Ahead of the Company's Annual General Meeting today, Gulf Keystone, the operator of the world class Shaikan field in the Kurdistan Region of Iraq, is providing an operational update.
The Company continues to produce at stable rates from both Shaikan production facilities (PF-1 and PF-2). Following debottlenecking work performed on both facilities, well and plant capacity exists for production rates in excess of 43,000 barrels of oil per day ("bopd"). However, production guidance below has been adjusted to take into account potential offtake and market constraints.
The rolling production average from the Shaikan field for the past two months has been 38,000 bopd and a new daily production record of 44,600 bopd was established on 21 June 2015. Cumulative production from the field has now surpassed 13 million barrels of oil.
It is the Directors' current expectation that production will remain within the range of 36,000-40,000 bopd between now and the year end, subject to offtake.
Due to the previously announced five week suspension of production operations at the end of Q1 2015, caused by adverse market conditions, the daily production average for the year is expected to be between 30,000 and 34,000 bopd.
The Company continues to make progress towards a regular payment cycle for its current production. In line with the recently announced new contract with the domestic buyer and further to the first payment of US$4.9 million gross (US$3.9 million net to Gulf Keystone) received last week, an additional payment of US$6.7 million gross (US$5.4 million net to Gulf Keystone) has now been received by the Company for crude oil exported in June 2015 by truck to the Turkish coast, bringing total payments under this contract to date to US$11.6 million gross (US$9.3 million net to Gulf Keystone).
In addition and in line with the stated diversified marketing strategy, the Company expects in the near future to commence trucking Shaikan crude 120 km to Fyshkhabour on the Turkish border where it will be injected into the export pipeline to Ceyhan. Once injection into the pipeline at Fyshkhabour commences and a payment mechanism for this production is established with the Kurdistan Regional Government's Ministry of Natural Resources ("MNR"), Shaikan crude will be sold as part of the internationally traded blend and higher netback prices should result.
As of 8 July 2015, the Company's cash position was US$72.1 million with further payments anticipated as a result of the ongoing contract with the domestic buyer and continuing dialogue with the MNR.
The Company's half year results for the period ended 30 June 2015 will be announced on Thursday 27 August 2015.
Commenting on today's announcement, Jón Ferrier, Chief Executive Officer of Gulf Keystone said:
"As we work towards our primary objective of establishing a regular payment cycle for crude oil sales from the Shaikan field, today's confirmation of a further payment of US$6.7 million gross represents another important development for Gulf Keystone's financial position"
"The Shaikan field is performing well, with current production at stable rates and an average daily offtake of 38,000 bopd achieved in June. Taking into account the suspension of production operations earlier in the year due to external market factors, today's performance allows us to exit the year at an average rate of between 30,000 and 34,000 bopd, subject to future market factors."
Gulf Keystone will hold its Annual General Meeting today at 12.00 noon at Le Meridien Etoile 81 Boulevard Gouvion-Saint-Cyr, 75017 Paris, France.
For more information, please visit : http://www.gulfkeystone.com