investor presentation - gulf keystone · investor presentation april 2015 . overview ... chief...

Investor Presentation

April 2015

overview Shaikan commercial production and sales pending projects financial highlights

Key assets

• Public company, moved to Standard Segment of Official List of the London Stock Exchange in March 2014

• One of the largest acreage holders in Kurdistan, 1,632 km2 across four contiguous blocks

• Total investment in Kurdistan of over USD 810 million

• Five discoveries since 2009 with four declared commercial

• All 2P reserves and majority of contingent resources within GKP’s operated assets Shaikan and Sheikh Adi

• Net 2P reserves of 163 mmbbls and net contingent resources of 518 mmbbls from GKP’s first independent reserve assessment in March 2014

• Shaikan Field Development Plan (“FDP”) approved by the KRG’s Ministry of Natural Resources in June 2013; commercial production began in July

• In December 2014, production and sales reached 40,000 bopd gross from two Shaikan production facilities

• Shaikan crude oil export deliveries to the Turkish coast by truck commenced in late 2013 and continued in 2014 and 2015

• Significant progress is being made on finalizing and implementing a pipeline access solution for the Shaikan crude through trucking to Fyshkhabour and injecting into the export pipeline to Ceyhan

2

A leading Kurdistan independent E&P company

Blocks WI Diluted Operator Partner

Shaikan(1) 75% 51%(3) GKP MOL (20%), TKI (5%)(2)

Sheikh Adi 80% 80% GKP KRG (20%)

Ber Bahr 40% 40% Genel Genel (40%), KRG (20%)

Akri-Bijeel(1) 20% 12.8% MOL MOL (80%) (1) GKP holding subject to third party and KRG back-in rights (2) Texas Keystone Inc. (TKI) holds its interest in trust for GKP, pending transfer of its interest to GKP (3) Inclusive of TKI’s holding increases to 54.4%

3

Management team

John Gerstenlauer – Chief Executive Officer Joined the Company as Chief Operating Officer in October 2008 and was appointed Chief Executive Officer in July 2014 • Started his oil and gas career with Shell in 1978 • Significant international experience with Pecten, Canadian Occidental Yemen, UMC Petroleum and Wintershall

Tony Peart – Legal and Commercial Director Joined the Company in 2008. Has 34 years of legal, commercial and management experience in the oil and gas industry • Previous positions with African Arabian Petroleum, Petrokazakhstan, Bula Resources, MMS Petroleum, Lasmo, Ultramar Exploration

and Veba Oil and Gas

Umur Eminkahyagil – Country Manager, Kurdistan Joined the Company in March 2012 as Development and Production Manager and was subsequently appointed Kurdistan Country Manager • Spent 11 years holding various reservoir engineering positions with Shell prior to joining Expro in 2002 and subsequently becoming

Vice President for MB Petroleum Services

Sami Zouari– Chief Financial Officer Joined the Company in January 2015 following careers in both the oil & gas industry and investment banking with particular focus on the Energy and Commodities sectors in the Middle East and North Africa. • Previous roles: Regional Head of Corporate & Investment Banking for North Africa, Iraq and Oman at BNP Paribas; Total EP Libya • Holds a BA in Economics from Columbia University (New York, NY), and a Masters from Harvard University (Cambridge, MA).

John Stafford – Vice President Operations Joined the Company in early 2009 as Manager of Geology & Geophysics and was appointed VP operations in May 2014 • Has over 30 years of experience in roles within the oil and gas industry • Experience includes particular exposure to field development, reserve certification and reporting and equity redetermination

Mary Hood – Deputy Chief Financial Officer Joined the Company in 2011 as Financial Controller and was appointed Interim Chief Financial Officer in June 2014, before assuming the role of Deputy CFO in January 2015 • Qualified as a Chartered Accountant with Deloitte and is also a Chartered Company Secretary • Holds a Ph.D. and MA obtained from the University of Cambridge

Proven drilling track record 4

Shaikan-1

Flow rate 18,038bopd

Sheikh Adi-2

Flow rate 4,345bopd

Bakrman-1

Flow rate 2,616bopd

Bijell-1

Flow rate 3,488bopd

Shaikan-3

Flow rate 9,805bopd

Shaikan-4


Shaikan-2


Shaikan-5

Flow rate 4,450bopd

Spud Apr-09

Spud May-12

Spud May-12

Spud Dec-09

Spud Sep-10

Spud May-11

Spud Dec-10

Spud Oct-11

Spud Oct-11

Ber Bahr-1

Discovery Aug-09

Discovery Nov-12

Discovery Feb-13

Discovery Mar-10

Appraisal Jan-11

Appraisal Dec-11

Appraisal Mar-11

Appraisal Dec-11

Discovery May-13

Flow rate 2,100bopd

Non-Core Asset

163 163

434

127 9 5

576

212

1,257

-

300

600

900

1,200

1,500

Shaikan Sheikh Adi Ber Bahr Bijell Total 3P + 3C

mm

boe

2P reserves 2C resources 3P reserves 3C resources

Net, diluted WI to GKP

STOIIP/GIIP GKP diluted WI Oil (mmbbls) Gas (bcf) mmboe(1)

Shaikan 54.4%(2) 5,013 537 5,103 Sheikh Adi 80.0% 1,805 - 1,805 Ber Bahr 40.0% 262 - 262 Bijell 12.8% 47 - 47 Bakrman 12.8% 1 - 1 Total 7,129 537 7,218 2P reserves Shaikan 54.4%(2) 163 - 163 2C resources Shaikan 54.4%(2) 382 313 434 Sheikh Adi 80.0% 122 29 127 Ber Bahr 40.0% 9 2 9 Bijell 12.8% 5 1 5 Bakrman 12.8% - - - Total 518 345 576 Total 2P + 2C 681 345 739 Total 3P + 3C 1,351 706 1,469

Reserves and resources summary

Note: Reserves and resources as at 1 January 2014 (1) 6 bcf of gas = 1 mmboe (2) Includes 5% interest (undiluted) held by TKI in trust for GKP Source: February 2014 ERC Equipoise CPR

• 12,506 mmbbls of gross hydrocarbons in place

• Gross 2P + 2C of 1,219 mmbbls

• 3P + 3C unrisked valuation

• Implied recovery factor for 2P and 2C approximately 12%, with scope for considerable improvement

• Shaikan 2P reserves of 163 mmbbls (net) relates to 26 production well Phase 1 development plan

• Phase 1 focuses on a limited number of wells only. The majority of these wells will target only three of the Jurassic intervals

• During Phase 1 there will be limited development of the Cretaceous and Triassic, with the objective being to gauge reservoir response before further development of these intervals

Reserves and resources

5

6

Company strategy

Ramp-up commercial oil production from Shaikan

Exit non-core assets/operations

Increase reserves and production through further exploration and appraisal across the portfolio

Become a cash generating business and maintain financial

flexibility

Reinvestment of cash flows

Monetisation proceeds

Transitioning towards becoming a major Kurdistan oil producer

Stakeholder relationships

• Over 300 employees and contractors in the Kurdistan Region of Iraq

• 93% of employees are Kurdish nationals, receiving regular training in the region and abroad

• Approximately 30% of expenditure represents business done with local vendors

Health, safety, security and environment

• HSSE a key focus area integral to day-to-day operations with robust safety processes and procedures, overseen by a Board-level HSSE committee and corporate HSE manager

Corporate social responsibility

• Long term CSR plan in place

• Strong relationships with local community through involvement in infrastructure, education and humanitarian relief programs

• Environmental improvement programs are in place, including waste management, bio-remediation, evaporation and de-watering systems

Humanitarian aid relief

• Delivery and distribution of humanitarian aid provisions to support the relief effort of the Kurdistan Region, now host to a large number internally displaced persons seeking refuge

7

Strong stakeholder relationships

• 40,000 bopd reached in December 2014

• Total gross commercial production from Shaikan is over 9 mln barrels

• Two production facilities PF-1 and PF-2 and 9 production wells

• Focus on ensuring stable production rates of 40,000 bopd aiming to maintain a daily average of 36,000 bopd throughout 2015

• Debottlenecking work on PF-1 and PF-2 is expected to increase current production capacity beyond 40,000 bopd in 2015

• Working with the MNR to establish the best route for the Shaikan crude to export market

• Shaikan Central Processing Facility (CPF) Phase 1 will allow to achieve up to 70,000 bopd of production 20-24 months after commitment to invest

• The commitment will be made after a stable payment cycle for Shaikan export crude oil sales has been established

• Diversified export routes

• Trucked deliveries to the Turkish coast continue in 2015

• Expectation to be able to access the export pipeline through trucking to Fyshkhabour and accessing the export pipeline to Ceyhan at that point for some Shaikan production

• A payment cycle is currently being established for Shaikan crude oil deliveries

9

Shaikan: 40,000 ibopd and ibeyond

10

Shaikan commercial production since July 2013

Shaikan 1 Well

Shaikan 3 Well

Shaikan 4 Well

Shaikan 7 and 8 Wells

PF-1

Shaikan 2 Well

Shaikan 5 Well

Shaikan 10 Well

Shaikan 11 Well

PF-2

(bbl

s/d)

11

Current Export Route iby truck

Shaikan

12

Near-term export pipeline access

Expected injection

point

Possible twinned Heavy

Oil Line Atrush

PF -1 PF -2

13

Shaikan pipeline connection

PF -1 PF -2

Atrush

15

Priorities versus pending projects

Maintain stable production and sales of 40,000 bopd and beyond through debottlenecking

Establish a steady flow of revenues before making decision on further investment

Investment in Shaikan CPF Phase 1 and its associated development drilling and infrastructure

Finalize a pipeline access solution for Shaikan

Priorities

Side-track and re-test of Shaikan-6

Drilling of a Shaikan exploration well into the deep Triassic and the Permian

Review of the Shaikan FDP to include Cretacious, Triassic and potentially Permian developments Completion of the appraisal of the Sheikh Adi discovery and decision on early development

Pending projects

Shaikan: Phase 1 (CPR 2P) Wells 16

• Shaikan Phase 1 is focused on the first 26 development wells targeting 299MMstb of 2P reserves

Flowline

Source: GKP

Shaikan: Full field development: IbeyOnd phase 1 17

Full field development well Well locations are

approximate

• Shaikan Full Field Development envisages approximately 109 wells targeting 1,001MMstb of 2P + 2C reserves and contingent resources

• Further reserves are fully expected in time

Flowline

Source: GKP

Financial Highlights 19

• Cash balance of US$118.8 million at 13 April 2015 including:

• 31 March 2015 net placing proceeds of US$39.0 million • US$26.0 million gross pre-payment for crude oil export sales received in February 2015

• Removal of Book Equity Ratio Put Option in 13.0% Senior Unsecured HY Bonds successfully achieved on 7 April 2015

• Current debt of US$575 million:

• 2014 Revenue: US$38.6 million net; US$10.4 million domestic sales (US$42.5/bbl realised price); US$28.2 million export sales • 2014 Unrecognised Revenue: US$102 million net • Revenues for domestic sales recorded on an accruals basis; exports recorded on a cash receipts basis (see below)

Notes US$m Rate Maturity Purpose

Convertible bonds 325 6.25% Oct 2017 Funded exploration and appraisal of all assets, together with commencement of Shaikan development

Senior HY bonds 250 13.0% Apr 2017 Secured the completion of the Shaikan FDP Phase 0 reaching 40,000 bopd and appraisal of other assets

Revenue receipts for export sales (gross for the Shaikan field)

Date $ million

Est. price realised ($/bbl)

09-May-2014 6.5 50.8

22-May-2014 6.8 53.4

13-Jun-2014 6.9 55.7

02-Dec-2014 15.0 18.1

26-Feb-2015 26.0 N/A

Total / Weighted average price 61.2 29.1

Operating KPIs

2015 2014 2013

Cash operating cost (gross) $/bbl: $5 $7 $19

Cash operating cost (entitlement basis) $/bbl:

$9 $12 $27

2015 Forecast Opex and G&A - US$8-10 million per month

Funding development 20

Source 1H

2014 gross

FY 2014 gross

1H 2014 net

FY 2014 net Notes

Unrecognised revenues $44m $128m $35m $102m

Value depends on pricing assumptions used. Assumed $23/bbl Shaikan crude discount to Brent and $22/bbl transportation costs throughout 2014 Further clarity required on price achieved and exact amounts lifted at port in addition to payment schedule

Shaikan Government option past costs $66m $83m $53m $66m Amounts subject to audit

Shaikan Third party option past costs $95m $105m $76m $84m Amounts subject to audit. Past costs due should the Third party option be exercised by the government or a third party

Total $205m $316m $164m $252m All amounts subject to audit

• Total gross investment in Shaikan field to 31 Dec 2014: US$811 million, of which US$781 million is estimated to be cost recoverable

• Continuing to discuss regular payment cycle with the Kurdistan Regional Government • Further investment to increase production to 70,000 bopd and then 100,000 bopd dependent on agreed payment schedule

(US$m net to GKP) 2015 firm

Shaikan 70,000 bopd (24 months)

Comments

Shaikan

Shaikan-11 11.0 - Drilling of an additional well to tie into PF-2 completed under budget

PF 1 Change orders and debottlenecking 9.7 - Maximising capacity & sustaining plant operation

PF 2 Change orders and debottlenecking 8.0 - Maximising capacity & sustaining plant operation

Ongoing development studies and FEED 5.3 8.2 Continuing subsurface analysis and engineering design

FEED relating to pipeline spur 2.3 - First stage of Shaikan spur to export pipeline

Pipeline spur - 72.0 Requirement for blending facility tbd

CPF Phase 1 construction and associated wells

- 201.0 Includes acid gas injection

Sheikh Adi 1.8 - Appraisal report/FDP preparation. Additional test on SA-3 contingent ($5.5 million)

Ber Bahr * 3.0 - Continuing subsurface analysis. Drilling of BB-2 to occur in 2016

Akri Bijeel * ** ** ** Capex budget under review

Total capex 41.1 281.2

Capex schedule 21

* GKP non-operated; capex within operator control

NB: Shaikan 70,000 bopd costs are indicative only, further work currently being undertaken to firm-up cost estimates

22

Thank you

By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations:

The information in this document has been prepared by Gulf Keystone Petroleum Limited (the "Company") solely for use at a presentation to be held in connection with the proposed offering (the "Offering") of notes (the “Securities”) by the Company.

These materials contain statements about future events and expectations that are forward-looking statements. These statements typically contain words such as "expects" and "anticipates" and words of similar import. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the presentation. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

Investment in the Securities will also involve certain risks. A summary of the material risks relating to the Offering will be set out in the section headed "Risk Factors" in the offering memorandum. There may be additional material risks that are currently not considered to be material or of which the Company and its advisors or representatives are unaware.

This document and its contents are confidential and are being provided to you solely for your information and may not be retransmitted, further distributed to any other person or published, in whole or in part, by any medium or in any form for any purpose. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.

This presentation has not been approved by the UK Financial Conduct Authority. This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. The information in this presentation is subject to verification, completion and change. The contents of this presentation have not been verified by the Company or by Deutsche Bank AG, London Branch and Pareto Securities AS (together the “Joint Lead Managers” and each a “Joint Lead Manager”). Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers or employees or any of the Joint Lead Managers (and their shareholders, directors, officers or employees) or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of the Company nor any of its shareholders, directors, officers or employees nor the Joint Lead Managers nor any of their shareholders, affiliates (within the meaning of Rule 405 under the U.S. Securities Act of 1933, as amended (the "Securities Act")), directors, officers or employees nor any other person accepts any liability (in negligence or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. In giving this presentation, neither the Company nor its respective advisers and/or agents undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent.

Investors and prospective investors in the Securities of the Company are required to make their own independent investigation and appraisal of the business and financial condition of the Company and the nature of the Securities. Any decision to purchase Securities in the context of the proposed Offering, if any, should be made solely on the basis of information contained in an offering memorandum or prospectus published in relation to such Offering. No reliance may be placed for any purpose whatsoever on the information contained in this presentation, or any other material discussed verbally, or on its completeness, accuracy or fairness. This presentation does not constitute a recommendation regarding the Securities of the Company.

Any offer of Securities to the public that may be deemed to be made pursuant to this document in any EEA Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the "Prospectus Directive") is only addressed to qualified investors in that Member State within the meaning of the Prospectus Directive.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, failing within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication may relate is only available to, and any invitation, offer, or agreement to engage in such investment activity will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

The information in this presentation is given in confidence and the recipients of this presentation should not engage in any behaviour in relation to qualifying investments or related investments (as defined in the Financial Services and Markets Act 2000 (FSMA) and the Code of Market Conduct made pursuant to FSMA) which would or might amount to market abuse for the purposes of FSMA.

This presentation and its contents are directed only at and may only be communicated to: (a) within the United States to persons who are qualified institutional buyers (“QIB’s”), defined in rule Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”); and (b) outside the United States (within the meaning of regulation 5 under the Securities Act). Any investment activity to which this presentation relates is available only to (i) in the United States QIB’s, (ii) in the United Kingdom, Relevant Persons and (iii) in any member state of the EEA other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons. Persons who are not QIB’s, Relevant Persons or Qualified Investors should not attend the presentation and should immediately return any materials relating to that meeting currently in their possession.

Neither this presentation nor any copy of it may be taken or transmitted into, or distributed, directly or indirectly in, Australia, Canada or Japan. This presentation is not a public offer of securities for sale in the United States. The Securities proposed in the Offering have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The Company does not intend to register any portion of the proposed Offering under the applicable securities laws of the United States, Australia, Canada or Japan or conduct a public offering of any Securities in the United States, Australia, Canada or Japan. Subject to certain exceptions, the Securities may not be offered or sold within the United States, Australia, Canada or Japan. Any failure to comply with these restrictions may constitute a violation of U.S., Australian, Canadian or Japanese securities laws, as applicable. The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

The Joint Lead Managers are acting for the Company in connection with the proposed Offering and for no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Joint Lead Managers, nor for providing advice in relation to the proposed Offering or any other matter referred to herein. Any prospective purchaser of the Securities in the Company is recommended to seek its own independent financial advice. The Joint Lead Managers have not authorized the contents of, or any part of, this document.

23

Disclaimer

Investor Presentation

April 2015

investor presentation - gulf keystone · investor presentation april 2015 . overview ... chief...

Documents