TIDMGKP
RNS Number : 0151W
Gulf Keystone Petroleum Ltd.
17 December 2021
17 December 2021
Gulf Keystone Petroleum Ltd. (LSE: GKP)
("Gulf Keystone", "GKP" or "the Company")
Operational, Corporate & AGM Update
Gulf Keystone, a leading independent operator and producer in
the Kurdistan Region of Iraq, today provides an operational and
corporate update.
Jon Harris, Gulf Keystone's Chief Executive Officer, said:
" We are pleased to announce that we have submitted a draft
Field Development Plan to the Ministry of Natural Resources. While
the timing of FDP approval is uncertain given the scale of the
project, this is an important step forward to develop the
significant potential of the Shaikan Field while more than halving
CO(2) per barrel by eliminating routine flaring.
Production performance has been strong, reaching a record
monthly average high in October, and we are on track to meet our
tightened 2021 gross average production guidance. With our leverage
to oil prices and low cost base, strong production has translated
into robust cash flow generation. We have experienced operational
challenges with SH-13 and SH-14 and, subject to well productivity,
we are now targeting to increase gross production towards 55,000
bopd in January."
Shaikan Field Development Plan ("FDP")
-- Following extensive constructive engagement with the Ministry
of Natural Resources ("MNR"), Gulf Keystone and its partner
Kalegran B.V. (a subsidiary of MOL Hungarian Oil & Gas plc)
("MOL") have submitted a draft FDP to the MNR
-- The FDP includes the continued ramp-up of Jurassic oil
production , an appraisal of the Triassic reservoir and a Gas
Management Plan to more than halve CO(2) per barrel by eliminating
routine flaring
-- The FDP is subject to review and final approval by the MNR,
the timing of which is uncertain given the scale of the project.
Final investment decision ("FID") is also subject to approval of
both Boards of Directors of Gulf Keystone and MOL, and the Company
will provide an update at the appropriate time
Operational
-- Following over 660 days without a Lost Time Incident ("LTI"),
we were disappointed to have an LTI during drilling operations in
October. Following the incident, we have completed a full
investigation and have put in place a number of remedial
actions
-- Gross average production from the field in 2021 to date of
c.43,300 bopd, in line with tightened 2021 guidance, with record
gross average production in October of 45,654 bopd
-- SH-14 has been drilled, completed and is currently being
hooked-up , following delays caused by equipment failures and
wellbore issues in the subsequent side-track
-- Following the rig move from the SH-13/SH-14 well pad, an acid
stimulation programme is now underway on SH-13 to access the
broader fracture network in the reservoir after an area of low
fracture connectivity was encountered. Acid stimulation is commonly
used in carbonate reservoirs such as Shaikan
-- Activities are ongoing to start production from SH-13 and
SH-14 and the increase in gross production towards 55,000 bopd,
subject to well productivity, is now expected in January
-- Preparations are ongoing to spud SH-15 (formerly referred to
as SH-G) which is now expected to be brought onstream in Q2
2022
-- Planned installation of two electric submersible pumps
deferred to 2022 after successful trial of lower cost jet pump
solution at SH-10 and stronger than expected SH-11 reservoir
performance
Financial
-- $283.2 million ($221.7 million net to GKP) received from the
Kurdistan Regional Government in 2021 to date for payments of crude
oil sales and recovery of outstanding arrears. $32.4 million of the
original total net arrears balance of $73.3 million has now been
recovered
-- The delayed payment for September 2021 crude oil sales and
arrears (gross: $37.8 million; net to GKP: $29.6 million) is
expected to be paid shortly
-- Following the payment of the $50 million interim dividend on
8 October 2021, $100 million of dividends have been distributed to
shareholders in 2021, in line with the Company's strategy of
balancing investment in growth with shareholder returns
-- Robust balance sheet, with a cash balance of $176 million as at 16 December 2021
Outlook
-- On track to meet tightened 2021 average gross production guidance of 42,000 to 44,000 bopd
-- 2021 net Capex guidance lowered from $75-$85 million to
approximately $55 million, principally due to the revised spud date
of SH-15 and deferral of installation of SH-10 and SH-11 electric
submersible pumps, partially offset by the higher cost of SH-14
-- 2021 gross Opex guidance of $2.5 to $2.9/bbl remains unchanged
-- With continuing strong oil prices and cash flow generation,
there may be opportunities to consider further distributions to
shareholders and to optimise the capital structure
AGM update
At the Company's Annual General Meeting ("AGM") held on 18 June
2021, all resolutions were successfully passed. However,
resolutions 2 and 6, being the re-election of the Company's
Chairman and Chief Financial Officer, failed to attain the support
of 80% of the shareholders who voted. Voting turnout in general was
low relative to prior years, with approximately 49% of the total
shareholder register voting. The Company continues to look at ways
to increase voting turnout at future general meetings.
Substantially all the votes against resolutions 2 and 6 were
from a single major shareholder. In accordance with Provision 4 of
the 2018 UK Corporate Governance Code, the Board has consulted with
the single shareholder, and, as part of this exercise, also
consulted with the Company's other major shareholders.
Feedback received from the single shareholder encompassed issues
principally related to the Company's operational progress,
organisational structure and capital allocation. The Company also
received feedback from other major shareholders, all of which were
supportive of resolutions 2 and 6. The Board has carefully
considered the issues and has addressed them, to the extent
possible or necessary. The independent members of the Board
continue to hold every confidence in both the Chairman and Chief
Financial Officer, recognising the value and contribution each
bring to the Company.
The Company will continue to engage with the major shareholder
in question and welcomes ongoing engagement and feedback from all
shareholders.
This announcement contains inside information for the purposes
of the UK Market Abuse Regime.
Enquiries:
Gulf Keystone: +44 (0) 20 7514 1400
Aaron Clark, Head of Investor Relations aclark@gulfkeystone.com
Celicourt Communications: + 44(0) 20 8434 2754
Mark Antelme GKP@Celicourt.uk
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. 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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