Gulf Keystone Petroleum (GKP) has announced that Jón Ferrier (pictured), Chief Executive Officer, has informed the Board of his intention to retire from the Company upon appointment of a successor and after a period of handover.

The Company is now commencing a formal, externally facilitated, search process and will provide an update as and when appropriate.

Jaap Huijskes, Chairman of the Company, said:

Jón Ferrier took the helm five years ago, immediately leading the Company through its financial restructuring and breathing new life into GKP as an attractive investment proposition.  He has brought us the experience he gained over a long and distinguished career, resulting in GKP meeting the highest standards across all aspects of its business. 

“Today, Gulf Keystone is a highly respected and successful E&P Company, for which Jón deserves considerable credit.  On behalf of the Board and everyone within the Company I would like to thank Jón for his leadership and resolute commitment over the past five years.  We will be sad to see him step down when a successor is found and wish him all the best for his retirement.”   

(Source: GKP)

By John Lee.

Gulf Keystone Petroleum (GKP) has provided an operational and corporate update in advance of Friday’s Annual General Meeting:

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

In response to the unprecedented COVID-19 pandemic and macroeconomic conditions, we took decisive actions to preserve liquidity and safeguard the long-term health of the business. We are now well placed to weather the current environment and are able to move quickly back to growth at the right time. 

“Our cost reduction initiatives have been thorough, and I am grateful to our staff and contractors for their commitment and support.  Whilst uncertainty around the timing of the end of the crisis persists, the partial oil price recovery gives us some grounds for optimism about the future and our return to delivering the significant untapped value in Shaikan.

Operational

  • Maintaining strong focus on safety with zero LTIs recorded in 2020.
  • In order to protect all personnel, the Company continues to actively manage its working practices in light of the COVID-19 pandemic observing all of the appropriate protection measures.
  • Despite the challenges presented by COVID-19, production operations continue at c.36,000 bopd (gross). Average gross production for the year to date is 37,232 bopd.
  • DQE’s Rig 40 has been stacked on site at zero cost, which will aid the timely resumption of drilling activities, when appropriate.
  • During this period of reduced activity, the Company continues to optimise its plans for a quick and effective restart of the 55,000 bopd expansion project.

Financial

  • As a result of a continued rationalisation of the organisation, expenditures, and contract renegotiations, the Company remains on track to achieve its previously announced target of Opex and G&A savings in excess of 20% in 2020 compared to 2019. On a run-rate basis, we are targeting to achieve savings of c.30%.
    • The Company is introducing 2020 guidance for Opex of $2.7 to $3.1 per barrel (vs $3.9 per barrel in 2019).
    • The workforce is in the process of being reduced by c.40%, including over 60% of expatriates, due to the reduction in the work programme.
  • Capex for 2020 remains in the range $40 – $48 million (net), a 50% reduction compared to 2019, of which $30 million (net) had been spent by the end of April 2020.
  • Cash balance of $144 million as at 17 June 2020.
  • Payments by the Kurdistan Regional Government to GKP are in line with the peer group, with invoices from March 2020 onwards being settled the following month. There is an ongoing dialogue relating to the payment of invoices for November 2019 to February 2020, aggregating $73 million (net).

Corporate

  • Garrett Soden is to be welcomed back to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria.
  • Mr Soden will be formally appointed following completion of the appointment process and will bring valuable financial and industry experience.  Mr Soden was a Non-Executive Director between 2016 and 2019 and he has undertaken to conform to UK corporate governance standards in respect of external appointments.

Outlook

  • With the Company’s ongoing prudent approach to managing its financial position and the decisive measures taken to reduce its cost structure to preserve liquidity, GKP remains financially resilient to manage through the current macro environment.
  • Despite a partial recovery in oil price, the Company closely monitors market dynamics and will continue to take the appropriate actions to preserve value in Shaikan.
  • GKP looks forward to resuming investment and shareholder distributions when conditions allow.

(Source: GKP)

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were up around 10 percent on Thursday morning, following the company’s announcement of its results for the year ended 31 December 2019.

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

2019 saw a step change in activity at Shaikan; we delivered production and controlled expenditures in line with guidance, returned just under $100 million to our shareholders, and maintained a strong balance sheet with cash of $164 million at 22 April 2020. 

The current oil price and macro-economic uncertainty continues to have profound, far-reaching effects. We have taken concrete steps to protect value and assure the viability and financial strength of our business, both for today and the longer-term. As previously announced, we have suspended guidance and, while we were on-track to achieve 55,000 bopd in Q3 2020, we have stopped further expansion activity and are currently demobilising the team until circumstances improve. While we have secured ongoing production operations, we continue to closely monitor market dynamics and will take appropriate further actions to preserve value.

“We continue to focus on strict financial discipline and maintaining our strong balance sheet.  GKP remains underpinned by Shaikan, which continues to perform in line with expectations, and we look forward to resuming expansion activity and delivering the underlying value of the field for all stakeholders upon resolution of the outstanding payments from the Kurdistan Regional Government (“KRG”) and an improvement in economic conditions.”

 Highlights to 31 December 2019 and post reporting period

Operational

  • Robust safety performance during a period of increased operational activity.
  • GKP remains committed to the welfare of all personnel and the safety of our operations. To limit the risk and transmission of COVID-19, only location essential personnel are working at GKP sites and offices.  
  • Average gross production in 2019 of 32,883 bopd, in line with original guidance.
  • Gross production from the field in 2020 to date of c.38,000 bopd.
  • As a result of COVID-19, the focus on cost control and overdue payments from the KRG, operations have been reduced to focus on minimum safety critical activities required for production.
  • Once macro conditions improve, including resolution of outstanding payments from the KRG, the Company will restart expansion activity to increase production to 55,000 bopd.

Financial

  • In 2019, the Company achieved its production, capital expenditures, operating costs and G&A costs guidance.
  • Profit after tax of $43.5 million (FY 2018: $79.9 million) and revenue of $206.7 million (FY 2018: $250.6 million) were down, as Brent oil prices averaged $64 per barrel in 2019 compared to $71 per barrel in 2018.
  • Net capital investment in Shaikan of $90.0 million (FY 2018: $35.4 million).
  • Maiden dividend and share buyback programmes returned $79 million in 2019. Subsequent completion of the share buyback programme brought total returns to $99 million.
  • Cash balance of $190.8 million at year end (2018: $295.6 million).

Outlook

  • The Company is actively focused on maintaining a robust financial position and is targeting a major reduction of costs across the business, while maintaining a strong focus on safety and long-term asset reliability. These actions are being taken in response to the current oil price environment and in anticipation of a protracted recovery:
    • net Capex for 2020 include expenditures incurred to date and remaining firm commitments andare expected to be $40-$48 million ($50-$60 million gross), a c.50% reduction compared to 2019;
    • targeted Opex and G&A savings of at least 20%; and
    • in process of reducing expatriate workforce by c.60%.
  • The KRG has committed to paying for monthly production by the 15th day of each following month starting with March 2020, for which payment was recently received.  Dialogue with the KRG is continuing relating to payment of outstanding invoices for November 2019 to February 2020 aggregating $93.7 million gross ($73.3 million net to GKP).
  • Guidance for 2020 suspended until the outlook becomes clearer.
  • Resumption of distributions is dependent on an improvement in macro-economic conditions, resolution of outstanding payments from the KRG and a clear operational outlook.
  • With a strong balance sheet, limited capital commitments and an existing low-cost production base, GKP is well placed to navigate through these challenging conditions and, if necessary, to withstand a lower oil price throughout 2020 and 2021.

The Company’s 2019 Full Year Results presentation is available on the investor relations section of the website: https://www.gulfkeystone.com/

(Source: GKP)

Gulf Keystone Petroleum (GKP) has announced the appointment of Jacobus (“Jaap”) Huijskes as Non-Executive Chairman effective as of 11 April 2018, immediately following the announcement of the Company’s 2017 Full Year Results.  

Jaap Huijskes, who replaces Keith Lough as Chairman, joined the Board of Gulf Keystone in November 2017 as a Non-Executive Director.  Today’s news follows the January 2018 announcement of Mr Lough’s intention to step down from the Board.  Mr Huijskes selection was the result of a process undertaken by the Nominations Committee and was unanimously supported by the Board. 

Jaap Huijskes has had a distinguished career in the oil and gas sector, including relevant experience in the Kurdistan region of Iraq.  He was most recently a Director at OMV (AG:OMV), the largest listed Austrian oil and gas company, where he was responsible for Exploration and Production (E&P) and oversaw the Company’s expansion into new territories.  He also played a key role in OMV’s operations in the Kurdistan region of Iraq. 

Prior to this, Mr Huijskes held a number of senior positions at Shell, including Executive Vice President of Upstream Major Projects and Project Director at the Sakhalin Energy Investment Company, which was set up to develop the Sakhalin-II oil and gas project in Russia.  He holds a Masters in Mechanical Engineering from Delft University of Technology in The Netherlands. 

In addition to serving on the Board of Gulf Keystone, Mr Huijskes is currently Non-Executive Chairman of the Dutch state-owned integrated oil and gas company, Energie Beheer Nederland. He was a member of OMV’s Executive Board for E&P between 2010 and 2016.

Commenting on today’s announcement, Jaap Huijskes, said:

I am delighted to have been selected to take on the Non-Executive Chairman role.  Gulf Keystone has a strong investment case, underpinned by a great asset and management team. 

“With recent positive progress, including the signing of the important Shaikan Crude Oil Sales Agreement, we are looking forward to recommencing investment into the field and generating value for our investors, as well as the Kurdistan Region of Iraq.  I look forward to leading the Board and supporting the Company at this exciting time.

“On behalf of the Board and everyone at GKP, I would like to thank Keith Lough for his leadership and significant contribution to the business over the past two years.  It was a challenging period for the Company and we are grateful for his hard work and wise counsel.  We wish him the very best for the future.  

(Source: GKP)

Gulf Keystone Petroleum (GKP) has announced that a crude oil sales agreement has been signed between Gulf Keystone Petroleum International Ltd (“GKPI”), on behalf of the Shaikan contractors, and the Kurdistan Regional Government (KRG).

Under the agreement, the KRG will purchase Shaikan crude oil at the monthly average Dated Brent oil price minus a total of c.$22 per barrel for quality discount, as well as domestic and international transportation costs. This discount is based on the same variables contained within other oil sales agreements in the Kurdistan Region of Iraq. 

The majority of the Shaikan crude oil is currently being transported by truck from the Shaikan field to Fishkhabour, where it has been injected into the export pipeline to Turkey gradually since 15 November 2017, while the remainder is sold domestically. 

The agreement is effective from 1 October 2017 until 31 December 2018.  GKPI will now invoice the KRG for oil sales for the months from October 2017 onwards on the basis of the realised netback price and net entitlement volumes in accordance with the Shaikan Production Sharing Contract, as amended by the 1st PSC Amendment in 2010 (“Shaikan PSC”).

The Company continues its discussions with the KRG’s Ministry of Natural Resources (“MNR”) on the terms of a potential 2nd PSC Amendment.  The Company will inform the market of any material developments in this regard.

(Source: GKP)

Gulf Keystone Petroleum (GKP) has announced the appointment of Jacobus (“Jaap”) Huijskes as a Non-Executive Director with immediate effect.

Jaap Huijskes was most recently a Director at OMV, the Austrian integrated oil and gas company listed on the Vienna Stock Exchange.

While at OMV, he was responsible for Exploration and Production (E&P) and oversaw the Company’s expansion into new territories. He also played a key role in OMV’s operations in the Kurdistan region of Iraq. 

Prior to this, Mr Huijskes held a number of senior positions at Shell, including Executive Vice President of Upstream Major Projects and Project Director at the Sakhalin Energy Investment Company, which was set up to develop the Sakhalin-II oil and gas project in Russia. He holds a Masters in Mechanical Engineering from Delft University of Technology in The Netherlands.

Mr Huijskes is currently a director of the Dutch state-owned integrated oil and gas company, Energie Beheer Nederland. He was a member of OMV’s Executive Board for E&P between 2010 and 2016.

Keith Lough, Gulf Keystone’s Non-Executive Chairman, said:

“We are pleased to welcome Jaap Huijskes to the Board of Gulf Keystone Petroleum. He has an impressive industry track record in the oil and gas sector, including relevant experience in the Kurdistan region of Iraq.”

(Source: GKP)

Gulf Keystone Petroleum has issued the details of the payments made to governments for the year ended 31 December 2015, as required under the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

Basis for preparation

Total payments below £86,000 made to a government are excluded from this report as permitted under the Regulations.

All of the payments made in relation to the Shaikan Production Sharing Contract (‘PSC’) in the Kurdistan Region of Iraq (‘KRI’) have been made to the Ministry of Natural Resources of the Kurdistan Regional Government (‘KRG’).

Estimated production entitlements

Production entitlements are the host government’s share of production during the reporting period from the Shaikan Field operated by Gulf Keystone. The figures reported have been produced on an entitlement basis rather than on a liftings basis. Production entitlements are paid in-kind and the monetary value disclosed is derived from management’s calculation of estimated revenue from the field.

Royalties

Royalties represent royalties paid in-kind to governments during the year for the extraction of oil. The terms of the Royalties are described within the Shaikan PSC. Royalties have been calculated on the same barrels of oil equivalent basis as production entitlements.

Summary of payments

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Notes

(1)   Under the lifting arrangements implemented by the KRG, the KRG takes title to crude at the Shaikan facility and then trucks it to Fishkabour on the Turkish border where it is injected into the export pipeline to Ceyhan in Turkey. The crude is then sold by the KRG into the international market. All proceeds of sale are received by or on behalf of the KRG, out of which the KRG then makes payment for cost and profit oil in accordance with the PSC to Gulf Keystone, in exchange for the crude delivered to the KRG. Under these arrangements, payments are in fact made by or on behalf of the KRG to Gulf Keystone, rather than by Gulf Keystone to the KRG. For the purposes of the reporting requirements under the Regulations however, we are required to characterise the value of the KRG’s entitlement under the PSC (for which they receive payment directly from the market) as a payment to the KRG.

(2)   The realised prices on export sales remain subject to audit and the establishment of a retroactive quality bank for Kurdistan crude exports delivered through the international pipeline to Turkey.

(3)   Barrels of oil.

(Source: GKP)

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) closed down nearly 3 percent on Friday after it reached agreement with less than 75 percent of its bondholders to delay making interest payments.

The company’s full statement:

Further to the Company’s disclosure on 14 April 2016, Gulf Keystone confirms that constructive dialogue continues with a number of its stakeholders on the Company’s need for near-term fundraising and the restructuring of the Company’s balance sheet (“Stakeholder Discussions”). The grace periods for the 18 April 2016 coupon payments in respect of the Company’s Bonds and Notes (“April 2016 Coupon Payments”) expire on 2 May and 3 May, 2016, respectively.

In this context Gulf Keystone announces today that the Company has reached an agreement with the Ad Hoc Committee of holders of Notes and Bonds, that they will enter into a Standstill Agreement with the Company until 20 May 2016, extendable until 31 May 2016. The signatories represent a significant proportion (but less than 75% by principal amount) of the holders of each of the Company’s Notes and Bonds. The purpose of the Standstill Agreement is to provide the Company with an extended period to continue the Stakeholder Discussions beyond the expiry of the grace periods for the April 2016 Coupon Payments.

Whilst the Standstill Agreement remains in effect, the Company does not intend to make the April 2016 Coupon Payments. After the expiry of the relevant grace period on 2 May and 3 May, respectively, the continuing failure to make those payments under the Bonds and the Notes will constitute an Event of Default under the Bonds and Notes, respectively. At a time when an Event of Default subsists the holders of not less than one-quarter of the principal amount of the Notes or the Bonds, as the case may be, then outstanding may request the relevant Trustee to declare the principal amount of the Notes or the Bonds, as the case may be, immediately due and payable.

The signatories to the Standstill Agreement will agree not to vote in favour of any resolution of the Noteholders or Bondholders to instruct the relevant Trustee to take such a step.

A further announcement will be made in due course.  

(Source: Gulf Keystone Petroleum, Yahoo!)

Shares in Gulf Keystone Petroleum (GKP) plunged 30 percent to a new low following the mid-morning announcement of details of fundraising and investment options:

Gulf Keystone today publishes further details on potential interim investment scenarios to build a common foundation for stakeholder discussions on the Company’s need for near-term fundraising, upcoming debt obligations and possible restructuring of the Company’s balance sheet.

In this context Gulf Keystone announces, following discussions with the Company’s advisors, its current intention to utilise the grace periods for the upcoming 18 April 2016 coupon payments in respect of its Convertible Bonds and Guaranteed Notes, which expire on 2 May and 3 May 2016, respectively.

Without additional capital expenditure Shaikan wells may begin to exhibit natural declines later in 2016. The potential interim investment scenarios aim to maintain Shaikan production at 40,000 barrels of oil per day (“bopd”) with an option to increase production to 55,000 bopd.

As communicated on 17 March 2016 in the 2015 Results Announcement, these scenarios have been developed to bridge to and complement the revised Shaikan Field Development Plan (“FDP”) currently being reviewed by the Company’s partners.

Commenting on today’s announcement, Jón Ferrier, CEO said:

The additional detail on the potential interim investment scenarios being released today ensures an orderly market, and represents an important step as we prepare to embark upon detailed discussions with stakeholders. 

“We are working to achieve the best possible way to restructure our balance sheet.  Addressing our funding needs will ensure the Company’s longer term future and ability to continue developing the Shaikan field for the benefit of all our stakeholders.

The full announcement can be read here.

(Sources: GKP, Yahoo!)