Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq announces its audited results for the full year ended 31 December 2020.
Jon Harris, Gulf Keystone's Chief Executive Officer, said:
"Against the backdrop of extraordinary global challenges in 2020, GKP acted decisively to successfully manage the impact of COVID-19 on our staff, contractors and production operations. We achieved all of our cost reduction targets and annual average production of 36,625 bopd, 11% higher than 2019.
We have had a strong start to 2021. The updated independent Competent Person's Report reaffirmed the significant upside production potential of the field with gross 2P reserves + 2C contingent resources of c.800 MMstb. Average gross production from Shaikan in 2021 to 29 March is 43,190 bopd, up c.13% from the corresponding period in 2020.
Recently, we resumed the 55,000 bopd investment programme and today we are pleased to be announcing the reinstatement of at least a $25 million annual dividend, in keeping with our commitment to balance investment in growth and returns to shareholders."
Highlights to 31 December 2020 and post reporting period
· Effectively managing the impact of COVID-19 on production operations and continue to prioritise the welfare of workforce and contractors whilst maintaining production momentum.
· Continued strong safety performance, with no Lost Time Incident ("LTI") recorded for over 450 days.
· 2020 average gross production of 36,625 bopd, exceeding revised guidance and the highest annual average production rate to date from the field.
· Gross average production from the field in 2021 to date of 43,190 bopd, in line with guidance of 40,000 - 44,000 bopd for the year.
· Updated Competent Person's Report ("CPR") published with c.800 MMstb gross 2P+2C reserves and resources volumes, which was in line with the 2016 CPR, after adjusting for production over the period, supporting GKP's view of the geological model.
· GKP achieved its 2020 cost reduction targets, reducing Opex and G&A by more than 20% compared to 2019 and delivering gross unit Opex of $2.6/bbl, below the low end of the guidance range and down over 30% versus 2019.
· Net Capex was $45.9 million net (FY 2019: $90.0 million) within the $40-48 million revised guidance range despite the addition of low-cost, high impact investments during the fourth quarter that contributed to record 2020 annual average production.
· Loss after tax of $47.3 million (FY 2019: $43.5 million profit) and reduced revenue of $108.4 million (FY 2019: $206.7 million) were driven by a decline in Brent oil prices that averaged $42/bbl in 2020 compared to $64/bbl in 2019.
· Consistent payments from the Kurdistan Regional Government ("KRG") for the last eleven months. Repayment mechanism in place to recover outstanding arrears of $73.3 million net for the period November 2019 - February 2020 with the first payment of $2.6 million net recently received.
· Cash balance of $147.8 million at year end (FY 2019: $190.8 million). Cash balance of $161.0 million at 30 March 2021.
· The Company has hedged c.60% of Q2 and Q3 2021 forecast net production at a floor price of $35/bbl and $40/bbl respectively, while retaining full upside exposure.
· Resumption of expansion activity with drilling operations expected to begin in Q3 resulting in an increase in gross production towards 55,000 bopd in Q1 2022.
· Reinstatement of at least a $25 million annual dividend. A $25 million dividend is subject to shareholder approval at the Annual General Meeting ("AGM") scheduled for 18 June 2021 and is expected to be paid in full on 2 July 2021 based on a record date of 25 June 2021.
· With continuing strong oil prices, there may be opportunities to consider further distributions to shareholders this year.
· Guidance for 2021 of average gross production of 40,000 to 44,000 bopd, net Capex of $55-$65 million and gross unit Opex of $2.5 to $2.9/bbl.