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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 Reaches Production Target at Shaikan

By John Lee.

Gulf Keystone Petroleum has announced that the existing Shaikan production facilities (“PF-1″ and “PF-2″) are now producing from seven wells with Shaikan-8 expected to come online in January 2015.

Total daily production has been gradually increasing since early December 2014, reaching the Company’s 40,000 gross barrels of oil per day target on 27 December.

On 29 December, a record number of 354 trucks were loaded at PF-1 and PF-2 with nearly 58,000 gross barrels of Shaikan crude sent by truck to the Turkish coast for further export sale.

On 24 December, the Company spudded Shaikan-11, an additional producer, which will be tied to PF-2 through the 11 km flowline, already in place.

John Gerstenlauer (pictured), Gulf Keystone’s Chief Executive Officer commented:

We are pleased to begin 2015 on the back of a positive end to last year, having achieved the Company’s record daily production and crude oil export sales rates from the Shaikan field.

2014 was not without its challenges for the Kurdistan Region and we are proud of what has been achieved against this backdrop, in particular a nearly 300% increase in Shaikan production and export sales since January 2014.

Our immediate focus is to ensure a stable daily production rate of 40,000 gross barrels of oil per day, which is a base for future production growth, whilst maintaining a regular payment cycle for Shaikan export oil sales by truck and to finalise a pipeline access solution for Shaikan.”

Shares on the company were down more than 5 percent on Monday morning.

(Sources: GKP, Yahoo!)

Posted in Construction & EngineeringComments (4)

GKP Shares Jump on Kurdistan Oil Update

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) closed up more than 16 percent up on Tuesday, after the company issued an update on its operations at Shaikan, its key producing asset in Iraqi Kurdistan.

The shares had been languishing at new lows earlier in the week, having lost more than three-quarters of their value over the past two years.

The Company announced the completion of the installation of the flowlines to connect the Shaikan-7, -8, and -10 wells to the existing production facilities (“PF-1″ and “PF-2″).

The Shaikan-7 and -8 wells are now tied to PF-1 and Shaikan-10 to PF-2. The flowlines are currently being hydro-tested and first oil is expected to flow to the production facilities in December.

With the addition of the three new producers, the current total production levels of between 23,000 and 25,000 gross bopd will increase to 40,000 gross bopd.

An amine plant is currently being tested at PF-2, to be followed by the similar plant at PF-1 in early 2015. The amine plants will sweeten the associated gas stream, allowing it to be used as fuel for the production facilities instead of diesel, representing savings of up to US$400,000 per month to the project.

A rig package is moving to a location in the vicinity of Shaikan-10 in order to drill Shaikan-11, an additional producer. An 11 km flowline to tie this well to PF-2 has already been laid.

Shaikan crude oil exports by truck to the Turkish coast continue uninterrupted.

John Gerstenlauer (pictured), Gulf Keystone’s Chief Executive Officer commented:

“Despite numerous challenges earlier this year, Gulf Keystone has completed the work on the three additional producers on time. We are now testing the flowline connections, including an 11 km link between Shaikan-10 and PF-2, and look forward to boosting Shaikan production to our near-term target of 40,000 bopd.

“I would like to thank our entire team in the Kurdistan Region, which today includes over 300 employees and contractors, for their effort and diligent delivery in the area of construction, production and crude oil export sales.”

(Source: Gulf Keystone Petroleum)

Posted in Oil & GasComments (3)

UK Consul Visits GKP’s Shaikan Facility

UK Consul General Angus McKee visited Gulf Keystone‘s production facility at the Shaikan oil field on Wednesday, where he was given a tour by company officials.

He viewed the production processes, control room and loading of tankers for onward transportation.

Following the visit, McKee said:

“Kurdistan Region’s oil industry is a real success story, and it benefits from significant UK investment and know-how. Gulf Keystone is a UK-listed exploration and production company looking to expand its operations.

“As well as contributing to oil exports, it employs over 200 local staff, and takes social responsibility – including the current humanitarian crisis – seriously.

“Kurdistan Region’s operators draw significantly on British expertise. UK companies are active across the region, providing high-quality services, and next week’s Erbil Trade Fair will be a further opportunity to champion the British businesses operating here.

“Many oil industry professionals, including Kurds, have British degrees including from universities at the forefront of oil research such as Aberdeen. And the annual CWC Kurdistan Iraq Oil and Gas Conference will take place in London 16-18 December.

“The Consulate General in Erbil, including our UK Trade and Investment Team, work to strengthen these ties. The oil industry’s success is essential for the future development and prosperity of Kurdistan Region”

Gulf Keystone Petroleum (GKP) is an independent oil and gas exploration and production UK-listed company and a leading operator in the Kurdistan Region of Iraq.

Commercial production and export crude oil sales have been ramping up from Shaikan, a the company’s flagship project, with two production facilities on track to produce 40,000 barrels of oil per day. In order to realise further multi-billion barrel resource potential, Gulf Keystone continues exploration, appraisal and early production operations on the Sheikh Adi, Ber Bahr and Akri-Bijeel blocks, all with discoveries.

(Source: British Consulate General in Erbil)

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GKP Shares Up 70% in Past Month

By John Lee.

Gulf Keystone Petroleum (GKP) has given an update this morning on its operations at Shaikan, its key producing asset. Shares in the company are up more than 70 percent from their low in October.

The Company is on track to complete all remaining work in order to achieve 40,000 gross barrels of oil per day (“bopd”) of production capacity from the Shaikan production facilities (“PF-1″ and “PF-2″) by the end of 2014.

The total production levels are stable, averaging 23,000 gross bopd from three wells at PF-1 and two wells at PF-2. The civil works are ongoing to connect the Shaikan-7 and -8 wells to PF-1. The trenching work has been completed on the 15 km connection between the Shaikan-10 well and PF-2 and the flowlines are currently being laid.

Shaikan crude oil exports by truck to the Turkish coast have continued uninterrupted since 29 November 2013. All of our production is currently being exported and nineteen tanker cargoes totalling 4.7 million gross barrels of Shaikan crude oil have been sold to the international market since the Shaikan crude oil export sales began from the port of Dortyol in January 2014.

The Company welcomes the announcement made by the Kurdistan Regional Government’s Ministry of Natural Resources on 7 November 2014 regarding the plan to make an initial payment of US$75 million on account to producers for exports in November 2014, with further payments to follow on a regular basis. The announcement can be viewed at http://mnr.krg.org/index.php/en/press-releases/422-update-on-oil-export-from-the-kurdistan-region-of-iraq.

The management team will host a conference call for analysts and investors at 11am UK time today. A live audio webcast of the call will be available on the Company’s website www.gulfkeystone.com.

John Gerstenlauer, Gulf Keystone’s Chief Executive Officer commented: 

“Gulf Keystone’s production operations and export oil sales have continued uninterrupted in 2014. All current production is being exported by truck and these exports are set to increase in the coming months as we are nearing our production target of 40,000 bopd.

“As we stand by the Kurdistan Region and its people, we welcome the KRG’s commitment to putting in place a regular payment cycle for oil exports from the region. As our production increases, we look forward to receiving our full contractual entitlement.”

(Sources: Gulf Keystone, Yahoo!)

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GKP Shares Surge on Shaikan Update

By John Lee.

Sharess in Gulf Keystone Petroleum surged as much as 10 percent by lunchtime on Wednesday, after teh company issued an update on the its operations at Shaikan, its key producing asset:

The Company remains focused on achieving the target of 40,000 barrels of oil per day (“bopd”) of production capacity from the Shaikan production facilities (“PF-1″ and “PF-2″) in line with our Half Year Report schedule published on 28 August 2014. The Company’s staffing levels in the Kurdistan Region, including all key international contractors, returned to normal in the first half of September.

In the period since 28 August 2014, Shaikan PF-1 and PF-2 production has been achieving stable rates of approximately 23,000 gross bopd from three wells at PF-1 and two wells at PF-2. The work on the flowlines to connect additional production wells, Shaikan-7, -8 and -10 later in 2014 is on-going.

Trucking operations from PF-1 and PF-2 continue with approximately 70% of the current production trucked as export crude oil to the Turkish port of Dortyol and sold to the international market by Powertrans, an authorised transportation and marketing agent of the Kurdistan Regional Government’s Ministry of Natural Resources (“KRG” and “MNR”).

Seventeen cargoes totalling approximately 4.0 million gross barrels of Shaikan crude oil have been sold to the international market since the Shaikan crude oil export sales began from Dortyol in January 2014.

As previously announced, constructive discussions surrounding a payment cycle for past and future Shaikan export crude oil sales are progressing with the MNR, while the Company is awaiting further payments for export sales.

Approximately 30% of the current Shaikan production is being sold to domestic buyers in the Kurdistan Region. Since the publication of the Half Year Report, the domestic market has been providing steady revenue with approximately 220,000 barrels gross sold since 28 August 2014 generating US$9.4 million in gross revenues. The cash receipts associated with these sales as at 30 September were US$5.9 million.

The Company’s Q3 2014 Interim Management Statement will be published on 30 October 2014.

John Gerstenlauer (pictured), Gulf Keystone’s Chief Executive Officer commented:

Receiving steady revenues from our domestic sales is positive as we continue our constructive discussions regarding a stable payment cycle for past and future export sales.

“With all personnel now back in country, we are making good progress and look forward to reaching our target of 40,000 gross barrels of oil per day.

“We continue to manage our expenditure in a prudent manner in order to maximise production, whilst actively pursuing options regarding the Company’s 20% working interest in the Akri-Bijeel Block.”

(Sources: GKP, Yahoo!)

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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


·           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

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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GKP Falls on Payment Delays

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) closed 7 percent lower on Wednesday after the company warned of delays in receiving payments for exports.

The full text of the interim management statement for the period from 1 January 2014 to today is shown below:


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.

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