Gulf Keystone Petroleum has declared an additional dividend but warned that production will not grow as much as expected in 2022.
The company announced another $50 million distribution this morning, bringing the total to $150mn in the last eight months. This, CEO John Harris said, showed its “commitment to balance investment in growth with returns to shareholders”.
Production peaked early this at just over 50,000 barrels per day and has averaged 46,800 bpd. This is up from the 43,440 bpd average in 2021.
Problems at recently completed wells, SH-12, SH-13 and SH-14, “have resulted in a delay in gross production increasing to 55,000 bpd. 2022 gross average production is expected to be 44,000 to 50,000 bpd.”
Gulf Keystone is drilling the SH-15 well, which should start up in the second quarter of this year.
Kurdistan paid out $283.2 million in 2021, of which $221.7mn was net to Gulf Keystone. It made another payment of $69.7mn net in January this year.
The region continues to ow $28.6mn net to Gulf Keystone for arrears from January and February 2020.
The company has a cash balance of $228mn as of January 21.
CEO Harris was upbeat despite the well challenges.
The company’s production base “continues to generate significant cash flow and value for Gulf Keystone’s stakeholders. On approval of our recently submitted Field Development Plan [FDP], we are well positioned to achieve sustainable growth from the Shaikan Field, which has delivered close to 100 MMstb, and has 489 MMstb of estimated 2P gross reserves remaining.”
The SH-13 and SH-14 wells both started up in December 2021. The company said it is working on an acid stimulation process for SH-14.
It has curtailed production from SH-12 after finding traces of water. This is not the first time it has happened on Shaikan wells, given the fractured carbonate reservoirs, and the company said it has plans for water handling.
It does not expect any “material impact” on reserves of medium-term production.
Gulf Keystone submitted a new FDP on the Shaikan field in 2021. This focuses on developing oil production from the Jurassic and an appraisal of the Triassic. It would also involve a gas management plan, with the aim of eliminating routine flaring.
Looking ahead, the company has said strong oil prices and cash flow may provide “opportunities to consider further distributions to shareholders and to optimise the capital structure”.