The Kurdish Crush

The Kurdistan producers are in a tough spot brought about by COVID-19 and the collapse in oil prices. Earlier this year, the KRG said it would delay payments in respect of October 2019 to February 2020 deliveries as its cash to pay producers was stuck in a Lebanese bank account with the bank itself facing liquidity issues. The KRG had struck a deal to pay producers for the backlog later in 2020. Payments in respect sales from March 2020 were...

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Kurdistan steps up efforts to eliminate gas flaring

The Kurdistan Ministry of Natural Resources ("MNR") has asked the Shaikan field partners (Gulf Keystone and MOL) to re-submit a revised FDP for the field to address additional MNR requests on gas management. The next well planned on the field will now be used to assess the feasibility of gas reinjection into the Jurassic formation, rather than as an originally planned Jurassic production well. Whilst a key driver to be reservoir management and...

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Kurdistan E&Ps get paid for January sales

Genel has announced that the Tawke and Taq Taq partners have received payment from the KRG for January oil sales. The Tawke partners (DNO 75% and Genel 25%) have received USD56 million and will also share in a USD13 million overriding payment The Taq Taq partners partners received USD8 million this month The continuing payments by the KRG is constructive for sentiment and critical in bringing interest and investment back into the region. Many E&Ps have held off investing in the country with payments being a big concern. While the continuing...

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Kurdistan payments and new oil sales agreements

Kurdistan producers receive payment for October sales Gulf Keystone signs new oil sales agreement with the KRG DNO has reported a payment of USD54 million for Tawke production from the Kurdistan Regional Government. This is in respect of October oil deliveries. The payment will be shared between the licence partners WHO 75% and Genel 25%. Although there is a lag in payments between production and receipt, this is viewed as normal with October sales invoiced in November and approval by the Government in December with payment the following month....

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Kurdistan consolidation? DNO's proposed offer for Gulf Keystone

On Friday 29th July, DNO made a proposal to acquire Gulf Keystone for USD300 million in cash and shares. The tactics around the timing of this offer are unclear, given that Gulf Keystone are part way through a creditor restructuring. Negotiations during creditor processes are generally messy with the potential acquirer having to become involved in discussions with the debt holders, who hold significant power given their ability to "pull the plug" on the distressed company and/or dictate restructuring terms that lead to massive dilution of the existing...

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Gulf Keystone debt restructuring

On 14th July, Gulf Keystone announced the terms of its proposed balance sheet restructuring, marking the culmination of months of discussions with the company's debt holders. The restructuring, if approved by shareholders, will be implemented by way of a debt-for-equity swap and will see existing shareholders significantly diluted. The company has c.USD600 million of debt, comprising USD335 million of Convertible Bonds and USD266 million...

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