TIDMGKP
RNS Number : 0408Q
Gulf Keystone Petroleum Ltd.
24 June 2022
24 June 2022
Gulf Keystone Petroleum Ltd. (LSE: GKP)
("Gulf Keystone", "GKP" or "the Company")
2022 AGM & Operational & Corporate Update
Ahead of today's 2022 Annual General Meeting ("AGM"), Gulf
Keystone, a leading independent operator and producer in the
Kurdistan Region of Iraq, provides an operational and corporate
update.
Jon Harris, Gulf Keystone's Chief Executive Officer, said:
"Following a year of strong operational and financial
performance in 2021, our leverage to the oil price, low-cost
production base and focus on capital discipline have continued to
drive significant cash flow generation from the Shaikan Field in
2022. We have declared sector-leading dividends of $190 million
year to date, $75 million of which is subject to shareholder vote
at today's AGM, while continuing to invest in the high growth
potential of the Shaikan Field. We also remain focused on
maintaining a robust balance sheet and today we are pleased to
announce our intention to call the $100 million outstanding bond,
leaving the Company debt free.
Year to date production has averaged c.44,900 bopd. We are
prudently managing our wells to avoid traces of water and, as a
result, we are tightening 2022 gross production guidance to 44,000
- 47,000 bopd. The installation of water handling facilities will
unlock upside production potential and we continue to explore
acceleration options in a supply constrained market. In the
near-term, we continue to progress our well workover and
intervention programme to optimise production. While timing of
approval remains uncertain, we also continue to make positive
progress on the FDP as we prepare to resume drilling and ramp up
production.
Ahead of our AGM later today, I would like to thank our
shareholders, employees and other stakeholders in Kurdistan for
their continued commitment and support. Together, we are focused on
safely delivering the significant value of the Shaikan Field."
Operational
-- Continued strong focus on safety, with no Lost Time Incident
("LTI") recorded for over 240 days
-- Gross average production in 2022 year to date of c.44,900
bopd; gross average production in June of c.45,900 bopd, as at 22
June 2022
-- Year to date gross average production impacted by:
o SH-12 reperforated and brought back online in June at a
reduced rate after being shut-in at the beginning of the year
o SH-14 production remains constrained following acid
stimulation earlier in the year
o SH-15 brought online in April after being drilled in record
time and is currently producing towards the lower end of the
anticipated range
-- While the industry is currently experiencing equipment lead
time pressures in a supply constrained market, we are continuing to
review options to accelerate installation of water handling
facilities that would enable further production ramp up from
existing wells
-- Progressing well workover and intervention programme to optimise near-term production
Financial
-- Significant cash flow generation in 2022 year to date, with
$348.8 million ($273.1 million net to GKP) received from the
Kurdistan Regional Government ("KRG") for crude oil sales and
revenue arrears. The outstanding arrears balance has been fully
recovered
-- $190 million of dividends declared in 2022, a sector-leading
dividend yield of 26% based on GKP's closing price on 22 June
2022
o $115 million paid to shareholders to date; additional $75
million, including the previously declared ordinary and special
dividends, to be paid in July following approval at AGM
-- Robust balance sheet, with a cash balance of $247.0 million at 23 June 2022
Outlook
-- Tightened 2022 gross average production guidance to 44,000 - 47,000 bopd
-- Gross Opex guidance of $2.9-$3.3/bbl remains unchanged
-- Net capital expenditure guidance of $85-$95 million remains unchanged
-- While timing of FDP approval remains uncertain, we continue
to progress towards sanction with the MNR. The Company is preparing
to resume drilling to ramp-up production from the Jurassic
reservoir and will update capital expenditure guidance in due
course
-- We continue to monitor the long running dispute between the
Federal Iraqi Government and the KRG on the management of oil and
gas assets in Kurdistan. Our operations currently remain unaffected
and we continue to work closely with the KRG, our advisers and
other stakeholders to protect the Company's interests
-- Remain focused on balancing investment in growth with
shareholder returns, while preserving adequate liquidity:
o Intention to call $100 million bond after the step down in
July 2022 of the call premium from 4% to 2% of principal
o Assuming timely payment of invoices and strong oil prices, we
expect continuing robust cash flow generation in 2022 providing
flexibility to consider further shareholder distributions and an
increase in capital expenditure to resume drilling
2022 AGM
Gulf Keystone is today hosting its 2022 AGM at 10am CET via
webcast. It will not be possible to attend the meeting in person
but all registered Gulf Keystone shareholders are invited to view
the webcast at the following link: meetnow.global/gkplagm2022 .
Joining instructions are available on Gulf Keystone's website:
https://www.gulfkeystone.com/investors/agm/ .
The AGM will be hosted by Jaap Huijskes, Non-Executive Chairman,
and will include a presentation by Jon Harris, Chief Executive
Officer, and Ian Weatherdon, Chief Financial Officer. A copy of the
presentation will be available to view on the Investors section of
Gulf Keystone's website (
https://www.gulfkeystone.com/investors/presentations ). A recording
of the presentation will also be available to view on the same page
later in the day following the conclusion of the AGM.
Update on ordinary and special dividend per share rate
Gulf Keystone will be seeking shareholder approval at today's
AGM to pay total dividends of $75 million, comprising the $25
million annual ordinary dividend declared on 30 March 2022 and the
$50 million special dividend declared on 25 May 2022.
-- The annual ordinary dividend of $25 million is equivalent to
11.56 US cents per Common Share of the Company and is expected to
be paid on 15 July 2022, based on a record date of 1 July 2022
-- The special dividend of $50 million is equivalent to 23.12 US
cents per Common Share of the Company and is expected to be paid on
29 July 2022, based on a record date of 15 July 2022
The Company will disclose the pounds sterling rate per share for
both dividends prior to their payment dates.
Update on Iraqi Federal Supreme Court ("FSC") Ruling
Further to Gulf Keystone's disclosure in its Annual Report and
Accounts for the year ended 31 December 2021 regarding the FSC
ruling, the Iraqi Ministry of Oil recently commenced legal
proceedings with respect to the validity of Production Sharing
Contracts ("PSCs") issued under the Kurdistan Region of Iraq Oil
and Gas Law, an escalation in the long running dispute between the
Federal Iraqi Government and the KRG on the management of oil and
gas assets in Kurdistan. The Company has been advised that the
Iraqi Ministry of Oil has raised a case in the Baghdad Commercial
Court against several IOCs, including Gulf Keystone. Gulf Keystone
also understands that the Iraqi Ministry of Oil has also written to
contractors and service providers requesting them to cease working
in Kurdistan.
Gulf Keystone notes the KRG's public assertion that the actions
taken by the Iraqi Ministry of Oil are unlawful and that "it will
take all constitutional, legal, and judicial measures to protect
and preserve all contracts made in the oil and gas sector".
Further, on 4 June 2022, the Judicial Council of the Kurdistan
Region of Iraq stated that the Kurdistan Region of Iraq Oil and Gas
Law "remains in full force" and that the Iraq Federal Supreme Court
"lacks the constitutional authority" to invalidate the Law. Also,
on 13 June 2022, the Ministry of Natural Resources stated that "the
contracts entered into between the IOCs and the Kurdistan Regional
Government are entirely in accordance with the 2007 Oil and Gas
Law". The Company notes that the KRG has itself launched criminal
and civil lawsuits which seek to protect the validity of the
PSCs.
The Company continues to work closely with the KRG, its advisers
and other stakeholders to protect its interests and will provide
further updates on the matter as and when it is able and necessary
to do so, recognising that this is a live legal matter and Gulf
Keystone is not party to the resolution discussions between the
Federal Iraqi Government and the KRG.
Gulf Keystone's operations currently remain unaffected.
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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