31 January 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.
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:
“2023 was a
challenging year for GKP and our industry as Kurdistan crude
exports were suspended in March and payments from the Kurdistan
Regional Government for oil sales were further delayed. By adapting
to the new environment and commencing sales to the local market we
have been able to protect our business and balance sheet. I’m proud
of the GKP team, who have swiftly transitioned from a focus on
profitable production growth to preserving liquidity and restarting
trucking operations, maintaining an excellent safety record
throughout.
While local
market demand remains variable, we are actively working to increase
volumes and remain focused on at least covering our estimated
monthly capex and other costs of c.$6 million in 2024, while
proactively managing our accounts payable.
We continue to
engage with government stakeholders to push for the restart of
exports and payment surety for past and future sales. We see
considerable upside should the operating environment improve,
underpinned by the attractive fundamentals of the Shaikan Field and
our historic track record of value creation.”
Operational
-
Zero Lost Time Incidents for over a
year, demonstrating GKP’s rigorous commitment to safety despite
significant operational and project changes in 2023
-
2023 gross average production of
21,891 bopd (2022: 44,202 bopd), reflecting the suspension of
exports and subsequent initiation of local sales
- Gross production averaged 49,165
bopd between 1 January and 24 March 2023 prior to
the Iraq-Turkey Pipeline closure
- Gross average sales of 23,331
bopd between the initiation of
local sales on 19 July and 31 December 2023
-
Gross average sales in 2024 year to
29 January of c.21,600 bopd
- Continued fluctuation in volumes reflects
seasonal logistics and demand challenges, refinery capacity constraints
and supply from other producers in
the region
- Realised prices are currently c.$27/bbl, in
line with local market pricing (current breakeven at gross sales of
c.20,500 bopd); reduced from an average of $30/bbl in the second
half of 2023
- The Company continues to receive advance
payments for its net entitlement of 36% of gross sales
revenue
-
No operational impact from regional
tensions; we continue to closely monitor the security environment
and have taken precautions to protect the organisation
Financial
-
Total 2023 revenue receipts of
$109.2 million (2022: $450.4 million), reflecting:
- $65.7 million related to invoices paid for
export sales in August and September 2022, received in January and
March 2023 respectively
- $43.5 million proceeds from local sales in H2
2023
-
Capital expenditures and costs were
significantly reduced in 2023 to preserve liquidity in response to
the suspension of exports
- Aggregate net capex, operating costs and other
G&A monthly run rate reduced to c.$6 million in H2 2023 that
was covered by local sales revenues
- 2023 net capex of c.$59 million (2022: $114.9
million), of which c.$12 million was in H2 2023, as the Company
suspended all Shaikan Field expansion activity
- 2023 operating costs of c.$36 million (2022:
$41.9 million), reflecting the shut-in of production for the
majority of Q2 2023 and cost saving initiatives
-
Prior to the suspension of
dividends, $25 million interim dividend paid in March
-
Cash balance of $82 million at 30
January 2024 with no debt
- Proactively managing and reducing accounts
payable with balances trending towards levels in line with ongoing
monthly expenditures
-
The Kurdistan Regional Government
(“KRG”) owes $151 million net to GKP for October 2022 to March 2023
export sales
Outlook
-
The Company remains focused on
maximising local sales to at least cover monthly costs while
proactively managing accounts payable
-
While local market demand remains
variable and difficult to predict, we are actively pursuing
opportunities to increase sales volumes
-
Expect to maintain aggregate net
capex, operating costs and other G&A monthly run rate at c.$6
million in 2024:
- Estimated 2024 net capex of c.$20 million,
comprising safety critical upgrades and production maintenance
expenditures
- Continuing to focus on minimising costs while
retaining operational capability to increase local sales and resume
exports
- Production and gross Opex per barrel guidance
remains suspended
-
The Company continues to actively
engage with government stakeholders to push for the restart of
pipeline exports:
-
Political and commercial
negotiations between the Government of Iraq (“GOI”) and the KRG are
ongoing
-
First tripartite discussions
between the GOI, KRG and International Oil Companies recently held
in Baghdad, at which GKP was present
-
We continue to emphasise the
importance of payment surety for future oil exports, the repayment
of outstanding receivables and the preservation of current contract
economics
-
With the resumption of exports and
normalisation of KRG payments, GKP will consider incremental field
investment to realise Shaikan’s substantial reserves base and
return to previous production levels
Enquiries:
Gulf
Keystone:
|
+44 (0) 20 7514
1400
|
Aaron Clark, Head of Investor
Relations
& Corporate
Communications
|
aclark@gulfkeystone.com
|
FTI
Consulting
|
+44 (0) 20 3727
1000
|
Ben Brewerton
Nick Hennis
|
GKP@fticonsulting.com
|
or visit:
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 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.