Gulf Keystone Pet Ord New

Good morning and welcome to Gulf Keystone Petroleum's 2025 full year results presentation. At the end of today's presentation, there will be an opportunity for Q&A. For participants joining via the conference call, you may ask a question by pressing star 1 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. We will take analyst questions from the conference call first followed by investor questions from the webcast. I will now hand over to Chief Executive Officer, John Harris. John, please go ahead.

Thank you. Welcome to Gold Keystone's 2025 full-year results. My name is John Harris and I'm the CEO. I'm joined today by Gabriel Papadolou-Legree, 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 Borsk. 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 costs in line with the type of 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 hot water handling at PF2, 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 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 to 42,000 barrels of oil a day. Any back losses from trucking and security-related disruptions over the summer of around 3,500 barrels of oil per day annualised 2025 would have been our best year of production on record, demonstrating the continued resilience and quality of the Shai Khan Field. On the 27th of September 2025, international pipeline exports restarted from the Shai Khan 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 world work overs and some interventions. However, on the 28th of February, we were forced to swiftly shut in production as a safety precaution in response to the strikes by the US and Israel on Iran and the subsequent deterioration in the regional security environment. Our assets have not been impacted to date, 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 is known. Moving on now to Shai Kam Field investment and activity. Next slide, please. We delivered our 2025 work programme in line with guidelines with discipline net capex of 39 million, reflecting investments in producing, production enhancing projects and safety upgrades at PF2. We were pleased to sanction the installation of water handling facilities at PF2, which will unlock production growth while reducing reservoir risk. Once operational, the new facilities are expected to unlock an estimated 4,000 to 8,000 barrels of oil per day of incremental gross production above the anticipated fill 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 minimise upfront capital expenditure and As with production guidance, we have suspended our previous 2026 net capital guidance of between $40 to $50 million. We will look to update guidance once production restarts and the situation stabilises. If the shut-in persists, we have significant flexibility to reduce the work program and expenditures, which Gabrielle will cover shortly. Next slide, please. In September 2025, GOC Keystone and other IOC by the Iraq-Turkey pipeline. The agreements are a game changer for the company and the industry. We have provided immediate benefits through the increased cash receipts versus local sales of around $30 a barrel, consistent listings and payments, and the recognition of our contracts by Iraq for the first time. They have 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 invoiced revenue for 2025 export sales, the implied discount to Brent for 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 the completion of the consultant's report. Simultaneously, we are continuing to progress our negotiations with the 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 modelling assumptions. 2022 CPR, it is clear that the Shai Kenfield remains a world-class and long-life asset. With a reserves life of 2027 years, the field has significant profitable growth potential to pursue once production restarts and we return to exports at international prices. It has also been an extremely resilient asset to the ups and downs of operating incurred stamp, 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, John. 2025 was another year of strong delivery in line with annual guidance, with targeted investment in production-enhancing projects, strict cost control, and continued free cash flow generation. This led to $15 million of dividend payments to our shareholders. significantly higher realized prices visible in our invoice revenue in Q4 2025, and consistent payments for sales under 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 invoice. As John summarized, the higher realized prices and lower implied discounts to rent 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 trust 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 capping 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 persists. Our initial focus will be to preserve liquidity while maintaining the ability to quickly restart production and exports. However, we have sought 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 Next slide, please. We generated $29 million in free cash flow last year, reflecting the increase in EBITDA upsets by incremental capex and working capital outflow related to the 2025 exports receivables. 2025 export payments equated to $30 per barrel, whereas the realized prices of around $51 a barrel in invoices was much higher. translating to a receivable of $33 million net to GDP 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. The receivable of $32 million under the interim agreements was also accrued for a 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 pre-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. JKP'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 within our only commercial matters. In due course, we expect the outstanding cost pool to be recovered, putting us into an excellent position to invest in profitable production growth while continuing to generate free cash flow, assuming LTO 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 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 27 April 2026. The 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 John to wrap up. Great, thanks Gabriel. To summarise, 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 debt-free balance sheet, lean cost base, and flexibility to reduce expenditures if required. The interim exports 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 Thank you, sir.

As a reminder, to ask a question over the phone, please signal by pressing star 1 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 1 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, but I wonder in terms of your previous guidance on both OPEX and CAPEX and where you provided a split, could you tell us what, 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. So, at this stage, we're still kind of in the early days. not rehearsal, but we have navigated this in the past. As you can imagine right now, operation is very, very minimal. So in terms of actual OPEX, it's extremely low, given the fact that there is no diesel, that there's no civil, that the activity is a bit suspended. It's a little bit too early to provide clear guidance in terms of run rate, but we're definitely on it. We want to balance the serving the cash on balance sheet, cutting the cost, 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? And 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, so maybe what I can do is start with the actual guidance that we are providing. If you kind of put it together, that was kind of between $9 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 seven, probably a bit around five, six. And obviously, you could even go further, but obviously that would impact our ability over time to restart production. I think the seven you mentioned is a conservative assumption and we'd be able to go further.

Okay. And 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 Rigging from Peel Hunt. Please go ahead.

Thanks. Morning, guys. Yeah, just to kind of probe a little bit on on what your understanding of the discussions taking place are to get sheikah and oil flowing again? And what assurances might you need to make the decision to restart production? Clearly, you're not going to put anyone's lives at risk from a safety perspective, but yeah, specific assurances and your understanding of the discussions.

the commencement of oil flowing through the ITP from Iraq.

And 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. And I believe that they've committed also to paying salaries to Erbil. So again, easing Erbil's economic pain going through this at this point in time.

I think we would

we would really be looking for and that we would look for an improvement in 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, any, what assurances do you need? Is it sort of an okay from the ministry or is there other, you know, Is there anything more than that that you would be comfortable taking the decision?

I mean, you'll understand this is sensitive, but we are having conversations with ministries in both Baghdad and Erbil.

Okay. So changing tack slightly, if that's all right, with another question. I was just wondering whether or not the conflict changes your view on whether

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 return for shareholders investment i think previously you know we've always said we would look at opportunities both internally and outside of understand if the opportunity presents itself and it fits with our kind of continuing strategy um so that's how we've answered it always and we'll continue i think we're continually in the same we are in the same space where we would consider we would consider uh expansion but 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, but this I'd like to hand the call over to Aaron for any webcast questions.

Good morning and 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 John has answered. Maybe if we 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, so thanks for the question. So the plan was to get the consultant completed in June. We're expecting that there's probably going to be a bit of a delay on this. We expect the adjournment agreement will be extended. I think all parties recognise the benefits pipeline but the engagement has been really well with the consultants and so we're it's kind of progressing really well and we hope that the we've seen brought more brought into the region will have minimal effects then we can kind of carry this in the background as much as we can thanks Gabrielle maybe if we just stay with you so I've got a question here on the receivable in particular relations of the outstanding receivable Could you provide an update on the discussions around that and how we expect it to be repaid? Yeah, sure. No problem. So we, as John mentioned, we continue to engage with the M&R on resolving several of the historical Shai Ken commercial matter, which includes those receivables, other KRG related assets and liabilities, as well as PSCA agreements or amendment for that matter. But you will note in our financial and P&L, there is a line which is in the revenue around the effective recovery of past receivables 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, so as we said before, the current framework with the local sales and the transit I think it's also fair to say that what we're seeing right now are unforeseen events. So basically, in that context, the board intends to review the feasibility of supplementary dividend payments following the restart of production, exports, and obviously payments, which is very important to drive the dividend. But what I'm trying to say is that, in short, Okay, very good. Just got one last question from the webcast, and then we're just going to switch back to one last analyst question. So, John, 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 is to drill two or three appraisal wells and reduce them into an early production scheme and then

it's quite sad and the great idea one as a suggestion on a stake and therefore that would once we uh be able to sort of sample that flow test it then i think we would end up uh thinking about a later development phase for that but the the initial kca we we think we would go quite quickly um 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 that to the operator to answer any final questions from the analysts. Thank you.

And we have a follow-up question from Charlie Sharp from Canaccord. Please go ahead, Charlie.

Yes, thank you. Much appreciated. It's just a quick question really on the receivables related to late year 25 production, the exports. and then the true-up mechanism as well. Do you see, and 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 Iraqis 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 Charlie. As you can expect, I think that the whole region is definitely navigating this in real time considering that oil and gas is the largest components of financing for the budget of several of the states, including Iraq. And I think we'll have to first see when we'll see recurrent flows going through the pipeline as well as exporting south. But all of those, you made a valid point, we'll need to sit down, first of all, with the completion of the consultant's review, understanding that the timeline We've been navigating for a very long time ups and downs in Kurdistan and Iraq. But I think it's very important that first thing, we get that production of oil into the pipeline to alleviate it and kind of very much immediate the fiscal crisis in the region. And 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 thought 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.