Gulf Keystone Petroleum reduces FY loss, encouraged by stable Shaikan performance

Gulf Keystone Petroleum has booked a much-lower full-year loss and says it is strongly encouraged by the stable performance of Shaikan, in-line with expectations.

The company's loss before tax was $17.3m, from a loss of $213.3m a year earlier. An impairment expense of $215.7m was more than offset by a gain on debt extinguishment of $222.5m.

Chief executive Jon Ferrier said Gulf Keystone Petroleum was strongly encouraged by the stable performance of Shaikan, in-line with expectations.

He noted the company achieved average gross production for 2016 at 34,794 barrels of oil per day, which was at the upper-end of its 31,000-35,000 bopd guidance.

"Over the first quarter of 2017 we averaged 36,293 bopd," he said.

Gulf Keystone Petroleum was cash flow positive with a healthy current cash balance of $112.7mat 5 April 2017. "We are primed for future development."

Ferrier added that, since September 2015, the company had received 16 payments from the MNR for Shaikan exports.

"The company is progressing in its ongoing discussions with the MNR regarding commercial and contractual conditions, in particular those around regular payments conforming to the Production Sharing Contract, and crude marketing arrangements."

He expected to achieve a satisfactory resolution to this around the middle of this year.

Gulf Keystone Petroleum was looking to making further investments to maintain plateau output at the nameplate capacity of 40,000 bopd, with a view to increasing to 55,000 bopd as soon as possible.

"The company is funded for the estimated capital expenditure of $58-68 million for the 40,000 bopd stabilisation case and a further $25m-$45m for the increase to 55,000 bopd, and work continues on optimisation of these programmes."

At 14: 15 GMT, shares in Gulf Keystone Petroleum were down 0.84% to 118.25p each.