TIDMGKP
RNS Number : 2183V
Gulf Keystone Petroleum Ltd.
14 April 2016
Not for release, publication or distribution, directly or
indirectly, in whole or in part in or into the United States or any
jurisdiction other than the United Kingdom and Bermuda where to do
so would constitute a contravention of the relevant laws or
regulations of such jurisdiction. This announcement (and the
information contained herein) does not contain or constitute an
offer to sell or the solicitation of an offer to purchase, nor
shall there be any sale of securities in any jurisdiction where
such offer, solicitation or sale would constitute a contravention
of the relevant laws or regulations of such jurisdiction.
RNS No 2038V has been amended.
Amendments are identified with an asterisk (*).
The full amended text is shown below.
14 April 2016
Gulf Keystone Petroleum Ltd. (LSE: GKP)
("Gulf Keystone" or "the Company")
Interim Investment Scenarios, Liquidity Management Update and
Grace Period Utilisation
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 potential interim investment scenarios provided below are
unaudited and should in no way be construed as targets or
forecasts.
Scenario Assumptions
As highlighted in the 2015 Results Announcement on 17 March
2016, the interim investment scenarios can be executed within 12
months of committing to a gross capex programme of either $71
million in order to maintain Shaikan production at around 40,000
bopd or $88 million for the option to increase production to 55,000
bopd, both including 30% capex contingency. Any decision to proceed
with the interim investment scenarios will require approvals by the
Kurdistan Ministry of Natural Resources (MNR) and our Shaikan JV
partner MOL Hungarian Oil and Gas plc (MOL). Further details are as
follows:
Maintain 40,000 bopd scenario (see table below)*
2016E 2017E 2018E 2019E 2020E
Average gross production
(kbopd) 37 44 43 44 46
=============================== ====== ====== ====== ====== ======
Net Shaikan project
capital expenditure
($m) (37) (9) - - -
=============================== ====== ====== ====== ====== ======
Other net capital expenditure
($m) (17) (12) (15) (15) (14)
=============================== ====== ====== ====== ====== ======
Net production costs
($m) (31) (32) (35) (39) (44)
=============================== ====== ====== ====== ====== ======
Increase to 55,000 bopd scenario (see table below)*
2016E 2017E 2018E 2019E 2020E
Average gross production
(kbopd) 37 56 55 55 56
=============================== ====== ====== ====== ====== ======
Net Shaikan project
capital expenditure
($m) (55) (1) - - -
=============================== ====== ====== ====== ====== ======
Other net capital expenditure
($m) (17) (13) (16) (16) (15)
=============================== ====== ====== ====== ====== ======
Net production costs
($m) (31) (36) (38) (42) (47)
=============================== ====== ====== ====== ====== ======
-- Average gross production does not take into account any
potential external disruptions to operations or the effects of
other operational disruptions.
-- Subject to the completion of the proposed PSC amendment
agreement as outlined in the 16 March 2016 bilateral Agreement
between the Company and the MNR, Gulf Keystone's net share of
Shaikan capex and production costs will be 64%, which is the basis
for Gulf Keystone's 64% net share of costs under these
scenarios.
-- 'Net Shaikan project capital expenditure' includes costs for:
o Maintain 40,000 bopd scenario: installation of three Electric
Submersible Pumps ("ESP") in existing production wells, one new
well, trunk line tie-in and other items;
o Increase to 55,000 bopd scenario: as above, plus the
installation of an additional production facility.
-- Subject to available funding the majority of 2016 Shaikan
project capex would be committed in the second half of 2016.
-- The above capex scenarios do not include expenditure to
initiate the revised Shaikan FDP which may commence before 2020
subject to available financing as well as MNR and MOL
approvals.
-- 'Other net capital expenditure' includes:
o Costs associated with the installation of air-assisted flares,
several small projects to improve Shaikan production facilities,
technical studies and the installation of additional ESPs post
2017;
o Capitalised G&A;
o Residual costs related to exits from Sheikh Adi, Ber Bahr and
Akri Bijeel; and,
o Other corporate capex.
-- Production bonuses and capacity building payments are
excluded from net production costs. Production bonuses in the
amount of $10 million and $20 million are due to the MNR by Gulf
Keystone and MOL once Shaikan cumulative production reaches 25
million barrels and 50 million barrels, respectively.
G&A and Trade Payables Assumptions
-- Net G&A is estimated to be $19 million in 2016. Such
G&A expenses relate to the Company's operations, exclude
one-time exceptional costs and are assumed to increase by 5-6% per
annum with inflation and business growth.
-- Returning to normal trade payment cycle will result in an
exceptional increase in working capital of around $18 million over
the next 3 years ($13 million in H2 2016, $3 million in 2017, and
$2 million in 2018).
Further Information on March Payment
The Company provides further information below to illustrate the
components of the MNR payment in relation to the March 2016 export
sales as announced in the 12 April 2016 press release:
In $m Cash receipts Gulf Keystone's
from the MNR share
------------------------- -------------- ----------------
PSC entitlements 5.5 4.3
========================= ============== ================
Payment towards revenue
arrears 0.6 0.4
========================= ============== ================
Top-ups 8.9 8.9
------------------------- -------------- ----------------
Total 15.0 13.6
-- March sales of 672,788 barrels of oil.
-- Average Brent price of $38.4/bbl.
-- Realised price adjustments of $14.7/bbl for Shaikan quality
discount for exports and $5.7/bbl for pipeline and transportation
deductions, subject to audit and the establishment of a retroactive
quality bank for Kurdistan crude exports delivered through the
international pipeline to Turkey.
-- Monthly cash receipts comprise PSC entitlements, Payment
towards revenue arrears and Top-ups. The below assumptions are
subject to completion of the proposed PSC amendment agreement.
PSC entitlements
o PSC entitlements reflect proposed PSC amendments outlined in
the 16 March 2016 bilateral agreement between the Company and the
MNR.
o Gulf Keystone's entitlement to cost oil for the March payment
is assumed to be 80%. The Company's share of cost oil as per the
PSC can range between 64% and 80% depending on the recovery rate of
production costs, exploration costs and development costs.
o Gulf Keystone's capacity building payment of 30% of the
Company's share of profit oil is deducted from PSC
entitlements.
Payment towards revenue arrears
o An amount equal to 5% of gross revenue after the adjustments
for Shaikan quality differential and transportation costs is
expected to be received monthly towards the recovery of outstanding
entitlements for past oil deliveries.
o Gulf Keystone's share of the payment towards revenue arrears
is assumed 69%, subject to audit. This percentage is based on the
contractors' respective outstanding net revenue arrears as of 31
December 2015, which takes into account the Company's capacity
building payment liabilities.
Top-ups
o Monthly top-ups are allocated against the past costs due from
the MNR under the Shaikan Government Participation Option.
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 06:02 ET (10:02 GMT)
o Gulf Keystone's share of the March top-up payments is assumed
to be 100%, under the 16 March bilateral agreement.
o Monthly receipts of up to $15 million are expected to include
top-ups and to continue until Gulf Keystone's past costs associated
with the Shaikan Government Participation Option are repaid in
full.
o Subject to MOL's confirmation of its position with regard to a
potential acceptance of the Shaikan Government Participation
Option, Gulf Keystone may be entitled to 80% of top-up payments
instead of 100%.
Enquiries:
Gulf Keystone Petroleum: +44 (0) 20 7514 1400
Jón Ferrier, CEO
Sami Zouari, CFO
Anastasia Vvedenskaya, Head
of Investor Relations +44 (0) 20 7514 1411
Celicourt Communications: +44(0) 20 7520 9266
Mark Antelme
Jimmy Lea
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
and the operator of the Shaikan block, which is a major producing
field.
-- Following the establishment of a regular payment cycle for
all oil sales and arrears, and a positive economic outlook, Gulf
Keystone plans to move into the large-scale phased development of
the Shaikan field targeting 110,000 bopd of production
capacity.
Disclaimer
This announcement contains certain forward-looking statements.
These statements are made by the Company's 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 uncertainties, including both economic
and business factors, underlying such forward-looking information.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCAKQDKKBKDKQD
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April 14, 2016 06:02 ET (10:02 GMT)
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