information contained herein has not been audited and may be subject to further review and amendment. 

Operational Update

  • GKP has continued its strong safety performance in 2017 and into 2018 with no lost-time incidents at the Shaikan field. Operations in the area remain secure.
  • Plant uptime of 99% in 2017 helped contribute to an average gross production of 35,298 barrels of oil per day (“bopd”), in the middle of our guidance range of 32,000-38,000 bopd for the year.
  • Since 15 November 2017, the Kurdistan Regional Government’s (“KRG”) Ministry of Natural Resources (“MNR”) has resumed exporting the Shaikan crude via the export pipeline to Turkey. The Company sees the latest export development as confirmation of the suitability of the Shaikan crude within the Kurdish blend.
  • The Company was encouraged by the signature of the crude oil sales agreement announced on 16 January 2018. The Company is also in dialogue with the MNR on the terms of a potential 2nd PSC Amendment.
  • Subject to resolution of the commercial matters and the KRG continuing regular payment of monthly invoices, the Company currently intends on investing this year in wells and facilities to expand production capacity to 55,000 bopd.
  • Part of these investments would include the hook-up of a short (400m) spur pipeline from Production Facility 2 to the Atrush export line, which links to the main export oil line to Turkey.  This will reduce trucking requirements, HSE risk and improve netbacks.
  • Final investment plans for 2018 are under review and will be provided to the market in due course.