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Gulf Keystone taps bond market for US$250mln

Last updated: 20:46 19 Mar 2014 AEDT, First published: 21:46 19 Mar 2014 AEDT

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Gulf Keystone Petroleum (LON:GKP) is planning to raise funds through a debt offering of US$250 million to boost the daily oil production at the Shaikan field in Kurdistan to 40,000 barrels.

The company, a favourite among retail investors, currently produces oil at a stable rate of around 10,000 barrels a day from the first production facility at Shaikan (PF-1).

The third production well, Shaikan-4, has been flowing at up to 6,000 barrels of oil a day in the last week, the company added.

The company said it has recruited Deutsche Bank and Pareto Securities to arrange a series of fixed income investor meetings in the US, Europe and Asia starting tomorrow.

It follows a disappointing reserves and resources update last week, which saw the share price tank as much as 30%.

A total of 12.5bn barrels of gross oil in place were confirmed in the competent person’s report (CPR), which is well shy of previous estimates in the order of 19bn barrels.

GKP’s plan is to use cash generated from increasing oil sales, as well as the rest of the debt financing, to lift production to 66,000 barrels a day by the first quarter of 2016, the next step towards GKP’s medium-term target of 100,000 barrels.

The increase to 66,000 barrels a day, alongside continued work at the Sheikh Adi, Ber Bahr and Akri-Bijeel blocks, is expected to cost another US$340mln to the end of 2015.

Chief executive Todd Kozel said: “We have reached a crucial milestone in Gulf Keystone's transition from an exploration company to an exploration and production company.

“This is the first time in the company's history that it has been in a position to access the conventional bond markets, and we are confident that this proposed bond issue will further expand the company's financial options in the future.”

Kozel also said the planned move from AIM to the main market should complete shortly.

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