GKP – Page 3 – Cursor international

23 April, 2020

GKP Shares up 10% on Results

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 15^th 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)

25 March, 2020

GKP Updates on Iraq Operations

Gulf Keystone Petroleum (GKP) has issued providing an operational and corporate update:

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

“In these challenging times, we remain focused on the safety of our people and have adapted our operations to ensure their continued welfare. With the associated economic backdrop compounded by a delay in payments, we are taking a prudent approach to running our business with a sharp focus on financial discipline and maintaining liquidity. While we were on track to deliver the expansion to 55,000 bopd in Q3 2020, flexibility is the order of the day and as such, beyond our existing commitments, we have suspended further expansion activity until conditions improve.

“Underpinning the Company’s strong investment case is the quality and scale of the Shaikan Field, which continues to perform well with current production of c.38,000 bopd.

“Given our strong balance sheet with cash of $154 million at 23 March 2020, no debt repayment until mid-2023, limited capital expenditure commitments and a low-cost structure, we are highly confident in our future ability to capture the significant value in Shaikan, for the benefit of all stakeholders.”

Operational

Production from the field continues in line with expectations at c.38,000 bopd, currently unaffected by the impact of COVID-19.
GKP was on track to achieve 55,000 bopd in Q3 2020, prior to the previously announced suspension of expansion activity.
The Company remains committed to the elimination of routine gas flaring. Its gas management plan now envisages the export of sweet gas instead of gas reinjection. This follows the results of the SH-9 well, which did not encounter a gas cap. The well has been completed as an oil producer and is in the process of being tied into PF-1.
A revised Field Development Plan (“FDP”) is currently expected to be submitted this year, reflecting the new gas management project. Upon FDP approval, planning will commence for FEED (“Front End Engineering and Design”).

Outlook

GKP will maintain a conservative financial position with a clear focus on cost control and cash preservation. At current production levels, the Company covers all operating, general and administrative costs and interest payments with a Brent price of c.$35 per barrel.
In the absence of further expansion activity, 2020 capital expenditures, including expenditures incurred to date and remaining firm commitments, are estimated to be between $50 million and $60 million (gross).
The delay of further investment into Shaikan is expected to impact prior gross 2020 production guidance of 43,000-48,000 bopd and achieving 55,000 bopd in Q3 2020.
Given the macro uncertainty, the Board is suspending guidance until such time as the outlook becomes clearer.
The Board recognises the importance of distributions to shareholders and intends to consider the appropriateness and timing of the ordinary dividend and any share buyback – upon resumption of payments and when it has a clearer view of the scale and duration of the impact of COVID-19 and the macro-economic effects on the business.

(Source: GKP)

16 March, 2020

GKP Shares Fall as Coronavirus Delays Plans

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were trading down 9.6 percent on Monday, compared to a broader market fall of 7.4 percent, as the company announced that expansion plans will be delayed due to coronavirus (COVID-19).

In a statement to the markets, the company said:

The Company has been closely monitoring the Coronavirus (COVID-19) situation in the Kurdistan Region of Iraq. Gulf Keystone’s priority is the welfare of its staff, contractors and the communities close to its operations. We remain committed to deliver safe operations, protection of the asset and the underlying business.

In an attempt to limit the spread of Coronavirus (COVID-19), the Kurdistan Regional Government, in line with many other jurisdictions, has put in place a series of tight controls on the movement of personnel into and around the region. With these controls, along with the increasing global restrictions on movement, it has become difficult to ensure Gulf Keystone has the appropriate drilling personnel and equipment on site in order to continue safe drilling operations.

Therefore, with the SH-13 well – the current well in the campaign – at a safe stage, the decision has been taken to suspend drilling activities until conditions improve to ensure safe operations.

Production rates from the field are at c.38,000 bopd and production currently continues unaffected by the impact of Coronavirus (COVID-19). However, as a precaution, the Company has restricted the access to its production facilities. As a result, certain construction activities related to the expansion to 55,000 bopd have also been suspended until circumstances improve.

The current situation is extraordinary and we believe that our actions protect the long-term value of the asset. The planned production increase to 55,000 bopd, scheduled for Q3 2020, and average production guidance for 43,000 – 48,000 bopd remain priorities.

However, the suspension of drilling and certain expansion operations may impact Gulf Keystone’s ability to meet these targets in the timeframes currently in place. Gulf Keystone will continue to closely monitor this fast-moving situation and will provide updates, as appropriate. As previously announced, the Company will release its Full Year results on 26 March 2020.

Notwithstanding the above, the Company remains in a strong financial position to manage through these turbulent times with a cash balance of $159 million, as at 13 March 2020.

Jón Ferrier, CEO, commented:

“As a Company we place the welfare of our people and those we work with and near as our absolute priority. We also have to be confident of having the right people on site to continue safe operations. Whilst we are not aware of any employees or contractors having been infected, we believe it is prudent to suspend drilling and certain production facility expansion operations during this time.

“We are watching the situation closely and will keep all of our stakeholders informed of developments. Meanwhile, the Shaikan Field itself is performing well.“

(Source: GKP)

22 January, 2020

GKP Plans 30% Year-on-Year Growth

Gulf Keystone Petroleum (GKP) has issued an operational and corporate update in advance of the Company’s full year 2019 results which are scheduled to be released on 26 March 2020.

Operational

Average gross production for 2019 of 32,883 barrels of oil per day (“bopd”), meeting original 2019 gross production guidance.
Current production rates from the field at c.40,000 bopd.
The side-track to the SH-9 well, designed to assess the gas reinjection potential of the Jurassic formation, reached total depth on 27 December 2019.
The SH-9 well is currently being tested. GKP and its partner MOL will then review plans for gas management, in consultation with the Ministry of Natural Resources.
In order to optimise the cost and production benefits from the drilling campaign, the sequence of wells will now be SH-L then SH-I, both of which will be drilled from the same pad and will produce into PF-2, which has available processing capacity.
The rig is currently being mobilised to drill the SH-L production well.
Full oil export from Shaikan via pipeline following commissioning of the PF-1 export line on 10 December 2019.
Safety remains a core focus. However, following over 530 Lost Time Incident (“LTI”) free days, an LTI occurred in December as a result of a road traffic accident.

Corporate

Cash balance of $192 million as at 20 January 2020.
The Company returned value to shareholders by paying dividends of $50 million in 2019 and to date repurchasing c.$35 million of shares out of $50 million in aggregate of share buyback programmes previously announced (with the Company today separately announcing its intention to complete the final $10 million tranche of such programmes).
Ian Weatherdon joined the Company on 13 January as Chief Financial Officer and Executive Board member.

Outlook

With the continued development of the Shaikan Field, the Company expects to increase average production in 2020 by more than 30% year-on-year to 43,000-48,000 bopd.
Debottlenecking and facility upgrades remain on schedule.
On track to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.

Jon Ferrier, CEO, commented:

“2019 saw GKP continue to realise the benefits of the Company’s recent turn around. In a year in which we returned significant value to shareholders, through both our maiden dividend and share buyback programmes, we also benefited from the increased operational tempo. This resulted in the first steps along the road to a significant production increase from Shaikan, and we are pleased to confirm today that we achieved our original 2019 gross production guidance.

“Looking forward, the pace of the development of Shaikan continues with the drilling and investment in our facilities, in order to deliver our growth trajectory. With a robust balance sheet and confidence in regular payments, we expect to be fully funded for our work programme and continue to return value to shareholders.“

(Source: GKP)

12 December, 2019

GKP launches second Share Buyback Programme

Gulf Keystone Petroleum (GKP) has provided an operational and corporate update.

Operational

Average gross production for the year up to 30 November 2019 of 32,127 barrels of oil per day (“bopd”).
November gross production averaged 40,582 bopd, with current production rates from the field at c.42,000 bopd.
GKP is therefore on track to meet its original gross production guidance for 2019 of 32,000-38,000 bopd.
The first well of the drilling campaign, SH-12 came onstream on 13 November. During commissioning, the well produced at rates up to 4,600 bopd, in line with expectations and is currently producing at c.4,000 bopd.
The second well in the drilling campaign, SH-9 is a crucial part of the long-term field gas management plan and is designed to assess the gas reinjection potential of the Jurassic formation. The well, which was spudded on 19 October, encountered a faulted section requiring the well to be side-tracked to the Jurassic reservoir target.
The SH-9 side-track necessitates a revision to the drilling schedule. Assuming a duration of one month for the side-track, the Company now expects to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.
The planned maintenance and debottlenecking shutdown at PF-2 was completed safely during October.
The PF-1 export pipeline is complete. Full oil export operations are expected to commence in the next 24 hours marking the end of export by trucking from the Shaikan Field.
Operations at Shaikan remain safe and secure, with no Lost Time Incidents (“LTI”) recorded in over 500 days.

Corporate

Cash balance of $206 million as at 9 December 2019.
With a robust cash position and the Company’s confidence in its delivery of the Shaikan project, a second share buyback programme for a further $25 million has been approved and an initial tranche of $15 million will be initiated today.

Jón Ferrier, CEO, commented:

“The Company has made significant progress on a number of fronts; with the successful addition of SH-12 to the PF-2 production inventory and drilling of the gas appraisal well SH-9 where operations continue. The imminent start of export through the PF-1 pipeline means all production from Shaikan will now be exported directly via pipeline, benefitting safety, reducing environmental impact and improving netbacks.

“We are pleased to confirm that we are on track to achieve our initial average production guidance for 2019, and whilst the need to side-track SH-9 has slightly impacted our timing guidance for delivering 55,000 bopd, we remain on course to achieve further significant production growth in 2020.

“We are also pleased to announce the launch of a second $25 million share buyback programme, which is in line with our focus on returning value to shareholders, whilst retaining the capital necessary to grow the business.“

(Source: GKP)

12 December, 2019

GKP launches second Share Buyback Programme

Gulf Keystone Petroleum (GKP) has provided an operational and corporate update.

Operational

Average gross production for the year up to 30 November 2019 of 32,127 barrels of oil per day (“bopd”).
November gross production averaged 40,582 bopd, with current production rates from the field at c.42,000 bopd.
GKP is therefore on track to meet its original gross production guidance for 2019 of 32,000-38,000 bopd.
The first well of the drilling campaign, SH-12 came onstream on 13 November. During commissioning, the well produced at rates up to 4,600 bopd, in line with expectations and is currently producing at c.4,000 bopd.
The second well in the drilling campaign, SH-9 is a crucial part of the long-term field gas management plan and is designed to assess the gas reinjection potential of the Jurassic formation. The well, which was spudded on 19 October, encountered a faulted section requiring the well to be side-tracked to the Jurassic reservoir target.
The SH-9 side-track necessitates a revision to the drilling schedule. Assuming a duration of one month for the side-track, the Company now expects to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.
The planned maintenance and debottlenecking shutdown at PF-2 was completed safely during October.
The PF-1 export pipeline is complete. Full oil export operations are expected to commence in the next 24 hours marking the end of export by trucking from the Shaikan Field.
Operations at Shaikan remain safe and secure, with no Lost Time Incidents (“LTI”) recorded in over 500 days.

Corporate

Cash balance of $206 million as at 9 December 2019.
With a robust cash position and the Company’s confidence in its delivery of the Shaikan project, a second share buyback programme for a further $25 million has been approved and an initial tranche of $15 million will be initiated today.

Jón Ferrier, CEO, commented:

(Source: GKP)

19 November, 2019

GKP appoints new Chief Financial Officer

By John Lee.

Gulf Keystone Petroleum (GKP) has announced the appointment of Ian Weatherdon as Chief Financial Officer (“CFO”).

Mr Weatherdon has over 25 years’ experience in the international oil and gas industry and joins GKP from Sino Gas & Energy Holdings Limited where he was CFO. Sino Gas is an energy company focused on developing natural gas assets in China and was an Australian listed Company (ASX:SEH) until acquired by a private equity firm.

Prior to this, he held various executive roles, including; Vice President of Finance & Planning for the Asia-Pacific region, and Vice President of Investor Relations for Talisman Energy Inc., the Canadian exploration and production company which was acquired by Repsol in 2015. He also held the CFO role at Equión Energía Limited, a Colombian joint venture between Talisman Energy Inc. and Ecopetrol SA.

Mr Weatherdon was educated at the University of Calgary before qualifying as a Chartered Accountant from the Chartered Professional Accountants of Canada.

Mr Weatherdon will join the Board of GKP and assume the CFO role on 13th January 2020. As previously announced, Sami Zouari will step down as CFO and a Director of the Company on 2nd December 2019, but will assist Mr Weatherdon for a short handover period.

Jaap Huijskes, Chairman of the Company, said:

“Following a thorough search process, I am very pleased to announce the appointment of Ian Weatherdon as CFO. Ian brings a wealth of highly relevant finance experience within the sector to the management team, and to the Board. We look forward to him joining the team and to his contribution.

“On behalf of the Company, I would like to again thank Sami Zouari for his outstanding contribution to Gulf Keystone, since joining the Company in 2015. We wish him all the best for the future.“

Save as disclosed below there is no further information to be disclosed pursuant to sections LR 9.6.11, LR 9.6.12 or LR 9.6.13 of the Listing Rules, FCA Handbook.

Previous Directorships/Partnerships:

Talisman SAE Pte Ltd
Sino Gas and Energy Holdings
Daily Glory Investment Limited
Lucky Asia Industrial Limited

(Source: GKP)

19 November, 2019

GKP appoints new Chief Financial Officer

By John Lee.

Gulf Keystone Petroleum (GKP) has announced the appointment of Ian Weatherdon as Chief Financial Officer (“CFO”).

Mr Weatherdon was educated at the University of Calgary before qualifying as a Chartered Accountant from the Chartered Professional Accountants of Canada.

Jaap Huijskes, Chairman of the Company, said:

Save as disclosed below there is no further information to be disclosed pursuant to sections LR 9.6.11, LR 9.6.12 or LR 9.6.13 of the Listing Rules, FCA Handbook.

Previous Directorships/Partnerships:

Talisman SAE Pte Ltd
Sino Gas and Energy Holdings
Daily Glory Investment Limited
Lucky Asia Industrial Limited

(Source: GKP)

16 September, 2019

GKP Report on Payments to Govts for 2018

Report on Payments to Governments for 2018

This report sets out details of the payments made to governments by Gulf Keystone Petroleum Ltd and its subsidiary undertakings (“Gulf Keystone”) for the year ended 31 December 2018 as required under Disclosure and Transparency Rule 4.3A issued by the UK’s Financial Conduct Authority (“DTR 4.3A”) and in accordance with The Reports on Payments to Governments Regulations 2014 (as amended in 2015) (“the UK Regulations”) and our interpretation of the Industry Guidance on the UK Regulations issued by the International Association of Oil & Gas Producers.

DTR 4.3A requires companies listed on a stock exchange in the UK and operating in the extractive industry to publicly disclose payments to governments in the countries where they undertake exploration, prospection, discovery, development and extraction of oil and natural gas deposits or other materials.

This report is available to download on the Company’s website: http://www.gulfkeystone.com/investor-centre/presentations-and-reports.

Basis for preparation

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

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

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.

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 basis as production entitlements.

Taxes

Taxes include taxes levied on the income, production or profits of companies, excluding taxes levied on

consumption such as value added taxes, personal income taxes or sales taxes.

Bonuses

Bonuses include signature, discovery and production bonuses.

Licence fees

These include licence fees, rental fees, entry fees, capacity building payments, security fees and other considerations for licences or concessions.

Infrastructure improvement payments

These include payments for infrastructure improvements, whether contractual or otherwise, such as roads, other than in circumstances where the road is expected to be primarily dedicated to operational activities throughout its useful life.

Summary of payments

	KRG
Production entitlements in-kind ⁽¹⁾ (mboe ⁽³⁾ )	3,877
Production entitlements in-kind ^{(1) (2)} ($ ‘000)	190,077

Royalties in-kind ⁽¹⁾ (mboe ⁽³⁾ )	926
Royalties in-kind ^{(1) (2)} ($ ‘000)	45,419

Taxes in-kind ⁽⁴⁾ ($ ‘000)	2,838

Bonuses ($ ‘000)	16,000

Licence fees in-kind ⁽⁵⁾ ($ ‘000)	12,566

Infrastructure improvement payments ($)	430

Total (mboe ⁽³⁾ )	4,803
Total ($)	267,330

Notes

(1) All of the crude oil produced by Gulf Keystone was sold by the KRG. All proceeds of sale were received by or on behalf of the KRG, out of which the KRG then made payment for cost oil and profit oil in accordance with the Shaikan PSC to Gulf Keystone, in exchange for the crude oil delivered to the KRG. Under these arrangements, payments were made by or on behalf of the KRG to Gulf Keystone, rather than by Gulf Keystone to the KRG. However, for the purposes of the reporting requirements under the UK Regulations, we are required to characterise the value of the KRG’s production entitlements under the Shaikan PSC (for which the KRG receives payment directly from the market) as a payment to the KRG.

(2) The realised prices for crude oil sales remain subject to audit and reconciliation.

(3) Barrels of oil.

(4) Per the Crude Oil Sales Agreement (dated 10 January 2018), road tax is payable on export sales of Shaikan crude oil transported by road from 15 November 2017 until 31 December 2018 at $7/ton. The road tax was paid in kind, as the value of the road tax was deducted in calculating the value of production entitlements payable by the KRG to Gulf Keystone.

(5) No cash payments were made by Gulf Keystone to the KRG. Instead, the value of these fees has been accrued and will be settled with the KRG upon finalisation of the second PSC amendment.

(Source: GKP)

8 July, 2019

GKP announces Share Buyback

By John Lee.

Gulf Keystone Petroleum (GKP) has announced its intention to commence a share buyback programme, using the company’s existing cash resources to make market purchases of Gulf Keystone common shares for a maximum consideration of US$25 million, with the first stage of that programme being initiated now to purchase Gulf Keystone shares for an initial amount of US$15 million.

The buyback programme is aligned with the company’s focus on capital allocation and will be an accretive use of funds whilst not impacting the company’s ability to continue the execution of its existing investment programme. It will be executed in accordance with the company’s general authorities to make on market purchases which was approved by shareholders at the company’s AGM on 21 June 2019.

The company has entered into an agreement with its brokers Canaccord Genuity Limited and Peel Hunt LLP to carry out purchases of the Initial Amount under the buyback programme on its behalf on an irrevocable and non-discretionary basis.

(Source: GKP)