Interim Management Statement

RNS Number : 0576H

Gulf Keystone Petroleum Ltd.

14 May 2014

 



Not for release, publication or distribution, directly or indirectly, in whole or in part in or into the United States or any jurisdiction other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws or regulations of such jurisdiction.  This announcement (and the information contained herein) does not contain or constitute an offer to sell or the solicitation of an offer to purchase, nor shall there be any sale of securities in any jurisdiction where such offer, solicitation or sale would constitute a contravention of the relevant laws or regulations of such jurisdiction.

14 May 2014

Gulf Keystone Petroleum Ltd. (LSE: GKP)

Interim Management Statement

Gulf Keystone Petroleum Limited ("Gulf Keystone" or "the Company") is pleased to present the Company's first Interim Management Statement for the period from 1 January 2014 to today.

Overview

On 25 March 2014, Gulf Keystone's common shares were admitted, with a standard listing, to the Official List of the United Kingdom Listing Authority and to trading on the London Stock Exchange plc's ("LSE") main market for listed securities ("Main Market"). The move from AIM to the Main Market was a significant milestone in the growth and transition of Gulf Keystone from an independent oil and gas explorer to an established exploration and production company.

On 17 April 2014, Gulf Keystone closed on a US$250 million debt financing that will fully fund the Company and its development plan into 2015. Under that plan, the Company expects to achieve an increase of production from Shaikan PF-1 and PF-2 to 40,000 gross barrels of oil per day ("bopd") by year-end 2014 from the current level of 15,000-16,000 gross bopd. Currently, average Shaikan production for the year to December 2014 is expected to be equivalent to approximately 20,000-25,000 gross bopd.

Gulf Keystone commenced Shaikan crude oil exports by truck to Turkey in December 2013 and the first export sales in late January 2014. In Q1 2014, gross export deliveries by truck totalled 836,205 barrels. Gross domestic sales in Q1 2014 totalled 24,767 barrels, with sales realisations of US$42 per barrel and further 7,163 barrels of gross domestic sales in April 2014. Production revenues are expected to increase significantly in H2 2014.

In May 2014, Gulf Keystone received a US$6.46 million gross payment for the first Shaikan crude oil export sales. The Company records revenue in its accounts on a cash received basis resulting in a time lag between the physical production and shipment of crude oil and payment. The time lag can be significant with an approximate US$24 million net outstanding to the Company, after the first payment of US$6.46 million gross received in May 2014, from the commencement of oil sales in January 2014 to date. This therefore gives rise to uncertainty in the timing of revenue recognition and guidance for 2014. At this time, revenue guidance for 2014 is in the range of US$150 million to US$180 million which reflects the Company's current view on cash payment and current production levels.               

Production and Infrastructure

·       Shaikan PF-1 is currently producing from three wells, Shaikan-1, -3 and -4.

·       Hook-up of Shaikan-8 and Shaikan-7 to PF-1 is expected later in 2014; flowlines are being ordered.

·       Shaikan PF-2 has been commissioned and the start-up process has commenced with live oil flowing from Shaikan-5 to the production facility, which will also be producing from Shaikan-2 and -10.

·       Flowlines are being ordered for an additional development well to be drilled and hooked-up to Shaikan PF-2.

Exploration

·      Due to a number of mechanical failures in the course of the drilling operations, the Shaikan-7 deep exploration well has not been able to achieve its objective and will now be converted into a Jurassic producer and tied into Shaikan PF-1. Based on well logs, Shaikan-7 should become a prolific producing well and the full cost of the well should be recovered within six months from first production.

·      A new deep exploration well to test the previously undrilled deep Triassic and potentially Permian horizons, which is a commitment under the approved Shaikan Field Development Plan, will be added to the drilling schedule.

Development and Appraisal

·     Appraisal of the Sheikh Adi discovery is ongoing with Sheikh Adi-3 currently drilling ahead at 2,150 metres after having experienced some mechanical difficulties.

·     Early production from the Bijell Extended Well Test Facility on the Akri-Bijeel block commenced in March 2014 expected to ramp-up to 10,000 bopd by the end of 2014.

·     Field Development Plan for the Bijell and Bakrman discoveries on the Akri-Bijell block has been submitted to the Kurdistan Regional Government's Ministry of Natural Resources by MOL Hungarian Oil & Gas plc, the operator.

·     Appraisal of the Bijell and Bakrman discoveries is ongoing with wells operating at Bijell-2, -4, -6 and Bakrman-2 respectively.

Finance

·      Successful debt offering of US$250 million in three-year senior unsecured notes due April 2017, privately placed in accordance with Reg S/144A with institutional investors in Europe, the US and Asia.

·      As of 30 April 2014, cash, cash equivalents and liquid investments of approximately US$270 million.

Corporate

·      Mr Chris Garrett retired from his position as the Company's Vice President Operations after 10 years with Gulf Keystone. Mr John Stafford, previously Geology and Geophysics Manager, has been appointed Vice President Operations effective 3 May 2014.

·      Gulf Keystone's Annual General Meeting will be held on 17 July 2014 in Paris, France. 

Enquiries:

Gulf Keystone Petroleum:	[phone]
Simon Murray, Non-Executive Chairman
Todd Kozel, Chief Executive Officer
Anastasia Vvedenskaya, Head of Investor Relations
The Dilenschneider Group	[phone]
Terence Franklin

or visit: www.gulfkeystone.com   

Notes to Editors:

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

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

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

·           Gulf Keystone is moving into the large-scale phased development of the Shaikan field targeting 100,000 bopd of production capacity during Phase 1 of the Shaikan Field Development Plan following its approval in June 2013.

Disclaimer

This announcement contains certain forward-looking statements.  These statements are made by the Company's 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 uncertainties, including both economic and business factors, underlying such forward-looking information. 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.

This communication and the information contained herein is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States unless they are registered or are exempt from registration. Any public offering of securities to be made in the United States would be made by means of a prospectus that would contain detailed information about the company and its management, as well as financial statements. The company does not intend to register any portion of this offering in the United States or to conduct a public offering in the United States or any other jurisdiction. Any public offering of securities to be made in the United States would be made by means of a prospectus that would contain detailed information about the Company and its management, as well as financial statements. Copies of this communication are not being, and should not be, distributed in or sent into the United States.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order or (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50, and 50A respectively of the Order or (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as relevant persons). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

 

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