Gulf Keystone production plunges on Kurdistan export suspensions

Kurdistan-focussed energy company Gulf Keystone Petroleum said in an update on Wednesday that its gross average production for 2023 decreased to 21,891 barrels of oil per day, from 44,202 daily barrels in the prior year, due to export suspensions.

The company said it achieved an exceptional safety record, with no lost time incidents for more than a year.

It recorded fluctuating sales volumes, with gross average sales of 23,331 barrels per day from July to December, and around 21,600 barrels per day in early 2024.

Realised oil prices were about $27 per barrel, down from $30 per barrel in the second half of 2023.

Financially, Gulf Keystone reported total revenue receipts of $109.2m in 2023, compared to $450.4m in 2022.

The drop was mainly due to payments for export sales invoices received in early 2023.

To cope with export suspensions, the company significantly reduced capital expenditures and costs in 2023 to maintain liquidity.

Gulf Keystone said it maintained a cash balance of $82m, with no debt as of 30 January.

Looking ahead, the company said it was planning to focus on maximising local sales while managing accounts payable.

It said it anticipated maintaining monthly expenses of about $6m in 2024, and was continuing to engage in negotiations for the resumption of pipeline exports, emphasising payment surety for future oil exports.

“2023 was a challenging year for GKP and our industry as Kurdistan crude exports were suspended in March and payments from the Kurdistan Regional Government for oil sales were further delayed,” said chief executive officer Jon Harris.

“By adapting to the new environment and commencing sales to the local market we have been able to protect our business and balance sheet.

“I’m proud of the GKP team, who have swiftly transitioned from a focus on profitable production growth to preserving liquidity and restarting trucking operations, maintaining an excellent safety record throughout.”

Harris said that, while local market demand remained variable, the firm was actively working to increase volumes and remain focussed on at least covering its estimated monthly capex and other costs of $6m in 2024, while proactively managing its accounts payable.

“We continue to engage with government stakeholders to push for the restart of exports and payment surety for past and future sales.

“We see considerable upside should the operating environment improve, underpinned by the attractive fundamentals of the Shaikan Field and our historic track record of value creation.”

At 1018 GMT, shares in Gulf Keystone Petroleum were down 2.43% at 108.79p.

Reporting by Josh White for Sharecast.com.