Fixed Income Investor Meetings

RNS Number : 6676C

Gulf Keystone Petroleum Ltd.

19 March 2014

 



Not for release, publication or distribution, directly or indirectly, in whole or in partin or into the United States or any jurisdiction other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws or regulations of such jurisdiction.  This announcement (and the information contained herein) does not contain or constitute an offer to sell or the solicitation of an offer to purchase, nor shall there be any sale of securities in any jurisdiction where such offer, solicitation or sale would constitute a contravention of the relevant laws or regulations of such jurisdiction.

19 March 2014

Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")

Fixed Income Investor Meetings

Gulf Keystone, an independent oil and gas exploration, development and production company with operations in the Kurdistan Region of Iraq, is pleased to announce today that it has mandated Deutsche Bank and Pareto Securities to arrange a series of fixed income investor meetings in the US, Europe and Asia commencing 20 March 2014. A debt offering of up to US$250 million in accordance with Reg S/144A is expected to follow, subject to market conditions.

On 13 March 2014, Gulf Keystone released an Operational and Corporate Update and published the first third party audit of the Company's reserves, contingent resources and prospective resources for its petroleum interests in the Kurdistan Region of Iraq comprising the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks. The Company continues to maintain current stable production and sales levels at an average of 10,000 barrels of oil per day ("bopd") from the Company's first Shaikan production facility (PF-1). In addition, Shaikan-4, the third production well, recently tied-in to PF-1, has been flowing at up to 6,000 bopd in the recent week.

The Company's immediate focus remains on achieving its target of 40,000 bopd of production capacity from PF-1 and PF-2 in 2014, which will allow further expansion of export crude oil sales. The Company estimates that achieving this level of production capacity at Shaikan, as well as continuing planned expenditure at Sheikh Adi, Ber Bahr and Akri-Bijeel, will require capital expenditure of approximately US$210 million in 2014. To complete this work programme, the Company expects to seek additional funding via a debt offering of up to US$250 million to enhance its existing cash resources, which totalled US$81.9 million as at 31 January 2014. Whilst there can be no certainty that a debt transaction will follow the Company's investor meetings, any debt raised will support the completion of the Company's move to 40,000 bopd of production capacity.

The Company expects to utilise cash generated from increasing oil sales, in addition to the funds remaining from the contemplated raising of up to US$250 million in debt financing, to initiate the next stage of the Shaikan project execution and increase production capacity from 40,000 bopd to 66,000 bopd by Q1 2016. The increase of Shaikan production capacity to 66,000 bopd, which is the Company's next step towards reaching the medium-term target of 100,000 bopd set for Phase 1 of the approved Shaikan Field Development Plan, is expected to require construction of at least one additional production facility (PF-3) with gas injection and water handling capabilities, as well as the drilling of a substantial number of development and production wells. The increase of Shaikan production capacity from 40,000 bopd to 66,000 bopd, alongside the continuation of the planned work programmes at Sheikh Adi, Ber Bahr and Akri-Bijeel, is anticipated to require further capital expenditure of approximately US$340 million through 2014 to the end of 2015.

Commenting on today's announcement, Todd Kozel, Chief Executive Officer of Gulf Keystone, said:

"We have reached a crucial milestone in Gulf Keystone's transition from an exploration company to an exploration and production company. This is the first time in the Company's history that it has been in a position to access the conventional bond markets, and we are confident that this proposed bond issue will further expand the Company's financial options in the future.

The roadmap for the Shaikan development is the field development plan approved by the KRG and its Phase 1 target of 100,000 bopd production capacity. In order to achieve this significant medium-term target, by Q1 2016 we plan to grow our production capacity from 40,000 bopd to 66,000 bopd, drilling more wells and completing our next production facility. In the near term, our intention is to maintain and increase consistent production and sales, continue to prove up reserves, diversify our funding mix, and we are looking forward to issuing our Listing Prospectus and completing our planned move to the standard segment of the Official List shortly. 

The recently published Competent Person's Report confirming some 12.5 billion barrels of gross oil in place across our portfolio in the Kurdistan Region of Iraq, demonstrates the world-class significance of the Company's asset base, especially the Shaikan field, and indicates the scale of the reserves that we can prove up as we implement Phase 1 of the development. The report has also provided us with the necessary initial baseline of minimum tangible value in order to access the credit market, which will enable us to continue to develop the Shaikan field and begin to realize its value for all of our stakeholders."

Enquiries:

Gulf Keystone Petroleum:	[phone]
Simon Murray, Non-Executive Chairman
Todd Kozel, Chief Executive Officer
Anastasia Vvedenskaya, Investor Relations
Strand Hanson Limited	[phone]
Stuart Faulkner / Rory Murphy / James Harris
Mirabaud Securities LLP	[phone]
Peter Krens
Bell Pottinger	[phone]
Mark Antelme / Henry Lerwill

or visit: www.gulfkeystone.com

John Gerstenlauer, the Company's Chief Operating Officer, who has over 37 years of relevant experience within the sector and meets the criteria of a qualified person under the AIM note for mining, oil and gas companies, has reviewed and approved the technical information contained in this announcement.  Mr. Gerstenlauer is a member of the Society of Petroleum Engineers.

Notes to Editors:

·           Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company focused on exploration in the Kurdistan Region of Iraq.

·           Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four exploration blocks in Kurdistan, including the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.

·           GKPI is the Operator of the Shaikan Block, which is a major commercial discovery, with a working interest of 75% and is partnered with Kalegran Ltd. (a 100% subsidiary of MOL Hungarian Oil and Gas plc.) and Texas Keystone Inc., which have working interests of 20% and 5% respectively.  Texas Keystone Inc. holds its interest in trust for Gulf Keystone, pending transfer of its interest to the Company.

·           Gulf Keystone is moving into the large-scale phased development of the Shaikan field targeting 100,000 bopd of production capacity during Phase 1, following the approval of the Shaikan Field Development Plan in June 2013.

Disclaimer

This announcement contains certain forward-looking statements.  These statements are made by the 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 uncertainties, including both economic and business factors, underlying such forward-looking information.  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.

This communication and the information contained herein is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States unless they are registered or are exempt from registration. Any public offering of securities to be made in the United States would be made by means of a prospectus that would contain detailed information about the company and its management, as well as financial statements. The company does not intend to register any portion of this offering in the United States or to conduct a public offering in the United States or any other jurisdiction. Any public offering of securities to be made in the United States would be made by means of a prospectus that would contain detailed information about the Company and its management, as well as financial statements.Copies of this communication are not being, and should not be, distributed in or sent into the United States.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order or (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50, and 50A respectively of the Order or (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as relevant persons). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

 

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