Welcome to Gulf Keystone's 2025 full year results. My name is Jon Harris, and I'm the CEO. I'm joined today by Gabriel Papineau-Legris, our CFO, who will be taking you through our financial performance. Over the next few slides, we will run through our operational and financial performance in 2025 and the outlook for the remainder of 2026, considering the current security environment. Following that, we will open up the line for questions. Before we start, I would like to welcome our new Gulf Keystone shareholders who recently bought shares as part of the company's dual listing on Euronext Growth Oslo. We successfully completed the listing through our oversubscribed retail offering in February. We are excited about engaging with investors in Norway, which have historically been a very supportive capital market for the company and the Kurdistan oil and gas industry.
With cross-border transfers set to be enabled at the beginning of next month between our Oslo and London listings, we are also hoping to see the liquidity of our existing share capital improve. Next slide, please. Disclaimer. This is our regular legal disclaimer, and I will leave you to review at your leisure. I'd like to remind you that the presentation slides are available on our website. Next slide, please. We delivered a strong operational and financial performance in 2025, with production, CapEx and cost in line with the guidance, positive free cash flow and another year of safe operations with zero lost time incidents. We remain focused on executing our strategy, balancing investments in production-enhancing projects, primarily the sanction of our produced water handling at PF-2, with $50 million of dividends to shareholders and maintaining a robust balance sheet.
The year was defined by the restart of Kurdistan crude exports in September 2025 after a hiatus of two and a half years. The interim exports agreements have been working well since, with consistent liftings and export payments in line with expectations, and we are making good progress in returning to international prices. We started 2026 positively but have been shut in since the 28th of February due to the recent deterioration in the regional security environment. We will talk through the current situation in more detail over the next few slides. We are in a strong position to weather the disruptions and are ready to quickly restart production and exports when it is safe to do so. Turning now to the operational review. Next slide, please.
We delivered a strong production performance in 2025 of just over 41,500 barrels of oil per day, with volumes up 2% year-on-year and towards the top end of our tightened guidance range of 40,000-42,000 barrels of oil a day. Absent losses from trucking and security-related disruptions over the summer of around 3,500 barrels of oil per day annualized, 2025 would have been our best year of production on record, demonstrating the continued resilience and quality of the Shaikan Field. On the 27th of September 2025, international pipeline exports restarted from the Shaikan Field following the signing of historic agreements with the Kurdistan Regional Government and the Federal Government of Iraq.
We transitioned smoothly from trucking to export sales, with volumes quickly ramping up to full well capacity. We started 2026 positively, with gross production increasing to above 44,000 barrels of oil per day at the end of February, following the successful completion of well workovers and some interventions. However, on the 28th of February, we were forced to swiftly shut in production as a safety pre-caution in response to these strikes by the U.S. and Israel on Iran and the subsequent deterioration in the regional security environment. Our assets have not been impacted to date, and we have taken measures to protect our staff. Estimated annualized losses have been around 840 barrels of oil per week, reducing our year-to-date production to just above 32,000 barrels of oil per day as of the 17th of March.
We are ready to restart production and exports quickly with an improvement in the security environment. In the meantime, we have placed our previous production guidance under review. We will look to update guidance once production has restarted and the overall impact is known. Moving on now to Shaikan field investment and activity. Next slide, please. We delivered our 2025 work program in line with guidance, with disciplined net CapEx of $39 million, reflecting investments in production-enhancing projects and safety upgrades at PF-2. We were pleased to sanction the installation of water handling facilities at PF-2, which will unlock production growth while reducing reservoir risk. Once operational, the new facilities are expected to unlock an estimated 4,000-8,000 barrels of oil per day of incremental gross production above the anticipated field baseline.
The project will also increase total dry and wet processing capacity to around 77,000 barrels of oil per day, giving us significant running room for future growth. To minimize upfront capital expenditure and provide flexibility, facilities will be leased over a number of years following commissioning. Good progress has been made on the project to date. As with production guidance, we have suspended our previous 2026 net capital guidance of between $40 million- $50 million. We will look to update guidance once production restarts and the situation stabilizes. If the shut-in persists, we have significant flexibility to reduce the work program and expenditures, which Gabriel will cover shortly. Next slide, please.
In September 2025, Gulf Keystone and other IOCs in Kurdistan signed interim agreements with the Kurdistan Regional Government and the Federal Government of Iraq to restart exports via the Iraq-Turkey pipeline. The agreements are a game changer for the company and the industry. They say they have provided immediate benefits through the increased cash receipts versus local sales of around $30 a barrel, consistent liftings and payments, and the recognition of our contracts by Iraq for the first time. They've also unlocked a path towards international prices, both in the form of top-ups for export sales since September 2025 and for future oil sales.
As you can see from our invoice revenue for 2025 export sales, the implied discount to Brent of around $13 a barrel is a significant improvement on local sales and much improved relative to historic discounts for export sales. While it is too early in the process to project a precise discount going forward, the direction of travel is encouraging. The path to international prices is dependent on the completion of a review by an international independent consultant of IOC invoices and contractual costs. The review has been progressing well, and we are expecting the interim agreements, which expire at the end of March, to be extended to allow for the completion of the consultant's report. Simultaneously, we are continuing to progress our negotiations with the MNR regarding a number of historical Shaikan commercial matters.
These include settlement of past oil sales arrears related to 2022 and 2023 invoices and the other KRG-related assets and liabilities. Next slide, please. We have reported today internally estimated gross 2P reserves of 416 million barrels at the end of 2025. Small reduction relative to the year-end 2024 estimate of 443 million barrels reflects 2025 production of 15.1 million barrels and some minor revisions based on updated modeling assumptions. Combined with gross 2C resources of 311 million barrels estimated by the two, the 2022 CPR, it is clear that the Shaikan Field remains a world-class and long-life asset. With a reserve life of 27 years, the field has significant profitable growth potential to pursue once production restarts, and we return to export international prices.
It has also been an extremely resilient asset through the ups and downs of operating in Kurdistan, producing 154 million barrels to date since the commercial production began in 2013. With that, I now hand you over to Gabriel for the financial review.
Thank you, Jon. 2025 was another year of strong delivery in line with annual guidance. We targeted investment in production-enhancing projects, strict cost control, and continued free cash flow generation. This led $50 million in dividend payments to our shareholders. The restart of Kurdistan export was a pivotal milestone, with significantly higher realized prices visible in our invoice revenue in Q4 2025 and consistent payments for sales under the interim export agreements. Next slide, please. Adjusted EBITDA increased year-on-year by 46% to $111 million, primarily reflecting the sharp increase in realized prices visible in 2025 export sales invoiced. As Jon summarized, the higher realized prices and lower implied discounts to Brent are encouraging. We are hoping to see the speedy completion of the consultant's review to convert the differential into cash.
Adjusted EBITDA also benefited from the 2% increase in production and continued cost control, which I will talk about on the next slide. 2025 operating costs and other G&A expenses were delivered in line with guidance, with OpEx of $4.3 per barrel remaining one of the lowest in the industry. As with production and CapEx guidance, we have decided to suspend our OpEx and G&A guidance for 2026 while we remain shut in. As we have proven in past periods of disruptions, we have significant flexibility to reduce our cost base and will take action if the shut-in persists. Our initial focus will be to preserve liquidity while maintaining the ability to quickly restart production and exports. However, we have scoped to reduce our cost base much further if required.
On the flip side, our lean cost base provides significant leverage should we achieve a return to international prices following a restart of exports. We are in a strong position, and we will keep you updated as this situation evolves. Next slide, please. We generated $29 million in free cash flow last year, reflecting the increase in EBITDA, offset by incremental CapEx and a working capital outflow related to the 2025 export receivables. 2025 export payments equated to $30 per barrel, whereas the realized prices of around $51 per barrel in invoices was much higher, translating to a receivable of $33 million net to GKP at the end of 2025 for those recent export sales. We expect to collect these receivables following the completion of the consultant's review, likely through additional cargoes and associated payments.
A receivable of $32 million under the interim agreements was also accrued for the timing difference of around two months between production and payment. These amounts related to Q4 production have now been collected with consistent payments continuing into Q1 2026. The reduction in free cash flow relative to 2024 was primarily due to the working capital outflow associated with the transition from prepaid local sales to exports. This led to a cash balance of $78 million at the end of the year. Cash has increased this year to $89 million as at yesterday, reflecting continued export payments. GKP's net entitlement remained at 36% in 2025, reflecting the continued recovery of past costs.
Looking ahead, our net entitlement in 2026 will depend on several factors, including the start of production, evolution of realized prices, and the outcome of the ongoing negotiation with the MNR on commercial matters. In due course, we expect the outstanding costs will be fully recovered, putting us into an excellent position to invest in profitable production growth while continuing to generate free cash flow, assuming LDO price and consistent export payments. Next slide, please. With the production currently shut in due to the regional conflict, it is useful to step back and consider the company's resilience and consistent focus on shareholder value in recent history. We have gone through many similar moments over the past few years with the COVID-19 pandemic in 2020, the closure of the ITP from 2023 to 2025, and the security disruptions we saw last summer on neighboring fields.
Throughout, we have remained true to our strategy, balancing investment in Shaikan Field with shareholder returns and a robust balance sheet. Since 2019, we have distributed $535 million to shareholders via dividends and buyback without compromising our focus on the asset or the security provided by our balance sheet. Today, we are in a strong position to navigate current disruptions should they persist. With no debt, $89 million of cash and significant flexibility built into our capital program and cost base. We are therefore pleased to announce today the declaration of an interim dividend of $12.5 million to be paid to shareholders on 27th of April 2026. Dividend was approved by the board following careful consideration of our liquidity needs, the operating and security environment, and our ability to adjust expenditures as required.
This dividend confirms our continued commitment to returning excess cash to shareholders. With that, I will now hand it back to Jon to wrap up.
Great. Thanks, Gabriel. To summarize, we are pleased with our performance in 2025, meeting our annual guidance and executing against our strategy. Looking ahead, we are in a strong position to navigate the current disruptions while creating value for our shareholders. While we remain shut in due to the regional conflict, we are ready to quickly restart production and exports with an improvement in the security environment. We have a robust debt-free balance sheet, lean cost base, and flexibility to reduce expenditures if required. The interim export agreements are functioning well, and we are progressing towards a return to international prices. We continue to operate a world-class asset with a resilient track record of production and significant growth potential. Finally, I would like to thank all our staff, shareholders, and a broader stakeholder base for their continued support at this challenging time.
With that, I now hand you back to the operator for Q&A.
Thank you, sir. As a reminder, to ask a question over the phone, please signal by pressing star one on your telephone keypad. For those listening through the webcast, you can submit a written question at any time by clicking on the control panel at the bottom of your screen and selecting the questions icon to type it in. Again, it is star one to ask a question over the phone. We'll now take our first question from Charlie Sharp from Canaccord. Please go ahead.
Good morning, everybody, and thanks for the presentation. Really appreciate that. Obviously a challenging time and difficult to predict the future. I wonder, in terms of your previous guidance on both OpEx and CapEx and where you provided a split, could you tell us what the absolute minimum is that you need to spend in terms of OpEx and CapEx this year and your ability to do that in terms of access to the field? I may have a follow-up from that, but that would be a very good start. Thank you.
Yeah. Hi, Charlie. Thanks for your question. At this stage, we're still kinda in the early days of the situation. We're not even three weeks in. We have several scenarios to go should that persist, whether it's days, weeks, months. I think the actual run rate eventually will depend what's the length of this, but we have plans on them. I think the 2023 suspension of the pipeline has been a bit of a nursery or so, but we have navigated this in the past. As you can imagine right now, operation is very minimal.
In terms of actual OpEx, it's extremely low, given the fact that the there is no diesel and there's no civil maintenance and a lot of the activity has been suspended. It's a little bit too early to provide clear guidance in terms of run rate, but we're definitely on it, and we want to balance preserving the cash on balance sheet, cutting the costs, but also more importantly, retaining the flexibility to move back to production very, very quickly as soon as the security conditions allow.
Thank you for that. If I may then just sort of in the past, I think you have indicated a kind of you were able to maintain, I think under the previous shut in period before the local sales, it was around $7 million a month. Is that correct? Would that be a working assumption while you're shut in, that that's the total outgoing related to G&A, OpEx and CapEx, or is it lower than that?
Yeah. Maybe what I can do is start with the actual guidance that we had provided. If you kind of put it together, that was kind of between $9 million and $10 million per month. Obviously, we were in a much lower situation than where we were previously in terms of commitments and activity compared to 2023. I strongly believe that we can definitely be below $7, probably in the realm of $5, $6, and obviously you could even go further, but obviously that would impact our ability over time to restart production. I think the $7 you mentioned is a conservative assumption, and we'd be able to go further.
Okay. I may come back later, but I've taken up enough of your time, so thank you very much.
Thank you.
Thank you. We'll now take our next question from Werner Riding from Peel Hunt. Please go ahead.
Thanks. Morning, guys. Yeah, just to kind of probe a little bit on what your understanding of the discussions taking place are to get Shaikan oil flowing again, and what assurances might you need to make the decision to restart production? Clearly, you're not gonna put anyone's lives at risk from a safety perspective, but yeah, specific assurances and your understanding of the discussions.
Well, obviously we've seen the improvement in relations between Baghdad and Erbil with the commencement of oil flowing through the ITP from Iraq. Obviously that's great because the revenues from the Iraqi oil will go to Baghdad and ease their economic hardship at this point in time. I believe that they've committed also to pay the salaries to Erbil. Again, easing Erbil's kind of economic pain going through this at this point in time. I think. I mean, we've said what we would really be looking for, and that we would look for an improvement in the security environment going forward.
Right. Okay. Sorry, I mean, I guess that sort of sounds quite obvious, but I mean, is there anything specific like, you know, what assurances do you need? Is it sort of an okay from the ministry or is there anything more than that that you would be comfortable taking the decision?
I mean, you'll understand this is sensitive and we're having conversations with the ministries in both Baghdad and Erbil.
Okay. Changing tack slightly, if that's all right, with another question, I'm just wondering whether or not the conflict changes your view on whether, you know, geographic diversification for GKP might be necessary in order to lower the risk profile of the business and, you know, I guess ultimately to achieve sustainable growth.
Yeah. I think, you know, it's a broader question around about return for shareholders' investment. I think previously, you know, we've always said we would look at opportunities both internally and outside of Kurdistan if the right opportunity presents itself and it fits with our kind of continuing strategy. That's how we've answered it always and we'll continue. I think we're continually in the same space where we would consider expansion, but it'll obviously have to meet our risk profile for our shareholders.
Okay. Thank you.
Thank you. It appears there are currently no further questions in the conference call. With this, I'd like to hand the call over to Aaron Clark for any webcast questions.
Good morning, thank you very much. Yeah, thank you very much to everyone asking questions on the webcast. Some of them have already been covered, so there's a couple on what do we need to see to restart production and the security environment, which I think Jon has answered. Maybe if we could just go to the first question on the consultant's review. Do we have any further guidance on when we expect that to be completed?
Well, thanks for the question. The plan was to get the consultant completed in Q1. We're expecting that there's probably going to be a bit of a delay on this. We expect the interim agreement will be extended. I think all parties recognize the benefits of keeping Kurdistan oil into the pipeline. The engagement has been really well with the consultants. It's kind of progressing really well, and we hope that the regime brought more broadly into the region will have minimal effect, and we can kind of carry this in the background as much as we can.
Thanks, Gabriel. Maybe we just stay with you. I've got a question here on the receivable, in particular relating to the outstanding receivable for 2022 to 2023 export sales. Could you provide an update on the discussions around that and how we expect it to be repaid?
Yeah, sure. No problem. As Jon mentioned, we continue to engage with the MNR on resolving several of the historical Shaikan commercial matter, which includes those receivables, other KRG-related assets and liabilities, as well as PSA agreements or amendment, for that matter. You will note in our financial in the P&L, there is a line just within the revenue around the effective recovery of past receivable of $28 million, which essentially is driven by the current position of the cost pool. Rest assured the point here is really to get the final resolution of all those receivables. We're very confident that it will be wrapped up as part of the broader commercial negotiation with MNR. That's definitely one of our key priorities to get this sorted.
The next question is just on the dividends. Thank you for paying the dividend today. What's the outlook for dividends for the remainder of 2026?
Perfect. As we said before, in the current framework, with the local sales and the transition period, with the export, we're still aiming to review twice a year the distribution. As we just did for the full year results and the half year. I think it's also fair to say that what we're seeing right now are unforeseen events. Basically in that context, the board intends to review the feasibility of a supplementary dividend payment following the restart of production, exports and obviously payments, which is very important to strike the dividend.
What I'm trying to say is that in short, that could happen even before the review of the next scheduled year if we see rapid pickup of production and we're back to it, the board will review in due course. We might not need to wait until the kind of August scheduled review where we do this. We do understand that having clarity on this for investors is very important.
Okay, very good. Just got one last question from the webcast, and then we're just gonna switch back to one last analyst question. Jon, on the reserves and resources, you talked about the Triassic resources of 157 million barrels. What's your plan for developing the Triassic, and what would it take to get those resources moved into 2P?
Okay. The plan has always been to drill two or three appraisal wells and produce them into an early production scheme. Following a suitable appraisal period, which is probably sort of six to nine months, we will look at what it would take to fully develop the field. Now, the Triassic resources are split between two reservoirs, the KCA and the KCB. KCA is actually quite beautiful 38 API oil, and we believe we see. We can correlate fractures across the original exploration wells. We have more confidence there in being able to produce that. The deeper reservoir, we think it's a supercritical phase fluid, kind of gas condensate. It's quite sour and very high GOR, as it's a gas condensate.
Once we be able to sort of sample that flow, test it, then I think we would end up thinking about a later development phase for that. The initial KCA we think we would go quite quickly, if we were back into international exports and regular payments.
Very good. Thank you. That's everything I've got from the webcast. I'll hand back to the operator to answer any final questions from the analysts. Thank you.
We have a follow-up question from Charlie Sharp from Canaccord. Please go ahead, Charlie.
Yeah. Thank you. Much appreciated. It's just a quick question really on the receivables related to last year 2025 production, the exports, and then the true-up mechanism as well. Do you see. Obviously it's terrific that the discount you're expecting is considerably lower than it used to be. Do you see an issue related to the current lack of Iraqi production and therefore Iraq's finances becoming increasingly stretched while Iraq is not able to produce very much, impacting your ability to recover those receivables and the true-up mechanism kind of extending considerably further into the future? Perhaps you could just talk around your thoughts on that.
Yeah. Thanks. Thanks, Charlie. You, as you can explain, I think the whole region is definitely kind of navigating this in real time, considering that oil and gas is the largest component of financing for the budget of several of the states, including Iraq. Yeah, I think we'll have to first see when we'll see recurrent flows going through the pipeline as well as export itself. You make a valid point. We'll need to sit down, first of all, with the completion of the consultant's review, understanding the timeline for additional cargoes. Since at the end of the day, we're partners in this. We'll have conversations around how to make this work.
We've been navigating for a very long time ups and downs in Kurdistan and Iraq. I think it's very important that first thing we get that production oil into the pipeline to alleviate the kind of very much immediate fiscal crisis in the region. Then after that, we can kind of navigate to a more kind of resolving the historical top ups. There must be somewhere of an answer in what I just talked through now, I hope.
Yeah. No, I appreciate that. It's difficult and it's early stages, but thank you.
Thank you. It appears there are currently no further questions. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.