Gulf Keystone Petroleum (GKP)# – Page 2

17 December, 2020

GKP Shares Rally following Update

By John Lee.

Shares in Gulf Keystone Petroleum, have rallied more than 20 percent after the company issued an operational and corporate update on Tuesday:

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

“We have made significant operational strides in recent months, ensuring we remain on-track to achieve our revised targets for the year. I am pleased to update stakeholders on further success in executing the previously reported, low-cost, high-impact investments that have so far increased gross production to 42,000 bopd, in excess of the initially targeted increase of 5,000 bopd.

“The Shaikan Field recently achieved an important milestone of cumulative production of 80 million stock tank barrels. This is a clear testament to not only the quality of the asset, from which there remains significant untapped potential, but also the professionalism and dedication of the team. We look forward to updating the market on further progress early in 2021.“

Operational

Following on from the successful work over of the SH-12 well, the Company has progressed the previously announced low-cost, high-impact investments to further increase field production.
The SH-9 well, on which activity was suspended in March 2020 due to COVID-19, has now been successfully tied-in to PF-1 and is on production. PF-1 is now operating at its current maximum processing capacity of c.27,500 bopd. Debottlenecking activities at PF-1 remain on-track to further increase production capacity to over 30,000 bopd during Q1 2021.
Gross Shaikan production is currently at c.42,000 bopd, c.20% above the November 2020 average rate.
Average gross production for the year is expected to be at, or slightly above, 36,000 bopd, the top end of the guidance range.

Financial

The Company remains on track to achieve targeted G&A and Opex savings of at least 20% compared to 2019 and 30% on a run-rate basis.
Net capex for 2020 is expected to be at or slightly exceed the top end of the guidance range of $48 million, following the $3 million investment in high-impact projects.
The Kurdistan Regional Government (“KRG”) has maintained regular payments for eight months, including the recent October receipt.
The Company has extended its hedging programme, establishing a H1 2021 floor price of $35/bbl on c.60% of production, based on current production levels.
As at 14 December 2020, the Company had a cash balance of $142 million.

Outlook

With completion of the debottlenecking of PF-1, GKP is expected to deliver a further increase in production in Q1 2021.
In line with the KRG’s commitment to review the outstanding November 2019 to February 2020 invoices totalling $73.3m (net) when oil prices reached $50/bbl, we are pleased to confirm receipt of a proposal to repay the arrears. We look forward to further engaging with the KRG on this matter and will provide an update in due course.
GKP is well positioned to restart its drilling programme to achieve 55,000 bopd when circumstances permit.
The Company remains committed to maintaining its strong financial position and aims to return to a balance of production growth and shareholder distributions, as conditions continue to improve.
The search process to identify a successor for CEO, Jón Ferrier, is ongoing.

AGM Update

In accordance with the 2018 UK Corporate Governance Code, the Company can confirm that following the Annual General Meeting held on 19 June 2020, where three of the proposed Resolutions did not attain the support of 80% of the votes, members of the Board and executive management team have consulted with several of the Company’s large shareholders. Mr Garrett Soden has been reappointed to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria, GKP’s largest shareholder. The Company continues to actively engage with its shareholders.

(Source: GKP)

The post GKP Shares Rally following Update first appeared on Iraq Business News.

23 November, 2020

GKP Shares Rise as Workover Completed

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were trading up 5 percent on Monday morning as the company announced that the planned workover on the SH-12 well has been completed safely.

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

“We continue to successfully manage the challenging macro backdrop and make operational progress. I am pleased to report the successful planned workover of the SH-12 well, which is currently producing at over 5,000 bopd, driving an approximately 15% increase in production from the field.

“As announced in our half-year results, the SH-12 workover was one of a series of opportunities identified which in aggregate were expected to increase gross production by c.5,000 bopd. With the very successful SH-12 workover result and work to bring SH-9 online and the debottlenecking of PF-1 proceeding as planned, we now expect to exceed our original incremental production expectation.

“We are also pleased to confirm that we expect average production from the Shaikan Field this year to be at the top end of our guidance range for 2020. I look forward to updating all our stakeholders in December 2020 on the wider progress we have made as a business.“

Initial production from SH-12 was from the Lower Jurassic Butmah reservoir providing valuable information for future development planning. The workover involved moving up hole, perforating and producing from the main SAM reservoir.

SH-12 returned to production on 15 November 2020 and the well is currently flowing at a stable rate of over 5,000 bopd. The additional production flows to the PF-2 production facility, where there is spare production capacity. The workover design allowed the original Electronic Submersible Pump (“ESP”) completion to remain in place during the operation and the ESP is now back-in service. The operation came in ahead of schedule and on budget.

The Company is pleased to confirm that average 2020 gross production is expected to be at the upper end of the previously disclosed guidance range of 35,000 – 36,000 bopd, with the field currently producing at c.39,000 bopd.

The Company intends to publish an Operational & Corporate Update in December 2020.

(Sources: GKP, LSE)

The post GKP Shares Rise as Workover Completed first appeared on Iraq Business News.

28 June, 2020

Ferrier Steps Down as CEO of GKP

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)

20 June, 2020

GKP to Cut Workforce by 40%

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)

1 May, 2020

GKP Directors Buy Shares

By John Lee.

Gulf Keystone Petroleum (GKP) has announced that it was informed on 30th April 2020 of the following transactions by persons discharging managerial responsibilities and persons closely associated with them.

Mr Ian Weatherdon (pictured), Chief Financial Officer, purchased 50,112 common shares in Gulf Keystone Petroleum Limited on 30 April 2020 at a price of 79.8p per share. In total Mr Weatherdon owns 50,112 common shares in the Company representing 0.024% of the issued share capital.

Mr Gabriel Papineau-Legris, Chief Commercial Officer, purchased 20,000 common shares in Gulf Keystone Petroleum Limited on 30 April 2020 at an average price of 84.225p per share. In total Mr Papineau-Legris owns 30,000 common shares in the Company representing 0.014% of the issued share capital.

(Source: GKP)

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)

13 December, 2019

KRG Delays Payments to Oil Firms

By John Lee.

The Kurdistan Regional Government (KRG) has delayed payments to oil producers by several weeks.

In statements to the markets on on Thursday, Genel Energy, Gulf Keystone Petroleum (GKP) and Shamaran Petroleum said that payments relating to invoices for oil production in August and September, which were due to be paid in November and December, will be received in January 2020.

(Sources: Genel Energy, Gulf Keystone Petroleum (GKP), Shamaran Petroleum)

13 December, 2019

KRG Delays Payments to Oil Firms

By John Lee.

The Kurdistan Regional Government (KRG) has delayed payments to oil producers by several weeks.

(Sources: Genel Energy, Gulf Keystone Petroleum (GKP), Shamaran Petroleum)

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)