Gulf Keystone Petroleum (GKP ) says it continues to drive significant cash flow from Shaikan field, its flagship asset, located in the Kurdistan region of Northern Iraq.
Gulf Keystone Petroleum, which operates and produces predominantly in the Kurdistan Region of Iraq, has attributed its strong operational and financial performance in 2021 to the firm’s leverage to the oil price, low-cost production base, and focus on capital discipline.
In a statement published ahead of today’s AGM, the firm said cash flow generation in 2022 to date stood at US$348.8m paid via the Kurdistan Regional Government (KRG), including both oil sales and revenue arrears with past outstanding balances having been paid by the KRG.
The Board of Gulf Keystone intends to declare $190m of dividends in 2022 - $75m of which is subject to shareholder vote - a dividend yield of 26% based on Wednesday’s closing price.
As of 23 June 2022, the Company’s cash balance stood at $247.0m. The Company said it intends to call its remaining US$100m bonds at today’s AGM, which will leave it debt free.
Gulf Keystone’s production in the year to date has averaged 44,900 barrels of oil per day. The Company says it is now prudently managing its well performance to avoid flowing water. As a result, the group is now "tightening" its guidance for 2022 to 44,000-47,000 barrels of oil per day.
As the industry experiences equipment lead time pressures in a supply constrained market, GKP is reviewing options to accelerate the installation of water handling facilities that can unlock upside production potential to enable further production ramp up from existing wells.
The Company also noted that it continues to work towards further development with its field development plan (FDP) as it prepares to resume drilling and ramp up production.
Commenting on this morning’s update Jon Harris, Gulf Keystone's Chief Executive, said: “In the near-term, we continue to progress our well workover and intervention programme to optimise production. While the timing of approval remains uncertain, we also continue to make positive progress on the FDP as we prepare to resume drilling and ramp up production.”
As the Company continues its ongoing preparation to resume drilling to ramp-up production from the Jurassic reservoir, it intends to update capital expenditure guidance in due course.
GKP added that it is continuing to monitor the long running dispute between the Federal Iraqi Government and the KRG on the management of oil and gas assets in Kurdistan. At this point, the Company says its operations remain unaffected and that it continues to work closely with the KRG, its advisers, and other stakeholders to protect its interests.
The Company further highlighted to investors that its gross opex guidance of $2.9-$3.3 per barrel remains unchanged, as does its net capital expenditure guidance of $85-$95 million.
Assuming the timely payment of invoices and continued strong oil prices, GKP said it expects continuing robust cash flow generation in 2022 providing flexibility to consider further shareholder distributions as well as an increase in capital expenditure to resume drilling.
“Ahead of our AGM later today, I would like to thank our shareholders, employees and other stakeholders in Kurdistan for their continued commitment and support. Together, we are focused on safely delivering the significant value of the Shaikan Field,” Harris concluded.
Follow News & Updates from Gulf Keystone Petroleum: