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Investor Presentation
Sami Zouari, CFO
12 March 2015
overview
Shaikan commercial production and sales
pending projects
outlook
A leading Kurdistan independent E&P company
• Public company, moved to Standard Segment of Official List in March 2014
• One of the largest acreage holders in Kurdistan, 1,632 km2 across four
contiguous blocks
• Total investment in Kurdistan of over USD 800 million
• All 2P reserves and majority of contingent resources within GKP’s operated
assets Shaikan and Sheikh Adi
• Five discoveries since 2009 with four declared commercial
• Shaikan Field Development Plan (“FDP”) approved by the KRG’s Ministry
of Natural Resources (“MNR”) in June 2013
• Net 2P reserves of 163 mmbbls and net contingent resources of 518
mmbbls from GKP’s first independent reserve assessment
• In December 2014, production and sales reached 40 kbopd (gross)
from two Shaikan production facilities
• Company expects production to stabilise at 40 kbopd (gross) in 2015 and
then increase to 70 kbopd and 100 kbopd once a decision on further
investment has been made
• Shaikan crude oil export deliveries to the Turkish coast by truck
continued uninterrupted from January 2014 until February 2015
• A payment cycle is currently being established for Shaikan crude oil
sales with payments received in December 2014 and February 2015
(1)
(2)
(3)
Key assets
Blocks
WI
Diluted
Operator
Partner
Shaikan(1)
75%
51%(3)
GKP
MOL (20%), TKI (5%)(2)
Sheikh Adi
80%
80%
GKP
KRG (20%)
Ber Bahr
40%
40%
Genel
Genel (40%), KRG (20%)
Akri-Bijeel(1)
20%
12.8%
MOL
MOL (80%)
GKP holding subject to third party and KRG back-in rights
Texas Keystone Inc. (TKI) holds its interest in trust for GKP, pending transfer of its interest to GKP
Inclusive of TKI’s holding increases to 54.4%
2
Management team
Simon Murray– Non-Executive Chairman Joined the Company as Independent Non-Executive Chairman and Senior Independent Director
in July 2013
• Over 40 years of international business experience and a strong network of contacts globally and across the Far East, built up over four
decades. Specific Oil & Gas experience includes positions within Essar Energy, Hutchinson Whampoa and Glencore International
John Gerstenlauer – Chief Executive Officer Joined the Company as Chief Operating Officer in October 2008 and was appointed Chief
Executive Officer in July 2014
• Started his oil and gas career with Shell in 1978
• Significant international experience with Pecten, Canadian Occidental Yemen, UMC Petroleum and Wintershall
Sami Zouari– Chief Financial Officer Joined the Company in January 2015 following careers in both the oil & gas industry and
investment banking with particular focus on the Energy and Commodities sectors in the Middle East and North Africa.
• Previous roles: Regional Head of Corporate & Investment Banking for North Africa, Iraq and Oman at BNP Paribas; Total EP Libya
• Holds a BA in Economics from Columbia University (New York, NY), and a Masters from Harvard University (Cambridge, MA).
Tony Peart – Legal and Commercial Director Joined the Company in 2008. Has 34 years of legal, commercial and management
experience in the oil and gas industry
• Previous positions with African Arabian Petroleum, Petrokazakhstan, Bula Resources, MMS Petroleum, Lasmo, Ultramar Exploration
and Veba Oil and Gas
Mary Hood – Deputy Chief Financial Officer Joined the Company in 2011 as Financial Controller and was appointed Interim Chief
Financial Officer in June 2014, before assuming the role of Deputy CFO in January 2015
• Qualified as a Chartered Accountant with Deloitte and is also a Chartered Company Secretary
• Holds a Ph.D. and MA obtained from the University of Cambridge
John Stafford – Vice President Operations Joined the Company in early 2009 as Manager of Geology & Geophysics and was appointed
VP operations in May 2014
• Has over 30 years of experience in roles within the oil and gas industry
• Experience includes particular exposure to field development, reserve certification and reporting and equity redetermination
Umur Eminkahyagil – Country Manager, Kurdistan Joined the Company in March 2012 as Development and Production Manager and
was subsequently appointed Kurdistan Country Manager
• Spent 11 years holding various reservoir engineering positions with Shell prior to joining Expro in 2002 and subsequently becoming
Vice President for MB Petroleum Services
3
Proven drilling track record
4
Shaikan-1
Bijell-1
Shaikan-3
Shaikan-2
Shaikan-4
Shaikan-5
Sheikh Adi-2
Bakrman-1
Ber Bahr-1
Discovery
Aug-09
Discovery
Mar-10
Appraisal
Jan-11
Appraisal
Mar-11
Appraisal
Dec-11
Appraisal
Dec-11
Discovery
Nov-12
Discovery
Feb-13
Discovery
May-13
Spud
Apr-09
Spud
Dec-09
Spud
Sep-10
Spud
Dec-10
Spud
May-11
Spud
Oct-11
Spud
May-12
Spud
May-12
Spud
Oct-11
Flow rate
3,488bopd
Flow rate
9,805bopd
Flow rate
16,786bopd
Flow rate
14,205bopd
Flow rate
4,450bopd
Flow rate
4,345bopd
Flow rate
2,616bopd
Flow rate
2,100bopd
Flow rate
18,038bopd
Reserves and resources summary
• 12,506 mmbbls of gross hydrocarbons in place
Reserves and resources
Net, diluted WI to GKP
GKP diluted
Oil (mmbbls)
Gas (bcf)
mmboe(1)
WI
5,013
537
5,103
54.4%(2)
1,805
1,805
80.0%
262
262
40.0%
47
47
12.8%
1
1
12.8%
7,129
537
7,218
STOIIP/GIIP
Shaikan
Sheikh Adi
Ber Bahr
Bijell
Bakrman
Total
2P reserves
Shaikan
2C resources
Shaikan
Sheikh Adi
Ber Bahr
Bijell
Bakrman
Total
Total 2P + 2C
Total 3P + 3C
54.4%(2)
163
-
163
54.4%(2)
80.0%
40.0%
12.8%
12.8%
382
122
9
5
518
681
1,351
313
29
2
1
345
345
706
434
127
9
5
576
739
1,469
1,500
mmboe
1,200
900
9
5
127
600
1,257
• Gross 2P + 2C of 1,219 mmbbls
• 3P + 3C unrisked valuation
• Implied recovery factor for 2P and 2C approximately 12%,
with scope for considerable improvement
• Shaikan 2P reserves of 163 mmbbls (net) relates to 26
production well Phase 1 development plan
• Phase 1 focuses on a limited number of wells only. The
majority of these wells will target only three of the Jurassic
intervals
• During Phase 1 there will be limited development of the
Cretaceous and Triassic, with the objective being to gauge
reservoir response before further development of these
intervals
576
434
300
-
163
Shaikan
2P reserves
Sheikh Adi
Ber Bahr
2C resources
Bijell
3P reserves
163
212
Total
3P + 3C
Note: Reserves and resources as at 1 January 2014
(1) 6 bcf of gas = 1 mmboe
(2) Includes 5% interest (undiluted) held by TKI in trust for GKP
Source: February 2014 ERC Equipoise CPR
3C resources
5
Company strategy
Ramp-up commercial oil production
from Shaikan
Reinvestment
of cash flows
Become a cash generating
business and maintain financial
flexibility
Increase reserves and production
through further exploration and
appraisal across the portfolio
Monetisation
proceeds
Exit non-core assets/operations
Transitioning towards becoming a major Kurdistan oil producer
6
overview
Shaikan commercial production and sales
pending projects
outlook
Shaikan commercial production since July 2013
PF-1
Shaikan 1
Well
Shaikan 3
Well
PF-2
Shaikan 4
Well
Shaikan
7 and 8
Wells
Shaikan 2
Well
Shaikan 5
Well
Shaikan
11 Well
Shaikan 10
Well
25000
barrel/day
barrel/day
20000
15000
10000
5000
0
18/12/14
04/12/14
20/11/14
06/11/14
23/10/14
09/10/14
25/09/14
11/09/14
28/08/14
14/08/14
31/07/14
17/07/14
03/07/14
19/06/14
05/06/14
22/05/14
08/05/14
24/04/14
8
40,000 ibopd and ibeyond
• 40,000 bopd reached in December 2014
– Total commercial production from Shaikan is nearly 9 mln barrels
– Two production facilities PF-1 and PF-2 and 8 production wells
– Shaikan-11, an additional producer is currently being completed
– Focus on ensuring a stable daily production rate of 40,000 bopd
(gross) in 2015
– Debottlenecking work on PF-1 and PF-2 is expected to increase
current production capacity beyond 40,000 bopd in 2015
– Working with the MNR to establish the best route for the Shaikan
crude to export market
– Trucked deliveries to the Turkish coast under improved
commercial terms and pipeline access through injection at
Fyshkhabour
• Looking forward to the FDP Phase 1 target
– Shaikan Central Processing Facility (CPF) will allow to achieve at
least 70,000 bopd of production 20-24 months after commitment
to invest
– The commitment will be made after a stable payment cycle for
Shaikan export crude oil sales has been established
9
Current Export Route
Shaikan
10
Potential export routes
Possible
injection
point
Possible
twinned Heavy
Oil Line
11
getting Shaikan into the pipeline
12
overview
Shaikan commercial production and sales
pending projects
outlook
Priorities versus pending projects
Priorities
Maintain stable production and sales of 40,000 bopd and beyond through debottlenecking
Finalize a pipeline access solution for Shaikan
Establish a steady flow of revenues before making decision on further investment
Pending projects
Drilling of a Shaikan exploration well into the deep Triassic and the Permian
Side-track and re-test of Shaikan-6
Investment in Shaikan CPF and its associated development drilling and infrastructure
Review of the Shaikan FDP to include Cretacious, Triassic and potentially Permian developments
Completion of the appraisal of the Sheikh Adi discovery and decision on early development
14
Shaikan: Phase 1 (CPR 2P) Wells
15
• Shaikan Phase 1 is focused on the first 26 development wells targeting 299MMstb of 2P reserves
Flowline
Source: GKP
Shaikan: Full field development: IbeyOnd
phase 1
16
• Shaikan Full Field Development envisages approximately 109 wells targeting 1,001MMstb of 2P + 2C reserves and contingent resources
• Further reserves are fully expected in time
Full field
development
well
Source: GKP
Flowline
Well locations are
approximate
overview
Shaikan commercial production and sales
pending projects
outlook
Provisional Capex schedule
18
2015 firm
2015
Contingent
Shaikan-11
13.2
-
PF 1 Change orders and
debottlenecking
9.7
-
-
Maximising capacity & sustaining plant operation
PF 2 Change orders and
debottlenecking
8.0
-
-
Maximising capacity & sustaining plant operation
Ongoing development studies and
FEED
5.3
3.7
4.5
Continuing subsurface analysis and engineering
design
FEED relating to pipeline spur
2.3
-
-
Pipeline spur
-
32.0
40.0
Requirement for blending facility tbd.
CPF construction and associated
wells
-
96.0
224.0
Includes acid gas injection
Sheikh Adi
6.9
-
-
Additional test on SA-3 and appraisal report/FDP
preparation
Ber Bahr *
15.1
-
-
Continuing subsurface analysis and drilling of BB-2
Akri Bijeel *
**
**
**
** Capex budget under review
Total capex
60.5
131.7
268.5
(US$m net to GKP)
2016
contingent
Comments
Shaikan
Drilling of an additional well to tie into PF-2
First stage of Shaikan spur to export pipeline
NB: Contingent costs are indicative only, further work currently being undertaken to firm-up cost estimates
* GKP non-operated; capex within operator control
Funding development
Source
Unrecognised revenues
1H
2014
gross
$44m
19
FY
2014(E)
gross
$128m
1H 2014
net
$35m
FY
2014(E)
net
$102m
Notes
Value depends on pricing assumptions used.
Assumed $23/bbl Shaikan crude discount to
Brent and $22/bbl transportation costs throughout
2014
Further clarity required on price achieved and
exact amounts lifted at port in addition to
payment schedule
Shaikan Government option past costs
$66m
$84m
$53m
$67m
Amounts subject to year end adjustments
Shaikan Third party option past costs
$95m
$105m
$76m
$84m
Amounts subject to year end adjustments. Past
costs due should the Third party option be
exercised by the government or a third party
$205m
$317m
$164m
$253m
Total
All amounts subject to audit
•
Cash balance of $95.3 million at 25th February 2015, following receipt of $26 million payment
•
Continuing to discuss regular payment cycle with the Kurdistan Regional Government
•
Further investment to increase production to 70 kbopd and then 100 kbopd dependent on agreed payment plan
Outlook
•
Maintain and improved Shaikan production capacity at and beyond 40,000 bopd
•
Establish a regular payment cycle for past and future Shaikan crude oil export sales to generate steady
revenues
•
Manage expenditure in a responsible manner, continuing to review and control capital commitments
•
Once a steady flow of revenues has been established, make decisions on investment in an additional
production facility (CPF) and associated development drilling and infrastructure to increase production
to 70k bopd and further to 100k bopd in line with Shaikan FDP
•
Complete exiting the non-core Akri-Bijeel Block
•
Complete appraisal of the Sheikh Adi discovery, submit the appraisal report and make a decision
regarding early production and development
20
Strong stakeholder relationships
Stakeholder relationships
• Over 300 employees and contractors in the Kurdistan Region of Iraq
• 93% of employees are Kurdish nationals, receiving regular training in
the region and abroad
• Approximately 30% of expenditure represents business done with
local vendors
Health, safety, security and environment
• HSSE a key focus area integral to day-to-day operations with robust
safety processes and procedures, overseen by a Board-level HSSE
committee and corporate HSE manager
Corporate social responsibility
• Long term CSR plan in place
• Strong relationships with local community through involvement in
infrastructure, education and humanitarian relief programs
• Environmental improvement programs are in place, including waste
management, bio-remediation, evaporation and de-watering systems
Humanitarian aid relief
• Delivery and distribution of humanitarian aid provisions to support the
relief effort of the Kurdistan Region, now host to a large number
internally displaced persons seeking refuge
21
Thank you
22
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23
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Investor Presentation
Sami Zouari, CFO
12 March 2015