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GKP Full Year Results | Iraq Business News

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) closed the day down nearly four percent on Thursday, after it announced its results for the full year ended 31 December 2023.

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:

Following a challenging year in 2023, in which our operational and financial performance was impacted by the suspension of Kurdistan exports and delays to KRG payments, we successfully adapted to the new local sales environment. Local sales volumes have rebounded since the beginning of 2024, with year to date gross average sales of c.33,300 bopd and March to date sales of c.43,000 bopd.

“We are more than covering our monthly expenditures and have significantly reduced accounts payable, with all invoices now current. Free cash flow from current robust local sales demand is being used to further improve our liquidity position. Looking ahead, we remain resilient with upside potential from the restart of exports and normalisation of payments. While there is no defined timeline, we continue to actively engage with government stakeholders to secure a solution to unlock significant value for all stakeholders.

Highlights to 31 December 2023 and post reporting period


  • Continued rigorous focus on safety, with Zero Lost Time Incidents for 430 days as at 20 March 2024
  • Significant operational transition following the Iraq-Turkey Pipeline (“ITP”) closure on 25 March 2023 as GKP moved from pipeline exports and reservoir development to the shut-in of production, suspension of all expansion activities and subsequent start-up of local sales
  • 2023 gross average production of 21,891 bopd (2022: 44,202 bopd), reflecting strong growth prior to the suspension of exports followed by the start-up of local sales in H2 2023 at lower levels
    • Gross production averaged 49,165 bopd between 1 January and 24 March 2023, with the ramp-up of SH-16 and start-up of SH-17 driving production to highs of over 55,000 bopd on several days in March 2023
    • Gross average local sales of 23,331 bopd between 19 July and 31 December 2023
  • Increasing local demand in 2024 year to date has driven a rebound in sales volumes
    • Year to date gross average sales of 33,300 bopd, with gross average sales in March 2024 to date of c.43,000 bopd, as at 19 March 2024
    • Ramp up in local sales reflects strong market demand for certain refined products, the further easing of seasonal logistic challenges and a realised price of c.$25/bbl


  • Material impact on 2023 financial performance from the suspension of exports and continued delays to payments from the Kurdistan Regional Government (“KRG”)
  • Decisive action taken to preserve liquidity with significant expenditure reductions and transition to local sales
  • Reduction in revenue and profitability from lower production and realised prices
    • Revenue reduced to $123.5 million (2022: $460.1 million), reflecting the 50% decrease in gross average production to 21,891 bopd and lower average realised prices from local sales in H2 2023 of $30/bbl
    • Loss after tax of $11.5 million (2022: profit after tax of $266.1 million), including an increase in the expected credit loss provision determined under IFRS 9 of $21.4 million (2022: $2.0 million) related to the $151 million overdue receivables from the KRG for October 2022 to March 2023 export sales. The Company continues to expect to recover the receivables
  • Free cash outflow of $13.1 million (2022 free cash flow of $266.5 million), reflecting lower Adjusted EBITDA and delays to KRG payments, partially offset by reduced net capex and costs
    • Adjusted EBITDA declined to $50.1 million (2022: $358.5 million)
    • Revenue receipts of $109.2 million (2022: $450.4 million), reflecting $65.7 million for export sales in August and September 2022 received in Q1 2023 and $43.5 million from local sales in H2 2023
    • 2023 net capex of $58.2 million (2022: $114.9 million), of which $11.2 million was in H2 2023, as the Company suspended all Shaikan Field expansion activity
    • 2023 operating costs of $36.1 million were 14% lower year-on-year (2022: $41.9 million), reflecting the shut-in of production for more than three months and cost saving initiatives
    • 2023 Other G&A reduced to $10.5 million (2022: $12.2 million) principally due to cost savings and no bonus payments to staff, partially offset by non-recurring corporate costs of $2.1 million in H1 2023
  • Cash generated from local sales has enabled the Company to more than cover its monthly expenditures and strengthen its balance sheet
    • Net capex, operating costs and Other G&A reduced to a monthly run rate below $6 million in H2 2023
    • GKP’s 36% net entitlement from local sales have enabled the Company to more than cover its costs since commencement, with current breakeven at gross sales of c.22,200 bopd
    • Excess cash generation facilitated the reduction in accounts payable, including trade payables and accrued expenditures, to $26.0 million at 31 December 2023 (31 December 2022: $44.1 million)
    • The payment of all remaining overdue invoices in 2024 has resulted in a further reduction in accounts payable to roughly half the balance at the end of 2023
  • Following the payment of a $25 million interim dividend in March 2023, the Company’s ordinary dividend policy was suspended to preserve liquidity
  • Cash balance of $86 million at 20 March 2024 with no debt

Shaikan Field estimated reserves

  • In March 2023, the Company published the 2022 Competent Person’s Report (“CPR”), an independent third-party evaluation confirming 817 MMstb of estimated gross reserves and resources, including 506 MMstb million stock tank barrels (“MMstb”) of estimated gross proved and probable (“2P”) reserves
  • We have seen no degradation to the reservoir from the extended shut-in of production in 2023 and the field is performing in line with our expectations
    • However, we do not expect to consider a return to development of the Shaikan Field until exports have restarted and we have confidence in KRG payments and the commercial environment
  • To assess the impact of the production shut-in and suspension of expansion activity on gross 2P reserves, we have prepared internal estimates that incorporate a delay in return to development drilling
    • Adjusting year end 2022 gross 2P reserves of 506 MMstb for 2023 production of 8 MMstb, we estimate that the development delay has reduced gross 2P reserves by 40 MMstb or 8% to 458 MMstb at 31 December 2023, as recoverable volumes are pushed beyond licence expiry in 2043
  • Based on 2022 gross average production of 44,202 bopd, the last full year of production prior to the ITP closure, the estimated gross 2P reserves-to-production ratio is c.28 years, underpinning the case for eventual further investment when the environment improves
  • We expect to commission an updated CPR, including a comprehensive independent assessment of proved reserves, 2P reserves and contingent resources, once the operating environment has normalised


  • The Company is focused on maximising local sales and minimising costs to improve its liquidity position, while pushing for an exports restart and payment solution to unlock significant value
  • While we continue to expect variable local sales demand in 2024, we see robust market demand in the near term and remain focused on maintaining our strong performance
  • Subject to local sales demand and considering our limited capital programme, gross production potential is currently between 43,000 – 45,000 bopd:
    • Continue to manage well productivity to avoid traces of water and field declines estimated at 6-10% per year
  • Expect to maintain aggregate net capex, operating costs and other G&A monthly run rate at or below c.$6 million in 2024:
    • Estimated 2024 net capex of c.$20 million, comprising safety critical upgrades and production maintenance expenditures
    • Continuing to focus on further reducing costs while retaining operational capability to respond to local sales demand and resume exports
  • The Company continues to actively engage with government stakeholders to push for a pipeline exports restart solution:
    • While it remains uncertain when exports will restart, political and commercial negotiations between the Federal Government of Iraq (“FGI”) and the KRG are ongoing
    • Together with other International Oil Companies operating in Kurdistan, we continue to emphasise the importance of payment surety for future oil exports, the repayment of outstanding receivables and the preservation of current contract economics
  • With the resumption of exports and normalisation of payments and arrears, GKP will consider incremental field investment to realise Shaikan’s substantial potential and return to previous production levels
  • We continue to believe the distribution of excess cash by way of dividends or share buybacks is important to reward shareholders. As the operating environment and the Company’s liquidity position improve, we will keep under review our capability to reinstate distributions

More details here.

(Source: GKP)