Gulf Keystone Petroleum Limited

For the first half of 2025, gross average production increased 12% to 44,100 barrels of oil per day, average realized local sales prices were $27.80 per barrel, adjusted EBITDA increased 13% to $41 million, and free cash flow was $25 million versus $27 million a year ago. Gross OpEx per barrel was flat at $4.2 per barrel; operating cost increased 13% to $27 million; other G&A fell 15% to $4.6 million; net CapEx was $18 million, or $13 million cash basis after a $5 million noncash charge. Cash was $99 million at end-June and improved to $106 million as of yesterday. For 2025, management tightened gross average production guidance to 40,000-42,000 barrels of oil per day, raised cash net CapEx guidance to $30 million-$35 million, and said operating costs should remain $50 million-$55 million with other G&A under $10 million.

Jon R. Harris struck a positive but cautious tone, emphasizing that the business is generating free cash flow through capital and cost discipline while operating safely. He highlighted the sanctioning of the PF-2 water handling project as an important step to add incremental production and reduce reservoir risk, and said the company is making progress in negotiations to restart exports. At the same time, he repeatedly tied the outlook to stable local sales demand and the security environment, noting the recent shutdown and restart following drone attacks in the region.

Gabriel Papineau-Legris emphasized resilient first-half financials, pointing to $41 million of adjusted EBITDA and $25 million of free cash flow, which funded the April dividend and left cash broadly flat at $99 million at June 30 before rising to $106 million later. He said gross OpEx per barrel stayed flat at $4.2 and that operating costs and other G&A remained on track for full-year guidance of $50 million-$55 million and under $10 million, respectively. On capital allocation, he said the company wants to keep enough liquidity for roughly a year of spend, sees about $80 million as a minimum cash level for now, and approved the additional $25 million dividend while preserving flexibility for future investment and possible buybacks.

Analysts focused on PF-2 water handling economics, future drilling, export timing, receivables, dividends, and whether the company might broaden beyond Kurdistan. Management said PF-2 water handling will cost $12 million through commissioning in early 2027 and could unlock 4,000-8,000 barrels per day of incremental gross production, versus $35 million-$40 million for two new wells that might add 6,000-8,000 barrels per day. On exports and settlements, management said it is negotiating with stakeholders but would not disclose mechanics or timing yet, and said arrears would likely be recovered over time. On capital returns and strategy, they said dividends remain important, buybacks stay opportunistic, M&A and farm-ins are not near-term priorities, and the focus remains Kurdistan and Shaikan.