Gulf Keystone to redeem $100 million bond; narrows 2022 guidance


Gulf Keystone Petroleum Ltd on Friday said it intends to pay off its $100 million outstanding bond a year early and aso said it is narrowing its guidance for 2022's oil production.

The Bermuda-based oil and gas exploration company announced its intention to leave itself debt free by paying off the $100 million outstanding bond after the step down in July 2022 of the call premium from 4% to 2% of its principal. The company had not planned to mature these notes until July 2023, as announced in its annual results report in March.

The company said it wanted to remain focused on balancing investment in growth with shareholder returns. It reported a robust balance sheet with cash balance of $247.0 million at June 23, compared to $182.7 million at March 29 last year.

The company also said it's tightening 2022 gross production guidance to 44,000 - 47,000 barrels of oil per day, from a wider range of 44,000 to 50,000 bopd given in March.

Gross average production in 2022 to date was about 44,900 barrels of oil per day.

As at June 22, gross average production amounted to about 45,900 barrels of oil per day. This is compared to a gross average production of 43,440 bopd in 2021.

Chief Executive Officer Jon Harris said: ‘The installation of water handling facilities will unlock upside production potential and we continue to explore acceleration options in a supply constrained market. In the near-term, we continue to progress our well workover and intervention programme to optimise production.

‘We also remain focused on maintaining a robust balance sheet and today we are pleased to announce our intention to call the $100 million outstanding bond, leaving the company debt free.’

Gulf Keystone reported significant cash flow generation in 2022 to date, with USD 348.8 million received from the Kurdistan Regional Government for crude oil sales and revenue arrears. The outstanding arrears balance has been fully recovered.

The company also declared $190 million of dividends in 2022, representing a dividend yield of 26% based on GKP's closing price on Thursday. It said $75 million of which is subject to shareholder vote at the annual general meeting today.

Looking ahead, the company is preparing to resume drilling to ramp-up production from the Jurassic reservoir in Iraq and will update its capital expenditure guidance in due course.

Gulf Keystone shares were down 6.1% at 254.50 pence each on Friday morning in London.

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