Gulf Keystone Pet Ord New

Hello, and thank you for joining Gulf Keystone's 2021 Fall Year Results presentation. I'm joined today by Ian Weatherden, Chief Financial Officer, who will be taking you through our financial performance. I'm also joined by Gabriel Papanolagri, Chief Commercial Officer, and Aaron Clark, Head of Investor Relations. We will run through the presentation slides before opening the lineup for questions. Next slide. Before I start, I'd like to remind you that the presentation slides are available to view on our website. And also, slide two is our legal disclaimer, which I will leave you to review in your own time. Next slide, please. We are pleased to report a strong operational and financial performance, underpinned by continuous focus on safety and sustainability. Our leverage to the recovery in oil prices, combined with a 19% increase in gross production towards the upper end of our guidance range, and continued cost and capital discipline has enabled us to generate record adjusted EBITDA and significant free cash flow. We were disappointed to record a last time incident in October after working for almost two years without an incident. We are committed to continuous learning and we have now been operating for over 160 days without a further LTI. We also made good progress in the year on enhancing our ESG performance as our board approved our sustainability strategy and roadmap. Our mantra at Gulf Keystone is balancing investments in sustainable growth and shareholder returns. And I'm pleased to say we continue to deliver against this strategic commitment. Regarding growth, we brought two new wells online in 2021, Shai Khan 13 and Shai Khan 14, and Spud is a third, Shai Khan 15, in early 2022. We also submitted a draft field development plan to the M&R in November, which we are today providing an interim update on. Regarding returns, we distributed $100 million of dividends in 2021 and have already paid a further $50 million of dividends since the beginning of 2022. Today, we are declaring additional dividends for 2022 of $90 million, comprising a $25 million annual ordinary dividend and a $65 million interim dividend. I'd now like to explore in more detail our sustainability performance and strategy before looking at our operational performance and plans for future growth. Next slide, please. The safety and sustainability of our business and enhancing our performance is a strategic priority for Golf Keystone. We were pleased in the year to obtain board approval for our sustainability strategy and for a roadmap which we are using to guide our delivery. Our strategy is underpinned by several priorities which we have developed based on a materiality assessment exercise. We continue to make strides in executing our strategy in 2021. We submitted the draft FTP to the MNR, which includes a gas management plan targeting to eliminate routine flaring. This plan underpins our goal of more than halving scope one and scope two emissions intensity by 2025. And we're exploring other projects to further reduce our scope one and scope two emissions intensity beyond the 2025 target. As is the case every year, we continue to prioritize and focus on HSE improvements, building on our already strong HSE culture. We also continue to make significant social and economic contribution to Kurdistan through local employment, investment in the local supply chain, supporting local community projects, and generating at $356 million for the benefit of the Kurdistan Regional Government. As ever, a commitment to robust corporate governance and compliance, as well as high standards of business ethics, guided our activity. We were pleased to see MSCI ESG Research increase their rating from BB to A in September, driven by our emissions targets. We also look forward to providing you with more detail on our sustainability performance in our 2021 Annual Report that we plan to release in May. Turning now to our production performance, next slide. Gross average production increased 19% to 43,440 barrels of oil per day in 2021, towards the upper end of our guidance range and the third consecutive year of production growth. Since the beginning of the year, gross average production has increased further to around 45,500 barrels of oil per day. The contribution of SCICAM 13 and 14 underpinned the production increase in January, to around 46,100 barrels of oil per day and a new gross daily production record of just over 50,000 barrels of oil per day. Following the early appearance of trace water quantities in Shaikan 12 in January, the well has been shut in and is responsible for the subsequent decline in production. We are planning to run diagnostics on the well to investigate options to maximise near-term production. As water ingress is common in fractured carbonate reservoirs, we have always expected to install water handling to facilitate wet oil production, and we continue to expedite our plans. Following acid stimulations, currently, SciCAM 13 production is in line with expectations, while we continue to explore options to further increase SciCAM 14 production. Looking ahead to the remainder of the year, we are focused on delivering 2022 production guidance of between 44,000 to 50,000 barrels of oil per day, This reflects the anticipated production contribution from SHICAN 15 and the benefits of well intervention and work over activities. Next slide. We were pleased in February to hit the significant milestone of 100 million barrels of gross production from the SHICAN field since inception. Looking ahead, we see a significant growth opportunity from the field's substantial gross reserves and resources which are estimated at around 780 million barrels of oil following 2021 production. Our focus through the draft FTP, which I will talk about shortly, is to address this opportunity by ramping up production from the Jurassic Reservoir, which has been our production focus to date, and by testing the Triassic Reservoirs, which is estimated to contain around 157 million barrels of gross 2C resources. Now turning to our 2022 work program. Next slide. We are currently planning to invest between $85 to $95 million in 2022. This includes several components, drilling and completing SCICAN 15, targeting online in the second quarter, well interventions and workovers to optimize production, constructing well pads and installing flow lines to prepare for a continuous drilling program ahead of the FTP approval, and lastly, preparing for the expansion of our production facilities to include water handling. With progress on the SDP, we plan to resume drilling activity and update our capital guidance this year. Turning now to the draft SDP. Next slide. We were pleased to submit a draft field development plan to the M&R in November last year. As a result of positive progress with the M&R, we are today pleased to provide an interim update on the plan and an overview of scope, timing, and costs. While details may vary as we continue to optimize the field development plan and the timing of approval remains uncertain, we are targeting a significant ramp up in profitable production while simultaneously transforming our carbon intensity. As a result of a series of optimizations, we are now targeting to increase phase one gross plateau production by 10,000 barrels of oil per day to between 85 to 95,000 barrels of oil a day. The higher plateau production results in an increase of total phase one gross capex of around 160 million from the prior FTP, now estimated at 800 to 925 million dollars. Phase one is comprised of up to 85,000 barrels of oil per day from the Jurassic reservoir and up to 10,000 barrels a day from the Triassic reservoirs. Currently, we will implement a gas management plan, sorry, concurrently we will implement a gas management plan to eliminate routine flaring through gas reinjection, underpinning our target of more than halving Scope 1 and Scope 2 emissions intensity by 2025. The scope of the gas management plan has evolved from sweetening the associated gas for export and recovering elemental sulfur to reinjecting the gas. The recent reprocessing of seismic data, further studies, and analyzing additional production data confirmed the feasibility of reinjecting gas into the reservoir. We expect the phase one Jurassic and Triassic projects to take between 36 to 42 months from FTP approval, while the expected duration of the gas management plan is 18 to 24 months from approval. While our focus is on delivering phase one, we're also committed to exploiting the further potential of the field with a vision of increasing production above 95,000 miles of oil per day through the expansion of the Triassic reservoirs and the Cretaceous reservoir pilots. We believe the FDP is a tremendous opportunity to create value for all our stakeholders, and particularly our investors and the people of Kurdistan, and look forward to providing you with more detail upon approval. With that, I now hand you over to Ian for the financial review. Thanks, John.

Now on slide 11, I'd like to place the strength of our 2021 results into historical context. Over the last few years, we have focused on building a strong foundation that enables us to navigate through economic downturns and quickly capitalize on improving conditions. This is evident in looking at the step change in EBITDA, profit, and shareholders' distributions from 2020 to 2021. The Sheikhan field has significant production potential. With consecutive increases in production over the last three years and a relentless focus on costs, the business generates significant cash flow with leveraged oil prices. This enables us to balance sustainable growth with shareholder returns. We appreciate that shareholder returns are becoming increasingly more important and remain committed to striking the right balance between growth and returns going forward. Next slide. Adjusted EBITDA, a common measure of cash flow, increased almost fourfold in 2021 to a record $223 million. This was driven by a 19% increase in gross production to 43,440 barrels per day and our strong leverage to recovery in oil prices with a realized price for our crude oil sales more than doubling to $50 a barrel. Operating costs were up. with increased production and completion of deferred activities from 2020. On a unit basis, gross OPEX was 270 a barrel. Also, share option expense reduced EBITDA by $7 million due principally to the exercise of options under the legacy value creation plan. Next slide. The strong increase in adjusted EBITDA underpins strong cash flow generation in the year. Net capex was $51 million, including CHICAN 13 and CHICAN 14 drilling and completion activities and the de-bottlenecking of PF2. Working capital reduced cash flow by about $40 million, driven by higher oil prices and increasingly delayed KRG payments, despite the continued collection of arrears. This was partially offset by increased accounts payable. In 2021, we generated $122 million of free cash flow, enabling us to distribute $100 million of dividends in 2021. Next slide. We remain focused on strictly controlling our costs. Gross OPEX per barrel increased slightly in the year to 270 a barrel from 260 and was in the middle of our 250 to 290 per barrel guidance range. Higher operating costs due to increased activity were substantially offset by higher production. Other G&A expenses were up slightly, also due to increased operational activity. Next slide. In 2021, we received net $222 million from the KRG, including payments for both crude oil sales and arrears. Since the beginning of 2022, we have received an additional $106 million for the September to November 2021 invoices. To date, we have collected over 70% of the original $73 million net arrears balance, with an outstanding balance now standing at $22 million. We are currently awaiting payment for the December 2021 crude oil sales and arrears and will update the market on receipt. Next slide. Maintaining a robust balance sheet is a strategic priority for Gulf Keystone. Financial strength provides us with resilience through the commodity cycle and the flexibility we need to execute our strategy. At current oil prices, our low-cost structure and focus on capital discipline underpin significant cash generation as at the 29th of march we had around 183 million dollars of cash in the bank and 100 million dollars of debt that does not mature until mid 2023 we have a track record of maintaining a net cash position which enables us to develop the shycan field and manage potential downside risk We are mindful of the evolving situations regarding the recent Iraqi Supreme Court ruling on the constitutional basis of the Kurdistan oil and gas law and the potential sanctions implications resulting from the Russian invasion of Ukraine. While we have seen no impact on our business, we are closely monitoring the situations. The payment of dividends on the right partly explains the slight decline in our equity ratio since 2018. That said, the ratio remains robust and well above our bond covenants. While we have used hedging in the past to manage periods of extreme volatility, we do not currently have a program in place given the strong outlook for oil prices and the flexible spending program. However, we see hedging as a useful tool and will continue to monitor the environment and our future spending profile and adjust our approach as necessary. Turning now to shareholder distributions on the next slide. We are very pleased today to declare additional dividends of $90 million, further demonstrating our commitment to balance investment and growth and returns to shareholders. The declared dividends are comprised of a $25 million 2021 annual ordinary dividend, which will be proposed to shareholders at our upcoming AGM in June, and a $65 million interim dividend, which we plan to pay on the 13th of May, 2022. Today's announcement takes total dividends declared in 2022 to $140 million, equating to a pro forma yield of 22% based on yesterday's closing share price. In aggregate, the company has declared total distributions of $340 million since 2019. Assuming timely payment of invoices and continuing strong oil prices, we are expecting strong cash flow generation in 2022. This would provide flexibility to fund the potential increase in CapEx with progress on the FTP and the opportunity for further distributions to shareholders. With that, I'll now hand it back to you, John.

Thanks, Ian.