Gulf Keystone Pet Ord New

Good morning and welcome to Gulf Keystone's 2025 half-year results. I'm John Harris, CEO, and I'm joined by our CFO, Gabrielle Papanola-Green. Over the next few slides, we'll run through our operational and financial performance in the first half of 2025 and the outlook for the remainder of the year. Following that, we will open up the line for questions. Next slide, please. This is our regular legal disclaimer, and I'll leave you to review at your leisure. I'd like to remind those listening that the presentation slides are available on our website. Next slide, please. We delivered a strong operational financial performance in the first half of 2025. Consistent demand from local sales market in Kurdistan and good reservoir performance enabled an increase in production relative to the same period last year. Capital and cost discipline continued to underpin free cash flow generation. funding the payment of a $25 million interim dividend in April. We remain focused on safe operations, extending our track record of zero lost time incidents to over 950 days. We are pleased to have recently ramped up production back towards full well capacity following the temporary shut-in of the field in July after the drone attacks on neighbouring oil fields. With the return to stable sales and our robust cash balance, we are pleased to declare another $25 million interim dividend to be paid on September the 30th, increasing dividends paid and declared in the year to date to $50 million. We have also taken the investment decision of installing water handling facilities at our production facility too, which is an important milestone for the company. As we focus on maximising shareholder value from local sales, we also continue to engage with government stakeholders regarding the restart of exports. Turning now to our production and local sales performance and outlook. Next slide. Gross average production increased 12% in the first half of 2025 to 44,100 barrels of oil per day over that of the first half of 2024. The improvement was driven by consistently strong local market demand between January and May 2025, enabling monthly gross average production above 45,000 barrels of oil per day. Higher volumes were also supported by good reservoir performance. with our production optimisation programme enabling us to offset declines and well-maintenance. We saw a reduction in sales in June due to trucking shortages around Eid al-Adha, religious holiday, and a conflict between Israel and Iran. In mid-July, we shut us in the Sheikah field as a safety precaution following drone attacks on neighbouring oil fields. We acted quickly to move all staff and contractors to safe locations. At the beginning of August, following a security assessment, and consultation with the Kyrgyzstan Regional Government, we restarted production and have actually ramped up through the month towards full log capacity. We continue to closely monitor the security environment as we operate the plant, and we have also introduced increased security protocols. Average realized prices from local sellers in the first half were healthy at $27.80 a barrel, a slight increase relative to last year. We have continued to sell at prices around $27 to $28 a barrel since June. Looking ahead, we have timed our 2025 gross average production guidance to between 40 and 42,000 barrels of oil per day. The lower range reflects the production losses from June through August disruptions, which amounted to around 1.3 million barrels, or around 3,500 barrels of oil per day annualised. We have additional well optimisations planned in the remainder of the year As we continue to manage natural field decline and certain wells constrained by water and gas, the guidance remains subject to local sales demand and a stable security environment. Moving on now to field activity. We spent around $13 million of cash net capex in the first half of the year, in line with our discipline guidance for 2025. Work today has included implementing the programme of safety upgrades at Production Facility 2, with installed equipment expected to be tied in next year during the rescheduled shutdown. We have also been executing a variety of production optimisation initiatives on certain wells. We are really pleased this week to sanction the installation of water handling at Production Facility 2. This is an important milestone for the company, which we have long envisaged as part of the development of the field and its natural life cycle. Engineering design work has begun and commissioning is currently expected at the beginning of 2027. The facilities will add an additional wet oil processing capacity of around 17,000 barrels of oil per day to the Shai Kanfield's existing dry oil processing capacity of 60,000 barrels of oil a day. Whilst operational, the new facilities are expected to unlock an estimated 4,000 to 8,000 pounds of oil per day of incremental gross production above the anticipated field baseline from existing constrained wells. The ability to produce wet oil will also reduce the downside risk to reservoir recovery. To reduce costs, we are bringing second-hand facilities to Production Facility 2 and combining them with an existing but unused oil train from the previous expansion programme, which was suspended in 2023 with the closure of the pipeline. To minimise upfront capital expenditure and provide flexibility, the facilities will be leased over multiple years following commissioning. Limited incremental net capex is expected in 2025, and the total costs ahead of commissioning are estimated at around $12 million net to GKP. The facilities are expected to generate positive cash flow, even in a local sales environment and at the low end of the incremental production forecast I just mentioned. Looking ahead to the remainder of the year, we are now expecting cash net capex of $30 to $35 million in 2025, A slight increase versus previous guidance of $25 to $30 million, primarily reflecting the incremental net capex associated with the water handling project we have just sanctioned. We continue to expect around $20 million of net capital expenditure on the production facility to safety upgrades and the $5 to $10 million related to the production optimisation programme. Next slide, please. Update on Kurdistan exports. We are continuing to engage with the government stakeholders regarding a solution to restart Kurdistan exports through the Iraq-Turkey pipeline. We have seen increased momentum towards a solution in recent weeks, as we remain focused on securing written agreements on payment surety for past and future oil sales and the preservation of our contractual rights. We are ready to restart exports quickly, provided we have right agreements in place. We continue to see a number of sources of potential value to Gold Keystone from the restart, including operational leverage to higher realised prices, the full repayment of outstanding receivables, a stable commercial environment enabling us to develop the rich ICANN field's significant estimated 2p reserve space of around 440 million barrels of oil, and recognition by Iraq for Kurdistan's oil and gas industry, potentially reducing our cost of capital. The restart of exports would also be a significant positive for Kurdistan and Iraq by unlocking additional revenue from a vital source of global oil supply. With that, I'll now hand over to Gabriel for the financial review. Gabriel.

Great. Thank you, John. In the first half of 2025, we delivered a resilient financial performance. Increasing data from stronger production combined with capital and cost discipline enabled continued free cash flow generation. In turn, funding a 25 million dividend and reinforcing our robust balance sheet. Next slide, please. Adjusted EBITDA increased 13% to $41 million in the first half of 2025. The improvement was primarily driven by the 12% increase in gross average production to over 44,000 barrels a day and a higher average realized price of $27.8 per barrel. Stronger volumes and prices combined with lower G&A expenses more than offset the increase in operating costs and share option expenses. Turning now to operating costs and G&A. We continue to exercise tight control of our cost base while safely maintaining the production capacity of the Shaiyan field. Gross OPEX per barrel was flat at $4.2 per barrel versus last year first half as we maintain our leading industry cost position. The 13% increase in operating costs to $27 million reflected a higher production and increased well service costs spent on bringing two wells back onto production. Other GNA expenses decreased 15% to $4.6 million in the first half. The performance so far this year means that we are pleased to report today that we are on track to meet our 2025 guidance for operating costs between 50 and $55 million, and for other GMA expenses under $10 million. Next slide, please. On cash flow, we generated $25 million of free cash flow in the first half of the year, relative to $27 million a year ago. Stronger adjusted EBITDA more than offset the increase in net capital expenditures, working capital, and other cash outflows. Net capex in the first half of the year was $18 million, or $13 million on a cash basis, after excluding a $5 million non-cash charge associated with reclassification of drilling inventory purchased and paid in 2022 and 2023. Free cash flow funded the payment of the $25 million interim dividend paid in April, while $4 million were also used to fund share purchases by the employee benefit trust to satisfy the 2022 health investing. Our cash balance was broadly flat at $99 million at the end of June. And since then, liquidity has improved to $106 million as at yesterday. Moving on to capital allocation and shareholder distributions. We have a consistent track record of balancing investment with shareholder returns while maintaining a robust balance sheet. We've delivered against this strategy for many years now, and it is the cornerstone of our investment case. In the current local sales environment, we are taking a specific approach to capital allocation. In terms of field development, our focus is on safely maintaining our existing production capacity and reliability, as evidenced by the recent sectioning of the water handling project. Looking at our balance sheet, we are focused on preserving a certain level of minimum cash to fund this essential investment while managing the operating environment. We are committed to returning excess cash to shareholders in line with our clear shareholder distribution framework, which includes semi-annual dividend reviews and the opportunistic consideration of share buybacks. Given the recent return to stable sales and the current liquidity position, the board has approved the declaration of an additional $25 million interim dividend to be paid on 30th of September, bringing total dividends this year to $50 million. The dividend decision has been taken recognizing the potential liquidity required to transition from prepaid local sales to exports. In an exports restart scenario, we plan to review our approach to investment and broader field development. Higher realized prices from export will make growth investment more attractive, in particular as the recovery of the cost pool is accelerated. We would also expect to review the current distribution policy with the objective of providing investors with additional predictability on future returns. With that, I will now invite John to wrap up.

Thanks, Gabriel. To summarize, we've delivered a good performance in the first half of the year with higher production prices and capital discipline and cost control generating free cash flow. We've continued to execute our disciplined work programme to safely maintain the well capacity and the reliability of the Shikam field, and have taken an important step towards unlocking incremental production and reducing reservoir risk through the sanction of Water Handling Facility 2. Looking ahead to the remainder of the year, we are now focused on delivering a tightened gross average production guidance range for 2025 of between 40,000 to 42,000 barrels of oil per day, subject, of course, to stable local sales, demand, and the security environment. We have increased annual net capex guidance slightly to $13 million to $35 million, reflecting the incremental investment in the water handling. OPEX and G&A guidance remains unchanged. Following the return to stable sales and further improvement in our cash position since the end of June, we are pleased to declare an additional $25 million interim dividend to be paid on the 30th of September, increasing total dividends paid and declared in 2025 to $15 million. Finally, we are continuing to make progress towards unlocking the restart of exports. We continue to push hard, and we are hopeful of nearing a solution. With that, I will now hand you back to the operator for Q&A.