Gulf Keystone Petroleum (GKP) H1 2024 earnings summary

Executive summary

• Returned to profitability and free cash flow generation in H1 2024, driven by robust local sales, cost discipline, and no lost time incidents for over 590 days.

• Gross average production reached 39,252 bopd in H1 2024, with YTD average at approximately 41,400 bopd and strong local demand.

• Distributed $25 million to shareholders via dividends and buybacks year-to-date, supported by a strong cash balance of $98 million as of August 28, 2024.

• Engaged with government stakeholders to pursue a restart of Kurdistan exports, which could unlock significant value and recover over $150 million in outstanding receivables.

• Focus remains on maximizing value from local sales, optimizing production, and maintaining capital flexibility.

Financial highlights

• Adjusted EBITDA rose 6% year-over-year to $36.4 million, driven by higher production and cost control.

• Free cash flow reached $26.6 million in H1 2024, reversing a $9.9 million outflow in H1 2023.

• Revenue for H1 2024 was $71.2 million, down from $79.6 million in H1 2023, reflecting lower realized prices despite higher volumes.

• Gross OpEx per barrel fell 25% year-on-year to $4.2, and other G&A dropped to $5.4 million.

• Realized local sales price averaged $26.3 per barrel, nearly $60 below Brent, reflecting a 49% price reduction from export levels.

Outlook and guidance

• Local sales demand expected to remain robust in the near term, but longer-term market dynamics are uncertain; production guidance remains suspended.

• Planned safety-critical upgrades in November 2024 will require a 3-week shutdown of PF-1, impacting gross production by ~26,000 bopd and over $5 million in lost sales revenue.

• 2024 net capex guidance remains at ~$20 million, with costs weighted to H2 due to scheduled maintenance.

• Average monthly aggregate net capex, operating costs, and G&A now expected at ~$7 million for 2024.

• Committed to further shareholder returns, subject to liquidity and transition to export sales.