Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq ("Kurdistan" or "Kurdistan Region"), is providing an operational and corporate update.
Ø Average gross production for the year up to 30 November 2019 of 32,127 barrels of oil per day ("bopd").
Ø November gross production averaged 40,582 bopd, with current production rates from the field at c.42,000 bopd.
Ø GKP is therefore on track to meet its original gross production guidance for 2019 of 32,000-38,000 bopd.
Ø The first well of the drilling campaign, SH-12 came onstream on 13 November. During commissioning, the well produced at rates up to 4,600 bopd, in line with expectations and is currently producing at c.4,000 bopd.
Ø The second well in the drilling campaign, SH-9 is a crucial part of the long-term field gas management plan and is designed to assess the gas reinjection potential of the Jurassic formation. The well, which was spudded on 19 October, encountered a faulted section requiring the well to be side-tracked to the Jurassic reservoir target.
Ø The SH-9 side-track necessitates a revision to the drilling schedule. Assuming a duration of one month for the side-track, the Company now expects to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.
Ø The planned maintenance and debottlenecking shutdown at PF-2 was completed safely during October.
Ø The PF-1 export pipeline is complete. Full oil export operations are expected to commence in the next 24 hours marking the end of export by trucking from the Shaikan Field.
Ø Operations at Shaikan remain safe and secure, with no Lost Time Incidents ("LTI") recorded in over 500 days.
Ø Cash balance of $206 million as at 9 December 2019.
Ø With a robust cash position and the Company's confidence in its delivery of the Shaikan project, a second share buyback programme for a further $25 million has been approved and an initial tranche of $15 million will be initiated today.
Jón Ferrier, CEO, commented:
"The Company has made significant progress on a number of fronts; with the successful addition of SH-12 to the PF-2 production inventory and drilling of the gas appraisal well SH-9 where operations continue. The imminent start of export through the PF-1 pipeline means all production from Shaikan will now be exported directly via pipeline, benefitting safety, reducing environmental impact and improving netbacks. We are pleased to confirm that we are on track to achieve our initial average production guidance for 2019, and whilst the need to side-track SH-9 has slightly impacted our timing guidance for delivering 55,000 bopd, we remain on course to achieve further significant production growth in 2020.
We are also pleased to announce the launch of a second $25 million share buyback programme, which is in line with our focus on returning value to shareholders, whilst retaining the capital necessary to grow the business."