Gulf Keystone Petroleum achieves upper end of guidance

Gulf Keystone Petroleum, operator of the Shaikan Field in Kurdistan, Iraq, has provided a trading and operational update ahead of its full year statement for the period ended 31 December 2016.

Average gross production for the year was 34,794 barrels of oil per day (bopd), which is within the upper-end of the company’s 31,000-35,000 bopd guidance.

Plant uptime was over 98%, once adjusted for export constraints, with a strong safety performance no lost-time incidents.

As for the start of the current year, in January average gross production was 37,196 bopd with only minor export disruptions, maximum daily production reached 38,384 bopd.

Production data from Shaikan continues to support the interpretations made in the most recent competent person's report (CPR) published on 31 August 2016, which reported gross Shaikan 2P Reserves of 622 million barrels of oil (MMbo) and gross 2C resources of 239 MMbo as at 30 June 2016.

The company is also progressing in its ongoing discussions with the MNR regarding commercial and contractual conditions, in particular those around a regular and timely payment cycle, and crude marketing arrangements.

The group looks forward to making further investments to achieve plateau production at nameplate capacity of 40,000 bopd. Gross production guidance for 2017 is being set at 32,000-38,000 bopd which the group expects to achieve the lower-end of without further investment in the field and beyond maintenance capital.

It has reinforced its management team through the appointment of Stuart Catterall as its new chief operating officer last month.

Cumulative gross payments were $142.5m received from the Kurdistan Regional Government's Ministry of Natural Resources (MNR).

The company completed its financial restructuring on 13 October 2016 with a reinstated debt balance of $100m and a $25m equity raise through an open offer. The cash position was $104 million as at 31 January 2017.

Chief Executive Jón Ferrier,said: "I am very pleased to announce a strong operational performance during 2016, achieving average daily production at the top of our guidance range. We have an increasingly well understood field which continues to perform in line with expectations, a healthy balance sheet, and stand ready to further invest in the Shaikan Field. However, commercial and contractual clarity around payments and marketing remain key to achieving production growth and realising full value potential."

The share price rose 1.60% to 129.80p at 1030 GMT on Wednesday.