DJ Operational & Corporate Update
Gulf Keystone Petroleum Ltd (GKP)
Operational & Corporate Update
31-Jan-2024 / 07:00 GMT/BST
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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.USD6 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.USD27/bbl, in line with local market pricing (current breakeven at
gross sales of c.20,500 bopd); reduced from an average of USD30/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 USD109.2 million (2022: USD450.4 million), reflecting:
- USD65.7 million related to invoices paid for export sales in August and September 2022, received in
January and March 2023 respectively
- USD43.5 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.USD6 million in H2
2023 that was covered by local sales revenues
- 2023 net capex of c.USD59 million (2022: USD114.9 million), of which c.USD12 million was in H2 2023, as the
Company suspended all Shaikan Field expansion activity
- 2023 operating costs of c.USD36 million (2022: USD41.9 million), reflecting the shut-in of production for
the majority of Q2 2023 and cost saving initiatives
-- Prior to the suspension of dividends, USD25 million interim dividend paid in March
-- Cash balance of USD82 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 USD151 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.USD6 million in
2024:
- Estimated 2024 net capex of c.USD20 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
GKP@fticonsulting.com
Nick Hennis
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.
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ISIN: BMG4209G2077 Category Code: MSCM TIDM: GKP LEI Code: 213800QTAQOSSTNTPO15 Sequence No.: 300637 EQS News ID: 1826453 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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(END) Dow Jones Newswires
January 31, 2024 02:00 ET (07:00 GMT)
