Gulf Keystone production, exports not impacted by fighting

Gulf Keystone Petroleum, an independent operator and producer in the Kurdistan Region of Iraq, confirmed on Friday that operations continued safely and securely despite political instability in the surrounding region, with average production of 34,525 barrels of oil equivalent per day from the Shaikan oil field since the start of October.

Shaikan was performing as expected, management said in a statement, with cumulative production from the field reaching 42.4m barrels year-to-date, which was equivalent to an average volume of 35,966 bopd even amid the fighting taking place between Kurdish and Iraqi troops north of the city of Kirkuk on the border with the Kurdistan region.

Earlier this week, Iraqi forces took over swathes of Kirkuk which had been under control of the Kurds since 2014, sending Kurdish forces running back into the officially recognised autonomous Kurdistan region of Iraq.

Yet, Gulf Keystone maintained that its operations were safe and secure, boasting even that it was on track to meeting its gross production guidance of 32,000-38,000 bopd for the year, with its current cash position standing at $147.2m following payment of the Reinstated Notes coupon of $5m in October 2017.

The company also said that Shaikan crude production was still being exported uninterruptedly via trucks to Turkey, in line with the Ministry of Natural Resources's crude export strategy.

Commenting on today's announcement, CEO, Jón Ferrier, said: "We remain committed to ensuring safe and secure operations in Kurdistan, and we continue to monitor the geo-political situation closely. Despite the challenges facing the region, we are maintaining stable operations."

Canaccord Genuity's Charlie Sharp penned a research note to clients after the announcement, arguing that while the regional risk profile had worsened after the recent declaration of independence by the Kurdistan, and Baghdad's reaction, the shares still offered "compelling value".

Nonetheless, Sharp conceded the "complexity of the situation" for which reason he maintained his "speculative buy" recommendation on the stock.