Shaikan


GKP Confirms Shaikan Operating Securely

Gulf Keystone Petroleum (GKP) confirmed on Friday morning that its operations in Kurdistan continue safely and securely with the Company achieving average production of 34,525 bopd from Shaikan since the beginning of October 2017.

Shaikan is performing as expected with cumulative production from the field now at 42.4 million barrels, an average of 35,966 bopd in 2017. The Company is on track to meet gross production guidance of 32,000-38,000 bopd for the year.

In line with the Ministry of Natural Resource’s crude export strategy, Shaikan crude production is still being exported via trucks to Turkey. Trucking operations continue uninterrupted with approximately 200 trucks loaded daily.

Following the recent payment for the October 2017 Reinstated Notes coupon of $5 million, the Company’s current cash position is $147.2 million.

Gulf Keystone will keep the market appraised of any changes to its normal operations.

Commenting on today’s announcement, CEO, Jón Ferrier, said:

“We remain committed to ensuring safe and secure operations in Kurdistan, and we continue to monitor the geo-political situation closely. Despite the challenges facing the region, we are maintaining stable operations.”

(Source: Gulf Keystone)

GKP Shares Down on Half-Year Results

Shares in Gulf Keystone Petroleum (GKP) were trading down 3 percent this morning following the announcement of its results for the half year ended 30 June 2017.

Reuters quotes analysts at Cenkos Securities as saying that further clarity on payment is required before GKP can commit to proper capital expenditure.

Highlights to 30 June 2017 and post reporting period

Operational

  • Gulf Keystone’s operations in the Kurdistan Region remained safe and secure throughout H1 2017 with plant uptime at PF-1 and PF-2 of over 99% with no lost-time incidents.
  • Shaikan achieved average daily production of 36,664 bopd.
  • Cumulative production from Shaikan has now exceeded 40 million barrels.
  • In March 2017, Shaikan-8 (“SH-8”) was brought back on-stream.
  • In April 2017, ERC Equipoise verified remaining gross Shaikan 2P reserves of 615 MMstb, as at 31 December 2016.
  • With gross production of c.35,350 bopd in Q3 2017 so far, gross production guidance for 2017 remains at 32,000-38,000 bopd.
  • Operational strategy for investment into Shaikan has been matured throughout 2017.

Financial

  • Cash flow positive through H1 2017.
  • The Group has continued to receive regular payments from the Ministry of Natural Resources (“the MNR”) of $15 million gross ($12 million net to GKP) with cash receipts of $84 million net to GKP year to date.
  • Continued cost control with gross operating costs per barrel of $3/bbl (H1 2016:$4/bbl).
  • Profit after tax of $0.7 million (H1 2016 (as restated): loss after tax of $232.6 million).
  • As at 30 June 2017, the Group estimates an unrecognised revenue receivable of $33 million net to GKP with regards to unpaid export sales (December 2016: $25 million) and $76 million net to GKP for the past costs associated with the Shaikan Government Participation Option (December 2016: $71 million).
  • Cash balance at 30 June 2017 of $118.8 million against $100 million debt principal.
  • Cash balance at 18 September of $133.8 million.
  • April 2017, decision taken to pay Reinstated Notes coupon of $5.1 million at 10% interest rate. The decision regarding the October 2017 coupon will be communicated to the market in due course.

Outlook

  • The Company is progressing in its ongoing discussions with the MNR regarding commercial and contractual conditions, in particular those around regular payments conforming to the Shaikan Production Sharing Contract (“PSC”) and crude marketing arrangements.
  • GKP is preparing to make further investments to maintain plateau production at the nameplate capacity of 40,000 bopd with a view to increasing to 55,000 bopd, and beyond, subject to MOL and MNR approvals, a regular payment cycle from the MNR and a commercially acceptable investment environment.

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

The first half of the year was a period of solid operational delivery, which has seen the Shaikan field continue to perform in line with expectations.

“The Company continues its dialogue with the MNR with the objective of achieving contractual and commercial clarity. Whilst continuing to maintain a rigorous and disciplined approach to its cost base, Gulf Keystone remains cash flow positive and well placed to continue to invest in increasing production from Shaikan.”

Full results here.

(Sources: Gulf Keystone Petroleum, Reuters, Yahoo!)

Gulf Keystone: Payment and Operational Update

Gulf Keystone Petroleum (GKP) has confirmed that a gross payment of $15.0 million ($12.0 million net to GKP) has been received from the Kurdistan Regional Government (KRG) for Shaikan crude oil export sales for April 2017. Company’s current cash position is $140.3 million.

On August 8th, cumulative production from the Shaikan field reached 40 million barrels; another important milestone for the Company.

The Shaikan Field continues to perform in line with expectations with an average daily production of 36,671 barrels of oil per day during the first half of 2017. Gulf Keystone remains on course to achieve its previous gross production guidance of between 32,000 – 38,000 bopd for the full year.

Commenting on today’s announcement, CEO, Jón Ferrier (pictured), said:

“Safe and reliable operations remains a strategic priority and we continue to be strongly encouraged by the stable performance of the Shaikan Field during 2017. I am also pleased to report that GKP recently achieved two years with no Lost-time-incidents (“LTI”), a testament to the quality of our field operations.”

(Source: GKP)

GKP Trims Losses

Gulf Keystone Petroleum (GKP) has announced its results for the year ended 31 December 2016, which show reduced losses for the period:

Highlights to 31 December 2016 and post reporting period

Operational:

  • Gulf Keystone’s operations in the Kurdistan Region remained safe and secure throughout 2016. Plant uptime (at PF-1 and PF-2) of over 98%, once adjusted for export constraints, and strong HSSE performance with no lost-time incidents.
  • 2016 gross production of 12.7 million barrels of oil (“MMstb”), an increase of 14% on 2015, equivalent to an average of 34,794 barrels of oil per day (“bopd”), at the upper-end of our 31,000-35,000 bopd guidance, with no formation water.
  • Shaikan-8 (“Sh-8”) was brought back on-stream on 11 March 2017 and, while it is still being tested, is producing dry oil at a rate of c.1,800 bopd.
  • Shaikan production for Q1 2017 averaged 36,293 bopd.
  • Current daily production is at c.38,000 bopd.
  • In April 2017, the Company received confirmation from ERC Equipoise (“ERCE”) verifying remaining 2P reserves of 615 MMstb, as at 31 December 2016. 
  • In addition to our 2P reserves there are significant contingent resources of 239 MMstb (2C) as identified in the 2016 Competent Person’s Report (“CPR”) also provided by ERCE, as at 30 June 2016.
  • Gross production guidance for 2017 is set at 32,000-38,000 bopd; without further investment in the field – beyond maintenance capital – we would expect production levels at the lower-end of our guidance range.

Financial – as at 31 December 2016:

  • Cash receipts from the MNR amounted to $114.0 million net to GKP (2015: $56.8 million net to GKP).
  • Revenues up 126% at $194.4 million (FY15: $86.2 million) including $72.6 million in relation to the offset of payables due to the MNR (2015: nil).
  • Profit/loss from operations before exceptional items of $26.0 million (FY15:$81.7 million).
  • Loss after tax of $17.4 million (FY15: $214.0 million).
  • Operating costs per barrel on a gross field basis reduced to $3.5/bbl from $5/bbl in 2015.
  • As at 31 December 2016, the Group estimates an unrecognised receivable of $25 million (2015: $44 million) net to GKP on a diluted basis with regards to the unpaid export sales and $71 million (2015: $75 million) net to GKP for the past costs associated with the Shaikan Government Participation Option.
  • Strong liquidity at year end 2016 with unrestricted cash balance of $92.9 million.
  • Cash balance at 5 April 2017 of $112.7 million against $100 million of debt.
  • In Q1 2017, the Group received three further payments for 2016 from the MNR of $15 million gross each ($12 million net to GKP).
  • The Group completed its Balance Sheet Restructuring on 14 October 2016 reducing total debt from over $600 million to $100 million and raised additional cash through a successful $25 million Open Offer.
  • The Group has decided to pay its upcoming Reinstated Notes coupon of $5 million at 10% interest rate on 18 April 2017.

Gulf Keystone: Statement Regarding Recent Media

Further to reports in the media this week, Gulf Keystone (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, is today clarifying certain points regarding the marketing of Shaikan crude.

Recent media does not correctly represent the views of the Company and its Executives. The inference is that the company does not know where the Shaikan oil is exported or sold to. This is wrong. The company is fully aware that MNR have a number of international agreements with reputable trading houses for both the trucked Shaikan crude and the blended crude exported through the pipeline to Ceyhan.

In addition, the impression was wrongly given that the MNR was losing out financially by taking the Shaikan crude out of the pipeline. The pipeline exports to Ceyhan without the Shaikan crude is now sold at higher prices by the KRG, and for the export of Shaikan crude by truck the KRG are still achieving similar netback prices as before, therefore these new export arrangements have an economic benefit to the KRG as more value is realised overall.

The Kurdistan Regional Government’s Ministry of Natural Resources (“MNR”) is exporting all Shaikan crude production via trucks to Turkey in accordance with its stated policy of crude oil export quality management, and better pricing realisation. Shaikan export levels remain steady at ca 38,000 barrels a day. These trucking exports represent an important milestone by establishing a standalone export market for the Shaikan crude.

As previously confirmed, the economic benefit to the Company will be the same as that of the previous framework. 

We apologise, in particular to the KRG/MNR, for any confusion and misunderstanding caused.

(Source: GKP)

Shaikan Crude to be Exported by Truck

Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in Iraqi Kurdistan, has said the Kurdistan Regional Government’s Ministry of Natural Resources (MNR) is to begin exporting all Shaikan crude production via trucks to Turkey, from the end of February.

Subsequently, no Shaikan crude will be injected into the Kirkuk-Ceyhan export pipeline at Fishkhabour, until further notice by the MNR. The Company has been informed that the new arrangement is required by the MNR for its overall crude oil export quality management and is expected to be temporary. It is not expected to affect Shaikan production levels.

Under the new arrangement, the MNR has confirmed to Gulf Keystone that the economic benefit to the Company will be the same as that of the previous framework, whereby all Shaikan crude was exported via pipeline to Ceyhan.

The MNR has also confirmed its intention to take full responsibility, at its sole cost on a non-rechargeable basis, for the additional transportation costs related to this new export route arrangement, and that the Company will continue to receive a fixed payment of gross $15 million per month for sales of the crude. This agreement will remain subject to future audit and reconciliation.

Gulf Keystone continues its ongoing discussions with the MNR regarding commercial and contractual conditions, in particular those around a regular and timely payment cycle, and long-term crude marketing arrangements.

Subject to further clarity on these points, the Company looks forward to making further investments to maintain at least plateau production at nameplate capacity of 40,000 bopd, with a view to increasing to 55,000 bopd as soon as possible.

 Jón Ferrier, Chief Executive Officer, said:

This new export route arrangement confirms there is a market for Shaikan crude as a standalone product while also ensuring Gulf Keystone, and our partner MOL, remain financially and commercially neutral under this arrangement.

“We continue an active dialogue with the MNR to achieve satisfactory commercial and contractual clarity around payments and marketing which remain key to achieving production growth and realising full value potential.

(Source: GKP)

Gulf Keystone gains following Trading Statement

Shares in Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, closed up 1.7 percent on Wednesday followingn a trading and operational update.

This is in advance of the Company’s full year results for the period ended 31 December 2016 which will be announced on Thursday 6 April 2017. The information contained herein has not been audited and may be subject to further review and amendment.

2016 Highlights

  • Average gross production for the year at 34,794 barrels of oil per day (“bopd”) – within the upper-end of our 31,000-35,000 bopd guidance
  • Cumulative gross payments of $142.5 million received from the Kurdistan Regional Government’s Ministry of Natural Resources (“MNR”)
  • Plant uptime (at PF-1 and PF-2) of over 98%, once adjusted for export constraints, and strong safety performance with no lost-time incidents
  • The Company completed its financial restructuring on 13 October 2016 with a reinstated debt balance of $100 million and a $25 million equity raise through an Open Offer

Outlook

  • Average gross production during January 2017 was 37,196 bopd with only minor export disruptions, maximum daily production reached 38,384 bopd
  • Production data from Shaikan continues to support the interpretations made in the most recent Competent Person’s Report (“CPR”) published 31 August 2016, which reported gross Shaikan 2P Reserves of 622 million barrels of oil (“MMbo”) and gross 2C resources of 239 MMbo as at 30 June 2016.
  • The Company is progressing in its ongoing discussions with the MNR regarding commercial and contractual conditions, in particular those around a regular and timely payment cycle, and crude marketing arrangements. Subject to further clarity on these points, the Company looks forward to making further investments to achieve plateau production at nameplate capacity of 40,000 bopd. Accordingly, gross production guidance for 2017 is being set at 32,000-38,000 bopd. Without further investment in the field, beyond maintenance capital, we would expect to achieve the lower-end of our guidance range.
  • Management team recently reinforced with the appointment of Stuart Catterall as Chief Operating Officer in January 2017
  • Cash position of $104 million as at 31 January 2017
  • All Gulf Keystone operations remain safe and secure

 Jón Ferrier, Chief Executive Officer, said:

I am very pleased to announce a strong operational performance during 2016, achieving average daily production at the top of our guidance range. We have an increasingly well understood field which continues to perform in line with expectations, a healthy balance sheet, and stand ready to further invest in the Shaikan Field.

“However, commercial and contractual clarity around payments and marketing remain key to achieving production growth and realising full value potential.” 

(Sources: GKP, Yahoo!)