Launch of an offering of convertible bonds

RNS Number : 8908N

Gulf Keystone Petroleum Ltd.

04 October 2012

 



NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW

4 October 2012

Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")

Launch of an offering of up to USD$ 250 million
Convertible Bonds due October 2017

Gulf Keystone announces the launch of an offering (the "Offering") of senior unsecured convertible bonds due October 2017 (the "Convertible Bonds") in a principal amount of USD$ 200 million, which may be increased in the event the Company exercises in full its increase option of up to USD$ 25 million (the "Increase Option"). In addition, the Company has granted to BNP Paribas an overallotment option of up to USD$ 25 million exercisable up to the close of business on 16 October 2012 (the "Overallotment Option"). The Offering is being made by way of a Reg. S. Institutional Private Placement.

Funds raised via the Offering will enhance the Company's liquidity position and contribute to the Company's ongoing move to the large-scale staged development of its Shaikan block in the Kurdistan Region of Iraq, which was declared a commercial discovery in August 2012, and its aggressive exploration and appraisal of its other three blocks in the region. Together with the Company's existing cash resources, the additional financing will be deployed in order to, inter alia:

·    Complete and submit the Shaikan field development plan by the end of January 2013, select development concept and move to the large-scale staged development in 2013, with the goal of achieving 150,000 barrels of oil per day ("bopd") by 2015 and full plateau production thereafter.

·    Finalise the Company's on-going work on the commissioning of Shaikan's two new early production facilities (PF-1 and -2), which will allow the Company to produce up to 40,000 bopd by mid-2013, processing the crude to export specification. PF-1 and -2 will be equipped with an amine unit to sweeten gas, with the potential addition of a Claus sulphur recovery unit, allowing gas delivery to a nearby trunk gas pipeline, which is expected to be constructed.

·    Create in-field infrastructure network, including flowlines and wellhead separators, connecting Shaikan production wells to PF-1 and -2. 

·    Explore the undrilled horizons in the Shaikan block, with the Shaikan-7 well targeting the deeper Triassic and the Permian.

·    Continue the current aggressive exploration and appraisal of the neighboring Akri-Bijeel, Sheikh Adi and Ber Bahr blocks in addition to further activity throughout 2013.

Further funds will become available to the Company in the event that the Kurdistan Regional Government exercises its Third Party Assignment option under the terms of the Production Sharing Contracts regarding the Shaikan and Akri-Bijeel blocks. In addition, the Company continues to evaluate the ongoing process of the sale of the Company's 20% interest in the Akri-Bijeel block as the forthcoming results of the three wells currently being drilled and planned early production from the Bijell discovery are taken into consideration.

The Convertible Bonds will be convertible into common shares of the Company.  The Convertible Bonds are expected to carry a coupon of between 5.875% and 6.625% per annum payable semi-annually in arrear and the conversion price is expected to be set at a premium of between 25% and 30% to the volume weighted average share price of Gulf Keystone on the AIM market between opening and closing of the market today. The Convertible Bonds will be issued and redeemable at 100% of their principal amount and, unless previously redeemed, converted or cancelled, will mature on the fifth anniversary of the issue of the Convertible Bonds in 2017.

The final terms of the Offering will be determined at the time of pricing which is expected to be announced just after the close of the market today. Closing and settlement are expected on 18 October 2012. It is the Company's intention that an application will be made for the Convertible Bonds to be admitted to listing on the Official List of the UK Listing Authority and admitted to trading on the Professional Securities Market of the London Stock Exchange by no later than 30 November 2012.

BNP Paribas is acting as Sole Bookrunner and Lead Manager of the Offering.  

Todd F Kozel, Executive Chairman and CEO of Gulf Keystone, commented:

"We welcome this important financing initiative, which, in addition to being an important milestone for the Company in support of our transition from the exploration and appraisal phase to the fully-fledged development of the world class Shaikan discovery, shows an increasing confidence of international markets in doing business in the Kurdistan Region of Iraq."

Enquiries:

Gulf Keystone Petroleum:	[phone]
Todd Kozel, Executive Chairman and Chief Executive Officer
Ewen Ainsworth, Finance Director
Strand Hanson Limited	[phone]
Simon Raggett / Rory Murphy / James Harris
Pelham Bell Pottinger	[phone]
Mark Antelme
BNP Paribas
Florence Sztuder (Syndicate Desk) Ben Canning (Equity Capital Markets)	[phone]         [phone]

or visit: www.gulfkeystone.com

Notes to Editors:

§ Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company focused on exploration in the Kurdistan Region of Iraq.

§ Gulf Keystone Petroleum Limited is registered in Hamilton, Bermuda with further offices in Erbil, Kurdistan (Iraq), Algiers, Algeria and London, UK.

§ Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four exploration blocks in Kurdistan, including the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.

§ GKPI is the Operator of the Shaikan Block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively. Texas Keystone Inc. holds its interest in trust for Gulf Keystone, pending transfer of its interest to the Company.  

§ Shaikan is a major discovery with independently audited gross oil-in-place volumes of between 12.4 billion barrels to 15 billion barrels calculated on the P90 to P10 basis, with a mean value of 13.7 billion barrels.

§ The Company's shares have traded on the AIM market of the London Stock Exchange since listing on 8 September 2004.

STABILISATION / FSA

THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED ("REGULATION S"). THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY CONVERTIBLE BONDS, NOR SHALL THERE BE ANY OFFER OF CONVERTIBLE BONDS IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL. THE CONVERTIBLE BONDS OR OTHER SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF US PERSONS (AS DEFINED IN REGULATION S), ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THERE WILL BE NO PUBLIC OFFER OF THE CONVERTIBLE BONDS OR OTHER SECURITIES MENTIONED IN THIS ANNOUNCEMENT IN THE UNITED STATES.

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY CONVERTIBLE BONDS.

THIS ANNOUNCEMENT IS DIRECTED AT AND IS ONLY BEING DISTRIBUTED IN THE UNITED KINGDOM TO (I) PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"), (II) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED FALLING WITHIN ARTICLE 49 OF THE ORDER, AND (III) PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT MUST NOT BE READ, ACTED ON OR RELIED ON BY PERSONS IN THE UNITED KINGDOM WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM. BY READING THIS ANNOUNCEMENT, THE READER ACKNOWLEDGES THAT IT IS A PERSON EITHER (I) OUTSIDE THE UNITED KINGDOM OR (II) FALLING WITHIN ONE OF THE FOREGOING CATEGORIES.

THIS ANNOUNCEMENT DOES NOT PURPORT TO IDENTIFY OR SUGGEST THE RISKS (DIRECT OR INDIRECT) WHICH MAY BE ASSOCIATED WITH AN INVESTMENT IN THE CONVERTIBLE BONDS.

THE LEAD MANAGERIS ACTING ON BEHALF OF THE COMPANY AND NO ONE ELSE IN CONNECTION WITH THE CONVERTIBLE BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE LEAD MANAGER, OR FOR PROVIDING ADVICE IN RELATION TO THE CONVERTIBLE BONDS.

NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS OR WILL BE MADE AS TO, OR IN RELATION TO, AND NO RESPONSIBILITY OR LIABILITY IS OR WILL BE ACCEPTED BY THE LEAD MANAGER, OR BY ANY OF ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS AS TO OR IN RELATION TO THE ACCURACY, COMPLETENESS OR VERIFICATION OF THIS ANNOUNCEMENT, PUBLICLY AVAILABLE INFORMATION ON THE COMPANY OR ANY OTHER WRITTEN OR ORAL INFORMATION MADE AVAILABLE TO ANY INTERESTED PARTY OR ITS ADVISERS AND ANY LIABILITY THEREFOR IS HEREBY EXPRESSLY DISCLAIMED.

IN CONNECTION WITH THE OFFERING, THE LEAD MANAGER AND ITS AFFILIATES MAY, FOR THEIR OWN ACCOUNT, ENTER INTO ASSET SWAPS, CREDIT DERIVATIVES OR OTHER DERIVATIVE TRANSACTIONS RELATING TO THE CONVERTIBLE BONDS AND/OR THE UNDERLYING ORDINARY SHARES AT THE SAME TIME AS THE OFFER AND SALE OF THE CONVERTIBLE BONDS OR IN SECONDARY MARKET TRANSACTIONS. THE LEAD MANAGER AND ANY OF ITS AFFILIATES MAY FROM TIME TO TIME HOLD LONG OR SHORT POSITIONS IN OR BUY AND SELL SUCH SECURITIES OR DERIVATIVES OR THE UNDERLYING ORDINARY SHARES. NO DISCLOSURE WILL BE MADE OF ANY SUCH POSITIONS OTHER THAN AS REQUIRED BY APPLICABLE LAWS AND DIRECTIVES.

IN CONNECTION WITH THE OFFERING, THE LEAD MANAGER AND ANY OF ITS AFFILIATES ACTING AS AN INVESTOR FOR THEIR OWN ACCOUNT MAY TAKE UP CONVERTIBLE BONDS OR THE UNDERLYING ORDINARY SHARES AND IN THAT CAPACITY MAY RETAIN, PURCHASE OR SELL FOR THEIR OWN ACCOUNT SUCH SECURITIES AND ANY SECURITIES OF THE ISSUER OR ANY RELATED INVESTMENTS AND MAY OFFER OR SELL SUCH SECURITIES OR OTHER INVESTMENTS OTHERWISE THAN IN CONNECTION WITH THE OFFERING. THE LEAD MANAGER DOES NOT INTEND TO DISCLOSE THE EXTENT OF ANY SUCH INVESTMENT OR TRANSACTIONS OTHERWISE THAN IN ACCORDANCE WITH ANY LEGAL OR REGULATORY OBLIGATION TO DO SO.

 

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