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The latest Gulf Keystone Business News – Kurdistan, oil finds / discoveries, Sheikh Adi near Erbil, Shaikan, share price rise – brought to you by Iraq Business News

GKP Arranges $250m Debt Financing


By John Lee.

Gulf Keystone Petroleum (GKP) announced today that it has priced a debt offering of US$250 million.

The privately placed debt securities, offered in accordance with Reg S/144A to institutional investors in Europe, the US and Asia, consists of three-year senior unsecured notes carrying a coupon of 13% per annum and freely tradeable and detachable warrants relating to 40 million common shares in the Company.

Key terms of the notes and warrants can be viewed here.

(Source: GKP)

(Bonds image via Shutterstock)

Posted in Investment, Oil & GasComments (0)

GKP Investors Relax


By John Lee.

The Telegraph reports that an encouraging update on its fund-raising plans provided some much needed cheer for Gulf Keystone Petroleum (GKP) on the stock market. The Kurdistan-focused oil producer had slumped in recent weeks, amid speculation that the company’s key bond sale was running into trouble.

The company announced last month that it was meeting fixed income investors with a view to raising as much as $250 million from a bond sale to help it boost production at the Shaikan field.

However, the group caused alarm and its shares dropped sharply when it revealed a day later that, without the fund-raising, it was at risk of running out of cash by the end of next month.

Rumours that the international roadshow for the debt offering had encountered difficulties, as well as pressure from short-sellers, served to drag the shares even lower in the days that followed.

There was relief, then, when the company revealed late on Friday that the roadshow had finished and that the group would go-ahead with a private placement, which would include the sale of warrants linked to as many as 40m shares. As a result, GKP gained 8.2 percent on Monday, before giving up some of that gain on Tuesday.

(Source: Telegraph, Yahoo!)

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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 & GasComments (2)

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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GKP Shares Up Following Update


By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were up 4 percent this morning after the company provided an operational and corporate update:

Significant progress has been made since the Field Development Plan (“FDP”) for the Shaikan field was approved in June 2013. In July 2013 the Company commenced commercial production, marking Gulf Keystone’s transition to an operator with revenue generation. In December 2013 crude oil exports from the Shaikan field commenced.

Shaikan (75% working interest; Operator)

Shaikan Production Update

Gulf Keystone is pleased to announce the commencement of crude oil exports from the Shaikan field.

In line with the Company’s marketing strategy, which is being developed in co-operation with the Ministry of Natural Resources of the Kurdistan Regional Government, the first tendered cargo of between 30,000 tonnes (198,300 barrels) and 33,000 tonnes (215,000 barrels) of Shaikan crude was trucked to Turkey in December and will be loading at the port of Dortyol this month.

A second tender is underway for two further cargoes of similar size of Shaikan crude, which are expected to be loaded later this month and during February. Sales realisations are expected to be in accordance with the terms of the Production Sharing Contract for the Shaikan Block (“Shaikan PSC”) and will reflect transportation and quality adjustments.

The first Shaikan production facility (“PF-1″) is in operation with two wells currently tied to the facility, namely Shaikan-1 and -3. The flowlines from Shaikan-4 to PF-1 are now complete and the well has been worked over as a Jurassic Sargelu producer prior to being tied to PF-1 in early 2014.

Work at the second Shaikan production facility (“PF-2″) is nearing completion with electrical and instrumentation work ongoing. The Shaikan-2, -5, and -10 wells have been completed as Jurassic Sargelu producers and the flowlines from these wells to PF-2 are currently being laid.

Current average oil sales from PF-1 stand at between 9,000 and 10,000 barrels per day of export quality crude. The Company will provide an update on well performance and combined production capacity of PF-1 and PF-2 as the additional four wells become operational.

Posted in Oil & GasComments (3)

Akri Bijeel Oil Block Declared ‘Commercial’


By John Lee.

MOL Plc has informed the market that Kalegran Ltd. (a 100% subsidiary of MOL), as has officially declared the Akri Bijeel Block to be ‘commercial’, based on the discoveries made at the Bijell-1 well (pictured) in Jurassic horizons and Bakrman-1 well in Triassic horizon.

Kalegran is the Operator of the Block on behalf of the Contractor, comprising Kalegran and Gulf Keystone Petroleum International Limited (GKP).

MOL is accelerating its work program through employing additional rigs and plans to submit the Field Development Plan for the whole block by the end of 2014.

Please find below an update on its ongoing work programs in the Akri-Bijeel block:

Operational highlights:

  • Results of the Bakrman-1 exploration well: Triassic Kurra Chine B formation was subject to extended well testing from 25 July until 26 of August 2013. The well test confirmed long term production sustainability. Current tests gave maximum flow rates of 3,192 bbl/d light density oil with average 40⁰ API gravity and 10.19 MMscf/d of sour gas on 64/64″ choke. Submission of the Appraisal Work Program is due in Q4 2013. Kurra Chine B formation Discovery is subject to Appraisal Work Program which has been started with a 3D seismic acquisition fully covering the Bakrman structure. Drilling 2 appraisal wells is planned to start in 2014 and we are targeting early oil production around in the first half of 2015. Independently from the Triassic discovery, potential Jurassic reservoirs are also targets of further wells.
  • Appraisal program of Bijell-1 discovery: Kalegran Ltd and its partners are going on with the Appraisal Work Program of the Bijell Field. Extended Well Test (“EWT”) facility construction and commissioning was successfully finished. It is capable of handling up to 10,000 bbl/d gross nameplate capacity production on the Bijell-1 site. Due to technical issues a Bijell-1A well sidetrack is required (Bijell-1B), resulting in a delay to the start of the 180 day EWT, this has now been postponed to Q1 2014. Drilling of Bijell-2 appraisal well is ongoing and will be followed with two further appraisal wells. Early oil production could be resumed from Bijell-1B in Q1 2014. Expected EPF rates of 10,000 bbl of oil could be achieved by the end of 2014 through the tie in of three wells (Bijell-2, Bijell-4 and Bijell-6).
  • Rig availability: In order to efficiently progress the planned accelerated work stream we intend to employ 2 more drilling rigs than originally planned and work with 4 rigs by the end of the appraisal programs on the Akri Bijeel block.

Posted in Oil & GasComments (2)

GKP Launches Convertible Bonds


By John Lee.

Gulf Keystone Petroleum (GKP) announced today the launch of an offering of senior unsecured convertible bonds which will be issued in a principal amount of US$ 50 million.

The New Bonds are to be issued on the same terms (save for the issue price) as, and shall be consolidated and form a single series with, the US$ 275,000,000 6.25% Convertible Bonds due October 2017, issued by the Company on 18 October 2012. The Offering is being made by way of a Reg. S. institutional private placement.

The issue price of the New Bonds, to be determined after book-building, will be announced as soon as it has been finalised.

Closing and settlement of the Offering is expected on 6 November 2013. An application will be made to admit the New Bonds to trading on the EuroMTF market of the Luxembourg Stock Exchange prior to 30 November 2013.

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

Natixis is acting as Co-Bookrunner in respect of the Offering.

(Sources: )

Posted in Investment, Oil & GasComments (2)

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

Posted in Oil & GasComments (4)

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