Gulf Keystone announces $20m dividend, $10m share buyback

Gulf Keystone Petroleum announced a $20m interim dividend and the launch of a share buyback programme worth up to $10m on Tuesday.

The London-listed independent oil operator in the Kurdistan region of Iraq said it was continuing to generate free cash flow, driven by robust demand for crude from its Shaikan Field, where average production reached 48,500 barrels per day in September and 45,900 barrels per day this month so far.

Despite uncertainties in local sales and an upcoming maintenance shutdown in November, realised prices for Shaikan crude remained stable at $27 to $28 per barrel.

As of 7 October, Gulf Keystone held a cash balance of $110m.

The company said its updated approach to shareholder distributions would see it assess its capacity to declare interim dividends semi-annually, with share buybacks considered opportunistically.

Gulf Keystone's focus remained on balancing shareholder returns with the need to fund essential investments in the Shaikan Field and preparing for the resumption of Kurdistan oil exports.

The $20m interim dividend would be paid on 31 October, equivalent to 9.216 US cents per share.

Shareholders could opt to receive the payment in either sterling or dollars.

Additionally, the company’s buyback programme, which would be executed on the London Stock Exchange by brokers Canaccord Genuity and Peel Hunt, was set to start immediately and run until 31 December, or until the maximum amount of $10m was reached.

All repurchased shares would be cancelled to reduce the company’s capital.

“We have long recognised the importance of distributions to Gulf Keystone shareholders and we were pleased to be able to restart returns of excess cash earlier in the year with free cash flow generation from local sales,” said chief executive officer Jon Harris.

“As our liquidity continues to improve, we are today setting out an updated approach to shareholder distributions in the current local sales environment, which includes plans to review the company's capacity to declare an interim dividend on a semi-annual basis around our full year and half year results.

“In line with this approach, we have decided to declare a $20m interim dividend and initiate a share buyback programme of up to $10m.”

At 1052 BST, shares in Gulf Keystone Petroleum were up 6.8% at 135.74p.

Reporting by Josh White for Sharecast.com.