By John Lee.
Shares in Gulf Keystone Petroleum (LSE: GKP) are trading up around 10 percent this morning (Tuesday, 25th August) after the company published its 2026 half-year results.
Full statement from GKP:
2026 Half Year Results Announcement
Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, today announces its results for the half year ended 30 June 2026.
Jon Harris, Gulf Keystone's Chief Executive Officer, said:
"GKP's operational and financial performance in the first half of 2026 demonstrated the resilience of our business, our people and the Shaikan Field through a period of significant regional disruption. Our priority throughout has been the safety of our workforce while decisive action to reduce expenditures has enabled us to minimise cash outflow, maintain a robust, debt-free balance sheet and pay a $12.5 million dividend to shareholders.
We are pleased to have recently restarted production and exports following the extension of the tripartite interim export agreements, with volumes continuing to ramp up to prior levels. Despite the security issues in 2026 impacting production, the interim export agreements have worked effectively, with improved remuneration relative to local sales and consistent payments without delay following crude liftings.
Looking ahead to the remainder of the year, our focus is on maintaining stable production and exports, progressing the PF-2 water handling project and securing full PSC entitlement for past and present export sales at international prices. The latter would bolster cash flow generation, supporting our decision today to announce a semi-annual dividend of $10 million, and provide the foundations for a return to production growth in 2027. I would like to thank our staff, shareholders and wider stakeholders for their continued support."
Highlights to 30 June 2026 and post reporting period
Operational
- Gross average production of 14,600 bopd in H1 2026 (H1 2025: 44,100 bopd) reflects impact of precautionary shut-in between 28 February and 23 June 2026 due to regional security issues
- After gross production had restarted on 24 June 2026 and successfully ramped up to over 45,000 bopd, a second precautionary shut-in took place between 19 July and 15 August 2026
- Shaikan Field production restarted on 16 August 2026, with gross volumes currently approaching 40,000 bopd
- The production ramp-up is ongoing, with well activities underway to bring incremental volumes online and return to prior production levels soon
- Majority of work programme suspended during shut-ins to reduce costs and preserve liquidity, with only safety critical or strategic projects proceeding
- Installation of water handling facilities at PF-2 remains on track for start-up in Q1 2027, targeting incremental production growth, increased facility capacity and reduced reservoir risk
- Assets and workforce protected, with zero Lost Time Incidents for over three and a half years
Financial
- Resilient financial performance in H1 2026, with cost reductions enabling the Company to minimise the free cash outflow in the period to $(2.0) million (H1 2025 free cash flow: $24.6 million)
- Revenue based on entitlement invoices, a non-IFRS measure, of $82.8 million in H1 2026 was broadly flat relative to the prior period (H1 2025: $83.1 million)
- Average realised price of $83.5/bbl (H1 2025: $27.8/bbl) for H1 2026 export sales, representing a $8.8/bbl discount to Dated Brent
- Cash receipts for H1 2026 export sales equated to approximately $30/bbl as per the interim export agreements, with the differential to the reported realised price accruing as a top-up receivable
- Adjusted EBITDA of $51.7 million in H1 2026 (H1 2025: $41.1 million), with reduced production resulting from the temporary shut-in more than offset by higher realised prices and lower operating costs
- 25% decrease in operating costs to $20.2 million in H1 2026 (H1 2025: $26.9 million), reflecting the production shut-in and the prompt implementation of cost reduction measures
- 6% reduction in other G&A expenses to $4.3 million (H1 2025: $4.6 million)
- Net capital expenditure of $18.3 million (H1 2025: $18.1 million) reflecting investment in safety critical facility upgrades, well workovers and the ongoing construction of PF-2 water handling facilities
- Almost half of the expenditure in the period took place prior to the production shut-in on 28 February 2026 and actions taken by the Company to suspend or slow down the majority of capital projects
- $12.5 million semi-annual dividend paid to shareholders in April 2026
- Robust, debt free balance sheet, with cash of $63.5 million as at 24 August 2026
Outlook
- Gulf Keystone is focused on completing the ongoing ramp-up of production to prior levels and maintaining stable export sales, subject to the security environment
- Assuming stable production and export sales, the Company will continue to progress the PF-2 water handling project, safety critical facilities upgrades and selective, low-cost production optimisation initiatives
- The Company is focused on achieving full PSC entitlement for export sales at international prices:
- The tripartite interim export agreements between the International Oil Companies ("IOCs"), Federal Government of Iraq ("FGI") and Kurdistan Regional Government ("KRG") have been extended for six months to the end of January 2027 to enable the negotiation of longer-term agreements for export sales at international prices
- Following the completion of the independent consultant's review of IOC invoices and contractual entitlements, the Company is working to secure additional liftings and associated top-up payments to reconcile export sales since September 2025 to international prices
- The Company is seeking the commencement of additional liftings in Q3 2026
- In parallel, the Company is engaging with Kurdistan's Ministry of Natural Resources ("MNR") regarding a revised Shaikan Field Development Plan ("FDP") and preparing for a potential return to field development and drilling in 2027, subject to receiving full PSC entitlement for export sales
Shareholder distributions
- The Board has carefully considered the Company's operating environment and outlook, current cash balance, ability to reduce expenditures and progress towards achieving full PSC entitlement for its export sales
- Consequently, the Board has decided to declare an interim dividend of $10 million, equivalent to $0.046 per Common Share
- The dividend will be paid on 28 September 2026, based on a record date of 11 September 2026 and ex-dividend date of 10 September 2026
(Source: Gulf Keystone Petroleum)
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