Not so long ago, few would have expected Gulf Keystone Petroleum (GKP) to be able to pay a dividend. But, less than three years after a painful debt-for-equity swap almost completely wiped out shareholders, the Iraqi Kurdistan-based group has recovered so strongly that capital returns are now back on the agenda.
Full-year results for 2018 display the turnaround in action. Average daily production of 31,563 barrels of oil (bopd) dipped year on year, but came in above guidance and combined with higher sales prices to more than triple operating profits to $78.2m (£59.4m). Meanwhile, revenue payments from the KRG jumped 70 per cent to $225m, materially boosting cash flow and increasing Gulf’s total cash position by $135m to $296m.
Together with a refinanced bond – which allows the group to take on up to $200m of additional debt – Gulf now has a solid base for its long-overdue Shaikan investment programme. Capital expenditure came in at just $35.7m last year, but will step up to $130m-$150m in 2019 in a bid to increase near-term production to 55,000 bopd.
But in another sign of financial and operational stability, that should still leave enough for a maiden distribution of $25m, which is subject to a vote at the annual general meeting in June. Should that ordinary dividend be approved, shareholders have been promised a $25m supplemental award alongside the half-year results, which equates to a yield of 6 per cent.
On average, analysts expect earnings of 27¢ a share in 2019.
| GULF KEYSTONE PETROLEUM (GKP) | ||||
| ORD PRICE: | 270p | MARKET VALUE: | £ 619m | |
| TOUCH: | 269-270p | 12-MONTH HIGH: | 304p | LOW: 128p |
| DIVIDEND YIELD: | 3.1%* | PE RATIO: | 10 | |
| NET ASSET VALUE: | 241¢ | NET CASH: | $191m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 38.6 | -246 | -28.5 | nil |
| 2015 | 86.2 | -213 | -2,284 | nil |
| 2016 | 194 | -17.3 | -30.8 | nil |
| 2017 | 172 | 14.1 | 6.2 | nil |
| 2018 | 251 | 79.7 | 34.8 | 10.9* |
| % change | +45 | +467 | +466 | - |
| Ex-div: | tba | |||
| Payment: | tba | |||
| *Equivalent to $25m payment, subject to approval at June's AGM £1=$1.32 | ||||
