By John Lee.
Gulf Keystone has announced the launch of an offering of senior unsecured convertible bonds due October 2017 in a principal amount of USD$ 200 million, which may be increased in the event the Company exercises in full its increase option of up to USD$ 25 million (the "Increase Option").
Shares in the company were down 10% on Thursday afternoon.
In addition, the Company has granted to BNP Paribas an overallotment option of up to USD$ 25 million exercisable up to the close of business on 16 October 2012 (the "Overallotment Option"). The Offering is being made by way of a Reg. S. Institutional Private Placement.
Funds raised via the Offering will enhance the Company's liquidity position and contribute to the Company's ongoing move to the large-scale staged development of its Shaikan block in the Kurdistan Region of Iraq, which was declared a commercial discovery in August 2012, and its aggressive exploration and appraisal of its other three blocks in the region. Together with the Company's existing cash resources, the additional financing will be deployed in order to, inter alia:
- Complete and submit the Shaikan field development plan by the end of January 2013, select development concept and move to the large-scale staged development in 2013, with the goal of achieving 150,000 barrels of oil per day ("bopd") by 2015 and full plateau production thereafter.
- Finalise the Company's on-going work on the commissioning of Shaikan's two new early production facilities (PF-1 and -2), which will allow the Company to produce up to 40,000 bopd by mid-2013, processing the crude to export specification. PF-1 and -2 will be equipped with an amine unit to sweeten gas, with the potential addition of a Claus sulphur recovery unit, allowing gas delivery to a nearby trunk gas pipeline, which is expected to be constructed.
- Create in-field infrastructure network, including flowlines and wellhead separators, connecting Shaikan production wells to PF-1 and -2.
- Explore the undrilled horizons in the Shaikan block, with the Shaikan-7 well targeting the deeper Triassic and the Permian.
- Continue the current aggressive exploration and appraisal of the neighboring Akri-Bijeel, Sheikh Adi and Ber Bahr blocks in addition to further activity throughout 2013.