GKP Falls on Spending Concerns

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) have fallen 6 percent on Thursday amid concerns about the scale of spending needed to develop the company’s oilfields.

Following the publication of its half-yearly report (shown in full below), Bloomberg quotes Charlie Sharp, an analyst at Canaccord Genuity Securities, as saying:

This marks the end of the exuberance around the stock after its court victory and the beginning of the next phase … The question is how they get from where they will be in early 2014, at about 40,000 barrels a day, to their next big target.

GKP’s results for the six months ended 30 June 2013 were as follows:

HIGHLIGHTS

Operational – to 30 June 2013 and post period end

Shaikan Block (75% working interest; Operator)

  • Shaikan Field Development Plan (“Shaikan FDP”) was approved by the Ministry of Natural Resources of the Kurdistan Regional Government in June 2013
  • The first Shaikan production facility (“Shaikan PF-1”), capable of producing 20,000 barrels of oil per day (“bopd”), was fully commissioned in July
  • Shaikan commercial production began in mid-July, with 12,400 bopd achieved by early September
  • Gross production from Shaikan PF-1 from 24 July 2013 to 1 September 2013 totalled 183,000 barrels, with 179,063 barrels sold into the domestic market
  • Construction of the second Shaikan production facility (PF-2), capable of producing 20,000 bopd, is ongoing; its mechanical completion expected in October 2013, followed by production operations by the end of 2013
  • Project initiated for gas compressing equipment required to move beyond the near-tem production target of 40,000 bopd to the initial Shaikan FDP’s target of 100,000 bopd
  • Drilling of Shaikan-10, the first development well, spudded in July 2013 and is ongoing
  • Drilling of Shaikan-7, the first deep exploration well, targeting previously undrilled mid to lower Triassic and Permian horizons, spudded in June 2013 and is ongoing; potential to add between 1 and 5 billion barrels of gross oil-in-place to already discovered resources
  • Significant progress made on the development of the regional independent export infrastructure, expected to be completed by the end of 2013

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