9th Jul 2015 08:26
LONDON (Alliance News) - Gulf Keystone Petroleum Ltd Thursday said the five-week suspension of production at the beginning of the year will impact its full year guidance but said it has also received further payments from the Iraqi government as it continues to try to establish a regular payment cycle for the export of its crude oil.
The oil and gas producer operating in the Kurdistan region of Iraq said production from its Shaikan field facilities remains at a "stable rate", but said it has adjusted its production guidance "to take into account potential offtake and market constraints."
Back in April, Gulf Keystone said it was aiming to maintain an average of 36,000 barrels of oil per day in 2015, but said it aimed to reach a stable 40,000 barrels per day during the year.
On Thursday, the company said it now expects the daily production average for the full year to be between 30,000 to 34,000 barrels of oil per day, due to the five-week suspension of production in the first quarter of 2015 which was "caused by adverse market conditions".
In February, Gulf Keystone said it had temporarily suspended exporting its crude oil from the Shaikan project until it could agree a more "stable payment cycle" with the Kurdistan regional government, as it continued to try to recover money owed to the company, but production resumed in March after it secured a USD20.8 million prepayment for its crude.
On Thursday, Gulf Keystone said it received USD3.9 million last week and an additional USD5.4 million for its crude oil exported in June.
As of July 8, Gulf Keystone reported a cash balance of USD72.1 million and said it expects this to increase as further payments are received from the Kurdistan government.
"As we work towards our primary objective of establishing a regular payment cycle for crude oil sales from the Shaikan field, today's confirmation of a further payment of USD6.7 million gross represents another important development for Gulf Keystone's financial position," said Chief executive Jon Ferrier.
Despite the fall in full-year guidance, the company said the Shaikan field has been producing 38,000 barrels of oil per day over the last two months and also reached a "record" daily level of 44,600 barrels per day on June 21.
Gulf Keystone is expecting production to remain between 36,000 to 40,000 barrels of oil per day for the rest of 2015.
In addition, the company said it plans to commence trucking Shaikan crude 120 kilometres to Fyshkhabour on the Turkish border where it will be injected into the export pipeline to Ceyhan.
"Once injection into the pipeline at Fyshkhabour commences and a payment mechanism for this production is established with the Kurdistan Regional Government's Ministry of Natural Resources, Shaikan crude will be sold as part of the internationally traded blend and higher netback prices should result," said the company.
Gulf Keystone is also holding its annual general meeting later Thursday.
Gulf Keystone shares were up 4.1% to 33.82 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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