Share Awards Announcement

RNS Number : 8466Z

Gulf Keystone Petroleum Ltd.

22 March 2012

 



Not for release, publication or distribution in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.

22 March 2012

Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")

Awards on an Exit Event and under the Executive Bonus Schemes

Gulf Keystone today announces a number of performance-related awards for its Board, management and employees, following the Company's continued growth and operational success achieved in 2011 and early 2012.

Exit Event Awards

The Remuneration Committee has recommended that the Company makes cash settled awards to certain Executive Directors and employees conditional on the occurrence of an Exit Event (as defined below) ("Exit Event Awards"), up to a maximum amount equivalent to the value of 10,000,000 common shares of USD0.01 each ("common shares") at the time of an Exit Event, and that a trustee (the "Exit Event Trustee") be appointed to hold and, subject to the occurrence of an Exit Event, to sell sufficient common shares to satisfy the Exit Event Awards.

On 21 March 2012, the Independent Directors (as defined below) approved Exit Event Awards, subject to the occurrence of an Exit Event, equivalent to the value of 2,000,000 common shares to certain Executive Directors and employees, which included the following Exit Event Awards to Executive Directors of the Company and directors of its subsidiary companies, being Todd Kozel, John Gerstenlauer, Ewen Ainsworth, Tony Peart and Chris Garrett (together the "Relevant Directors").

Relevant Director		Number of common shares to be cash settled, subject to the occurrence of an Exit Event
Todd Kozel		300,000
John Gerstenlauer		140,000
Ewen Ainsworth		140,000
Tony Peart		140,000
Chris Garrett		140,000

The value of the common shares to be settled pursuant to the Exit Event Awards is dependent on the Company's share price, if and when an Exit Event occurs.

The Exit Event Trustee will hold the remaining 8,000,000 common shares to satisfy any future Exit Event Awards to full-time employees of the Company and subsidiary companies, subject to the occurrence of an Exit Event, with such beneficiaries to be determined in due course.

An Exit Event is defined in detail in the Share Award Agreement in relation to an Exit Event Award and envisages a sale of either the Company or a substantial proportion (i.e. more than 50%) of its assets.

The preparation of the Exit Event Awards commenced in June 2011 and has involved detailed discussions with a number of the Company's leading institutional and other shareholders, as well as consultation with the Company's advisers.  The Exit Event Awards and the awards under the 2011 Executive Bonus Scheme and the cash bonus (together the "Awards") are being made following consultation with a number of the Company's leading institutional and other shareholders who hold, in aggregate, in excess of 35 per cent. of the issued share capital of the Company.

Share subscription by the Exit Event Trustee

The Exit Event Trustee indicated on 21 March 2012 that it wishes to enter into a Loan Agreement with the Company and to subscribe for a total of 10,000,000 new common shares in the Company at par to enable it generally to satisfy Exit Event Awards, including those made to the Relevant Directors as detailed above.

2011 Executive Bonus Scheme

On 21 March 2012, following recommendation by the Remuneration Committee and in recognition of the Company's performance during 2011, the Independent Directors approved the grant to certain Executive Directors and employees under the Company's 2011 Executive Bonus Scheme of up to a maximum of 10,000,000 common shares for nil consideration, of which no more than 3,333,333 common shares can be considered for award in each of the years 2012 and 2013 and no more than 3,333,334 common shares can be considered for award in 2014.  A cash bonus has also been approved by the Independent Directors for certain Executive Directors and employees, to be paid in 2012, in respect of the year ended 31 December 2011.

Details of the maximum number of common shares that could be issued under the 2011 Executive Bonus Scheme at the discretion of the EBT Trustee (as defined below) to Relevant Directors over a three year period and the cash bonus to Relevant Directors in respect of 2011, amounting in aggregate to £3.2 million, are set out below:

Relevant Director	Number of common shares to be issued pursuant to the 2011 Executive Bonus Scheme in 2012	Value of the common shares to be issued pursuant to the 2011 Executive Bonus Scheme in 2012 (£m)*	Maximum number of common shares to be issued pursuant to the 2011 Executive Bonus Scheme over the subsequent two year period	Value of the maximum number of common shares to be issued pursuant to the 2011 Executive Bonus Scheme over the subsequent two year period (£m)*	Cash bonus in respect of 2011 (£m)
Todd Kozel	1,459,167	3.67	2,918,333	7.35	1.78
John Gerstenlauer	291,833	0.73	583,667	1.47	0.36
Ewen Ainsworth	291,833	0.73	583,667	1.47	0.36
Tony Peart	291,833	0.73	583,667	1.47	0.36
Chris Garrett	291,833	0.73	583,667	1.47	0.36

* The value of the common shares to be issued pursuant to the 2011 Executive Bonus Scheme is calculated by reference to the Company's closing mid-market share price of 251.75 pence as at the close of business on 21 March 2012.

Share subscription by the trustee of the Employee Benefit Trust

The trustee ("EBT Trustee") of the Company's Employee Benefit Trust ("EBT") indicated on 16 March 2012 that it wished to subscribe for a total of 10,246,338 new common shares in the Company at par to enable it generally to satisfy the award of up to 3,333,333 common shares, at its discretion, to Relevant Directors and employees in respect of the 2011 Executive Bonus Scheme and, in line with previous recommendations of the Remuneration Committee (detailed in announcements of the 7 February 2011, 25 June 2010 and 7 June 2010), 3,773,004 common shares in respect of the final instalment of the 2009 Executive Bonus Scheme and 3,140,001 common shares in respect of the second instalment of the 2010 Executive Bonus Scheme.

Related party transaction

The Awards to the Relevant Directors are deemed to constitute a related party transaction under the AIM Rules for Companies.  The Independent Directors, comprising those Directors who are not receiving any benefit from the Awards, being Mehdi Varzi, Lord Peter Truscott, General the Lord Guthrie of Craigiebank and Mark Hanson (together the "Independent Directors"), having consulted with Strand Hanson Limited, the Company's Nominated Adviser, consider the terms of the Awards to be fair and reasonable insofar as the Company's shareholders are concerned.

Executive Bonus Scheme Awards 2009 and 2010

On 21 March 2012, the Independent Directors approved the direct issue (not through the EBT) of a further 733,334 new common shares to enable the Company to effect the issue to certain Non-executive Directors of 66,668 common shares in respect of the final instalment of the 2009 Executive Bonus Scheme and 666,666 common shares pursuant to the second instalment of the 2010 Executive Bonus Scheme (detailed in announcements of the 7 February 2011, 25 June 2010 and 7 June 2010) in accordance with the recommendation of the Board. The direct awards to these Non-executive Directors are as follows:

	Number of common shares to be issued directly
Mehdi Varzi	366,667
Lord Peter Truscott	366,667

Mehdi Varzi has informed the Company that he intends to sell sufficient common shares to discharge his tax liabilities following such award.

Grant of options

On 21 March 2012, an option to acquire 250,000 common shares in the capital of the Company at a price of 250.00 pence per common share was granted under Gulf Keystone's Share Option Plan to Mark Hanson, who joined the Company as a Non-Executive Director in November 2011. Subject to certain performance criteria having been met prior to exercise, these options will vest over a three year period and can be exercised at any time until expiry on 25 November 2021.

Directors' interests in shares

Further to the Company's announcement of 17 January 2012, the transfer of the Settlement Shares, as defined in that announcement, by Mr Todd F Kozel to Mrs Ashley Kozel, has been completed.

Following the award of common shares under the 2011, 2010 and 2009 Executive Bonus Schemes and the grant of options, subject to the discretion of the EBT Trustee, the interests of the Directors in the enlarged share capital of the Company are as follows:

Director	Common shares held directly	Interests in common shares awarded under the 2011, 2010 and 2009 Executive Bonus Schemes, held subject to the discretion of the EBT Trustee	% of enlarged issued share capital	Number of Options held over common shares under the Company's Share Option Plan
Todd Kozel	166,667	5,140,836	0.61%	16,961,473
John Gerstenlauer	-	1,154,611	0.13%	4,792,295
Ewen Ainsworth	597,187	1,562,944	0.25%	3,792,295
Ali Al- Qabandi	9,450,000	1,000,000	1.19%	1,000,000
Mehdi Varzi	835,555	-	0.10%	100,000
Lord Truscott	1,122,555	-	0.13%	100,000
Lord Guthrie	-	-	-	250,000
Mark Hanson	-	-	-	250,000

Following the issue of common shares relating to the 2011, 2010 and 2009 Executive Bonus Schemes and the Exit Event Awards, the total issued share capital of Gulf Keystone will be 875,859,620 common shares. The Company does not hold any common shares in treasury and so the total number of voting rights in Gulf Keystone is 875,859,620.

The aforementioned figure of 875,859,620 common shares may be used by shareholders of the Company as the denominator for the calculations by which they will determine if they are required to notify their interest, or a change to their interest, in the Company under the FSA's Disclosure and Transparency Rules.

Application will be made to the London Stock Exchange for the admission of 20,979,672 new common shares to trading on AIM with effect from 28 March 2012.

Mehdi Varzi, Gulf Keystone's Deputy Chairman and Chairman of the Remuneration Committee, commented:

"The performance-related awards announced today are in recognition of the Company's remarkable growth and outstanding drilling success in the Kurdistan Region of Iraq. These plans fully align management and employees with shareholders' interests by incentivizing Company employees to continue to achieve significant value creation for the benefit of all shareholders. 

Gulf Keystone's management and employees have achieved considerable growth with the increase in the Company's share price from £0.05 pence in March 2009, before the first Shaikan well was drilled, to today's levels, which would place Gulf Keystone within the FTSE 100 index by market capitalisation. While the AIM index fell by almost 20 per cent between the end of 2010 and today, the Company's growth rate in terms of its market capitalization in the same period has been 76 per cent, reflecting our outstanding success in finding billions of barrels of oil.

Since we made one of the largest world class discoveries of the last decade at the Shaikan field in 2009, our independently audited mean resource estimates for Shaikan have increased by 375 per cent. In combination with preliminary resource estimates for the equally massive structures of Akri-Bijeel, Ber Bahr and Sheikh Adi, today Gulf Keystone has a share of gross, P50 oil-in-place resources of at least 16 billion barrels across our four licences in the Kurdistan Region of Iraq, one of the last frontier oil provinces in the world."

Enquiries:

Gulf Keystone Petroleum	[phone]
Investor Relations and Communications
Strand Hanson Limited	[phone]
Simon Raggett / Rory Murphy / James Harris
Mirabaud Securities LLP	[phone]
Peter Krens
Pelham Bell Pottinger	[phone]
Mark Antelme

or visit: www.gulfkeystone.com

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 fourexploration blocks in Kurdistan, including the Shaikan block.

§ Shaikan is a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels.

§ The Company's common shares have traded on the AIM market of the London Stock Exchange since listing on 8 September 2004.

§ Gulf Keystone Petroleum Limited is registered in Hamilton, Bermuda with further offices in Erbil, Kurdistan (Iraq), Algiers, Algeria and London, UK.

Not for release, publication or distribution, directly or indirectly, in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.  This announcement (and the information contained herein) does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.  The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.  No public offering of the securities will be made in the United States.

 

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