Gulf Keystone Petroleum Ltd (GUKYF) Q2 2024 Earnings Call Highlights: Strong Operational ...

In This Article:

  • Gross Average Production: Over 41,000 barrels of oil per day in 2024 to date.

  • Shareholder Distributions: $25 million returned via dividends and buybacks year to date.

  • Adjusted EBITDA: Increased 6% to $36 million in the first half of the year.

  • Realized Price: Average realized price of around $26 per barrel, representing a $60 discount to Brent.

  • Free Cash Flow: Generated $27 million in the first half of the year.

  • Net CapEx: Reduced 83% from $47 million to just under $8 million in the first half of 2024.

  • Cash Balance: Increased from $82 million at the end of last year to $102 million at the end of June.

  • Gross OpEx per Barrel: Reduced by 25% year on year to $4.2.

  • Other G&A: Reduced to $5.4 million, including the absence of $2.1 million of nonrecurring corporate costs from last year.

  • Share Buyback: Completed a $10 million share buyback in 2024.

  • Interim Dividend: Paid $15 million earlier this year.

Release Date: August 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Gulf Keystone Petroleum Ltd (GUKYF) achieved a solid operational and financial performance in the first half of 2024, with no lost time incidents for over 590 days.

  • The company returned to profitability and free cash flow generation, facilitated by robust local sales volumes and sustained capital and cost discipline.

  • Gulf Keystone Petroleum Ltd (GUKYF) strengthened its balance sheet and restarted shareholder distributions, returning $25 million to shareholders via dividends and buybacks year to date.

  • The Shaikan field is producing close to its maximum capacity, responding well to the ramp-up in local market demand.

  • Adjusted EBITDA increased by 6% to $36 million in the first half of the year, driven by strong production and cost control.

Negative Points

  • The Iraq-Turkey pipeline remains closed, impacting the company's ability to export and sell at international prices.

  • Realized prices for local sales are significantly discounted, with crude sold at $25 to $28 per barrel, almost a $60 discount to Brent.

  • The company faces unpredictability in the local market, with volumes and prices driven by local supply and demand dynamics.

  • Production is expected to be impacted by a temporary shutdown of PF-1 in November, resulting in a loss of around 26,000 barrels of oil per day for three weeks.

  • The company has over $150 million in outstanding export sales receivables, with repayment dependent on the reopening of the export pipeline.

Q & A Highlights

Q: When do we expect to get repaid the receivables currently owed by the Kurdistan Regional Government (KRG)? A: Jon Harris, CEO: The recovery of receivables is dependent on the reopening of the export pipeline. Historically, it took about 15-16 months to recover receivables once exports resumed. We hope for a similar mechanism to be put in place once the pipeline reopens.