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Gulf Keystone Losses Widen

Gulf Keystone Losses Widen

Gulf Keystone Petroleum (GKP) this morning announced its results for the year ended 31 December 2014.

HIGHLIGHTS

Operational

  • 2014 gross production of 6,484,391 barrels of oil (2013: 496,921 barrels of oil) with significant growth expected in 2015
  • Gulf Keystone’s operations in the Kurdistan Region remained secure with production operations and crude oil export deliveries from the Shaikan field uninterrupted throughout 2014
  • The first production milestone of 40,000 barrels of oil per day (“bopd”) reached in December 2014 following a gradual ramp-up during the year
  • Current production in excess of 37,000 bopd is being delivered against the pre-payment of US$ 26 million gross (US$20.8 million net to Gulf Keystone) received for Shaikan crude oil sales on 25 February 2015, with further payments of a similar nature anticipated

Financial – as at 31 December 2014

  • Revenues of US$38.6 million achieved (FY13: US$6.7 million); additional revenue in the region of US$100 million owed but not yet recognised for crude oil export sales
  • Loss after tax of US$248.2 million (FY13: US$32.0 million)
  • Net proceeds of US$240 million raised from the issue of debt securities and associated warrants in April 2014

Financial – post period end

  • US$26 million gross (US$20.8 million net) received as pre-payment for Shaikan crude oil sales in February 2015
  • Successful placing of 85.9 million shares on 31 March 2015, raising gross proceeds for the Company of US$40 million
  • Discussions ongoing with a number of parties in relation to possible asset transactions or corporate sale
  • Book Equity Ratio Put Option successfully removed from the Trust Deed and Conditions of the US$250 million 13.0 per cent Guaranteed Notes due 2017 at the noteholder meeting on 7 April 2015
  • Cash balance at 8 April 2015 of US$84.7 million (31 Dec 2014: US$87.8 million) excluding recent share placing proceeds

Posted in Oil & Gas7 Comments

Gulf Keystone KRG Operations Update

Gulf Keystone KRG Operations Update

By John Lee.

Gulf Keystone (pictured: CEO John Gerstenlauer) an independent oil and gas exploration, development and production company with operations in the Kurdistan Region of Iraq (“Kurdistan Region”), today announces its results for the six months ended 30 June 2014.

Operational highlights

·           Gulf Keystone’s operations in the Kurdistan Region remain secure and production and crude oil sales from the Shaikan field have not been interrupted in any material way

·           Ramp-up of Shaikan production in H1 2014 from 10,000 gross barrels of oil per day (“bopd”) to rates of in excess of 20,000 gross bopd through the tie-in of an additional producing well to Shaikan PF-1 and the commencement of production operations from Shaikan PF-2

·           Crude oil export deliveries by truck to Turkey in H1 2014 totalled 2.2 million barrels gross with total gross production from Shaikan to date fast approaching 5.5 million barrels

·           Initial payments for the export crude oil sales received with the realised price at the Shaikan facility estimated as US$51-56/bbl. Through an ongoing dialogue with the Ministry of Natural Resources of the Kurdistan Regional Government (“MNR” and “KRG”), the Company is seeking to establish a regular  payment cycle for past and future Shaikan crude oil export sales

·           Gross domestic sales for H1 2014 of 0.1 million barrels with a realised price of US$42/bbl

·           Agreement of the Field Development Plan (“FDP”) for the Akri-Bijeel Block by the MNR in August with production from the Bijell and Bakrman discovery areas expected by MOL Kalegran Limited, the operator, to reach 35,000 gross bopd in 2015

Financial highlights

·      Revenues of US$18.7 million achieved for H1 2014 (1H13: $nil; FY13: $6.7 million); additional revenue in the region of US$35 million owed but not yet recognised for H1 2014 crude oil export sales

·      Loss after tax for H1 2014 of $29.8 million (1H13: $26.4 million; FY13: $32.0 million)

·      Net proceeds of US$240 million raised from the issue of debt securities and associated warrants in April 2014

·      Cash and cash equivalents at 26 August 2014 of US$177 million

Outlook

·           Company continues to target 40,000 bopd of Shaikan production by year end through the tie-in of three additional producing wells (Shaikan-7, -8 and -10), although certain consequences of the recent security situation, including the current short term limited availability of some international contractors, may cause this to move to Q1 2015

·           Conclude discussions with the MNR on the establishment of a regular and predictable payment cycle for past and future Shaikan crude oil export sales in order to generate steady revenues, which is of critical importance to Gulf Keystone’s funding position

·           Manage expenditure in a responsible and prudent manner, continuing to review and control capital commitments. Once a steady flow of revenues has been established, make decisions on investment in additional production facilities, development wells and infrastructure in order to increase Shaikan production in line with the approved  Shaikan Field Development Plan

·          Continue to review options regarding the Company’s 20% working interest in the Akri-Bijeel Block and explore other funding options available

·          Complete the appraisal of the Sheikh Adi discovery, submit the appraisal report and make a decision regarding early production and development

Simon Murray, Non-Executive Chairman of Gulf Keystone, said:

Despite the recent security crisis in Iraq, which clearly affected the lives of many people in the Kurdistan Region and refugees from elsewhere in Iraq, I strongly believe that Gulf Keystone’s footprint as one of the key oil producers in this strategically important area is assured. With the continued support of the Ministry of Natural Resources, we are positive about increasing our production to the stated goal of 40,000 bopd, receiving payment for all entitlement barrels produced to date and entering a new phase of value generation.”

John Gerstenlauer, Chief Executive Officer of Gulf Keystone, commented:

“Our operations in the Kurdistan Region, where we have been present since 2007, are progressing well with the two existing Shaikan production facilities producing in the range of 20,000 to 25,000 bopd and crude oil export deliveries continuing essentially uninterrupted since late November 2013 to date. We are currently discussing with our hosts and stakeholders in the Kurdistan Region the plan for monetizing all past and future Shaikan production through achieving a stable payment cycle to progress in line with the approved Shaikan Field Development Plan.”

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Gulf Keystone CEO and Directors Resign

Gulf Keystone CEO and Directors Resign

By John Lee.

Gulf Keystone Petroleum announced this morning that Non-Executive Director and Deputy Chairman Jeremy Asher and Non-Executive Director John Bell “have ceased to be Directors in accordance with the Company’s bye-laws”.

The Company will restart its previously announced search process, with the assistance of Odgers Berndtson, for two new independent non-executive directors, and a further announcement on that process will be made in due course.

The Company also announced that Todd Kozel (pictured) will retire from his current role of CEO at the Company’s upcoming Annual General Meeting on 17 July 2014 and that, subject to Mr. Kozel’s re-election to the Board of Directors by shareholders, he will take up a new role of Executive Director. A search for Mr Kozel’s replacement is underway with the assistance of an international executive search firm and potential candidates have been identified.

Hours later, the company said that Non-Executive Director Thomas Shull had resigned from the Board.

Simon Murray, Gulf Keystone’s Non-Executive Chairman commented:

The Company is strongly positioned to continue the successful development of our assets in close cooperation with our partners MOL and the Kurdistan Regional Government.

“We have already begun the process of bringing in additional top-quality talent at both the Executive and Non-Executive level to help take the Company through the next stage of its development.

Shares in the company closed down 2 percent on Wednesday.

(Sources: GKP, Yahoo!)

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Gulf Keystone Up on Shaikan Update

Gulf Keystone Up on Shaikan Update

By John Lee.

Gulf Keystone Petroleum (GKP) has given an update on its production operations at Shaikan in Iraqi Kurdistan, its key producing asset. The company’s shares closed up 1.9 percent on Friday.

Production

  • Development plans to increase Shaikan production capacity to 40,000 gross barrels of oil per day (“bopd”) by year-end 2014 are on track
  • Shaikan PF-1 production continues at stable rates of 16,000 gross bopd from three wells, Shaikan-1, -3 and -4 and will increase to 20,000 gross bopd later in 2014
  • Shaikan PF-2 has been fully commissioned and production operations commenced from two wells, Shaikan-5 and -2
  • Shaikan-5 is producing at an average rate of 5,000 gross bopd, having achieved maximum daily rate to date of over 8,000 gross bopd
  • Shaikan-2 is expected to contribute additional production in the near future, having already achieved maximum daily rate to date of nearly 3,000 gross bopd
  • To boost production rates and provide spare well capacity, further wells will come online in 2014, including Shaikan-7, -8 and -10, and a work-over of Shaikan-1 and -3 will be carried out
  • Two additional production wells, Shaikan-9 and -11 are planned to be drilled later in 2014

Sales

  • Trucking operations from PF-1 continue and PF-2 production is being processed and flowed into two storage tanks at the facility with trucking operations from PF-2 anticipated to commence by the end of June
  • The majority of Shaikan production is being trucked to the Turkish port of Dortyol and sold to the international market, while some sales into the domestic market continue
  • Eight cargoes totalling approximately 1.85 million gross barrels of Shaikan crude have been sold to the international market to date
  • In June to date, the Company received its second and third payments of US$6.85 million and US$6.88 million respectively for the Shaikan crude oil export sales, as well as a further payment of US$1.5 million for the domestic sales

Todd Kozel (pictured), Gulf Keystone’s Chief Executive Officer commented:

Our operations in the Kurdistan Region of Iraq are progressing in line with our previous guidance, whilst we remain alert to the current security situation in Iraq, which has recently escalated outside the Kurdistan Region.

“We projected that Gulf Keystone would reach 20,000 gross bopd of production by the end of Q2 2014 and, with the combined production from PF-1 and PF-2, we are now very much on schedule. On 4 June, Shaikan cumulative production reached our record maximum daily rate to date of 25,000 gross bopd. We look forward to exiting 2014 with 40,000 gross bopd of production.

“Our crude oil export sales have now surpassed our historic sales into the domestic market, and our revenues are expected to increase significantly in the second half of 2014 with the establishment of a steady payment cycle for the Shaikan exports sales.

(Source: GKP)

Posted in Oil & Gas1 Comment

Gulf Keystone to Raise $250m Debt

Gulf Keystone to Raise $250m Debt

Gulf Keystone has announced that it has mandated Deutsche Bank and Pareto Securities to arrange a series of fixed income investor meetings in the US, Europe and Asia commencing 20 March 2014. A debt offering of up to US$250 million in accordance with Reg S/144A is expected to follow, subject to market conditions.

On 13 March 2014, Gulf Keystone released an Operational and Corporate Update and published the first third party audit of the Company’s reserves, contingent resources and prospective resources for its petroleum interests in the Kurdistan Region of Iraq comprising the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.

The Company continues to maintain current stable production and sales levels at an average of 10,000 barrels of oil per day (“bopd”) from the Company’s first Shaikan production facility (PF-1). In addition, Shaikan-4, the third production well, recently tied-in to PF-1, has been flowing at up to 6,000 bopd in the recent week.

The Company’s immediate focus remains on achieving its target of 40,000 bopd of production capacity from PF-1 and PF-2 in 2014, which will allow further expansion of export crude oil sales. The Company estimates that achieving this level of production capacity at Shaikan, as well as continuing planned expenditure at Sheikh Adi, Ber Bahr and Akri-Bijeel, will require capital expenditure of approximately US$210 million in 2014.

To complete this work programme, the Company expects to seek additional funding via a debt offering of up to US$250 million to enhance its existing cash resources, which totalled US$81.9 million as at 31 January 2014. Whilst there can be no certainty that a debt transaction will follow the Company’s investor meetings, any debt raised will support the completion of the Company’s move to 40,000 bopd of production capacity.

The Company expects to utilise cash generated from increasing oil sales, in addition to the funds remaining from the contemplated raising of up to US$250 million in debt financing, to initiate the next stage of the Shaikan project execution and increase production capacity from 40,000 bopd to 66,000 bopd by Q1 2016.

Posted in Banking & Finance, Oil & Gas2 Comments

Gulf Keystone Update

Gulf Keystone Update

Gulf Keystone Petroleum (GKP) has this morning provided an Operational and Corporate update, and released a third party audit of the Company’s reserves, contingent resources and prospective resources for its petroleum interests in the Kurdistan Region of Iraq.

Summary

The Company continues to maintain current stable production and sales levels of approximately 10,000 barrels of oil per day (“bopd”) from the Company’s first Shaikan production facility (“PF-1″) in the Kurdistan Region of Iraq, which is expected to increase in Q2 2014 as a result of the recently tied-in third production well, Shaikan-4, which is now flowing.

The second Shaikan production facility (“PF-2″) is being commissioned, with two wells (Shaikan-2 and Shaikan-5) already tied in and the first production from PF-2 expected in Q2 2014. The Company remains focused on achieving the target of 40,000 bopd of production capacity from PF-1 and PF-2 in 2014.

Since crude oil exports from the Shaikan field commenced in December 2013, in excess of 105,000 tonnes (690,000 barrels) of oil have been tendered and sold at international prices. The Company is expecting to receive payment, in line with the terms of the Shaikan Production Sharing Contract.

In order to move to the next stage of the Shaikan project execution, the Company is making progress in its discussions on the near term debt financing options.

Production and Development

Shaikan (75% working interest; Operator)

Stable production operations and sales from PF-1 continued in January, February and March 2014 at the level of approximately 10,000 bopd (gross). Total cumulative production from late 2010 to date from Shaikan has reached 2.1 million barrels.

Since crude oil exports from the Shaikan field commenced in December 2013, three cargoes totalling in excess of 105,000 tonnes (690,000 barrels) of oil have been delivered from PF-1. The fourth cargo of approximately 33,000 tonnes (215,000 barrels) of Shaikan crude is expected to be delivered later in March 2014.

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Gulf Keystone Starts Drilling at Shaikan-7

Gulf Keystone Starts Drilling at Shaikan-7

By John Lee.

Gulf Keystone has announced the commencement of the Company’s drilling campaign to explore deeper, yet untested horizons of the world class discovery at the Shaikan field, which the Company operates.

Shaikan-7, the first deep exploration well on the Shaikan block, is targeting the mid to lower Triassic and, potentially, Permian horizons, spudded late on Sunday 16 June 2013. The well is being drilled with the Weatherford Rig 319 (3000HP) close to the crest of the Shaikan structure, approximately 1 km east of the Shaikan-1 discovery well.

Shaikan-7 is being drilled to the lower Triassic to evaluate the potential for significant quantities of light oil and identify commerciality of the deeper Triassic reservoir. The well is then expected to penetrate the Permian, the deepest undrilled horizon to date on the Shaikan structure.

This vertical well is planned to reach a total depth below 4,500m in the Permian and the drilling is expected to take about 9 months.

Commenting on today’s announcement, John Gerstenlauer (pictured), Chief Operating Officer, said:

As we are about to commence implementation of our Field Development Plan for the Shaikan discovery and start Jurassic production from the newly constructed Shaikan production facility, the spudding of our first deep exploration well adds a new and exciting dimension to Gulf Keystone’s work programme in 2013.

“With Shaikan-7, we hope to confirm our expectations of major reservoirs beneath the deepest horizon drilled to date and add to what is already recognised as one of the world’s largest onshore conventional oil & gas developments.

(Source: GKP)

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Gulf Keystone Resumes Pumping in Kurdistan

Gulf Keystone Resumes Pumping in Kurdistan

By John Lee.

According to industry sources cited by reuters, Gulf Keystone has restarted production in Kurdistan after a gap of six months.

The company is now producing between 5,000 and 7,000 bpd for sale on the domestic market, and is developing its Shaikan field to raise output to around 40,000 bpd by the middle of next year.

GKP reportedly aims to produce as much as 150,000 bpd from Shaikan by 2015.

(Source: Reuters)

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