Gulf Keystone Petroleum Records Higher Than Expected Loss


LONDON -- Gulf Keystone Petroleum -- an oil and gas exploration and production company with operations in the troubled Kurdistan Region of Iraq -- released its annual results for 2012 this morning.

While a loss was inevitable, analysts had predicted it would be less than in 2011. Unfortunately, that was not to be, and Gulf Keystone recorded a loss after tax in 2012 of $81.8 million, over 30% worse than the previous year's $62.4 million. Perhaps as a result, its share price is currently 2% down at 148.5 pence.

Operational highlights of 2012 included a total production of 1.14 million barrels gross from the Shaikan Extended Well Test facility, the start of commissioning of the first Shaikan production facility (PF-1), replacing the EWT, and which will be capable of producing 20,000 barrels of oil per day (bopd), and the start of construction of second Shaikan production facility (PF-2), with commissioning anticipated by the end of 2013.

Elsewhere, there was the discovery of Jurassic oil in the Sheikh Adi-2 exploration well, a new Triassic oil discovery at Bakrman-1 in the Akri-Bijeel Block, and a 300 meter oil column in the Jurassic found in the first exploration well in the Ber Bahr Block.

Looking ahead, Gulf Keystone intends to increase production from the Shaikan PF-1 and PF-2 up to 40,000 bopd by the end of 2013, prepare for the export of oil from the Shaikan field to reach 150,000 bopd, and move the company from AIM to the "standard segment" (previously known as a "secondary listing") of the Official List of the London Stock Market, preparatory to ultimately gaining a Premium listing.

Commenting on the results, Todd F Kozel, the combined Executive Chairman and CEO of Gulf Keystone, said:

Gulf Keystone is entering a new stage of its development as it matures from a proven oil explorer to a significant producer in the Kurdistan Region of Iraq.

The phased development approach to the implementation of the Shaikan FDP will enable Gulf Keystone to achieve a significant ramp up of production by the year end, while ensuring the Company retains flexibility in financing the development of this giant field and bringing us closer to the goal of fully financing our activities from production cash flows.

We are fully funded for our current work program for 2013 and believe that Gulf Keystone is well positioned to realize the full potential of our multi-billion barrel resources.

Although up an impressive 450% over the past five years, Gulf Keystone's share price is down over 12% over the past year, and close to 16% in 2013. With the outcome of its legal battle with Excalibur Ventures still pending, where Gulf Keystone's share price will go over the rest of 2013 remains in the balance.

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