Gulf Keystone has announced losses of $81.8 million after tax, for the year ended December 31, 2012.
The results for 2012 show an increased loss after tax of $81.8 million, from $62.4 million in 2011 reflect the increase in administrative expenses, interest expense now arising on the Convertible Bonds and the increase in tax charge, according to the company’s statement.
Despite the losses, the company appears confident that approval to embark on its Field Development Plan (FDP) on the Shaikan block, and a recent discovery in the Sheikh Adi Block, will bring it back out of the red.
The Kurdistan-focused exploration and production company operates the Shaikan block with a 75% stake. It completed its five-well appraisal programme in the middle of 2012 and is currently waiting for the Kurdistan Regional Government’s Ministry of Natural Resources to approve its Field Development Plan.
“Once approved by the Ministry of Natural Resources of the Kurdistan Regional Government, the FDP will become a roadmap for unlocking significant oil and gas volumes, already de-risked by extensive appraisal drilling and seismic analysis, establishing the necessary infrastructure required to develop this giant field and bringing to market the world class resources, which are of increasing strategic importance,” said Todd F Kozel, executive chairman and CEO of Gulf Keystone, in the annual report.
The company spudded its first deep exploration well, Shaikan-7, which targeted the mid-to-lower Triassic and potentially, Permian horizons on June 16, 2013. It also announced that it had produced a total of 1.14 million barrels gross from the Shaikan Extended Well Test (EWT) facility since the commencement of stable production testing operations in November 2011. The EWT facility has since been replaced with the first Shaikan production facility (PF-1), capable of producing 20,000 bpd, the facility is currently being commissioned. The company has plans to construct a second Shaikan production facility (PF-2) with the aim of commissioning the unit, capable of producing 20,000 bpd by the end of 2013.
“The phased development approach to the implementation of the Shaikan FDP will enable Gulf Keystone to achieve a significant ramp up of production by the year end, whilst ensuring the Company retains flexibility in financing the development of this giant field and bringing us closer to the goal of fully financing our activities from production cash flows,” he added.
Jurassic oil was also discovered in the Sheikh Adi Block, with which Gulf Keystone holds an 80% interest as operator, in November 2012. “We plan to appraise the Sheikh Adi discovery and continue to target additional exploration prospects on the block, taking into account clear future synergies with the Shaikan block in terms of production facilities, infrastructure and logistics,” said Kozel.
“Gulf Keystone is on the cusp of becoming a fully-established exploration and production company following the submission of the Shaikan FDP, which will result in a significant ramp up of production at the field. We believe that recent momentum on a number of fronts clearly signals that the Kurdistan Region of Iraq itself is entering the next stage of developing its oil and gas resources.”
