Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gulf Keystone Petroleum Ltd (GUKYF, Financial) delivered a strong operational and financial performance in 2024, with production levels almost doubling compared to the previous year.
- The company achieved zero lost time incidents in 2024, extending their safety record to nearly 800 days without such incidents.
- Gulf Keystone Petroleum Ltd (GUKYF) generated significant free cash flow, enabling the restart of shareholder distributions totaling $45 million in 2024.
- The company declared a $25 million interim dividend, reflecting a commitment to shareholder returns.
- Adjusted EBITDA increased by 52% to $76 million in 2024, driven by an 86% increase in gross average production.
Negative Points
- Realized prices averaged around $27 per barrel, reflecting a full year of discounted local sales.
- Production was temporarily disrupted by a lack of trucks during regional holidays and politically motivated road closures.
- The company faces ongoing uncertainty regarding the restart of pipeline exports, with discussions with government stakeholders remaining inconclusive.
- Gulf Keystone Petroleum Ltd (GUKYF) anticipates potential disruptions in local market demand or export restarts, which could impact production guidance.
- The company expects a decline in field production of around 6% to 10% per year, which could affect future output levels.
Q & A Highlights
Q: What is the timeline and plan for ramping up investment once the export pipeline reopens?
A: Jon Harris, CEO, stated that they have enough equipment to drill the first well and nearly enough for the first three wells. They would need to contract a rig, which is available in the Kurdistan market. If exports and stable payments resume, drilling could recommence in Q1 or Q2 next year. They are also considering water handling improvements and pad expansions in preparation for drilling.
Q: What are the investment requirements for accelerating development and increasing production if exports restart?
A: Jon Harris, CEO, explained that they can start with a small amount of capital as they have most equipment in stock. Each well costs between $15 million to $20 million, and they plan to drill three to four wells annually, totaling $80 million to $100 million in CapEx. Additional projects like water handling are being considered, potentially through lease-to-purchase arrangements.
Q: Will dividends decrease as CapEx needs increase, or will they be maintained?
A: Gabriel Papineau-Legris, CFO, emphasized that dividends and distributions are crucial to GKP's equity story. They plan to maintain distributions while ensuring the capital program supports this. The continuation of dividends will depend on regular payments, and they will adapt capital spending based on cash inflows.
Q: What are the key pillars of the Field Development Plan (FDP) and other potential projects?
A: Gabriel Papineau-Legris, CFO, mentioned the FDP includes potential benefits from reservoir development and long-term gas management plans. However, it's too early to provide specific details or timelines for these projects.
Q: How does Gulf Keystone plan to manage shareholder distributions amid changing operating environments?
A: Gabriel Papineau-Legris, CFO, stated that the company is committed to balancing shareholder returns with necessary investments. They will ensure the capital program allows for continued distributions, adapting to any changes in payment regularity or operating conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
