from Gulf Keystone Petroleum Ltd (isin : BMG4209G2077)
2024 Full Year Results Announcement
Gulf Keystone Petroleum Ltd (GKP)
20 March 2025
Gulf Keystone Petroleum Ltd. (LSE: GKP) (“Gulf Keystone”, “GKP”, “the Group” or “the Company”)
2024 Full Year Results Announcement
$25 million interim dividend declared & 2025 guidance reiterated
Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, today announces its results for the full year ended 31 December 2024.
Jon Harris, Gulf Keystone’s Chief Executive Officer, said: “2024 was a year of strong operational and financial delivery for Gulf Keystone. We have sustained our positive momentum into 2025, with year to date gross average production of c.46,400 bopd, strong local sales demand and a disciplined expenditure programme supporting continued free cash flow generation. As a result, we are pleased to announce today the declaration of a $25 million interim dividend as we reiterate our 2025 operational and financial guidance. We remain focused on facilitating a solution to restart oil exports as we continue to seek fair and transparent agreements regarding payment surety, the repayment of receivables and the preservation of current contract economics.” Highlights to 31 December 2024 and post reporting period
Operational
Shaikan Field estimated reserves
Financial
Outlook
Investor & analyst presentations
GKP’s management team will be hosting a presentation for analysts and investors at 10:00am (GMT) today via live audio webcast:
https://brrmedia.news/GKP_FY_2024
Management will also be hosting an additional webcast presentation focused on retail investors via the Investor Meet Company ("IMC") platform at 12:00pm (GMT) today. The presentation is open to all existing and potential shareholders and participants will be able to submit questions at any time during the event.
https://www.investormeetcompany.com/gulf-keystone-petroleum-ltd/register-investor
Recordings of both presentations will be made available on GKP’s website.
This announcement contains inside information for the purposes of the UK Market Abuse Regime.
Enquiries:
or visit: www.gulfkeystone.com
Notes to Editors: Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading independent operator and producer in the Kurdistan Region of Iraq. Further information on Gulf Keystone is available on its website: www.gulfkeystone.com
Disclaimer
This announcement contains certain forward-looking statements that are subject to the risks and uncertainties associated with the oil & gas exploration and production business. These statements are made by the Company and its Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent risks and uncertainties, including both economic and business factors and/or factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy. This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. This announcement should not be relied on by any other party or for any other purpose.
Chair’s statement This is my first annual results statement as Chair of Gulf Keystone following my appointment under sad circumstances in September 2024 after the passing of Martin Angle. Martin was an excellent Chair, an outstanding professional and above all a good friend with whom I worked for many years as a Non-Executive Director. He is sorely missed by all of us at the Company. Thankfully, he has left behind an experienced and diligent Board of Directors and a talented executive team focused on driving shareholder value from the Company’s world-class asset, the Shaikan oil field.
The last two years have been a challenging period for Gulf Keystone, catalysed by the suspension of international crude oil exports from Kurdistan via the Iraq-Türkiye Pipeline (“ITP”) in late March 2023 and the resultant requirement to preserve the Company’s liquidity by accessing new local oil markets whilst cutting costs and safely maintaining production. I am pleased to say that these challenges have been met and, during 2024, the Company generated a significant amount of free cash flow with a much leaner organisation and strong production levels. Production during the year averaged 40,689 bopd gross which, given the relatively low level of development activity, was a good outcome and again demonstrates the quality of the Shaikan reservoir.
The improved cash flow position allowed for the settlement of all the Company’s overdue invoices to our suppliers and service providers in Q1 2024 and for shareholder distributions to recommence consistent with our stated policy. A $10 million share buyback programme was announced in May 2024 and, with continuing strong local sales demand and improving liquidity, the Board approved the payment of a total of $35 million of dividends in July and October 2024. The total shareholder distributions completed during the year were $45 million.
Gulf Keystone’s strong operational and financial performance in 2024 reflected the Company’s commitment to maximise shareholder value and positions it well to capitalise on the potential restart of international oil exports when the ITP reopens. GKP’s leadership team and Board continue to dedicate a significant amount of time and effort to engaging with government and other stakeholders to move towards a solution, both as a Company and alongside other IOCs operating in the region. Engagement remains ongoing as we continue to seek agreements on payment surety, the repayment of past receivables and the preservation of existing commercial terms. We are hopeful of a swift resolution and remain ready to quickly restart oil exports.
One of our primary areas of focus as a Board in 2024 was to ensure that we retain the Company’s considerable talent to navigate through the current operational and commercial environment in Kurdistan. At the same time, we oversaw a number of new Director appointments which have deepened the experience and expertise of the Board and also enabled us to meet the UK Corporate Governance Code and Listing Rules requirements in respect of Board independence, gender and ethnic diversity.
In June 2024, we were pleased to welcome Gabriel Papineau-Legris as a Director following his appointment as Chief Financial Officer at the 2024 AGM, replacing Ian Weatherdon who retired. In October 2024, we also appointed Catherine Krajicek and Marianne Daryabegui to the Board and together they bring many years of experience working in the oil and gas industry, emerging markets, finance and M&A and also as Non-Executive Directors. In addition to her other Board responsibilities, Marianne has assumed the role of the Senior Independent Director for the Company. I am sure that our new Board members will make a significant contribution to the Company and look forward to working with them in the future.
I would like to take this opportunity to thank our shareholders for their continued support through what has been a period of volatility and uncertainty for the Company. We continue to actively engage with our shareholders and welcome all feedback. Gulf Keystone has emerged as a fitter and stronger organisation and, with the success of the local sales arrangements and safe maintenance and enhancement of the Shaikan Field’s production capacity, has been able to restart shareholder distributions with top quartile total shareholder return performance of 24% in 2024 relative to our peers (assuming dividends paid in the year were reinvested). The Board and the Company are now focused on unlocking further upside value by securing a commercial solution to restart oil exports while delivering on our operational and financial guidance for the year.
David Thomas Non-Executive Chair
19 March 2025
CEO review 2024 was a positive year for Gulf Keystone, characterised by strong operational and financial delivery despite the challenging operating environment. As the local sales market in Kurdistan developed, we returned to consistently strong production levels which, combined with a lean work programme and strict cost control, enabled us to generate significant free cash flow, facilitating the restart of shareholder distributions and the preservation of our robust balance sheet.
2024 performance Our performance was underpinned by the extension of our excellent safety track record, with zero Lost Time or Recordable incidents in the year, well below the relevant Kurdistan and international peer benchmarks. This was achieved despite 24/7 truck loading operations at both production facilities and the temporary shut-in of PF-1, which involved close to 100,000 working hours of activity. We were pleased to further extend our record of Lost Time Incident free days to over two years in January 2025 and have been currently operating without an LTI for over 790 days as at 18 March 2025.
2024 gross average production of 40,689 bopd was almost double 2023’s performance of 21,891 bopd as we returned to a full year of sales after the extended shut-in of the Shaikan Field in Q2 2023 due to the suspension of Kurdistan crude exports. After a slow start in Q1 2024, during which the local market was developing to absorb increasing supply from producers in the region, we saw strong underlying demand from the second quarter onwards. This enabled a number of months of high production at levels we had last seen prior to the shut-in of the ITP, with September 2024 production of 48,458 bopd our best month on record.
Local market demand was tempered by temporary disruptions to truck availability during regional holidays, in particular the two Eid celebrations in April and June 2024, and temporary road closures related to the Kurdistan regional elections in October 2024. Production was also reduced as expected during the planned shutdown of PF-1 in November 2024 as we installed safety upgrades and carried out maintenance.
Local sales realised prices averaged $26.8/bbl in 2024. As with production volumes, we saw lower prices in Q1 2024 which then improved and stabilised in the second half of the year. Prices have averaged between $27-$29/bbl in 2025 year to date, as at 18 March 2025.
Our ability to meet local market demand was supported by the execution of a disciplined work programme focused on maintaining and enhancing the production capacity of the Shaikan Field whilst preserving the future value of the field. The successful completion of safety upgrades and maintenance at PF-1 have improved the safety and reliability of the plant, while production optimisation expenditures on existing wells enabled us to offset field declines in the year. The Shaikan Field continues to perform extremely well after over ten years of operations and over 135 million barrels of production.
Higher production and the achievement of an average monthly capex and cost run rate below $7 million, in line with guidance, enabled us to generate $65.4 million of free cash flow. In line with our commitment to return excess cash to shareholders, we distributed $45 million of dividends and share buybacks in the year, an excellent outcome after we had been forced to suspend our ordinary dividend policy in 2023 due to the suspension of exports.
Shaikan Field estimated reserves The Company estimates gross 2P reserves of 443 MMstb as at 31 December 2024, reflecting our year-end 2023 internal estimate of 458 MMstb reduced by gross production of 15 MMstb in 2024.
We have estimated 2P reserves based on a number of modelling assumptions, including a return to development drilling and the expansion of our production facilities from 2026. A return to field development continues to be predicated on the restart of exports and establishment of a stable commercial and payments environment. This would also likely be the point at which we would review the commissioning of an updated Competent Person’s Report (“CPR”), including a comprehensive independent assessment of 1P and 2P reserves and 2C resources. Our last independent CPR was prepared by ERC Equipoise (“ERCE”) as at 31 December 2022.
2025 outlook Gross production has averaged c.46,400 bopd in the year to date (1 January to 18 March 2025), supported by continued strong local sales demand, enabling us to reiterate our gross average production guidance of 40,000 to 45,000 bopd. Our full-year guidance is contingent on stable demand at current levels and a number of other assumptions, including estimated field declines of around 6-10%, the expected impact on production from the planned PF-2 shutdown later in the year and the estimated reduction in truck availability during regional holidays. Should we see any unforeseen disruptions in the local market or the restart of exports, we expect to review the guidance.
We remain focused on balancing capital and cost discipline while maintaining safe and reliable production capacity. We are executing a similar work programme to 2024, with estimated net capital expenditures of $25-$30 million in 2025. The increase relative to 2024 is driven by incremental expenditures on production optimisation, accounting for $5-$10 million of the guidance, as we target quick payback, low-cost and efficient interventions on existing wells to offset declines. Around $20 million is expected to be spent on replicating the 2024 PF-1 safety upgrades and maintenance at PF-2, currently scheduled for Q4 2025 and requiring the shut-in of the facility for approximately three weeks.
In addition to our existing budget, we are actively exploring additional plant initiatives to enhance production, including water handling. We have scheduled reviews and expect to take appropriate actions later in 2025 considering the Company’s liquidity position and operating environment at the time.
As we execute against delivering our annual guidance, we continue to actively pursue a solution to restart the export of our crude to international markets via the ITP, with a number of recent meetings between the IOCs, KRG and FGI, in which Gulf Keystone has played an active role. As we approach the two-year anniversary of the ITP’s closure on 25 March 2025, we remain hopeful that we are now nearing a solution.
We continue to believe a return to international exports with the right agreements in place regarding payment surety, receivables repayment and the preservation of our contractual rights would be transformative for the Company, Kurdistan and Iraq, both in unlocking additional revenue from a vital source of global oil supply which is currently selling for significantly discounted prices but also by signalling that Kurdistan and Iraq are open for business and are attractive destinations for foreign investment.
Jon Harris Chief Executive Officer
19 March 2025
Financial review
Key financial highlights
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