With the oil price crash dominating its first half, Gulf Keystone Petroleum (GKP) cut operating costs and maintained a net cash position despite the major loss of revenue. The long-running delays in getting paid by the Kurdistan authority for production have also continued, with recent months’ payment coming through but $73m (£55m) due from November to February still outstanding.
The Kurdistan Regional Government (KRG) has said it would catch up on the payments once oil gets above $50 per barrel (bbl). Gulf Keystone has booked a $13m expected credit loss on the payment, although said it should be paid eventually.
Despite earnings slipping into the red, the first half was a success operationally. Gross production at the 80-per-cent-owned Shaikan field was 36,272 barrels of oil per day (bopd), out to September 1, and guidance for the year has been set at 35,000-36,000bopd. First-half oil production was up more than a quarter on the first half of 2019, and gross operating costs were down a third to $2.60/bbl. This was not enough to overcome the realised oil price tumbling 57 per cent to $19/bbl.
Gulf Keystone has now spent $2.7m to give itself a price floor of $35/bbl for 70 per cent of its production in the second half as part of a hedging programme.
It was not just lower prices that hit the company - the plan was to bring Shaikan up to 55,000bopd before the pandemic saw work suspended in March.
Consensus forecasts are for cash profits to slide to $28m this year, from $122m in 2019.
| GULF KEYSTONE PETROLEUM (GKP) | ||||
| ORD PRICE: | 82p | MARKET VALUE: | £ 172m | |
| TOUCH: | 82-83p | 12-MONTH HIGH: | 247p | LOW: 47p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | NA | |
| NET ASSET VALUE: | 222¢ | NET CASH: | $39m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢)* |
| 2019 | 95.6 | 24.2 | 10.6 | 14.7 |
| 2020 | 49.9 | -32.6 | -15.6 | nil |
| % change | -48 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.34 | ||||
