Gulf Keystone returns to post-tax profit in first half

Iraqi Kurdistan-focussed petroleum operator Gulf Keystone reported a 162% improvement in its first-half revenue on Thursday, to $130.7m (£94.78m), contributing to a return to profit after tax of $64.8m, compared to a $33.1m loss a year ago.

The London-listed firm reported adjusted EBITDA of $93.8m for the six months ended 30 June, which was “more than triple” the $27.5m it reported in the first half of 2020.

Its board said that was driven by the company's “strong” leverage to the recovery in oil prices, as well as an increase in production and its low cost base.

The firm’s realised price was up 129% to $43.70 per barrel, while gross average production for the period was up 17% to 43,516 barrels of oil per day.

First half gross operational expenditure was $2.4 per barrel, coming in below its 2021 guidance range of $2.50 to $2.90 per barrel.

Net capital expenditure totalled $14.1m, down from $38.5m a year earlier, with the restart of the 55,000 barrels of oil per day expansion programme.

Total dividends of $50m had been paid to date, including an annual dividend of $25m and a special dividend of $25m.

The board described Gulf Keystone’s cash balance as “robust”, at $177.4m as at 1 September.

“Our leverage to the recovery in oil prices, combined with safe and reliable production towards the top end of our guidance range and a continued sharp focus on costs, has resulted in significant cash flow generation,” said chief executive officer Jon Harris.

“With continued strong production performance from the Shaikan Field, we are tightening the 2021 production guidance range to 42,000 to 44,000 barrels of oil per day.

“We continue to deliver against our commitment to balance investment in growth and returns to shareholders.”

Harris confirmed that the company was declaring an interim dividend of $50m, bringing total dividends for the year to $100m.

“The early restart of the drilling campaign in June enables us to maintain production growth momentum and to drill an additional well, SH-G, in 2021 after completion of SH-14, the final well in the 55,000 barrels of oil per day investment programme.

“SH-14 is expected to come onstream in the fourth quarter, while we expect SH-G to come onstream in the first quarter of 2022.

“We continue to work closely with the [Kurdistan] Ministry of Natural Resources and our partner on the preparation of the Shaikan field development plan, and expect to submit the plan to the ministry in the fourth quarter for approval.”

At 0845 BST, shares in Gulf Keystone Petroleum were up 9.48% at 169.92p.