Shares in Gulf Keystone rose 15% on Tuesday, following a 're-organisation of interests' in Iraqi Kurdistan - rumours also continue to circulate regarding a possible bid for the company from China.
Gulf Keystone confirms that certain Production Sharing Contract ("PSC") amendments were approved and executed by the Kurdistan Regional Government (KRG) and all the other parties in each of the respective PSCs, with an effective date of 1 August 2010.
On 10 March 2010, Gulf Keystone announced proposals to reorganise its interests in Gulf Keystone Petroleum International (GKPI) and in its four PSCs, which required, inter alia, KRG approval. These proposals have been documented in a series of amendments to each of the four PSCs which have been approved and executed by the KRG and by GKPI and each of its partners in the four PSCs. In the case of the Shaikan Block and Akri-Bijeel Block PSCs certain Third Party Rights have been modified as set out below.
Key changes to the proposals announced on 10 March 2010 are:
- Previously announced payment dates for the Infrastructure Support Payments have been revised so that such payments are fully payable on 15 August 2010.
- The parties to the Shaikan Block and Akri-Bijeel Block PSCs have agreed to extend the period that the KRG may exercise the Option of Third Party Participation to enable the KRG to nominate a Third Party Participant until 30 June 2011.
- Clarification that the existing Ber Bahr Capacity Building Payment of $10 million is now due on declaration of the first commercial discovery.
There are no other material changes to the proposals or to the post re-organisation interests announced on 10 March 2010 or to the terms of the PSCs other than as set out above.
Gulf Keystone CEO, Todd Kozel, said:
"We regard this as an excellent outcome for our shareholders who have secured a substantial uplift in exposure to outstanding resources and highly prospective pre-drill acreage from the net expenditure of $52 million, which will be made out of the proceeds of the recent successful equity fund raising of $165 million. Additionally the company enjoys a much simplified ownership structure for its assets and full alignment with its regional partner. We look forward to continuing success with our operations in Kurdistan together with the Kurdistan Regional Government as a key stakeholder in our projects."