Operational and Corporate Update

RNS Number : 4386Q

Gulf Keystone Petroleum Ltd.

19 June 2020

 

19 June 2020

Gulf Keystone Petroleum Ltd. (LSE: GKP)

("Gulf Keystone", "GKP" or "the Company")

Operational and Corporate Update

Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq ("Kurdistan" or "Kurdistan Region"), is providing an operational and corporate update in advance of today's Annual General Meeting.

Jón Ferrier, Gulf Keystone's Chief Executive Officer, said:

"In response to the unprecedented COVID-19 pandemic and macroeconomic conditions, we took decisive actions to preserve liquidity and safeguard the long-term health of the business. We are now well placed to weather the current environment and are able to move quickly back to growth at the right time.  Our cost reduction initiatives have been thorough, and I am grateful to our staff and contractors for their commitment and support.  Whilst uncertainty around the timing of the end of the crisis persists, the partial oil price recovery gives us some grounds for optimism about the future and our return to delivering the significant untapped value in Shaikan."

Operational

Ø Maintaining strong focus on safety with zero LTIs recorded in 2020.

Ø In order to protect all personnel, the Company continues to actively manage its working practices in light of the COVID-19 pandemic observing all of the appropriate protection measures.

Ø Despite the challenges presented by COVID-19, production operations continue at c.36,000 bopd (gross). Average gross production for the year to date is 37,232 bopd.

Ø DQE's Rig 40 has been stacked on site at zero cost, which will aid the timely resumption of drilling activities, when appropriate.

Ø During this period of reduced activity, the Company continues to optimise its plans for a quick and effective restart of the 55,000 bopd expansion project.

Financial

Ø As a result of a continued rationalisation of the organisation, expenditures, and contract renegotiations, the Company remains on track to achieve its previously announced target of Opex and G&A savings in excess of 20% in 2020 compared to 2019. On a run-rate basis, we are targeting to achieve savings of c.30%.

o  The Company is introducing 2020 guidance for Opex of $2.7 to $3.1 per barrel (vs $3.9 per barrel in 2019).

o  The workforce is in the process of being reduced by c.40%, including over 60% of expatriates, due to the reduction in the work programme.

Ø Capex for 2020 remains in the range $40 - $48 million (net), a 50% reduction compared to 2019, of which $30 million (net) had been spent by the end of April 2020.

Ø Cash balance of $144 million as at 17 June 2020.

Ø Payments by the Kurdistan Regional Government to GKP are in line with the peer group, with invoices from March 2020 onwards being settled the following month. There is an ongoing dialogue relating to the payment of invoices for November 2019 to February 2020, aggregating $73 million (net).

Corporate

Ø Garrett Soden is to be welcomed back to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria.

Ø Mr Soden will be formally appointed following completion of the appointment process and will bring valuable financial and industry experience.  Mr Soden was a Non-Executive Director between 2016 and 2019 and he has undertaken to conform to UK corporate governance standards in respect of external appointments.

Outlook

Ø With the Company's ongoing prudent approach to managing its financial position and the decisive measures taken to reduce its cost structure to preserve liquidity, GKP remains financially resilient to manage through the current macro environment.

Ø Despite a partial recovery in oil price, the Company closely monitors market dynamics and will continue to take the appropriate actions to preserve value in Shaikan.

Ø GKP looks forward to resuming investment and shareholder distributions when conditions allow.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Enquiries:

Celicourt Communications:	+ 44(0) 20 8434 2754
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. 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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