Company Announcements

21 January 2020

Gulf Keystone Petroleum Ltd. (LSE: GKP)

("Gulf Keystone", "GKP" or "the Company")

Operational and Corporate Update

2019 gross production target met; development activity continues

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 in advance of the Company's full year 2019 results which are scheduled to be released on 26 March 2020.

Operational

Ø Average gross production for 2019 of 32,883 barrels of oil per day ("bopd"), meeting original 2019 gross production guidance.

Ø Current production rates from the field at c.40,000 bopd.  

Ø The side-track to the SH-9 well, designed to assess the gas reinjection potential of the Jurassic formation, reached total depth on 27 December 2019. 

Ø The SH-9 well is currently being tested. GKP and its partner MOL will then review plans for gas management, in consultation with the Ministry of Natural Resources.

Ø In order to optimise the cost and production benefits from the drilling campaign, the sequence of wells will now be SH-L then SH-I, both of which will be drilled from the same pad and will produce into PF-2, which has available processing capacity.

Ø The rig is currently being mobilised to drill the SH-L production well.

Ø Full oil export from Shaikan via pipeline following commissioning of the PF-1 export line on 10 December 2019.

Ø Safety remains a core focus. However, following over 530 Lost Time Incident ("LTI") free days, an LTI occurred in December as a result of a road traffic accident. 

Corporate

Ø Cash balance of $192 million as at 20 January 2020.

Ø The Company returned value to shareholders by paying dividends of $50 million in 2019 and to date repurchasing c.$35 million of shares out of $50 million in aggregate of share buyback programmes previously announced (with the Company today separately announcing its intention to complete the final $10 million tranche of such programmes).

Ø Ian Weatherdon joined the Company on 13 January as Chief Financial Officer and Executive Board member.

Outlook

Ø With the continued development of the Shaikan Field, the Company expects to increase average production in 2020 by more than 30% year-on-year to 43,000-48,000 bopd.

Ø Debottlenecking and facility upgrades remain on schedule.

Ø On track to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.

Jón Ferrier, CEO, commented:

"2019 saw GKP continue to realise the benefits of the Company's recent turn around. In a year in which we returned significant value to shareholders, through both our maiden dividend and share buyback programmes, we also benefited from the increased operational tempo. This resulted in the first steps along the road to a significant production increase from Shaikan, and we are pleased to confirm today that we achieved our original 2019 gross production guidance. 

Looking forward, the pace of the development of Shaikan continues with the drilling and investment in our facilities, in order to deliver our growth trajectory. With a robust balance sheet and confidence in regular payments, we expect to be fully funded for our work programme and continue to return value to shareholders."

Enquiries:

or visit: www.gulfkeystone.com 

Notes to Editors:

Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading independent operator and producer in the Kurdistan Region of Iraq. Further information on Gulf Keystone is available on its website www.gulfkeystone.com

Disclaimer

This announcement contains certain forward-looking statements that are subject to the risks and uncertainties associated with the oil & gas exploration and production business.  These statements are made by the Company and its Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent risks and uncertainties, including both economic and business factors and/or factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy.  This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.