On behalf of DNB Markets, Carnegie AS and SpareBank 1 Markets, we are pleased to welcome you to today's company presentation by Gulf Keystone Petroleum. Gulf Keystone has made the decision to proceed with a dual listing of its shares on Euronext Growth Oslo and is currently in the market with an offering. Today, the company is represented by CEO Jon Harris, CFO Gabriel Papineau-Legris, and Head of IR Aaron Clark. We will begin with a presentation from the management team, followed by a Q&A session. If you have any questions during the presentation, please submit them via the Q&A function. We will address as many as possible afterwards. Before we start, please refer to disclaimer and risk factors on pages 2, 3, and 4 of the presentation.
If there are any questions related to the technical aspects of the retail offering, please reach out directly to your representatives at DNB Markets, Carnegie, Nordnet, or SpareBank 1 Markets. With that, I will hand over to CEO Jon Harris.
Great. Thanks, Ivan, and thanks for taking the time to join us this morning. I'm going to run through Gulf Keystone at a glance. So I think this is we are a pure-play experienced Kurdistan operator with a world-class asset, as you're going to learn about. We've been present in Kurdistan for almost 20 years, and the PSC was first awarded in 2007, with first commercial production in 2013. Last year, we produced at 41,600,000 on an average of 41,600,000 barrels a day, which equates to just over 15 million barrels. Our reserves, as you'll see, we have a world-class asset with huge 2P reserves of 443 million barrels as of the end of December, and we've produced 15 million barrels since then. Last year, in November, we passed a great milestone where we produced 150 million barrels in November.
So you can see there's plenty of running room left in this asset. We also passed another milestone in January where we were three years without a lost-time incident on our safety records, which we're very proud of. You can see that our operating costs are a mere $4.3 a barrel, which I think represents us as very low-cost onshore production with a lean corporate platform. We have low G&A as well. Part of the success of this is down to our strong team, and we have good governance last year. ISS and Glass Lewis basically green-topped our annual statements. So good governance. We have a market cap of about $540 million, which equates to about NOK 5.2 billion. Obviously, that supports we're London listed at the moment, and we're actively considering listing in Oslo, which is why we're having this presentation.
We've got a very supportive shareholder base of listing in Oslo. Last year, we've got a consistent strategy and track record of balancing investments with shareholder returns, and we currently have a strong balance sheet, as you'll see. Last year, we paid $50 million in dividends despite only putting our production into the local market at kind of a lower price. We're also debt-free, and we have a current cash position of $88 million. With that, I will now hand over to Gabriel to talk about dual listing.
Great. Thank you, Jon, and good morning, everyone. Last year, GKP announced its intention to make a dual listing on the Euronext Growth Oslo to increase liquidity, broaden the investor following, and also give us additional access to the capital markets. The Oslo market has a long history associated with the energy sector and understands oil and gas very well and has had a long following of the activity that's been going on in the Kurdistan region of Iraq. GKP has strong analyst coverage already. To put it in perspective, five of our existing eight analysts are based at Norwegian banks. There are several energy conferences that we attend each year in Oslo organized by Norwegian banks. We've been coming for several years to Oslo to meet investors and analysts. As Jon mentioned, there is strong support from our major shareholders with the listing.
Actually, one of our large shareholders has agreed to underwrite the retail offer and also is attending to transfer some of his shares as part of meeting the requirements for the listings. Our other shareholders have signaled their support for share transfer in due course to increase the number of shares listed on the Euronext Growth Oslo. Euronext Growth Oslo is the first step. We mentioned, obviously, our intention to list on the main boards because in the U.K., we are already on the main market. So it's just a stepping stone to eventually get to the main market in due course. Next slide, please. In terms of the company highlights, it's a very simple story. Just going a little bit more detail into what Jon said is it boils down to a fantastic asset.
The Shaikan Field is a world-class, long-life, and low-cost asset with a very strong production track record and material growth ahead of us. It's a field that we know very well. We've produced over 150 million barrels. Basically, we're constantly adjusting our assessment of the field with the new information, getting to the geological models, history matched. It's something that we really keep a close eye on. If you look at the reserves and the current production, that turns into a ratio, what we call in the industry, R over P or reserve over production of 30 years. That really demonstrates there's a lot more potential to increase the production and bring back those reserves much sooner than 30 years. That's pillar number one.
The second highlight is really about the current export agreements that we've entered with the governments of Iraq, of Kurdistan Regional Government, as well as other IOCs to allow us to return into the pipeline after over 2.5 years of local sales. There's been a consistent set of liftings, payments. Those agreements are working quite seamlessly. There is also further upside in terms of our ability to get further increase in international prices and also our ability to get the recovery of the past arrears from global sales. I'll come back a little bit more later on that. The third highlight of the company is really its ability to distribute dividends and buybacks to shareholders as we go along through the investment cycle. It's really about balancing the investment as well with the shareholder returns.
Also we have a very, very strong balance sheet with no debt at the moment, good cash balance, and the low cost of the business allows us to navigate the cycles. Next slide, please. I'll hand over back to Jon.
Thanks. Thanks, Gabriel. So basically, Kurdistan is a proven oil jurisdiction. As you can see, a number of other operators in the northwest of the region have been producing for a number of years. Obviously, we signed our PSC in 2007. PSC does a great job of incentivizing us to get after producing oil. We had discovery well in 2010. And then again, we were producing in 2013. So we've been producing now for nearly over 12 years. And we've been steadily ramping production. It's not as quick as we would have liked. Obviously, when we were diverted into local sales when the pipeline closed two and a half years ago, we were just on the cusp of entering into an expansion phase. What we see is there and I'll take you through this a bit more in detail in a couple of slides.
But we've got a significant potential to unlock from large reserves, from our large reserve space, both in 2P in the Jurassic, which is the only thing we're producing from at the moment. And that 443 million barrels as of the end of 2024 is the Jurassic 2P reserves. And we also see further production benefit both in the Triassic below, which was penetrated by, I think, 4 of the 6 kind of exploration and appraisal wells we drilled back in the 2000s. And we also see potential in the Cretaceous, which overlays the Jurassic reservoir. So a lot of reserves that are untapped currently and also that we're intending to enter into our kind of we want to get it back into our development phase in the near future, which I'll talk about again in the near future. Can you just expand some slides, please, Aaron? Thank you.
So you can see here, this is the production history from since 2013. We were in 2023, although the annual production is down, we just hit a production record before the pipeline was shut, unfortunately, of like 55,000 barrels a day, which we've been pursuing for a few years. We've got a again, as you see, as I said before, we've produced over 150 million barrels to date. And we've done that without producing any water because we've got a very, say, a very large relief from the water, from the aquifer.
It is underlain by an aquifer, but with something like 1,000 feet of reservoir above that, which and we place our wells very carefully with regards to not producing any water and not producing any gas from a gas cap, which is now in development as we've dropped the reservoir pressure, as we've been producing quite a lot of oil to date. I think we're very proud of our low-cost production. It's very much top quartile and our G&A relative to international and KRI peers in 2024. So again, very proud of being able to produce this field successfully at a very low cost. And we feel confident in that that's going to continue to be a top quartile in terms of operating cost and G&A.
As you can see, as Gabriel alluded to, at the moment, we've got a reserves-to-production ratio of like 30 years, which clearly sort of points to the fact that it's underdeveloped, which is why we want to get back into drilling more wells and increase production. Next slide, please. This is a kind of zoom in on 2025 and the outlook for 2026. We've had a resilient performance so far, and we're kind of quite proud in the fact that we can continue to kind of without drilling, which we haven't done for the last 2.5 years because we've been in the local market. We're quite proud in how we've managed to keep production up, albeit like any field, it does decline slightly over time. We've done a great job, we think anyway, of maintaining production.
This year, we've kind of started. There are a number of wells which required workovers, and we've been getting after that, and they're due to come back online. In fact, they've just come back on. 2 of them are coming back online this week following the tubing replacement and some other well work. And we're going to see our production again. January was at 40,000 barrels a day. And we'll see it return up towards 40-45, something like that. And in the guidance for the year, we're giving 37-41. So that's like an average of 39 because we haven't drilled a well recently. And we're very much hoping that we can get back to production.
In fact, we're out tendering a rig at the moment, but that's conditional on us continuing exports, which we're fairly confident of, and also increasing the price that we receive for that. And Gabriel is going to take you through that in a second. Plus also this year, because of some safety work we've been doing, we're going to have to take a shutdown probably late in the summer to ensure that we can do those safety tie-ins. So we do critical safety work and critical well work to obviously keep ourselves, keep our team safe, keep production reliable, and also maintain production at a relatively high level. During this year as well, we've kind of come up with an innovative approach to kind of like it's a lease-to-buy option on a water handling train. So we are installing a third train at our second production facility.
That's due to come on stream at the end of the beginning of end of 2026, beginning of 2027. That will allow us to process water. The original trains that we installed didn't have that processing capacity. This train will allow us to. Some of our wells at the moment are slightly choked back to stop us coning the aquifer into the wells. Once we have water handling capacity, we will be able to produce those wells a little harder. That will allow we will produce water with it, but we'll be able to deal with it now with this additional train. So that will allow us to produce in the order of, we think, between 4,000 and 8,000 barrels of additional oil. That's going to come at the end of the year. So we will start to see production growth from that.
And obviously, with us out tendering for a rig at the moment, then we will be very much looking for the commercial arrangements to be in place for us to start drilling, which would also be, I think, towards the end of the year if that comes to pass. With that, I'll hand back to Gabriel. Gabriel.
Great. Thanks. So looking back at last year's, in addition to the production that we delivered within the guidance, both our CapEx and OpEx came in within the guidance for 2025 with a continued disciplined, disciplined free cash flow generation while also protecting the investment base for the production. So we're naturally continuing to invest and unlocking value for future growth even in a constrained environment with, for example, as Jon mentioned, the sanctioning of that water handling project, which was going to drive production up at the beginning of next year. So in terms of the incremental CapEx in 2026, it primarily reflects the extended program on the facilities upgrades, the safety, as we mentioned, as well as completing this upfront capital for the water handling.
In terms of the OpEx, we've seen a slight increase in terms of the OpEx for this year, which is essentially driven by the restart of the export because we're using more of the power and generation for diesel to drive the export pumps. Also locally, since the restart of the pipeline, there's been more oil going internationally than locally. So local diesel prices have also gone up a little bit, as well as the maintenance associated with the PF2 shutdown, which kind of should be seen as a one-off and not recurring for 2027. Next slide, please. In September 2025, we entered into interim agreements with the government of Baghdad, the Kurdistan Regional Government, as well as several other IOCs to enable the return to exports via the pipeline. That was a fantastic milestone. I really thank all the parties involved to reach this achievement.
So those agreements are working well. They're working as planned. The lifting of the crude in the port of Ceyhan in the Med, regular cargoes are taking twice a month, payments are also coming in as per the agreements. So actually, it's going very well on track. Those agreements towards the end of the year were extended for another 3 months till the end of March 2026. And in parallel, the independent consultant appointed by the federal government has started its work and is expected to complete its review in line with the end of this extended period till the end of Q1 to allow it to perform the review on the various IOC assets, physical on the ground, but also contractually the cost to validate the entitlement of the companies. So post the review, we expect that we will be able to return to international prices for future sales.
But also on top of that, we expect to receive the remainder of the money that we should have received for the sales that have taken place since last September under the interim agreements. So quite optimistic about seeing an increase in both our price, the realized price, but also on the top-up on this. So we expect an inflection point later in the year. What does that mean, really, in terms of kind of the oil that we're producing today is that the oil on a cash basis that we're receiving equates to about $30 a barrel, which is higher than the local sales that we were doing for the last two years before the pipeline. And so we were selling. And at the moment, we believe that this could increase to at least $45 a barrel based on a $65 Brent.
And as part of the review, we believe that there's further upside to that price. So definitely a kind of a step change in the cash flow generation for the local sales that we have. In addition to that, as we've indicated in the past, GKP, we are continuing to engage with the Kurdistan Regional Government with regards to historical oil sales receivables that. And as part of the broader commercial negotiation to have a clean slate part of the investment and also the engagement with the independent review. So this is all going in parallel. Next slide, please. I'll hand back to Jon.
Yeah. Thanks, Gabriel. So I talked a little bit before about our potential and our resource base and that clearly we have very large 2P Reserves in the Jurassic. We also have a considerable reserve base in the Triassic, which we talked about, which is produced by our neighboring operators, both Hunt Oil and HKN, in their fields. And ours, we feel looking at our appraisal well logs, look very similar in nature to theirs, and they have very high production rates of a much lighter oil in the top reservoir in the Triassic and a gassy condensate in the reservoir below. And we also want to stop all of our routine flaring, if we can, or nearly stop all of our routine flaring.
And so previously, back in 2023, prior to the closure of the pipeline, we had a field development plan, which was agreed with the Ministry of Natural Resources who regulate and drive the industry. But that was put on hold. And we also had a contract to actually build a gas management, a reinjection scheme, which would have stopped our flaring. So we were just poised and the pipeline shut and we had to kind of put everything on ice. And so now with the pipeline open and hopefully returning to the prices that Gabriel alluded to in the last slide, we will very much be looking to agree to the development plan and to get back to it.
The sort of production rates we were targeting previously, we were looking to go from our current sort of 45 today, 55 back in March 2023, looking to go all the way up to 85,000 barrels a day from the Jurassic and somewhere between 10-20,000 barrels a day from the Triassic and the solution to our flaring. So again, lots of running room, lots of potential in this field. Again, what's changed since 2023? I guess the situation is that we have our cost pool is a lot lower now, and this will accelerate our basically incentivize and accelerate our investment. As soon as we invest $1, we get the $1 back almost immediately.
Really, like I say, it's less about building capacity because we will have with the water handling train I talked about earlier, we will have nearly 77,000 barrels of oil a day handling capacity. It's more about drilling. We'll be looking to drill quite a large number of wells. I think it's somewhere between 16-20. But obviously, as Gabriel alluded to, the longer you go operating a reservoir, the more you understand about it, and you get always further optimization. But we are looking to drill a number of wells over a number of years. I guess since the start of exports, we've been dusting off our plans, and we're now actively preparing to drill, which is what I said earlier. We're out tendering, and we're looking at we've got a number of because back in 2023, we were about to embark on a large program.
We have quite a lot of stock, but we're also needing to look at topping up that stock so that we can have a continuous program once we do start. Combined with water handling coming online, targeting a return to growth in 2027. Back to Gabriel to finish.
Great. So yeah, so a little bit more now on distributions. So Gulf Keystone has an excellent track record of balancing investment with capital returns to shareholders. Just to put in perspective, we have almost returned the equivalent of our current market cap since 2019. And we will continue to review the opportunities to return excess cash in 2026 through two means. First of all, the semi-annual dividend payments review. And also opportunistically, throughout the years, we may consider buyback. But all this in a balanced way with investment in the field to grow the production and also in light with international prices and the evolution of our net entitlement. And there's that chart at the bottom right of the slide that I quite like to demonstrate this concept of matching the CAPEX with its distribution as we go along.
The story here, because we have such a strong asset producing base at the moment, is that we don't need to make several years of investment before seeing the return, is that those two can come in parallel. You invest, but at the same time, investors are getting rewarded. And that's been the mantra of the companies for several years. So we plan on providing with investors a more predictable policy once we have consistent payment at international prices and better visibility on the timing of those CapEx. And we will come back to investors to provide that visibility. Next slide, please. So in summary, very simply, why invest in Gulf Keystone? The three key highlights that I mentioned earlier: world-class asset with significant organic growth ahead of us and de-risk through multiple reservoirs as well.
We have the path for further upside on realized price with the export reconciliation process and the top-up of past payments. And number three is the consistent track record of shareholders distribution throughout the cycles that we're facing in the industry. So thank you for your time, your attention. And on that, I will end back to Ivor for the Q&A.
Thank you, Gabriel. We received several questions during the session, so let's move into the Q&A. I'll start with a few topics that have come up. You spoke about production outlook. What milestone should investors watch over the next 12 months to unlock growth at the Shaikan Field?
I think milestones this year will be us hitting our guidance, so continue strong production to hit guidance. Also updates on the start of our water handling train, which should allow us to get an additional 4,000-8,000 barrels a day. If we see with the right conditions, we will kind of announce during the year, but we'll also be announcing those conditions have been met. Increased pricing for our exports. I think we'll be announcing that we'll be resuming drilling probably at the end of 2026, but more likely to be in 2027.
On the exports, what would you say is the single biggest remaining uncertainty around the export stability today?
Gabriel, can we update this one?
Yeah, sure.
Yeah, no worries. So at the moment, it's fair to say that there's a process underway. It's going quite smoothly. Obviously, the consultant needs to complete the review of all the assets. We see at the moment no real material hiccups. It's following its course on track. The cargoes are being lifted in time, no delays, payments as well. There's one element ongoing at a more macro level, which is that there were some elections in Q4 last year in Baghdad, in federal Iraq. The prime minister and the cabinet are still being discussed. It'll be interesting to see how this new prime minister comes in, the timeline, the formation of the government, and the implementation of the next budget law. That's one of the elements of uncertainty.
At the moment, from our perspective, we're quite optimistic that there is quite a lot of support to get this over the line and basically normalize the Kurdistan industry. So I guess we'll have to see over the coming months how this is unfolding. But so far, nearly approaching five months into this process, it's been going as per the plan, aside from a little bit of the delay of the appointment of the consultant. But they came in right at the beginning of this year or actually started late last year, but really in earnest the beginning of this year, and they're going ahead. So yeah, quite several milestones ahead of us on the return to international pricing.
And as the exports normalize, how should investors think about the capital allocation between drilling, balance sheet strength, and shareholder returns?
Yeah. No, that's an excellent question. And that's one we've been kind of balancing even in the local sales. And that's why we felt comfortable that, for example, the water handling project, we sanctioned this while we were still in local sales. It's still very important to deploy capital in the asset to see the growth. The real question is, how much do you put forward until the conditions are right? But as John said, we have already made a lot of pre-investment, whether it's on the facilities or on the equipment, the long leads for drilling. So actually, we'd be quite keen to return to drilling. And when we say drilling, it's not just drilling a well. The goal is to really have a campaign and drilling consistently from one well after the other.
We have several well locations already identified and very little incremental investment required to get the remaining inventory for well 2, well 3. So I think it's really just making sure that as we deploy more capital into the asset, we have also some exit ramps because one thing we don't want is to commit for $700 million in a single moment, and then the conditions change. For example, in 2023, right, we were rolling a very ambitious capital plan, and then the pipeline shut. We had to adjust, correct, to limit the exposure of the company to preserve liquidity. So it's really trying to get that healthy tension between getting more production growth, getting some investment, but also protecting the business with the distributions, but also with a strong balance sheet. So this is a conversation.
As we come to update our CAPEX guidance with additional drilling and so forth, we'll be able to also provide more color because by that time, we'll have also more visibility on international prices and the resilience of that mechanism.
Following the reopening of the pipeline, how do you see the M&A dynamics evolving in Kurdistan, and what role could Gulf Keystone potentially play?
Do you want to take this one, Jon, or?
Yeah, sure. I think with normalization of our commercial arrangements, both for us and for the other IOCs that are out there, I think it then for a long time, it's been quite difficult to value based on future cash flows, it's been quite difficult to value companies who are in Kurdistan because there's quite a lot of uncertainty about it. With the normalization well, with the return to exports and exports have been consistent since we started, since the 27th of September, exports and loadings and payments have been very reliable. So with that, I think that's the first thing that we needed. The second thing now is for us to see us to be being paid international prices for it.
And then that will allow people to come up with, I think, good valuations or better valuations for companies, which I think can therefore potentially enable the M&A market, I think. Obviously, any deal that's got to be done, it's got to work for the shareholders in this. So we'll have to wait and see. But I think it could be positive. It's got to be a positive step.
For investors, scale is always preferable, right? Better liquidity, better diversification of the portfolio. Those are things that we keep in our mind as we go along. The beauty with Shaikan is that there's a lot of growth just with the asset, but we do understand the benefit of scale and diversification. In the right conditions, as John said, we could consider.
I think the last one. How has your London-based shareholders reacted to the planned delisting also so far?
Yeah, it's actually been surprisingly well. We receive the support from some of our larger shareholders that we mentioned, but also some of our smaller shareholders actually praised us for looking beyond and trying to find ways to increase the liquidity. It's been quite supportive. And actually, some of them were saying that we're probably not going to be the last one. Actually, we're opening a door where other companies will come to Oslo given the support of the investor community and the broader advisory set. So yeah, it'll be very interesting. We're going to see more companies coming from London to Oslo. But we're really pleased to be the first one to do it. And feedback has been very positive across to this date.
Agree. Again, if there are any questions related to the technical aspects of the retail offering, please reach out to your representatives at DNB, Carnegie, Nordnet, or SB1 Markets. And that concludes today's session. Thank you very much to the Gulf Keystone team and to everyone who has attended.
Thank you.
Great. Thank you very much. Have a good day.