2025 Half Year Results Announcement
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Gulf Keystone Petroleum Ltd (GKP)
28 August 2025
Gulf Keystone Petroleum Ltd. (LSE: GKP) (“Gulf Keystone”, “GKP”, “the Group” or “the Company”)
2025 Half Year Results Announcement
Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, today announces its results for the half year ended 30 June 2025.
Jon Harris, Gulf Keystone’s Chief Executive Officer, said: “We delivered strong operational and financial performance in the first half of 2025, with material free cash flow generated from increased production and realised prices, capital discipline and cost control. Following the temporary shut-in of the Shaikan Field in July related to security concerns, production restarted earlier this month after consultation with the Kurdistan Regional Government and has gradually ramped back up towards full well capacity. Given the return to stable sales and our robust cash balance, we are pleased to announce today the declaration of a $25 million interim dividend, increasing total dividends declared in 2025 to $50 million. Looking ahead, we have tightened 2025 gross average production guidance to 40,000 - 42,000 bopd primarily reflecting the production losses from recent temporary disruptions. We are excited to have sanctioned the installation of water handling facilities at PF-2 which we expect, once operational, to unlock incremental production above the anticipated field baseline and reduce downside risk to reservoir recovery. We continue to engage with government stakeholders regarding the restart of Kurdistan crude exports, with increasing momentum towards a solution in recent weeks.”
Highlights to 30 June 2025 and post reporting period
Operational
Financial
Outlook
Investor & analyst presentation
GKP’s management team will be hosting a presentation for investors and analysts at 10:00am (BST) today via live audio webcast:
https://brrmedia.news/GKP_GY_25
Sell-side analysts are requested to join the meeting via the dial-in details provided to them separately and ask questions verbally. Investors are encouraged to pre-submit written questions via the webcast registration page, with the opportunity to submit questions live during the presentation.
A recording of the presentation will be made available on GKP’s website.
This announcement contains inside information for the purposes of the UK Market Abuse Regime.
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.
CEO review The Company performed well in the first half of 2025, with consistently robust local market demand and good reservoir performance enabling increased production relative to the prior year period. Capital and cost discipline continued to underpin free cash flow generation and shareholder distributions. While temporary market disruption and security concerns impacted sales in June and July respectively, production has gradually returned towards full well capacity in August. We have also seen increased momentum towards an exports restart solution in our engagement with government stakeholders in recent weeks.
We have maintained a rigorous focus on safety in 2025 year to date, extending our track record of days without a Lost Time Incident to over 950.
Gross average production in the first half of 2025 was 44,100 bopd, a 12% increase relative to H1 2024. Local market demand for Shaikan Field crude was consistently strong between January to May 2025, enabling monthly gross average production above 45,000 bopd. Sales reduced in June because of trucking shortages around the Eid Al-Adha holiday and some disruptions during the conflict between Israel and Iran. Average realised prices in H1 2025 were relatively healthy at $27.8/bbl, 6% higher compared to the prior year period. The Company’s ability to meet buyer demand was enabled by good reservoir performance, with successful production optimisation initiatives offsetting natural field declines and well maintenance.
Gross production has averaged c.40,600 bopd in the year to date as at 26 August 2025, with the reduction relative to the first half average primarily reflecting the temporary shut-in of the Shaikan Field on 15 July 2025 following drone attacks on a number of oil fields close to our operations and elsewhere in Kurdistan. The safety of Gulf Keystone’s staff is always our top priority and we acted quickly to move employees and contractors to safe locations. Earlier this month, the Company restarted production operations following a security assessment and consultation with the KRG. Following a gradual ramp up, production levels have returned towards full well capacity.
The Company has continued to execute its disciplined work programme, progressing safety upgrades at PF-2 and executing production optimisation initiatives. As previously announced, the planned shut-in of PF-2 that had been scheduled to take place in Q4 2025 to tie-in the safety upgrades was deferred to 2026 to support production and provide greater work programme flexibility.
Increased production, stronger prices and continued capital and cost discipline enabled the Company to generate $24.6 million of free cash flow in the first half of 2025. In line with our commitment to return excess cash to shareholders, we paid a $25 million interim dividend in April.
The Company has recently sanctioned the installation of water handling facilities at PF-2. Engineering design work has commenced and commissioning is currently expected at the beginning of 2027.
Once operational, the facilities are expected to unlock an estimated 4,000 - 8,000 bopd of incremental gross production above the anticipated field baseline from existing constrained wells and reduce downside risk to reservoir recovery. The facilities will add additional wet oil processing capacity of around 17,000 bopd to the Shaikan Field’s existing dry oil processing capacity of around 60,000 bopd. While there are no indications of a near term increase in water ingress following an extraordinary track record of dry oil production to date of over 145 MMstb, we have long viewed water handling as a critical component of the Shaikan Field’s development and natural life cycle.
To reduce costs, we have sourced second hand facilities and are combining them with an existing oil train at PF-2. To minimise upfront capital expenditure and provide flexibility, the facilities will be leased over multiple years following commissioning. Limited incremental net capital expenditure is expected in 2025, with total costs during the construction phase ahead of commissioning estimated at approximately $12 million net to GKP. The facilities are expected to generate positive cash flow, even in a local sales environment, with future operating costs associated with the lease and water disposal expected to be more than covered by the anticipated incremental production.
Looking ahead to the remainder of the year, we are expecting 2025 gross average production to be between 40,000 - 42,000 bopd (previous guidance: 40,000 - 45,000 bopd), reflecting the impact of the temporary disruptions experienced from June to August. We continue to progress our production optimisation programme, with additional well workovers planned in the second half of the year, while managing natural field declines and certain wells constrained by water and gas. The guidance remains subject to local sales demand and a stable security environment.
2025 net capital expenditure is expected to be $30-$35 million (previous guidance: $25-$30 million), primarily reflecting the incremental capex associated with water handling.
The Company, along with other international oil companies (“IOCs”) operating in Kurdistan, has been continuing to engage with government stakeholders and other relevant parties regarding the restart of Kurdistan exports. The past few weeks have been characterised by increased levels of activity as we focus on securing written agreements. We are hopeful of reaching a solution soon and remain ready to restart exports quickly.
Jon Harris Chief Executive Officer
27 August 2025
Financial review
Key financial highlights
Gulf Keystone continued to generate material free cash flow in the first half of 2025, supported by increased production and realised prices, capital discipline and cost control. The strong financial performance funded the payment of a $25 million interim dividend to shareholders while maintaining the Company’s robust, debt-free balance sheet. With production having returned towards full well capacity following the temporary July shut-in and a robust cash balance, the Board has approved the declaration of an additional $25 million interim dividend. Looking ahead, we remain focused on maintaining capital and cost discipline to drive free cash flow from local sales as we work towards the restart of exports.
Adjusted EBITDA
Adjusted EBITDA increased 13% to $41.1 million in H1 2025 (H1 2024: $36.4 million) as higher production, stronger realised prices and lower other G&A expenses more than offset the increase in operating costs and share option expense.
Gross average production increased 12% to 44,100 bopd in H1 2025 (H1 2024: 39,252 bopd) reflecting consistently robust demand from a more established local sales market and good reservoir performance.
H1 2025 revenue increased 17% to $83.1 million (H1 2024: $71.2 million) as strong production volumes were complemented by a 6% increase in the average realised price during the period to $27.8/bbl (H1 2024: $26.3/bbl). Realised prices have averaged around $27-$28/bbl since June.
The Company continued to carefully manage its cost base in the first half of 2025 while safely maintaining the production capacity of the Shaikan Field. Gross operating costs per barrel of $4.2/bbl were flat relative to the prior period (H1 2024: $4.2/bbl), with the decrease from the 2024 average of $4.4/bbl primarily reflecting higher production. Operating costs in the first half of 2025 increased by 13% to $26.9 million (H1 2024: $23.9 million), principally reflecting higher production and well service costs to bring two wells back online.
Other G&A expenses decreased 15% to $4.6 million in H1 2025 (H1 2024: $5.4 million), primarily reflecting the absence of one-off retention awards accrued for in 2024 and paid in Q1 2025.
Share option expense was $4.4 million in H1 2025 (H1 2024: $2.1 million), reflecting the higher vesting in April 2025 of a greater number of awards associated with the 2022 LTIP relative to the vesting of the 2021 LTIP award in 2024.
(Loss)/profit after tax
The Company reported a loss after tax of $7.2 million in the first half of 2025 (H1 2024 profit after tax: $0.4 million), principally reflecting an $8.9 million charge to the expected credit loss (“ECL”) provision associated with the outstanding export sales receivables. The non-cash charge reflects a revision of the previously modelled ITP reopening date and updated commercial assumptions (see note 12 to the financial statements for further detail).
Cash flows
Revenue receipts, which reflect cash received in the period for the Company’s net entitlement of production sales, were $78.2 million, 19% higher year-on-year (H1 2024: $65.5 million) primarily driven by higher production and stronger realised prices.
Net capital expenditure in H1 2025 was $18.1 million (H1 2024: $7.8 million), as the Company progressed its disciplined work programme comprised of safety-critical upgrades at PF-2 and production optimisation expenditures. Net capex in the period included a non-cash charge of $5.4 million associated with the capitalisation of drilling inventory purchased and paid for in 2022 and 2023 that had previously been classified as held for sale following the wind down of the Company’s expansion programme in 2023 (see note 10 to the financial statements for further detail).
Free cash flow decreased 8% to $24.6 million in H1 2025 (H1 2024: $26.6 million), with the increase in production and realised prices offset by higher cash capex and outflows related to working capital and other items.
The Company continued to engage with the KRG regarding outstanding commercial matters including the payment mechanism of the overdue October 2022 to March 2023 invoices. The total owed to GKP amounts to $151.1 million (comprising of $120.4 million cost oil and $30.7 million profit oil net to GKP after capacity building payment (“CBP”) deduction). The combined total owed to GKP and Kalegran B.V. (a subsidiary of MOL Group, “MOL”) (who form together the ”Shaikan Contractor” or the ”Contractor”) amounts to $192.8 million (comprising $150.5 million cost oil and $42.3 million profit oil). The Company continues to expect to recover the invoices in full.
Gulf Keystone was pleased to pay an interim dividend of $25 million in H1 2025 (H1 2024 shareholder distributions: $21 million), according to the Company’s announced approach of semi-annual dividend reviews.
To satisfy the vesting of the 2022 LTIP award, purchases of the Company’s shares were made by the Employee Benefit Trust (“EBT”) in the period, amounting to $4.0 million. The vesting of LTIP awards in previous years has been satisfied by the issuance of shares.
GKP’s cash balance was $99.0 million as at 30 June 2025 (31 December 2024: $102.3 million) with no outstanding debt. The cash balance as at 27 August 2025 was $105.7 million.
The Group performed a cash flow and liquidity analysis, including consideration of the current uncertainty over the timing of the pipeline reopening and settlement of outstanding amounts due from the KRG, and the fact that the outlook for local sales volumes and prices have fluctuated in the past and may be difficult to predict. Based on this analysis, the Directors have a reasonable expectation that the Group has adequate resources to continue to operate for twelve months. Therefore, the going concern basis of accounting is used to prepare the financial statements.
Net entitlement
The Company shares Shaikan Field revenues with its partner, MOL, and the KRG, based on the terms of the Shaikan Production Sharing Contract (“Shaikan PSC”). GKP and MOL’s revenue entitlement is described as “Contractor entitlement” and GKP’s entitlement alone is described as “net”. GKP’s net entitlement includes its share of the recovery of the Company’s investment in the Shaikan Field, comprising capital expenditure and operating costs, through cost oil and a share of the profits through profit oil, less a CBP owed to the KRG.
The unrecovered cost oil balance (or ”Cost Pool”) and R-factor are used to calculate monthly cost oil and profit oil entitlements, respectively, owed to the Shaikan Contractor from crude oil sales. Unrecovered cost oil owed to the Shaikan Contractor increases with the addition of incurred expenditures deemed recoverable under the Shaikan PSC and is depleted on a cash basis as crude sales are paid.
As at 30 June 2025, there was $140.0 million of unrecovered cost oil for the Shaikan Contractor ($116.4 million net to GKP, including certain expenditures funded 100% by the Company), subject to a potential cost audit by the MNR. The R-factor, calculated as cumulative Contractor revenue receipts of $2,523 million divided by cumulative Contractor costs of $2,021 million, was 1.25, resulting in a share in the profit oil for the Contractor of 26.3%.
GKP’s net entitlement of total Shaikan Field sales was 36% in the first half of 2025. Looking ahead, the Company expects its net entitlement to remain at this level in the second half of 2025. Should exports restart, increases in realised price, cash receipt of payments for international sales and the potential implementation by the KRG of a repayment mechanism for past overdue invoices would accelerate the depletion of the Cost Pool upon receipt of payment. This would shorten the period that the Company’s net entitlement is expected to remain around 36% provided that investment in the Shaikan Field does not increase.
The outlook for the Company’s net entitlement assumes effective receipt of the cost oil portion of the outstanding October 2022 to March 2023 receivable balance due from the KRG to the Shaikan Contractor, which totalled $150.5 million as at 30 June 2025 (or on a net basis to GKP $120.4 million). Effective recovery of the receivable cost oil is expected to occur with regular payment from either local or export sales. Recovery is expected to effectively lead to a corresponding reduction in the net receivable balance due from the KRG. $30.7 million of profit oil (net to GKP after CBP deduction) is also expected to be fully repaid by the KRG as part of a repayment mechanism.
The Company now expects the receivable cost oil to begin to be effectively recovered through regular crude sales in the second half of 2025. This reflects the differing accounting recognition criteria of the Cost Pool and receivable balance, which under IFRS recognises revenue on an accrual basis in contrast to the reporting of the PSC which is prepared on a cash basis. It also reflects the Company’s ongoing negotiations with the MNR on outstanding commercial matters, which include the timing and mechanism for settling the outstanding receivables. See Note 12 to the financial statements for further detail.
Outlook
2025 net capital expenditure is expected to be $30-$35 million (previous guidance: $25-$30 million), primarily reflecting the incremental investment associated with water handling. We continue to expect c.$20 million of net capital expenditure on the PF-2 safety upgrades and $5-$10 million related to the production optimisation programme. Guidance excludes the H1 2025 non-cash charge of $5.4 million associated with the reclassification of drilling inventory, as described above.
The Company continues to expect operating costs of $50-$55 million and other G&A expenses below $10 million in 2025 as per previously communicated guidance.
The Company is pleased to declare, alongside the 2025 half year results, a $25 million interim dividend, increasing total dividends declared in 2025 to $50 million. The dividend is equivalent to 11.52 US cents per Common Share based on the Company's total issued share capital as at 27 August 2025 and will be paid on 30 September 2025, based on a record date of 12 September 2025 and ex-dividend date of 11 September 2025. Shareholders will have the option of being paid the dividend in either GBP or USD, with the default currency GBP.
Gabriel Papineau-Legris Chief Financial Officer
27 August 2025
Non-IFRS measures The Group uses certain measures to assess the financial performance of its business. Some of these measures are termed “non-IFRS measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with International Financial Reporting Standards (“IFRS”), or are calculated using financial measures that are not calculated in accordance with IFRS. These non‑IFRS measures include financial measures such as operating costs and non-financial measures such as gross average production. The Group uses such measures to measure and monitor operating performance and liquidity, in presentations to the Board and as a basis for strategic planning and forecasting. The Directors believe that these and similar measures are used widely by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-IFRS measures may not be comparable to other similarly titled measures used by other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Group’s operating results as reported under IFRS. An explanation of the relevance of each of the non-IFRS measures and a description of how they are calculated is set out below. A reconciliation of the non-IFRS measures to the most directly comparable measures calculated and presented in accordance with IFRS and a discussion of their limitations is also set out below, where applicable. The Group does not regard these non-IFRS measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with IFRS or those calculated using financial measures that are calculated in accordance with IFRS.
Gross operating costs per barrel Gross operating costs are divided by gross production to arrive at operating costs per barrel.
Adjusted EBITDA Adjusted EBITDA is a useful indicator of the Group’s profitability, which excludes the impact of costs attributable to tax expense)/(credit), finance costs, finance revenue, depreciation, amortisation, impairment of receivables and provision against inventory held for resale.
Net cash is a useful indicator of the Group’s indebtedness and financial flexibility because it indicates the level of cash and cash equivalents less cash borrowings within the Group’s business. Net cash is defined as cash and cash equivalents, less current and non-current borrowings and non-cash adjustments. Non-cash adjustments include unamortised arrangement fees and other adjustments.
Net Capital expenditure Net capital expenditure is the value of the Group’s additions to oil and gas assets excluding the change in value of the decommissioning asset or any asset impairment.
As detailed in Note 10 to the financial statements, the net capital expenditure in the period ended 30 June 2025, includes $5.4 million of items originally purchased and paid in 2022 and 2023, but were subsequently classed as impaired inventory held for sale. Upon delisting as held for sale these assets have been capitalised, as an oil and gas asset, but are a non-cash item in the current period. 2025 full year capex guidance of $30-$35 million excludes this non-cash item.
Free cash flow Free cash flow represents the Group’s cash flows, before any dividends and share buybacks including related fees.
Principal risks & uncertainties The Board determines and reviews the key risks for the Group on a regular basis. The principal risks, and how the Group seeks to mitigate them, for the second half of the year are largely consistent with those detailed in the management of principal risks and uncertainties section of the 2024 Annual Report and Accounts. The principal risks are listed below:
Responsibility statement The Directors confirm that to the best of their knowledge:
By order of the Board
Jon Harris Chief Executive Officer 27 August 2025 INDEPENDENT REVIEW REPORT TO GULF KEYSTONE PETROLEUM LIMITED Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2025 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority. We have been engaged by Gulf Keystone Petroleum Limited (the “company”) and its subsidiaries (the “Group”) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2025 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and the related explanatory notes that have been reviewed. Basis for conclusion We conducted our review in accordance with the International Standard on Review Engagements (UK) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” (“ISRE (UK) 2410”). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”. Conclusions relating to going concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the Group to cease to continue as a going concern. Responsibilities of directors The directors are responsible for preparing the half-yearly financial report in accordance with the UK adopted International Accounting Standard 34 “Interim Financial Reporting”, the Bermuda Companies Act 1981 and Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
BDO LLP Chartered Accountants London, UK 27 August 2025 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Condensed consolidated income statement For the six months ended 30 June 2025
Condensed consolidated statement of comprehensive income For the six months ended 30 June 2025
Condensed consolidated balance sheet As at 30 June 2025
Condensed consolidated statement of changes in equity For the six months ended 30 June 2025
Condensed consolidated cash flow statement for the six months ended 30 June 2025
Notes to the consolidated financial statements 1. General information Gulf Keystone Petroleum Limited (the “Company”) is domiciled and incorporated in Bermuda (registered address: c/o Carey Olsen Services Bermuda Limited, 5th Floor, Rosebank Centre, 11 Bermudiana Road, Pembroke, HM08 Bermuda); together with its subsidiaries it forms the “Group”. On 25 March 2014, the Company’s common shares were admitted, with a standard listing, to the Official List of the United Kingdom Listing Authority (“UKLA”) and to trading on the London Stock Exchange’s Main Market for listed securities. On 29 July 2024, new Listing Rules came into effect for the London Stock Exchange. The former categories for Main Market listed companies of Premium and Standard Listed were ceased (GKP being a Standard Listed company up until this point). From that date, GKP moved to the Equity Shares – Transition category. The Company serves as the parent company for the Group, which is engaged in oil and gas exploration, development and production, operating in the Kurdistan Region of Iraq. 2. Summary of material accounting policies These interim financial statements should be read in conjunction with the audited financial statements contained in the Annual Report and Accounts for the year ended 31 December 2024. The Annual Report and Accounts of the Group were prepared in accordance with United Kingdom adopted International Accounting Standards (“IAS”). The condensed set of financial statements included in this half yearly financial report have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ and the Disclosure and Transparency Rules (“DTR”) of the Financial Conduct Authority (“FCA”) in the United Kingdom as applicable to interim financial reporting. The condensed set of financial statements included in this half yearly financial report have been prepared on a going concern basis as the Directors consider that the Group has adequate resources to continue operating for the foreseeable future. The accounting policies adopted in the 2025 half-yearly financial report are the same as those adopted in the 2024 Annual Report and Accounts, other than the implementation of new International Financial Reporting Standards (“IFRS”) reporting standards. The financial information included herein for the year ended 31 December 2024 does not constitute the Group’s financial statements for that year but is derived from those Accounts. The auditor’s report on those Accounts was unqualified and did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter. Adoption of new and revised accounting standards As of 1 January 2025, a number of accounting standard amendments and interpretations became effective. The adoption of these amendments and interpretations has not had a material impact on the financial statements of the Group for the six months ended 30 June 2025. Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chief Executive Officer’s review and the Principal risks and uncertainties. The financial position of the Group at the period end and its cash flows and liquidity position are included in the Financial review. As at 27 August 2025 the Group had $105.7 million of cash and no debt. The Group continues to closely monitor and manage its liquidity. Cash forecasts are regularly produced and sensitivities are run for different scenarios including, but not limited to, changes in sales volumes, commodity price fluctuations, timing of export pipeline restart, delays to revenue receipts and cost optimisations. The Group remains focused on taking appropriate actions to preserve its liquidity position. The Group’s liquidity position has remained stable up to the date of this report. Although local sales were impacted by the precautionary shut-in of the Shaikan field from mid-July due to drone attacks at a number of oil fields in the vicinity of Shaikan operations, demand this year has been consistently strong. This enabled production to remain within the 2025 guidance range. Following the re-start of operations earlier this month, production has since returned to similar levels as before the shut-in. The Group continues to execute a disciplined work programme, with careful management of investment with a focus on production optimisation initiatives and well maintenance to offset natural field decline. Nonetheless, the Group is aware there could be a potential decline in local sales, and potential delays in Kurdistan Regional Government (“KRG”) revenue receipts once the Iraq-Türkiye pipeline (“ITP”) has been reopened. The key uncertainties in the current environment are summarised below:
The Directors believe an agreement will ultimately be reached to reopen the ITP, and reasonably expect that overdue balances will be paid, and that receipts from the KRG will return to a more regular basis. However, a reduction in local sales or reopening of the pipeline with a deferral of revenue receipts could result in liquidity pressures within the 12-month going concern period. The Directors have considered sensitivities, including local sales volumes and potential delays in KRG revenue receipts once the ITP reopens, to assess the impact on the Group’s liquidity position and believe sufficient mitigating actions are available to withstand such impacts within the 12-month going concern period. Specifically, the Directors considered stress tests that included no further local sales that could arise from constrained local demand or a prolonged disruption to operations, delayed KRG revenue receipts once the ITP reopens and confirmed that cost reduction opportunities exist to ensure that the Group can continue to discharge its liabilities for a period of at least 12 months. As explained in note 13, although the Group has recognised current liabilities of around $84 million payable to the KRG, it does not expect these will be cash settled. Overall, the Group’s forecasts which include the $25 million dividend declared on 27 August 2025, and taking into account the applicable risks, stress test scenarios and potential mitigating actions, show that it has sufficient financial resources for the 12 months from the date of approval of these interim financial statements. Based on the analysis performed, the Directors have a reasonable expectation that the Group has adequate resources to continue to operate for the foreseeable future. Thus, the going concern basis of accounting is used to prepare these interim financial statements. Critical accounting judgements and key sources of estimation uncertainty In the application of the accounting policies described above, the Group is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods. Critical judgements in applying the Group’s accounting policies The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in financial statements Production sharing contract entitlement: Revenue, trade receivables and capacity building payments The recognition of revenue, particularly the recognition of revenue from pipeline exports, is considered to be a key accounting judgement. The Group began commercial production from the Shaikan Field in July 2013 and historically made sales to both the domestic and export markets. The Group considers that revenue can be reliably measured as it passes the delivery point into the export pipeline or truck, in the period all revenue was to the local market via trucking. The critical accounting judgement applied in preparing the financial statements is that it is appropriate to continue to recognise trade receivables due from the KRG for deliveries from 1 October 2022 to 25 March 2023 based on an alternative proposed pricing mechanism, notwithstanding that there is no signed lifting agreement for that period and the pricing mechanism has not yet been agreed. In making this judgement, consideration was given to the fact that the Group received payment for September 2022 deliveries at an amount that was consistent with the proposed pricing terms; no further receipts for the period of pipeline exports from 1 October 2022 to 25 March 2023 have been received. No adjustments were made in the period in respect of the above as revenue was earned via local sales, with no agreement yet reached in respect of the export period mentioned above. Any future agreements between the Group and the KRG might change the amounts of revenue recognised. During past production sharing contract (“PSC”) negotiations with the Ministry of Natural Resources (“MNR”), it was tentatively agreed that the Shaikan Contractor would provide the KRG a 20% carried working interest in the PSC. This would result in a reduction of GKP’s working interest from 80% to 61.5%. To compensate for such decrease, capacity building payments expense would be reduced to 20% of profit petroleum. While the PSC has not been formally amended, it was agreed that GKP would invoice the KRG for oil sales based on the proposed revised terms from October 2017. The financial statements reflect the proposed revised working interest of 61.5%. Relative to the PSC terms, the proposed revised invoicing terms result in a decrease in both revenue and cost of sales and on a net basis are slightly positive for the Group. As part of earlier PSC negotiations, on 16 March 2016, GKP signed a bilateral agreement with the MNR (the “Bilateral Agreement”). The Bilateral Agreement included a reduction in the Group’s capacity building payment from 40% to 30% of profit petroleum. Subsequent to signing the Bilateral Agreement, further negotiations resulted in the capacity building payment rate being reduced from 30% to 20%, which has formed the basis for all oil sales invoices to date as noted above. Since PSC negotiations have not been finalised, GKP has included a non-cash payable for the difference between the capacity building rate of 20% and 30%, which is recognised in cost of sales and other payables. See note 13 for further details. The Group expects to confirm with the MNR whether to proceed with a formal amendment to the PSC to reflect current invoice terms. Material sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. Expected credit loss (“ECL”) The recoverability of receivables is a key accounting judgement. The difference between the nominal value of receivables and the expected value of receivables after allowing for counterparty default risk is the basis for the ECL. This ECL is offset against current and non-current receivable amounts as appropriate within the balance sheet with the change in the receivable balance during the period recognised in the income statement. In making this judgement, a weighted average has been applied to modelled receipt profiles, upon which a counterparty default allowance has been applied to derive the ECL. When modelling receipt profiles management have made a number of key estimates that are dependent upon uncertain future events including: the KRG’s deemed credit rating, the export pipeline reopening date, that the unrecovered cost pool is depleted on a cash basis as invoices for crude sales are paid and can be recovered through local or export sales, estimated timeline of cost oil and profit oil recoveries via commercial terms which have not yet been agreed with the KRG, future oil price including an estimate of both local and export prices, future oil production, a potential commercial settlement with the KRG which may include an agreement on the settlement mechanism of receivable balances on terms not yet agreed, and the probabilities allocated to various scenarios incorporating the aforementioned variables. Management has estimated the KRG’s probability of default based on credit default swap ratings (“CDS”) applicable to sovereign nations with similar characteristics to the KRG. Material sensitivities of the ECL to discrete variables are summarised in note 12. Decommissioning provision Decommissioning provisions are estimated based upon the obligations and costs to be incurred in accordance with the PSC at the end of field life in 2043. There is uncertainty in the decommissioning estimate due to factors including potential changes to the cost of activities, potential emergence of new techniques or changes to best practice. The basis for the updated estimate of the current value of obligations and costs at 30 June 2025 was prepared internally. An independent third-party review of the obligations and costs to decommission the asset was undertaken by ERC Equipoise as at 31 December 2023, which closely aligned with the internal estimate at the time; this estimate formed the basis of the updated estimate of the current value of obligations and costs as at 30 June 2025. Management have increased the decommissioning costs as at 30 June 2025, by estimated compound interest rates to future value in 2043 and reduced to present value by an estimated discount rate, there is also uncertainty regarding the inflation and discount rates used. Carrying value of producing assets In line with the Group’s accounting policy on impairment, management performs an impairment review of the Group’s oil and gas assets at least annually with reference to indicators as set out in IAS 36 ‘Impairment of Assets’. The Group assesses its group of assets, called a cash-generating unit (“CGU”), for impairment, if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Where indicators are present, management calculates the recoverable amount using key estimates such as future oil prices, estimated production volumes, the cost of development and production, post-tax discount rates that reflect the current market assessment of the time value of money and risks specific to the asset, commercial reserves and inflation. The key assumptions are subject to change based on market trends and economic conditions. Where the CGU’s recoverable amount is lower than the carrying amount, the CGU is considered impaired and is written down to its recoverable amount. The Group’s sole CGU at 30 June 2025 was the Shaikan Field with a carrying value, being Oil and Gas assets less capitalised decommissioning provision, of $324.9 million (31 December 2024: $348.9 million). The Group performed an impairment indicator evaluation as at 30 June 2025 and concluded that no impairment indicators arose. The key areas of estimation in assessing the potential impairment indicators are as follows:
3. Geographical information
The Chief Operating Decision Maker, as per the definition in IFRS 8 ‘Operating Segments’, is considered to be the Board of Directors. The Group operates in a single segment, that of oil and gas exploration, development and production, in a single geographical location, the Kurdistan Region of Iraq (“KRI”); 100% (31 December 2024: 100%) of the group’s non-current assets, excluding deferred tax assets and other financial assets, are located in the KRI. The financial information of the single segment is materially the same as set out in the condensed consolidated primary statements and the related notes.
4. Revenue
The Group accounting policy for revenue recognition is set out in its 2024 Annual Report, with revenue recognised upon crude oil passing the delivery points, either being entry into pipeline or delivered into trucks.
Throughout the period, GKP sold oil to local buyers at negotiated prices. The weighted average realised price achieved in the six-month period to 30 June 2025 was $27.8/bbl (H1 2024: $26.3/bbl; FY 2024: $26.8/bbl). Local buyers are contracted to pay GKP in advance of receipt of oil; such amounts are recognised as deferred income (see note 13) until a customer’s receipt of oil at the delivery point.
Information about major customers Customers making up greater than 10% of revenue are as follows:
5. Cost of Sales
Capacity building payments have been recorded in line with the MNR’s proposed pricing mechanism (see 2024 Annual Report); any difference between the proposed and final pricing mechanism will be reflected in future periods.
The Group accounting policy for depreciation of oil and gas assets is set out in its 2024 Annual Report. The increase in charge compared to the corresponding period in 2024 is principally derived from higher production in the six-month period ended 30 June 2025.
During the six-month period ended 30 June 2025, inventory formerly held for sale was reassessed to no longer be held for sale. Whilst held for sale this inventory was provided against, upon reassessment this provision has been reversed resulting in a gain of $2.6m in the six-month period ended 30 June 2025 (H1 2024: nil; FY 2024: nil). Following this reversal in the six-month period ended 30 June 2025, these items were capitalised as an addition to oil and gas assets (see note 10).
6. Other general and administrative expenses
7. Share option related expense
During the six-month period ending 30 June 2025, share options exercised relate to options vesting in the period under both the Deferred Bonus Plan and the Long Term Incentive Plan. Further details relating to these plans are set out in the 2024 Annual Report. The Company’s Employee Benefit Trust settled employee share option exercises from shares purchased during the period (see note 14).
8. Earnings per share
The calculation of the basic and diluted profit per share is based on the following data:
The Group followed the steps specified by IAS 33 ‘Earnings per share’ in determining whether outstanding share options are dilutive or anti-dilutive. Reconciliation of dilutive shares:
The weighted average number of ordinary shares in issue excludes shares held by Employee Benefit Trustee (“EBT”) of 0.2 million, (H1 2024: 0.2 million; FY 2024: 0.1 million) see note 14.
9. Reconciliation of loss from operations to net cash generated in operating activities
10. Property, plant and equipment
The additions to the Shaikan asset, amounting to $18.1 million during the six-month period ended 30 June 2025 (FY 2024: 18.3 million) included safety critical upgrades, the purchase of jet pumps as well as items purchased and paid for in 2022 and 2023 and subsequently classified as impaired inventory held for sale (see note 5). Upon delisting as held for sale, the items were capitalised as oil and gas assets at their unimpaired value of $5.4 million (2024: not applicable). The $0.5 million increase (2024: $0.7 million decrease) in decommissioning asset value relates to a $0.1 million increase in changes to inflation and discount rates (2024: $1.1 million decrease), in addition to an increase of $0.4 million relating to facilities work (2024: $0.4 million).
11. Inventories
In the six-month period ended 30 June 2025, management determined that inventory previously impaired and held for sale, was no longer being held for sale. Impairments of $2.6 million recognised within Cost of sales in prior periods were reversed in the six-month period ended 30 June 2025 (see note 5) and the unimpaired $5.4 million was included as an addition within Oil and gas assets as at 30 June 2025 (see note 10).
12. Trade and other receivables Non-current receivables
Current receivables
Reconciliation of trade receivables
Gross trade receivables relating to export sales of $171.0 million (2024: $171.0 million) are comprised of invoiced amounts due, based upon Kurdistan blend (“KBT”) pricing, from the KRG for crude oil sales totalling $158.8 million (2024: $158.8 million) related to October 2022 – March 2023 and a share of Shaikan amounts due from the KRG that GKP purchased from Kalegran B.V. (a subsidiary of MOL Group) (“MOL”) amounting to $12.2 million (2024: $12.2 million). Although no legal right of offset exists, the net balance due from the KRG comprises $158.8 million (2024: $158.8 million) included in trade receivables and $7.7 million (2024: $7.7 million) included within current liabilities (see note 13), resulting in a net receivable balance due from the KRG relating to crude oil sales of $151.1 million (2024: $151.1 million).
As detailed in the Summary of material accounting policies section within the 2024 Annual Report, entitlement has two components: cost oil, which is the mechanism by which the Company recovers its costs incurred, and profit oil, which is the mechanism through which profits are shared between the Company, its partner MOL and the KRG. The outstanding receivable balance of $151.1 million above, comprises $120.4 million cost oil and $30.7 million profit oil (2024: $151.1 million, $120.4 million and $30.7 million respectively) (net of Capacity Building Payment).
Impairment allowance relating to export sales (ECL) While GKP expects to recover the full value of the outstanding invoices and purchased revenue arrears, an ECL of $25.2 million (2024: $16.3 million) was provided against the trade receivables balance in accordance with IFRS 9 ‘Financial Instruments’. During the six-month period to 30 June 2025, an $8.9 million charge was recognised due to the increase in the ECL provision (H1 2024: $1.7 million credit; FY 2024: $8.2 million credit) arising from the delayed estimated pipeline reopening date and updated commercial assumptions applied compared to the prior year.
Negotiations are ongoing with the MNR on the wider commercial settlement, including the timing and mechanism for settling outstanding receivables. As a result of the ongoing discussions there is uncertainty on the balance of the unrecovered cost pool and therefore when the Contractor expects to start to recover the receivable balance which underpins the ECL estimate. As reported in the 2024 Annual Report, the Company had expected to start recovering cost oil balances within receivables in the first half of 2025, however the Company now expects the Contractor to effectively begin recovering the cost oil component of the trade receivables balance due from the KRG in the second half of 2025 via the settlement of invoices due from the point that the outstanding cost pool balance declines to a level at or below the trade receivable balance. It is expected that upon conclusion of commercial negotiations, cash received in line with current entitlements would be offset against the overdue trade receivables balance. This is incorporated into the ECL scenario modelling (see Material sources of estimation uncertainty section included above). Following the export pipeline reopening the remaining overdue trade receivables are expected to be recovered from the KRG including both the outstanding cost oil balance at that time and the full profit oil balance referenced above.
The outstanding sales invoices from October 2022 – March 2023 receivable have been recognised based on the MNR’s proposed pricing mechanism, which GKP has not accepted (see Critical accounting judgements and key sources of estimation uncertainty section included above)).
ECL sensitivities Considering the variables listed within the Summary of material accounting policies, the only variables with a significant impact upon the profit before tax, when varied reasonably, are the estimation of the KRG's credit rating for which no official market data exists, the estimated date of the re-opening of the ITP and the probability of reaching a commercial settlement.
For the purpose of GKP’s ECL calculation, the KRG's deemed CDS was estimated to be 4.43%. An increase of the CDS of 2% would increase the ECL provision by $7.4 million; conversely a decrease of the CDS by 2% would decrease the ECL provision by $7.6 million. Doubling or halving the probability of the modelled commercial settlement, in which the receivables are recovered via future production would cause the ECL provision to increase by $6.7 million or decrease by $3.2m respectively. GKP estimates that re-opening of ITP will occur in August 2026, should this be delayed by 12 months there would be a $6.3 million increase in the ECL provision.
All other variables listed within the Summary of material accounting policies, when individually reasonably varied do not have a material impact upon ECL valuation.
13. Trade and other payables
Current liabilities
Trade payables and accrued expenditures principally comprise amounts outstanding for trade purchases and ongoing costs; the Directors consider that carrying amounts approximate fair value. Accrued expenditures have decreased due to payment of operational invoices and other expenditure which became due in the six-month period ended 30 June 2025, having been accrued at 2024 year end.
Amounts due to the KRG not expected to be cash settled of $83.7 million (2024: $80.9 million) include:
Deferred income
At 30 June 2025, deferred income of $0.8 million (2024: $0.7 million) relates to cash advances paid by local oil buyers in advance of lifting oil (see note 4).
Non-current liabilities
14. Share capital
During the six-month period ended 30 June 2025, the Company’s EBT purchased 1.6 million shares of the Company for future satisfaction of employee share options for a total consideration of $4.0 million that originated from the Company. Subsequently 1.4 million of these shares, with a value of $3.5 million, were used to satisfy exercised employee share options. At period end 0.2 million shares, with a value of $0.5 million, were retained within the EBT.
15. Contingent liabilities
During the six-month period ended 30 June 2025, the Company has continued negotiations with the MNR around a number of outstanding commercial matters (including the sale of test production oil mentioned below), with the aim of agreeing a formal amendment to the PSC to reflect current invoicing terms. The Group has a contingent liability of $27.3 million (31 December 2024: $27.3 million) in relation to the proceeds from the sale of test production oil prior to the approval of the Shaikan Field Development Plan (“FDP”) in June 2013. If a cash outflow to the MNR were required in the future, this would result in a corresponding increase to the unrecovered cost pool as the test production revenue is recorded as a reduction of the cost pool by $34 million gross to the Contractor ($27.3 million net to GKP) in the Group’s cost Recovery submissions to the MNR.
The above negotiations may lead to a revision to the unrecovered cost pool impacting future revenues, the settlement of previously unrecognised assets and liabilities, netting of existing receivable and payable balances, or require material adjustments to such balances as they are currently recorded. Due to the uncertain and wide range of potential financial outcomes that cannot presently be reliably estimated, no provision for such asset or liability has been recognised within the financial statements.
16. Subsequent Events
On 26 August 2025, the Group entered into a contractual agreement to install water handling facilities at PF-2 which are expected to increase future gross production over the anticipated field baseline. The costs during construction phase are estimated at approximately $12 million net to GKP in the period up to the anticipated commissioning at the beginning of 2027. Once the water handling facilities have been commissioned, they will be operated under a lease agreement and expected to generate positive cash flows thereafter. The financial effect of this commitment will be reflected in future periods. No adjustment has been made to the 30 June 2025 financial statements. On 27 August 2025, the Company declared an interim dividend of $25 million.
GLOSSARY (See also the glossary in the 2024 Annual Report and Accounts)
Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
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| ISIN: | BMG4209G2077 |
| Category Code: | MSCM |
| TIDM: | GKP |
| LEI Code: | 213800QTAQOSSTNTPO15 |
| Sequence No.: | 400081 |
| EQS News ID: | 2189714 |
| End of Announcement | EQS News Service |
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