A flash blog today as I am in London meeting companies. As usual more if I get any feedback.

Gulf Keystone Petroleum

In advance of the publication of its 2023 Half Year Results on 31 August 2023, Gulf Keystone, is today providing an update on operational and corporate activity.

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:

“While no official timeline has been announced, we continue to believe the suspension of Kurdistan crude exports will be temporary and that the KRG will resume oil sales payments in due course. As political negotiations continue, we remain focused on what is within our control to preserve and bolster liquidity. We are pleased to have commenced local sales in July and partially restarted Shaikan Field production, increasing gross average sales volumes to 11,700 bopd in August to date while receiving payments in advance. We are actively pursuing additional local sales opportunities, although pricing and volumes remain unpredictable. At the same time, we are continuing to reduce our costs, pursue inventory sales and proactively manage our accounts payable. We look forward to providing a further update on progress at our half year results later this month.”

For GKP, like other players in the area, the stark truth is that apart from a small amount of local sales there is nothing the company can do but sit on their hands waiting for the pipeline to reopen. 

Noises from both Baghdad and Erbil are pretty positive in terms of relationships being maintained and so it is clear that when the pipeline reopens they will get revenues and back payments. 

Following the shut-in of the Iraq-Turkey pipeline on 25 March 2023, exports from the Shaikan Field remain suspended and no further oil sales payments have been received from the Kurdistan Regional Government (“KRG”) since the payment of the September 2022 invoice of $26.9 million net on 9 March 2023. Outstanding receivables of $151 million net are owed to the Company for the months of October 2022 to March 2023 on the basis of the KBT pricing mechanism.

While no official timeline has been announced, GKP continues to believe that the suspension of exports will be temporary and that the KRG will resume payments to GKP and other International Oil Companies (“IOCs”) operating in Kurdistan in due course.

In particular, the Company notes that:

  • Discussions between the KRG, the Iraqi Ministry of Oil and Turkish authorities regarding the restart of pipeline operations remain ongoing
  • The approval of the 2023-2025 Iraqi budget marks significant progress towards creating a new framework for KRG production that is recognised by Baghdad in return for budget transfers
    • While there is the potential for budget transfers to broadly cover the KRG’s monthly expenditures, including ongoing IOC receivables, certain aspects to fully implement the budget and determine monthly transfer amounts remain unclear and are the subject of ongoing negotiations between Kurdistan and Iraq
  • The KRG Prime Minister Masrour Barzani has assured GKP and other IOCs operating in Kurdistan that production sharing contracts will be honoured and outstanding receivables will be repaid

In the interim, GKP remains focussed on preserving and bolstering its liquidity by exploring opportunities to increase local crude sales, further reduce costs, pursue inventory sales and proactively manage accounts payable:

  • On 19 July 2023, the Company commenced sales to the local market by restarting production and trucking operations from PF-1. Crude sales averaged around 4,900 bopd gross for the period from 19 July to 31 July. Since the beginning of August, volumes have increased, with gross average sales of around 11,700 bopd. Volumes are sold at realised prices in line with the local market, with advance payments received in accordance with production sharing contract entitlements
  • The Company is actively pursuing additional opportunities to increase local sales further. While a number of parties have expressed interest in purchasing Shaikan crude oil, the outlook for volumes and pricing remains difficult to predict
  • The Company continues to aggressively reduce all costs across the business and remains focused on maintaining net capital expenditures, operating costs and G&A expenses at a monthly run rate of around $6 million from July 2023, in line with previous guidance. The Company continues to explore options to further reduce costs
  • The Company’s cash balance as at 8 August 2023 was $80 million with no outstanding debt

Star Energy

Star has issued the following trading and operations update in advance of the Company’s half-year 2023 results, which are scheduled for release on 13 September 2023. The information contained in this statement has not been audited and may be subject to change.

Chris Hopkinson, Chief Executive Officer, commented:

Production has remained strong averaging 2,080 boepd for the period, compared to 1,865 in the first half of 2022.  This is fantastic progress with maximum uptime from our wells which resulted in production during the latter part of July consistently above 2,250 boepd.

The restructuring and rebranding of the Company which is now complete, were important steps in refocussing resource and redefining our strategic direction. 

Whilst we are focused on delivering further value from our existing oil and gas assets, our desire over time is to transition out of our oil and gas business and fully into geothermal bringing with us all the complementary skill sets and experience of our workforce.

Globally, the move to geothermal as a zero carbon source of energy continues to grow apace, and whilst we spearhead the industry in the UK, strategically we will also look more widely for geothermal opportunities to diversify our portfolio.  Our approach to opportunities will be disciplined and provide the appropriate level of returns for our shareholders.

Star is going to be an interesting case in coming years as they transition from an oil & gas company to a geothermal one. Having increased expenditure to concentrate on maxing out production from its existing portfolio, production rose by just over 11% on 2022 1H as the run-off of the estate continues. 

From now on it is going to be a really interesting play, as the statement says the Government white paper calls for joint working on the industry and to ‘move quickly’ to unlock its potential. Star have been an early mover here so I imagine that they will be able to be leaders in the sector in the public sector especially as they have been investing time, money and human resources in it.

If not, killing the fatted calf may prove to be a fateful decision, investors will have to decide whether to wait around for the results, something that may take a very long time. The shares are down some 90% since the high earlier this year so it looks like investors would rather watch from the outside. 



·    Average net production for the 6 months to 30 June 2023 of 2,080 boepd.  Guidance remains for full year at c. 2,000 boepd.

·    As at 31 July 2023, cash balances were £2.7 million and net debt was £2.7 million.

·    Recently published Government white paper on deep geothermal energy funded by the Department for Energy Security and Net Zero (“DESNZ”): ‘The case for deep geothermal energy – unlocking investment at scale in the UK’  https://mcusercontent.com/8027fde9ba31fd5636a4f52c2/files/725a53d3-885e-c809-4a99-358d97207118/Geothermal_White_Paper_Report.pdf

 Report calls on government to work with industry to deliver geothermal energy and to move quickly to unlock its potential.

 Identifies a huge opportunity to use geothermal energy to drive towards net zero and decarbonise the NHS saving emissions between 1.3 -22.7 kt CO2 per year for individual hospital sites.