Gulf Keystone Petroleum H1 Earnings Call Highlights
Tue, August 25, 2026 at 2:02 PM GMT+3 6 min read
Key Points
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Production was severely disrupted: Shaikan was shut in from February 28 to June 23 and again in July, reducing first-half output to 14,600 barrels per day from 44,100 a year earlier. Following the August restart, production was approaching 40,000 barrels per day.
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Financial results remained resilient: Adjusted EBITDA rose 26% to $52 million as higher realized export prices and lower operating costs offset lost production. The board declared a $10 million interim dividend, while free cash outflow was limited to $2 million.
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Growth and cash recovery remain priorities: Gulf Keystone is seeking to recover an approximately $80 million top-up receivable through additional crude liftings, while its PF2 water-handling project could add 4,000–8,000 barrels per day from 2027. Future investment and drilling plans remain dependent on security, export arrangements and approval of a field development plan.
Gulf Keystone Petroleum (LON:GKP) reported a resilient first-half performance despite production disruptions tied to regional security conditions, with higher realized export prices and lower operating costs helping offset a prolonged shutdown at its Shaikan field.
Chief Executive Officer Jon Harris said the company prioritized employee safety during disruption associated with the conflict between the U.S. and Iran. The company extended its record of zero lost-time incidents to more than 3.5 years, he said.
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Shaikan production was shut in from February 28 through June 23, contributing to gross average first-half output of 14,600 barrels per day, down from 44,100 barrels per day in the first half of 2025. Harris said production had exceeded 44,000 barrels per day on several days before the initial shutdown following well workovers.
After restarting on June 24, output rose above 45,000 barrels per day before a second precautionary shut-in on July 19. Production resumed again on August 16 after the extension of interim export arrangements and an updated assessment of regional security. Harris said volumes were approaching 40,000 barrels per day and that well activities were underway to restore prior production levels.
Financial performance and dividend
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Chief Financial Officer Gabriel Papineau-Legris said adjusted EBITDA increased 26% to $52 million in the first half, from $41 million a year earlier. Higher realized prices in export entitlement invoices and lower operating costs more than offset the decline in production, he said.
Operating costs fell 25% to $20 million, while other general and administrative expenses declined 6% to $4.3 million. Papineau-Legris said the majority of the operating-cost reduction resulted from the shutdown, including lower spending on diesel and chemicals. Before the February shut-in, operating costs were approximately $4.4 per barrel, in line with prior years.
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Net capital expenditure was $18 million during the first half, with nearly half incurred before the February shutdown. The company reduced discretionary spending after production was halted but continued safety-critical and strategic work. Free cash outflow was limited to $2 million.
The board declared a $10 million interim semi-annual dividend, payable in September 2026, following a $12.5 million semi-annual dividend paid in April. Papineau-Legris said the company remained committed to returning excess cash to shareholders while preserving balance-sheet flexibility and supporting future investment.
Export pricing and top-up receivable
The company said interim export agreements involving international oil companies, the Kurdistan Regional Government and Iraq's federal government continued to support consistent payments after crude liftings. The agreements have been extended for six months through the end of January 2027.
Gulf Keystone reported that the Shaikan discount to Brent averaged about $9 per barrel in the first half, reflecting strong demand for Kirkuk blend crude marketed through Ceyhan. Harris said some Kurdistan crude cargoes achieved a netback price that included a premium to the Kirkuk blend official selling price amid market disruption linked to the U.S.-Iran conflict.
However, cash receipts remained at roughly $30 per barrel, below the international prices reflected in entitlement invoices. The difference resulted in a top-up receivable of about $80 million net to Gulf Keystone at the end of the period. The amount remains subject to implementation of an independent consultant's review of IOC invoices and contractual costs, which was submitted to the Iraqi government in June.
The company is seeking additional crude liftings beginning in September to recover the receivable. Papineau-Legris said the immediate priority was to secure an additional cargo related to the fourth quarter of 2025, followed by recovery related to the first half of 2026. He said recovery of the fourth-quarter receivable could occur before longer-term export pricing arrangements are finalized.
Production capacity and development plans
Gulf Keystone is progressing installation of water-handling facilities at PF2 and expects full startup in the first quarter of 2027. The project is expected to add 4,000 to 8,000 barrels per day of gross production above the baseline, expand total production capacity to about 77,000 barrels per day and reduce reservoir risk.
The company said Shaikan had internally estimated gross 2P reserves of 416 million barrels in the Jurassic reservoir at the end of 2025, alongside 311 million barrels of gross contingent resources. Harris said the 2P reserve estimate assumes production within the license period and a production ramp-up, rather than output remaining at 2025 levels.
A draft field development plan under discussion with the Ministry of Natural Resources targets more than doubling current Jurassic production, testing the Triassic reservoir at up to 10,000 barrels per day and eliminating routine gas flaring through a gas-management plan. Harris said the company was considering alternatives including full gas reinjection or reinjecting acid gas while selling sweet gas.
The company is tendering for a drilling rig and expects potential drilling activity in the second half of 2027, although Harris said the preferred path is to first agree the field development plan. Gulf Keystone has not reinstated capital-spending guidance, citing uncertainty around production, international pricing and the timing of discretionary investment.
Harris said the company's ability to sustain stable exports will remain dependent on the security environment. While management cited reduced hostility toward Kurdistan and international oil companies as supporting the latest restart, he said Gulf Keystone would continue monitoring conditions and could shut in production again if circumstances deteriorate.
About Gulf Keystone Petroleum (LON:GKP)
Gulf Keystone Petroleum Limited engages in oil and gas exploration, development, and production in the Kurdistan Region of Iraq. The company operates Shaikan field that covers an area of approximately 280 square kilometers, which is located north-west of Erbil. It also provides management, support, geological, geophysical, and engineering services. The company was incorporated in 2001 and is based in Hamilton, Bermuda.
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The article "Gulf Keystone Petroleum H1 Earnings Call Highlights" was originally published by MarketBeat.
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