Gulf Keystone Petroleum Limited (LON:GKP) has told investors it is now preparing to restart efforts to grow production at the Shaikan oil field in the Kurdistan region of Iraq.
Interim results released today confirmed production growth of 25% compared to the same period last year. Gross production from Shaikan was marked at 36,000 barrels of oil per day and said the rate up to the start of September averaged 36,272 bopd.
GKP sets its 2020 production at 35,000 to 36,000 bopd.
Meanwhile, having paused investment in March amidst oil market uncertainty and the COVID-19 pandemic, the company said it is now preparing to return to production growth. It told investors that it has identified a number of quick payback projects that can increase gross production 5,000 bopd for a gross cost of US$3mln.
“While waiting to resume the 55,000 bopd project, the company has identified a number of simple, low-cost, high-impact investments that have the potential to increase the current base level of gross production by approximately 5,000 bopd,” said Jón Ferrier.
He added: “We continue to maintain a tight focus on cost control and further savings will be reflected in the full year results.”
“With continued improvement in macro and operating conditions, we are well positioned to deliver the long-term potential of the Shaikan Field and look forward to resuming shareholder distributions over time."
Financial results for the first six months comprised US$49.9mln of revenue leading to earnings (adjusted EBITDA) of US$27.5mln, marking declines from US$95mln and US$59mln respectively a year ago, due mainly to lower crude prices through 2020 to date.
Production remains especially low-cost, at US$2.60 per barrel opex was below guidance (US$2.7 to US$3.1). Capex amounted to US$38.5mln in the first half of the year.
The company had US$140mln of cash as of September 2 and it noted that its financing arrangements mean it doesn’t have any debt repayment due until mid-2023.
Some US$73mln of payments to the company from the Kurdistan Regional Government, for the period between November 2019 to February 2020, are overdue and it continues to seek a timely settlement.
The KRG has stated that it will review outstanding arrears as dated Brent prices above US$50 per barrel.