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Gulf Keystone awaits payment as Shaikan crude exports reach 4mln barrels for 2014

Published: 02:38 01 Oct 2014 EDT

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Gulf Keystone Petroleum (LON:GKP) said it has exported 4mln barrels of crude oil from the Kurdistan region of Iraq via trucking operations since January.

The London-listed oil company revealed it has transported a total of seventeen cargoes of crude produced from its large, partially developed Shaikain field in the semi-autonomous region.

GKP said that “constructive discussions” were taking place with the Kurdish Ministry of Natural Resources over payment cycles for past and future Shaikan export sales.

The company revealed it is still awaiting payments for much of the exported crude - just US$16.2mln was received by the company for export sales during the first half of 2014.

Production continues from Shaikan from two wells at a rate of 23,000 barrels of oil per day (bopd) and the company is still working to increase output towards a 40,000 bopd target.

In August GKP warned it may miss this target, which had been set for the end of 2014, as a result of the conflicts in Iraq, which had caused a reduction in necessary staff and contractors.

To achieve the 40,000 bopd target GKP needs to hook up three additional wells (Shaikan-7, 8 and 10) and operations to achieve this are ongoing.

Staffing levels, including contractors, returned to normal levels in the first half of September, GKP added.

“With all personnel now back in country, we are making good progress and look forward to reaching our target of 40,000 gross barrels of oil per day,” said chief executive John Gerstenlauer.

GKP’s trucked crude exports are being sold in international markets via Powertrans, which is a transportation and marketing agent of the Kurdistan Regional Government.

It also continues to sell 30% of Shaikan’s output into Kurdistan’s domestic market, where it is priced at a discount to international prices.

The company has sold 220,000 barrels of crude domestically since August 28 generating US$9.4mln of gross revenue – back of an envelope maths puts the sales price at about US$42 per barrel.

GKP said it had US$5.9mln of cash receipts from these sales as of September 30.

"Receiving steady revenues from our domestic sales is positive as we continue our constructive discussions regarding a stable payment cycle for past and future export sales,” Gerstenlauer added.

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