We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gulf Keystone Petroleum Ltd | LSE:GKP | London | Ordinary Share | BMG4209G2077 | COM SHS USD1.00 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -6.10 | -4.29% | 136.00 | 135.60 | 136.00 | 140.70 | 135.10 | 139.20 | 1,133,140 | 14:24:38 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil And Gas Field Expl Svcs | 123.51M | -11.5M | -0.0517 | -26.38 | 303.41M |
Hot Features
Premium
TIDMGKP
RNS Number : 5372S
Gulf Keystone Petroleum Ltd
13 September 2010
Not for release, publication or distribution in or into the United States or
jurisdictions other than the United Kingdom and Bermuda where to do so would
constitute a contravention of the relevant laws of such jurisdiction.
13 September 2010
Gulf Keystone Petroleum Ltd. (AIM: GKP)
("Gulf Keystone" or "the Company")
Interim Results for the six months ended 30 June 2010
HIGHLIGHTS
Financial Summary
· Loss after tax $3.1 million (1H09: $5.6 million)
· Loss per share $0.01 (1H09: $0.01)
· Cash of $161.7 million at 30 June 2010 (1H09: $16.7 million)
Operational Summary - First Half
Kurdistan
+--+----------------------------------------------------------------+
| ·| Significant increase in gross oil in place numbers for the |
| | Shaikan discovery with a range of 1.9 (P90) to 7.4 (P10) |
| | billion barrels, following independent evaluation by Dynamic |
| | Global Advisers |
+--+----------------------------------------------------------------+
| ·| Oil discovery announced on Bijeel-1 with flow rates of up to |
| | 3,200 barrels of oil per day ("bopd") |
+--+----------------------------------------------------------------+
| ·| 3D seismic acquisition commenced on the Shaikan structure |
+--+----------------------------------------------------------------+
Algeria
+--+----------------------------------------------------------------+
| ·| Settlement agreement negotiated with BG North Sea Holdings |
| | Limited ("BG") for the immediate stay of arbitration between |
| | the parties and the proposed withdrawal of the Company from |
| | the Hassi Ba Hamou Permit in consideration for a net cash |
| | payment of $10.0 million from BG, subject to the necessary |
| | Algerian approvals |
+--+----------------------------------------------------------------+
| ·| During May 2010 Sonatrach exercised in its favour a guarantee |
| | of $15.6 million in relation to the Ben Guecha Permit Blocks |
| | 108 and 128b as the exploration commitments were not satisfied |
+--+----------------------------------------------------------------+
Corporate Developments - First Half
+--+----------------------------------------------------------------+
| ·| 173.2 million new common shares issued to existing and new |
| | institutional investors raising gross proceeds of $189.0 |
| | million |
+--+----------------------------------------------------------------+
| ·| 8.2 million new common shares issued as part of the Standby |
| | Equity Distribution Agreement ("SEDA") with YA Global Master |
| | SPV Ltd, an investment fund managed by Yorkville Advisors, LLC |
| | raising proceeds of $10.8 million |
+--+----------------------------------------------------------------+
| ·| Reorganisation of the Company's interests held through its |
| | subsidiary, Gulf Keystone Petroleum International Limited |
| | ("GKPI"), following the exit of Etamic |
+--+----------------------------------------------------------------+
| ·| Establishment of the Employee Benefit Trust and grant there |
| | under of i) Long Term Incentive Performance Share Options ii) |
| | Executive Bonus, announced on 7 June 2010 and 25 June 2010 |
+--+----------------------------------------------------------------+
| ·| Following the departure of Mr Jeremy Asher the Company is |
| | actively seeking an additional Non-Executive Director |
+--+----------------------------------------------------------------+
Operational Summary - Post Period End
Kurdistan
+--+-+--------------------------------------------------------------+
| ·| Additional testing of the Shaikan-1 Jurassic commenced on 12 |
| | July 2010: |
+--+----------------------------------------------------------------+
| | - | the Butmah section resulted in flow rates of 4,650 bopd |
+--+-+--------------------------------------------------------------+
| | - | the Mus section resulted in flow rates of 1,250 bopd - a ten |
| | | fold increase over the 128 bopd measured during the initial |
| | | test in 2009 |
+--+-+--------------------------------------------------------------+
| | - | Sargelu completed for long term production test |
+--+-+--------------------------------------------------------------+
| ·| Sheikh Adi-1 exploration well spudded on 4 August 2010 |
+--+----------------------------------------------------------------+
| ·| Shaikan-3 appraisal well spudded on 2 September 2010 |
+--+----------------------------------------------------------------+
| ·| Production facilities undergoing commissioning |
+--+----------------------------------------------------------------+
| ·| Sidetrack of Bijeel-1 completed and testing underway |
+--+----------------------------------------------------------------+
| ·| 3D seismic acquisition on the Shaikan structure 74% complete |
+--+-+--------------------------------------------------------------+
Todd Kozel, Executive Chairman & Chief Executive Officer of Gulf Keystone said:
"2010 has seen an unprecedented level of activity for Gulf Keystone. Our
extensive drilling programme is aimed at proving up last year's immense
discovery, and we look forward to the first test production from Shaikan-1 in
the coming weeks.
Gulf Keystone's outstanding progress could not have been achieved without the
commitment of our staff, industry partners, the Kurdistan Regional Government
and our shareholders, and I thank them all for their efforts and look forward to
further success in the remainder of 2010."
Enquiries:
+--------------------------------+--------------------+
| Gulf Keystone Petroleum: | +44 (0)20 7514 |
| | 1400 |
+--------------------------------+--------------------+
| Todd Kozel, Executive Chairman | |
+--------------------------------+--------------------+
| Ewen Ainsworth, Chief | |
| Financial Officer | |
+--------------------------------+--------------------+
| | |
+--------------------------------+--------------------+
| Strand Hanson Limited | +44 (0)20 7409 |
| | 3494 |
+--------------------------------+--------------------+
| Simon Raggett / Rory Murphy / | |
| James Harris | |
+--------------------------------+--------------------+
| | |
+--------------------------------+--------------------+
| Mirabaud Securities LLP | +44 (0)20 7878 |
| | 3362 |
+--------------------------------+--------------------+
| Peter Krens | |
+--------------------------------+--------------------+
| | |
+--------------------------------+--------------------+
| Brunswick Group LLP | +44 (0)20 7404 |
| | 5959 |
+--------------------------------+--------------------+
| Patrick Handley / Pip Green | |
+--------------------------------+--------------------+
or visit: www.gulfkeystone.com
Notes to Editors:
+---+--------------------------------------------------------------+
| ? | Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent |
| | oil and gas exploration company focused on exploration in |
| | the Kurdistan region of Northern Iraq. |
+---+--------------------------------------------------------------+
| ? | Gulf Keystone Petroleum International (GKPI) holds |
| | Production Sharing Contracts for four exploration blocks in |
| | Kurdistan. |
+---+--------------------------------------------------------------+
| ? | The Company's shares have traded on the AIM market since |
| | listing on 8 Sept 2004. |
+---+--------------------------------------------------------------+
| ? | Gulf Keystone Petroleum Limited is registered in Hamilton, |
| | Bermuda with offices in Erbil, Kurdistan, Algiers, Algeria |
| | and London, UK. |
+---+--------------------------------------------------------------+
| ? | Oil initially-in-place is that quantity of petroleum that is |
| | estimated, as of a given date, to be contained in known |
| | accumulations prior to production. The range of uncertainty |
| | of the oil-in-place volumes is represented by a probability |
| | distribution with a low and high provided: P90 represents at |
| | least a 90% probability (high) that the quantities |
| | determined to be in place will equal or exceed the low |
| | estimate and P10 represents at least a 10% probability (low) |
| | that the quantities determined to be in place will equal or |
| | exceed the high estimate. |
+---+--------------------------------------------------------------+
Not for release, publication or distribution, directly or indirectly, in or into
the United States or jurisdictions other than the United Kingdom and Bermuda
where to do so would constitute a contravention of the relevant laws of such
jurisdiction. This document (and the information contained herein) does not
contain or constitute an offer of securities for sale, or solicitation of an
offer to purchase securities, in the United States or jurisdictions other than
the United Kingdom and Bermuda where to do so would constitute a contravention
of the relevant laws of such jurisdiction. The securities referred to herein
have not been and will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered or sold in the United
States unless the securities are registered under the Securities Act, or an
exemption from the registration requirements of the Securities Act is available.
No public offering of the securities will be made in the United States
Executive Chairman and Chief Executive Officer's Statement
Gulf Keystone strives to be ahead of the pack, and the first six months of 2010
have seen us undertaking an unprecedented level of activity to successfully
maintain that position in Kurdistan. Operationally and financially we have made
significant progress positioning ourselves to exploit the upside of the
potentially vast resource we have discovered in Northern Iraq.
This time last year we had an exploration team in place in the region. Now we
employ close to 100 people, and our exploration team is supplemented by
appraisal and production teams, working as three cohesive units to implement our
strategy and prove up our resources. While we actively recruit from the local
talent pool, Gulf Keystone continues to attract top international experts, a
sign that we are not alone in recognising the potential of our assets.
Following the success of last year's exploration and discovery testing on
Shaikan, the majority of our recent efforts have been focussed on an extensive
drilling campaign aimed at increasing and providing greater certainty and
understanding of the extent of the resource. Full 3D seismic data collection
over the Shaikan structure is largely complete with the subsequent processing
and evaluation taking place well into 2011. There are currently two operated
drill rigs in place (Shaikan-3 and Sheikh Adi-1) with a third due to commence
operation on Shaikan-2 in the fourth quarter of 2010. We eagerly await
commencement of the extended production test on the Sargelu formation due in
September, with production to be sold to the local market. This is the
culmination of an intensive work programme involving tendering, procurement,
civil works, engineering and construction of production facilities.
The first six months of the year also saw preparatory work for Gulf Keystone's
first exploration well on the Sheikh Adi Block. The initial drilling campaign,
which is expected to take six months, commenced in August 2010. Full 3D seismic
data collection will be undertaken upon the arrival of the equipment from
Shaikan should the initial indications from Sheikh Adi prove encouraging.
Our partners have been progressing their campaigns. Initial exploration
activities conducted by MOL on the Bijeel structure in the Akri-Bijeel Block
have produced very encouraging results. We eagerly await the results of further
testing currently underway. Genel is evaluating data from Ber Bahr and we look
forward to reviewing their drilling plans.
Whilst we have focussed our efforts on exploring the massive potential of the
Kurdistan Region we also continue with our orderly exit from Algeria. Gulf
Keystone signed an agreement with BG North Sea Holdings Limited in early 2010
for our withdrawal from the Hassi Ba Hamou Permit. The Company also continues
to work on options with regard to Ferkane Permit Block 126a containing the
GKN/GKS oil fields.
For a small independent, sustaining this level of activity and delivering
results is an immense achievement and on behalf of the Company, I thank all our
staff for their extraordinary efforts and commitment.
None of this could be achieved without assistance from the Kurdistan Regional
Government ("KRG"), which in addition to being our host is now our strategic
partner, following the exit of Etamic as announced in March and finalised in
August. We continue to work closely with the KRG to ensure that the interests of
the Kurdistan Region of Iraq and its people are well served.
The support shown by our shareholders, both retail and institutional, has also
been instrumental to achieving our impressive progress. The successful
fundraising of $165 million in May provided the capital to substantially fund
our extensive drilling campaign through to the end of 2010 and early 2011. We
believe the significant amount raised was a vote of confidence from new and
existing investors in the high potential of our assets and is evidence of
management's ability to take the assets forward from their initial discovery.
TF Kozel
Executive Chairman
& Chief Executive Officer
Chief Operating Officer's Review
Kurdistan
On the heels of the giant oil field discovery in Gulf Keystone's-operated
Shaikan Block during the second half of 2009, our 2010 work program is one of
exploration and appraisal in Shaikan and exploration drilling in the Gulf
Keystone-operated Sheikh Adi Block immediately to the west of Shaikan and in the
MOL-operated Akri-Bijeel Block to the north east of Shaikan.
The Genel-operated Ber Bahr Block is currently expected to spud during the first
quarter of 2011.
Shaikan
The resounding success of the Shaikan-1 exploration and discovery well during
August and September of 2009 (aggregate well test rates from five zones in
excess of 20,000 barrels of oil equivalent per day ("boepd")) must, of course,
be followed by a comprehensive program of appraisal and further evaluation.
During the first half of 2010 the work program to properly appraise the Shaikan
discovery was initiated as follows:
· Full 3D seismic coverage of the Shaikan structure began in early April
with a targeted completion for the data acquisition phase of October 2010. Full
processing and evaluation of the acquired 3D seismic data will extend well into
2011.
· During the first half of 2010, in order to re-test additional Jurassic
age productive zones in the Shaikan-1 (the Butmah at 1,783 metres to 1,814
metres and the Mus at 1,627 metres to 1,667 metres) and complete the well in the
Sargelu formation, Gulf Keystone contracted a workover rig and all the
necessary support services. The workover rig has subsequently arrived and
successfully executed the mentioned re-tests and installed the Sargelu formation
completion equipment. Forward plans for the rig were to move slightly to the
north east and drill the shallow Shaikan-3 appraisal well through the Cretaceous
age intervals that were not adequately evaluated during the initial drilling of
Shaikan-1 due to lost circulation problems. Shaikan-3 spudded in early
September.
· The Jurassic age Sargelu formation (1,450 metres to 1,510 metres) which
was initially tested at 7,450 bopd through a limited and restrictive test
facility during the initial drilling of Shaikan-1 will be put on extended well
test to gain valuable reservoir performance and oil recovery data. Oil from
this test will be trucked to Erbil and sold into the domestic Kurdistan market.
Initial test production is now targeted to start in September 2010.
· In preparation for the extended production test of the Sargelu formation
a facility site was selected and site preparations were completed approximately
two kilometres south of the Shaikan-1 location. The construction of the
production facilities, storage tanks, production flowlines and truck loading
facilities were contracted for and commenced during the first half of 2010.
Both domestic construction, and the facilities and equipment being built in
Canada, are on schedule for a September 2010 start-up.
· Drilling locations were selected and constructed for the drilling of the
Shaikan-2 and Shaikan-4 deep appraisal wells. The Shaikan-2 location is nine
kilometres to the east of Shaikan-1 and Shaikan-4 is six kilometres to the west.
Even this 15 kilometre spread in exploration and appraisal well coverage only
accounts for about half the length of the potential Shaikan oil field.
Additional appraisal drilling will be necessary in 2011. Both appraisal wells
are designed to safely penetrate the Cretaceous age formations, the Jurassic
intervals as well as the high pressure Triassic formations that forced a halt to
the drilling of the Shaikan-1 discovery well. All casing and wellhead equipment
necessary for the drilling of these wells has been purchased.
· The Shaikan-2 well will be drilled first and is located on the flank of
the Shaikan structure in order to find the Jurassic-level oil water contact and
give us valuable data as well as the possibility of a regional water level that
would have significant upside oil volume implications for all four exploration
blocks in which Gulf Keystone has an interest. Shaikan-2 will be drilled by the
same drilling rig that drilled Shaikan-1. The initiation of drilling is
contingent on final testing of MOL's successful exploration well in the
Akri-Bijeel Block (GKPI working interest of 20%). Well spud is now expected in
late October 2010.
· The Shaikan-4 well will either be drilled following Shaikan-2 or a third
drilling rig is currently being considered. A further drilling rig would likely
result in a fourth quarter 2010 spud date for Shaikan-4.
Sheikh Adi
At the date of writing, the drilling rig is onsite and drilling operations were
initiated on 4 August 2010. The well is designed to penetrate and evaluate all
formations through the Triassic and is expected to take about six months to
drill (80% GKPI working interest).
Akri-Bijeel
The operator of the Akri-Bijeel Block, Kalegran (a subsidiary of the Hungarian
E&P company MOL) drilled a discovery well in the Bijeel structure during the
first half of 2010. The initial discovery zone tested at 3,200 bopd in March
2010. The presence of additional prospective oil intervals led to the need for
additional testing.
A series of subsurface problems necessitated that the well be sidetracked
through the prospective interval in order to safely conduct the needed testing
and evaluation program. Drilling of the sidetrack is complete and evaluation
activities are ongoing. When the rig is released it will move to the Shaikan-2
location.
The success of the first exploration well will be followed up by additional
exploration wells on the potentially much larger Bekhme and Bakrman structures
in the north east and north west corners (respectively) of the Akri-Bijeel
Block. At the very least, the presence of significant hydrocarbon volumes in
the Bijeel-1 structure serve to de-risk the exploration potential of the much
larger Bekhme structure immediately to the north.
Ber Bahr
Genel is continuing to evaluate seismic and geological data for the Ber Bahr
structure in advance of exploration drilling location selection and construction
with an anticipated spud date during 2011.
Algeria
In Algeria, our limited activities continue to focus on a full exit from our
involvement in both the small GKN/GKS oil fields in the Ferkane area of northern
Algeria and from the HBH/RM gas development operated by BG in central Algeria.
Summary
The first half of 2010 has been a time of preparation, both financially and
operationally, for the execution of an exploration and appraisal effort in
Kurdistan that is designed to prove up resources and add value as quickly and
efficiently as possible as a follow up to the Company's successful discovery
well at Shaikan. The results of the Shaikan-1 well and the subsequent MOL
discovery on Akri-Bijeel, not only open the door to the huge potential of those
individual discoveries but also carry major de-risking implications for all the
other exploration prospects in that area of Kurdistan.
JB Gerstenlauer
Chief Operating Officer
Finance Director's Financial Review
General and administrative expenses during the period were $2.7 million (1H09
$6.0 million). Adjusting for a foreign exchange gain of $5.6 million (1H09 $0.2
million), Algerian oil field operating costs of $nil (1H09 $0.6 million) and
share-based payment expense $3.0 million (1H09 $0.2 million) underlying costs
overall were flat.
Other losses of $0.2 million (1H09 $nil) relate to the change in the fair value
of the Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV
Ltd, which has been treated as a derivative financial instrument.
Interest revenue of $0.03 million (1H09 $0.6 million) declined due to reduced
cash balances and lower rates of interest.
Finance costs of $0.2 million (1H09 $0.1 million) relate to the interest charge
on the decommissioning provision and bank guarantee.
Taxation
The tax expense of $0.02 million (1H09 $0.01 million benefit) is related to UK
activities.
Profit after tax
The results for the first half of 2010 show a reduced loss after tax of $3.1
million (1H09 $5.6 million) reflecting the foreign exchange gain during the
period.
Issue of equity
Between January and May 2010, 8,179,645 new common shares were issued under the
SEDA at a weighted average price of GBP0.84 per share for a total value of $10.8
million.
On 10 March 2010 the Company announced a reorganisation of its assets in
Kurdistan. In order to meet the anticipated $52.0 million payment associated
with the Sheikh Adi and Ber Bahr PSC acquisitions and to fund the envisaged work
programme during the remainder of 2010 and into the second quarter of 2011, the
Company issued shares to existing and new institutional shareholders. On 25 May
2010 the Company placed 152.3 million new common shares of $0.01 each at a price
of GBP0.75 each, raising gross proceeds of $165.0 million.
On 15 March 2010 the Company placed 20,915,034 new common shares of $0.01 each
at a price of GBP0.765 each, raising gross proceeds of $24.0 million.
Cash flow
Net cash outflow from cash used in operations was $15.5 million (1H09 inflow of
$5.8 million).
Capital expenditure of $39.0 million (1H09 $29.4 million with expenditure also
in Algeria) relates mainly to exploration activities in the Kurdistan region of
Iraq.
The issue of new common shares during the period raised net proceeds of $192.1
million (1H09 $6.8 million).
Taking into account the net cash used in operations, capital expenditure and
proceeds from the issue of shares, the net cash inflow during the half year was
$137.6 million (1H09 outflow of $16.9 million).
Cash and cash equivalents at the end of the period were $161.7 million (1H09
$16.7 million). As at 6 September 2010 they were approximately $91.9 million.
Other and recent events
During May 2010 Sonatrach exercised a guarantee of $15.6 million in relation to
the Ben Guecha Permit Blocks 108 and 128b in Algeria as the exploration
commitments were not satisfied. This guarantee had been provided for from
existing cash resources prior to the $165.0 million share placing.
Gulf Keystone announced in February of this year an agreement with BG North Sea
Holdings Limited ("BG") for the proposed withdrawal of the Company from the
Hassi Ba Hamou ("HBH") Permit in consideration for a net cash payment of $10.0
million from BG. The agreement is subject to the conclusion of separate
withdrawal documentation which will require the approval of Sonatrach and the
necessary Algerian governmental authorities. On 23 August 2010 the parties to
the HBH permit executed an amendment to the production sharing contract
extending the expiry of the exploration period from 23 September 2010 until 23
September 2012.
During April Gulf Keystone upgraded its American Depository Receipt ("ADR")
programme in the United States and began trading on the prestigious OTCQX
International under the symbol "GFKSY", where each ADR represents 20 ordinary
shares listed on the AIM market under the symbol "GKP". US investment bank
Madison Williams and Company LLC acted as sponsor and Principal American Liaison
("PAL") for Gulf Keystone.
The Company established an Employee Benefit Trust and there under i) granted
Long Term Incentive Performance Share Options and awarded ii) an executive
bonus, all of which are detailed in an announcement on 7 June 2010 and 25 June
2010. Full details are also provided in the 2009 Annual Report and Accounts.
During August 2010 the Company paid $52.0 million to complete the reorganisation
of its interests in Kurdistan.
At the Annual General Meeting in early August approval was obtained to increase
the authorised share capital of the Company and to issue up to 900 million new
common shares of $0.01 each of which 676,215,161 are currently in issue.
Outlook
With the successful equity fundraising of $165.0 million in May 2010, Gulf
Keystone is now following through on its stated exploration and
appraisal activity. The scale of the operations on the ground reflects this
ambitious programme with the seismic crews active over Shaikan, the recent
spudding of both Sheikh Adi-1, the shallow Shaikan-3 and extended well test due
to commence from Shaikan-1. The eagerly awaited Shaikan-2 well location is
fully prepared for commencement of drilling currently planned for the fourth
quarter of 2010 and the Shaikan-4 well location largely complete. The pipeyard
is stocked with casing, wellheads and equipment. The office in Erbil has in
turn expanded to provide the technical and logistics support required.
It will take a few months to reach a steady oil rate from the testing of
Shaikan-1 as the production facilities are fully commissioned, personnel trained
and the testing programme executed. The first deliveries of test production for
sale are imminent and greatly anticipated and the associated revenues will
further bolster the Company's finances.
The Board, along with its shareholders, partners and the KRG await the results
of this extensive campaign which offers the potential for significant further
value creation.
KE Ainsworth
Finance Director
Condensed Consolidated Income Statement
for the six months ended 30 June 2010
+-------------------------------+-------+-----------+-----------+----------+
| |Notes | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | Unaudited | Unaudited | Audited |
+-------------------------------+-------+-----------+-----------+----------+
| | | $'000 | $'000 | $'000 |
+-------------------------------+-------+-----------+-----------+----------+
| | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Other operating expenses | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Impairment of intangible | | - | - | (57,418) |
| exploration assets | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Impairment of tangible oil | | - | - | (12,182) |
| and gas properties | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Impairment of inventories | | - | - | (4,343) |
+-------------------------------+-------+-----------+-----------+----------+
| General and administrative | | (2,714) | (6,000) | (21,180) |
| expenses | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Loss from operations | | (2,714) | (6,000) | (95,123) |
+-------------------------------+-------+-----------+-----------+----------+
| | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Other gains and losses | | (234) | - | (442) |
+-------------------------------+-------+-----------+-----------+----------+
| Interest revenue | | 27 | 558 | 318 |
+-------------------------------+-------+-----------+-----------+----------+
| Finance costs | | (153) | (139) | (1,027) |
+-------------------------------+-------+-----------+-----------+----------+
| Loss before tax | | (3,074) | (5,581) | (96,274) |
+-------------------------------+-------+-----------+-----------+----------+
| | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Tax (expense)/benefit | 4 | (20) | 12 | (28) |
+-------------------------------+-------+-----------+-----------+----------+
| Loss after tax | | (3,094) | (5,569) | (96,302) |
+-------------------------------+-------+-----------+-----------+----------+
| | | | | |
| | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Loss per share (cents) | | | | |
+-------------------------------+-------+-----------+-----------+----------+
| Basic | 5 | (0.57) | (1.48) | (22.80) |
+-------------------------------+-------+-----------+-----------+----------+
| Diluted | 5 | (0.57) | (1.48) | (22.80) |
+-------------------------------+-------+-----------+-----------+----------+
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2010
+-------------------------------+------+-----------+-----------+----------+
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | Unaudited | Unaudited | Audited |
+-------------------------------+------+-----------+-----------+----------+
| | | $'000 | $'000 | $'000 |
+-------------------------------+------+-----------+-----------+----------+
| | | | | |
+-------------------------------+------+-----------+-----------+----------+
| Loss for the period | | (3,094) | (5,569) | (96,302) |
+-------------------------------+------+-----------+-----------+----------+
| Foreign currency translation | | (26) | 6 | 27 |
| differences | | | | |
+-------------------------------+------+-----------+-----------+----------+
| Total comprehensive loss for | | (3,120) | (5,563) | (96,275) |
| the period | | | | |
+-------------------------------+------+-----------+-----------+----------+
Condensed Consolidated Balance Sheet
as at 30 June 2010
+--------------------------------+-------+-----------+-----------+-----------+
| | | 30 June | 30 June | 31 |
| |Notes | 2010 | 2009 | December |
| | | Unaudited | Unaudited | 2009 |
| | | | | Audited |
+--------------------------------+-------+-----------+-----------+-----------+
| | | $'000 | $'000 | $'000 |
+--------------------------------+-------+-----------+-----------+-----------+
| Non-current assets | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Intangible assets | 6 | 163,422 | 123,309 | 90,482 |
+--------------------------------+-------+-----------+-----------+-----------+
| Property, plant and equipment | 7 | 3,729 | 15,621 | 3,433 |
+--------------------------------+-------+-----------+-----------+-----------+
| Deferred tax asset | 4 | 1,078 | 19 | 960 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | 168,229 | 138,949 | 94,875 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Current assets | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Inventories | | 7,463 | 5,846 | 574 |
+--------------------------------+-------+-----------+-----------+-----------+
| Trade and other receivables | 8 | 14,028 | 1,382 | 2,214 |
+--------------------------------+-------+-----------+-----------+-----------+
| Cash and cash equivalents | | 161,708 | 16,722 | 19,156 |
+--------------------------------+-------+-----------+-----------+-----------+
| Derivative financial | | 340 | - | 574 |
| instruments | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| | | 183,539 | 23,950 | 22,518 |
+--------------------------------+-------+-----------+-----------+-----------+
| Total assets | | 351,768 | 162,899 | 117,393 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Current liabilities | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Trade and other payables | | 85,317 | 21,137 | 44,117 |
+--------------------------------+-------+-----------+-----------+-----------+
| Current tax liabilities | 4 | 255 | 7 | 524 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | 85,572 | 21,144 | 44,641 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Non-current liabilities | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Trade and other payables | | - | 14,857 | 113 |
+--------------------------------+-------+-----------+-----------+-----------+
| Provisions | | 4,641 | 2,985 | 3,545 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | 4,641 | 17,842 | 3,658 |
+--------------------------------+-------+-----------+-----------+-----------+
| Total liabilities | | 90,213 | 38,986 | 48,299 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Net assets | | 261,555 | 123,913 | 69,094 |
+--------------------------------+-------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Equity | | | | |
+--------------------------------+-------+-----------+-----------+-----------+
| Share capital | 9 | 5,807 | 3,071 | 3,985 |
+--------------------------------+-------+-----------+-----------+-----------+
| Share premium account | 9 | 430,175 | 211,443 | 239,813 |
+--------------------------------+-------+-----------+-----------+-----------+
| Share option reserve | | 15,142 | 5,136 | 11,745 |
+--------------------------------+-------+-----------+-----------+-----------+
| Exchange translation reserve | | (183) | (178) | (157) |
+--------------------------------+-------+-----------+-----------+-----------+
| Accumulated losses | | (189,386) | (95,559) | (186,292) |
+--------------------------------+-------+-----------+-----------+-----------+
| Total equity | | 261,555 | 123,913 | 69,094 |
+--------------------------------+-------+-----------+-----------+-----------+
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2010
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| | Attributable to equity holders of the Group |
+---------------------------+--------------------------------------------------------------------------------------+
| | Share | Share | Share | Exchange | Accumulated | Total |
| | capital | premium | option | translation | losses | equity |
| | | account | reserve | reserve | | |
+ +---------------------------+---------+---------+-------------+-------------+----------+
| | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Balance at 1 January 2009 | 2,765 | 204,919 | 4,890 | (184) | (89,990) | 122,400 |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Share-based payment | - | - | 246 | - | - | 246 |
| expense | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Share issue | 306 | 6,524 | - | - | - | 6,830 |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Foreign currency | - | - | - | 6 | - | 6 |
| translation differences | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Net loss for the period | - | - | - | - | (5,569) | (5,569) |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Balance at 30 June 2009 | 3,071 | 211,443 | 5,136 | (178) | (95,559) | 123,913 |
| (unaudited) | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Share-based payment | - | - | 6,115 | - | - | 6,115 |
| expense | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Deferred tax on | - | - | 494 | - | - | 494 |
| share-based payment | | | | | | |
| transactions | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Share issue | 914 | 28,370 | - | - | - | 29,284 |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Foreign currency | - | - | - | 21 | - | 21 |
| translation differences | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Net loss for the period | - | - | - | - | (90,733) | (90,733) |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Balance at 31 December | 3,985 | 239,813 | 11,745 | (157) | (186,292) | 69,094 |
| 2009 (audited) | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Share-based payment | - | - | 2,995 | - | - | 2,995 |
| expense | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Deferred tax on | - | - | 402 | - | - | 402 |
| share-based payment | | | | | | |
| transactions | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Share issue | 1,822 | 190,362 | - | - | - | 192,184 |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Foreign currency | - | - | - | (26) | - | (26) |
| translation differences | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Net loss for the period | - | - | - | - | (3,094) | (3,094) |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
| Balance at 30 June 2010 | 5,807 | 430,175 | 15,142 | (183) | (189,386) | 261,555 |
| (unaudited) | | | | | | |
+---------------------------+---------------------------+---------+---------+-------------+-------------+----------+
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2010
+----------------------------------+-------+-----------+-----------+----------+
| |Notes | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | Unaudited | Unaudited | Audited |
+----------------------------------+-------+-----------+-----------+----------+
| | | $'000 | $'000 | $'000 |
+----------------------------------+-------+-----------+-----------+----------+
| Operating activities | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Cash (used in)/generated by | 10 | (15,572) | 5,194 | (1,663) |
| operations | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Tax refunded | | - | - | 56 |
+----------------------------------+-------+-----------+-----------+----------+
| Interest received | | 27 | 558 | 318 |
+----------------------------------+-------+-----------+-----------+----------+
| Net cash (used in)/generated by | | (15,545) | 5,752 | (1,289) |
| operating activities | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Investing activities | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Proceeds on sale of property, | | - | 15 | 37 |
| plant and equipment | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Purchase of intangible assets | | (38,376) | (29,343) | (48,984) |
+----------------------------------+-------+-----------+-----------+----------+
| Purchase of property, plant and | | (582) | (116) | (279) |
| equipment | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Net cash used in investing | | (38,958) | (29,444) | (49,226) |
| activities | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Financing activities | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Proceeds on issue of share | | 192,124 | 6,830 | 35,657 |
| capital | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Net cash generated by financing | | 192,124 | 6,830 | 35,657 |
| activities | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Net increase/(decrease) in cash | | 137,621 | (16,862) | (14,858) |
| and cash equivalents | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Cash and cash equivalents at | | 19,156 | 33,606 | 33,606 |
| beginning of period | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Effect of foreign exchange rate | | 4,931 | (22) | 408 |
| changes | | | | |
+----------------------------------+-------+-----------+-----------+----------+
| Cash and cash equivalents at end | | 161,708 | 16,722 | 19,156 |
| of the period being bank | | | | |
| balances and cash on hand | | | | |
+----------------------------------+-------+-----------+-----------+----------+
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2010
1. General information
Gulf Keystone Petroleum Limited (the "Company") was incorporated and registered
in Bermuda on 29 october 2001 as an exempted company limited by shares. The
common shares of the Company were admitted to trading on the Alternative
Investment Market ("AIM") on 8 September 2004. The Company maintains its
registered office in Bermuda. In 2008 the Company established a Level 1
American Depositary Receipt ("ADR") programme in the United States in
conjunction with the Bank of New York Mellon which has been appointed as the
depositary bank. The ADRs trade under the symbol "GFKSY", where each ADR
represents 20 ordinary shares listed on the AIM market under the symbol "GKP".
During April 2010 Gulf Keystone upgraded this ADR programme and began trading on
the OTCQX International.
This consolidated interim financial information of Gulf Keystone Petroleum
Limited for the six months ended 30 June 2010, comprises the Company and its
subsidiaries (together the "Group"). The interim report was authorised for
issue by the directors on 13 September 2010. The financial information has not
been audited or reviewed by auditors.
The financial information for the year ended 31 December 2009 does not
constitute the Company's Annual Report for that year, but it is derived from
those accounts and is consistent with the accounting policies described therein.
The auditors have reported on those accounts and their opinion was unqualified
with an emphasis of matter relating to the Group's ability to continue as a
going concern.
2. Accounting policies
Basis of preparation
The annual financial statements of the Company are prepared in accordance with
International Financial Reporting Standards ("IFRSs"). The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34 'Interim
Financial Reporting'.
Going concern
In the absence of current production revenues, the Group is currently dependent
upon its existing financial resources which include approximately $91.9 million
of cash and cash equivalents at 6 September 2010 and the Standby Equity
Distribution Agreement facility to satisfy its obligations and finance its
exploration and evaluation programme in Kurdistan. Failure to meet these
exploration and evaluation commitments could put the related licence interests
at risk of forfeiture.
The Directors believe that based on the forecasts and projections they have
prepared, the resources available will be sufficient for the Company and its
subsidiaries to continue as a going concern for the foreseeable future.
However, due to high levels of planned expenditure as a result of the
significant drilling campaign following the Group's recent exploration success
in Kurdistan, the Group may require additional finance through production
revenue streams, fund raisings, or other methods of finance. In this regard the
Company is currently on track to commence first production in September 2010,
and has a number of financing possibilities which it believes it would be able
to pursue, if and when required. Nevertheless, the possibility remains that the
Group's operations, and the availability of additional finance, could be
significantly affected by adverse exploration and appraisal results,
geopolitical events in the region, macroeconomic conditions or other risks.
The Directors have concluded that the combination of these circumstances
represents a material uncertainty that casts significant doubt upon the Group's
ability to continue as a going concern and therefore it may be unable to realise
its assets and discharge its liabilities in the normal course of business.
Nevertheless after making enquiries, and considering the uncertainties described
above, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. For
these reasons, they continue to adopt the going concern basis in preparing the
interim financial statements.
Changes in accounting policy
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in the Group's
latest annual audited financial statements.
3. Segment information
For management purposes, the Group is organised into three business segments
which are based on their geography. The chief operating decision maker is the
Executive Chairman and Chief Executive Officer. He is assisted by the Chief
Operating Officer, the Finance Director and the Vice President of Operations as
well as the Country Managers in Kurdistan and Algeria.
The accounting policies of the reportable segments are consistent with the
Group's accounting policies which are described in the Group's latest annual
financial statements.
Each segment is described in more detail below:
- Algeria: the Algerian segment consists of the Algiers office and the
Group's operations in Algeria. In 2009 the remaining Algerian assets, being
Block 126a, which includes the GKN and GKS oil fields and the HBH gas field,
were impaired.
- Kurdistan: the Kurdistan segment consists of the Shaikan, Akri-Bijeel,
Sheikh Adi and Ber Bahr Blocks and the Erbil office which provides support to
the operations in Kurdistan.
- United Kingdom: the UK segment provides geological, geophysical and
engineering services to the Gulf Keystone Group.
Corporate manages activities that serve more than one segment. It represents
all overhead and administration costs incurred that cannot be directly linked to
one of the above segments.
There has been no change in the basis of segmentation or in the basis of
measurement of segment profit or loss in the period.
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| | Algeria | Kurdistan | United | Corporate | Elimination | Total |
| | | | | | | |
| | | | Kingdom | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| 30 June 2010 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Revenue | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Inter-segment | - | - | 1,730 | - | (1,730) | - |
| sales | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Total revenue | - | - | 1,730 | - | (1,730) | - |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Allocated general | (457) | (950) | (1,778) | (631) | 1,413 | (2,403) |
| and | | | | | | |
| administrative | | | | | | |
| expenses | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Depreciation and | (145) | (106) | (59) | (1) | - | (311) |
| amortisation | | | | | | |
| expense | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Loss from | (602) | (1,056) | (107) | (632) | (317) | (2,714) |
| operations | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Other gains and | - | - | - | (234) | - | (234) |
| losses | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Interest revenue | - | 1 | - | 26 | - | 27 |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Finance costs | (153) | - | - | - | - | (153) |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Loss before tax | (755) | (1,055) | (107) | (840) | (317) | (3,074) |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Tax expense | - | - | (20) | - | - | (20) |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| Loss after tax | (755) | (1,055) | (127) | (840) | (317) | (3,094) |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
| | 13,363 | 176,164 | 4,268 | 405,604 | (247,631) | 351,768 |
| Total assets | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+---------+
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| | Algeria | Kurdistan | United | Corporate | Elimination | Total |
| | | | | | | |
| | | | Kingdom | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| 30 June 2009 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Revenue | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Inter-segment | - | - | 1,255 | - | (1,255) | - |
| sales | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Total revenue | - | - | 1,255 | - | (1,255) | - |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Allocated general | (2,093) | (534) | (1,214) | (2,875) | 904 | (5,812) |
| and | | | | | | |
| administrative | | | | | | |
| expenses | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Depreciation and | (44) | (58) | (85) | (1) | - | (188) |
| amortisation | | | | | | |
| expense | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Loss from | (2,137) | (592) | (44) | (2,876) | (351) | (6,000) |
| operations | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Interest revenue | - | - | - | 558 | - | 558 |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Finance costs | (139) | - | - | - | - | (139) |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Loss before tax | (2,276) | (592) | (44) | (2,318) | (351) | (5,581) |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Tax benefit | - | - | 12 | - | - | 12 |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Loss after tax | (2,276) | (592) | (32) | (2,318) | (351) | (5,569) |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
| Total assets | 95,832 | 50,414 | 1,790 | 134,432 | (119,569) | 162,899 |
+-------------------+---------+-----------+---------+-----------+-------------+----------+
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| | Algeria | Kurdistan | United | Corporate | Elimination | Total |
| | | | | | | |
| | | | Kingdom | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| 31 December 2009 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Revenue | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Inter-segment | - | - | 3,991 | - | (3,991) | - |
| sales | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Total revenue | - | - | 3,991 | - | (3,991) | - |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Impairment of | (57,418) | - | - | - | - | (57,418) |
| intangible assets | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Impairment of | (12,182) | - | - | - | - | (12,182) |
| tangible oil and | | | | | | |
| gas properties | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Impairment of | (4,343) | - | - | - | - | (4,343) |
| inventories | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Allocated general | (6,667) | (2,126) | (3,622) | (11,791) | 3,409 | (20,797) |
| and | | | | | | |
| administrative | | | | | | |
| expenses | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Depreciation and | (88) | (122) | (171) | (2) | - | (383) |
| amortisation | | | | | | |
| expense | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| (Loss)/profit | (80,698) | (2,248) | 198 | (11,793) | (582) | (95,123) |
| from operations | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Other gains and | - | - | - | (442) | - | (442) |
| losses | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Interest revenue | - | 4 | 96 | 218 | - | 318 |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Finance costs | (1,027) | - | - | - | - | (1,027) |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| (Loss)/profit | (81,725) | (2,244) | 294 | (12,017) | (582) | (96,274) |
| before tax | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| Tax expense | - | - | (28) | - | - | (28) |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| (Loss)/profit | (81,725) | (2,244) | 266 | (12,017) | (582) | (96,302) |
| after tax | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
| | 13,591 | 82,769 | 4,813 | 227,393 | (211,173) | 117,393 |
| Total assets | | | | | | |
+-------------------+----------+-----------+---------+-----------+-------------+----------+
4. Taxation
Under current Bermuda laws, the Group is not required to pay taxes in Bermuda on
either income or capital gains. The Group has received an undertaking from the
Minister of Finance in Bermuda exempting it from any such taxes at least until
the year 2016.
Any corporate tax liability in Algeria is settled out of Sonatrach's share of
oil under the terms of the Production Sharing Contracts ("PSCs") and is
therefore not reflected in the tax charge for the period.
In Kurdistan, the Group is subject to corporate income tax on its income from
petroleum operations. The rate of corporate income tax is currently 15% on
total income. However, any corporate income tax arising from petroleum
operations will be paid from the Kurdistan Regional Government of Iraq's share
of petroleum profits.
The tax currently payable is based on taxable profit for the period earned in
the United Kingdom by the Group's subsidiary. UK corporation tax is calculated
at 28% (2009: 28%) of the estimated assessable profit for the period of the UK
subsidiary.
Deferred tax is provided for due to the temporary differences which give rise to
such a balance in jurisdictions subject to income tax. During the current
period no taxable profits were made in respect of the Group's Kurdistan PSCs,
nor were there any temporary differences on which deferred tax is required to be
provided. As a result, no corporate income tax has been provided in the period.
5. Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
+-------------------------------------+-----------+-----------+------------+
| | Six | Six | Year ended |
| | months | months | |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | Unaudited | Unaudited | Audited |
+-------------------------------------+-----------+-----------+------------+
| | $'000 | $'000 | $'000 |
+-------------------------------------+-----------+-----------+------------+
| Loss | | | |
+-------------------------------------+-----------+-----------+------------+
| Loss for the purposes of basic and | (3,094) | (5,569) | (96,302) |
| diluted loss per share | | | |
+-------------------------------------+-----------+-----------+------------+
+-------------------------------------+-------------+-------------+-------------+
| | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | Number | Number | 2009 |
| | Unaudited | Unaudited | Number |
| | | | Audited |
+-------------------------------------+-------------+-------------+-------------+
| Number of shares | | | |
+-------------------------------------+-------------+-------------+-------------+
| Weighted average number of common | 539,590,220 | 375,604,421 | 422,471,016 |
| shares for the purposes of basic | | | |
| loss per share | | | |
+-------------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------------+-------------+-------------+-------------+
| Adjustments for: | | | |
+-------------------------------------+-------------+-------------+-------------+
| -bonus shares | n/a | n/a | n/a |
+-------------------------------------+-------------+-------------+-------------+
| -share options | n/a | n/a | n/a |
+-------------------------------------+-------------+-------------+-------------+
| Weighted average number of common | 539,590,220 | 375,604,421 | 422,471,016 |
| shares for the purposes of diluted | | | |
| loss per share | | | |
+-------------------------------------+-------------+-------------+-------------+
There is no difference between basic and diluted earnings per share as the Group
was loss making in each period and hence the effect of bonus shares and share
options is anti-dilutive.
6. Intangible assets
The additions to oil and gas exploration and evaluation costs in the period
include seismic acquisition and interpretation, the drilling of the Shaikan-1B
workover well and 1drilling of the Bijeel-1 exploration well in Kurdistan.
7. Property, plant and equipment
During the period, the Group spent approximately $0.6 million on plant and
equipment, including $0.2 million on motor vehicles, for the Kurdistan
operations.
8. Trade and other receivables
The trade and other receivables balance includes $10.0 million receivable from
BG North Sea Holdings Limited for the immediate stay of arbitration between the
parties and the proposed withdrawal of the Company from the Hassi Ba Hamou
Permit which is subject to the necessary Algerian approvals.
It also includes $3.5 million in net receivables from Joint Venture Partners for
the Shaikan, Akri-Bijeel and Ber Bahr Blocks in Kurdistan.
9. Share capital
Share capital as at 30 June 2010 amounted to $436.0 million. During the period,
182.2 million common shares were issued including:
- 814,036 common shares issued as part of the Company's bonus share scheme,
increasing the value of share capital by $8,140;
- 8.2 million common shares issued as part of the Standby Equity
Distribution Agreement ("SEDA") increasing the value of share capital by $10.8
million; and
- 173.2 million common shares issued to private investors, increasing the
value of share capital by $181.4 million.
10. Reconciliation of loss from operations to net cash (used in)/generated by
operating activities
+---------------------------------------+-----------+-----------+----------+
| | Six | Six | Year |
| | months | months | ended 31 |
| | ended | ended | December |
| | 30 June | 30 June | 2009 |
| | 2010 | 2009 | Audited |
| | Unaudited | Unaudited | $'000 |
| | $'000 | $'000 | |
+---------------------------------------+-----------+-----------+----------+
| Loss from operations | (2,714) | (6,000) | (95,123) |
+---------------------------------------+-----------+-----------+----------+
| | | | |
+---------------------------------------+-----------+-----------+----------+
| Adjustments for: | | | |
+---------------------------------------+-----------+-----------+----------+
| Depreciation of property, plant and | 294 | 178 | 363 |
| equipment | | | |
+---------------------------------------+-----------+-----------+----------+
| Amortisation of intangible assets | 16 | 10 | 20 |
+---------------------------------------+-----------+-----------+----------+
| Impairment of intangible exploration | - | - | 57,418 |
| assets | | | |
+---------------------------------------+-----------+-----------+----------+
| Impairment of tangible oil and gas | - | - | 12,182 |
| properties | | | |
+---------------------------------------+-----------+-----------+----------+
| Loss on disposal of property, plant | - | 11 | 14 |
| and equipment | | | |
+---------------------------------------+-----------+-----------+----------+
| Impairment of inventories | - | 24 | 4,343 |
+---------------------------------------+-----------+-----------+----------+
| Foreign exchange gain | (5,579) | (247) | (336) |
+---------------------------------------+-----------+-----------+----------+
| Share-based payment expense | 2,995 | 246 | 6,361 |
+---------------------------------------+-----------+-----------+----------+
| (Increase)/decrease in inventories | (6,889) | 52 | 1,005 |
+---------------------------------------+-----------+-----------+----------+
| (Increase)/decrease in receivables | (1,814) | 6,475 | 5,643 |
+---------------------------------------+-----------+-----------+----------+
| Decrease in payables related to | (15,600) | - | - |
| 108/128b cash guarantee | | | |
+---------------------------------------+-----------+-----------+----------+
| Increase in payables | 13,719 | 4,445 | 6,447 |
+---------------------------------------+-----------+-----------+----------+
| Net cash (used in)/generated by | (15,572) | 5,194 | (1,663) |
| operating activities | | | |
+---------------------------------------+-----------+-----------+----------+
11. Guarantees
Cash-backed guarantees
As part of the contractual terms of the Algerian contracts, the Group was
required to give a bank guarantee to Sonatrach of $15.6 million for the Ben
Guecha ("108/128b Contract"). The guarantee was exercised in favour of
Sonatrach in May 2010 as the exploration commitments for these blocks were not
satisfied before the expiration of the licence in January 2010.
12. Related party transactions
Transactions with related parties
Transactions between the Company and its subsidiaries are disclosed below.
During the period the Parent Company entered into the following transactions
with its subsidiary, Gulf Keystone Petroleum (UK) Limited.
+---------------------------------------+-----------+-----------+----------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | Unaudited | Unaudited | Audited |
| | $'000 | $'000 | $'000 |
+---------------------------------------+-----------+-----------+----------+
| Purchases of services in period | 1,666 | 1,255 | 2,621 |
+---------------------------------------+-----------+-----------+----------+
| Amounts owed to related parties at | 283 | - | 200 |
| period end | | | |
+---------------------------------------+-----------+-----------+----------+
These amounts relate to the provision of geological, geophysical and engineering
services by Gulf Keystone Petroleum (UK) Limited.
Texas Keystone Inc.
Texas Keystone Inc is a related party of the Group because Mr Todd Kozel, a
Director of the Company, is also a Director of Texas Keystone, Inc. ("TKI").
On 21 December 2007, Gulf Keystone Petroleum International Limited ("GKPI")
entered into a Joint Operating Agreement ("the Agreement") for the Shaikan Block
in Kurdistan in which TKI holds a 5% participating interest. TKI initially led
the pursuit of opportunities in the Kurdistan region and participated in the
successful signature of the Production Sharing Contract ("the PSC") for the
Shaikan Block. In return for this and TKI's continuing participation, GKPI was
liable to pay for TKI's share of the costs of the Exploration Work Programme and
all costs ancillary to the Joint Operations up until the drilling of the first
exploration well. TKI elected not to participate in the drilling of the
Shaikan-1 well and by failing to exercise this election agreed to assign its
interest under the PSC to GKPI. Consequently TKI holds its interest in trust
for GKPI pending transfer of its interest under the PSC which is subject to the
approval of the Kurdistan Regional Government.
No guarantees have been given or received. No provisions have been made for
doubtful debts in respect of the amounts owed by related parties.
Opus Executive Partners
Opus Executive Partners ("Opus"), a specialist recruitment company, is a related
party of the Group because Lord Peter Truscott, a Director of the Company, is an
Associate Partner of Opus. Opus provided the Remuneration and Appointments
Committee with information with regard to structuring Directors' remuneration
packages and searching for suitable candidates in the first half of 2010. The
total value of services rendered in the first half of 2010 was $72,840. Opus
did not provide any other services to the Group.
13. Subsequent events
In the 2009 Annual Report and Accounts, the Company disclosed proposals to
reorganise its interests in Gulf Keystone Petroleum International ("GKPI") and
in its four PSCs, which required, inter alia, KRG approval. On 9 August 2010
the Company announced that certain Production Sharing Contract ("PSC")
amendments were approved and executed by the Kurdistan Regional Government
("KRG") and all the other parties in each of the respective PSCs, with an
effective date of 1 August 2010.
In the 2009 Annual Report and Accounts, the Company disclosed proposals to
reorganise its interests in Gulf Keystone Petroleum International ("GKPI") and
in its four PSCs, which required, inter alia, KRG approval. On 9 August 2010
the Company announced that certain Production Sharing Contract ("PSC")
amendments were approved and executed by the Kurdistan Regional Government
("KRG") and all the other parties in each of the respective PSCs, with an
effective date of 1 August 2010.
Key changes to the proposals announced on 10 March 2010 are:
- Previously announced payment dates for the Infrastructure Support Payments
have been revised so that such payments are fully payable on 15 August 2010.
- The parties to the Shaikan Block and Akri-Bijeel Block PSCs have agreed to
extend the period that the KRG may exercise the Option of Third Party
Participation to enable the KRG to nominate a Third Party Participant until 30
June 2011.
- Clarification that the existing Ber Bahr Capacity Building Payment of $10
million is now due on declaration of the first commercial discovery.
- There are no other material changes to the proposals or to the post
re-organisation interests announced on 10 March 2010 or to the terms of the PSCs
other than as set out above.
14. Further information
An electronic version of the Interim Financial Statements has been posted on the
Group's website www.gulfkeystone.com. Hard copies are available by writing to
Gulf Keystone Petroleum Limited, C/- Gulf Keystone Petroleum (UK) Limited, 16
Berkeley Street, London, W1J 8DZ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUAPBUPUGRP
1 Year Gulf Keystone Petroleum Chart |
1 Month Gulf Keystone Petroleum Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
