Gulf Keystone Petroleum ((GB:GKP)) has held its Q4 earnings call. Read on for the main highlights of the call.
Gulf Keystone Petroleum’s recent earnings call painted a picture of robust operational and financial health for 2024, marked by significant improvements in production and financial metrics. The company successfully resumed shareholder returns and implemented effective cost control measures. Despite these achievements, challenges persist in restarting pipeline exports and achieving higher realized prices. Nevertheless, the outlook for 2025 remains optimistic, with continued production guidance and cost management strategies in place.
Strong Operational Performance
In 2024, Gulf Keystone demonstrated impressive operational performance by returning to consistently strong production levels. The company’s production volumes nearly doubled, supported by a full year of local sales. Notably, Gulf Keystone achieved this milestone with zero lost time incidents, operating for almost 800 days without a lost time injury.
Financial Improvements
The financial landscape for Gulf Keystone in 2024 was marked by significant improvements. Adjusted EBITDA saw a 52% increase, reaching $76 million, driven by an 86% increase in gross average production. This financial strength translated into a robust free cash flow generation, with a $65 million inflow compared to a $13 million outflow in the previous year.
Shareholder Returns
Shareholder returns were a focal point in 2024, with Gulf Keystone resuming distributions totaling $45 million. This included a $25 million interim dividend in April 2025, resulting in a total shareholder return of 24% for the year.
Low Operating Costs
Gulf Keystone maintained its status as a leading low-cost operator among peers by reducing gross operating expenses per barrel by 21% to $4.4. This cost efficiency underscores the company’s commitment to maintaining competitive operational costs.
Positive Outlook for 2025
Looking ahead to 2025, Gulf Keystone remains optimistic, reiterating its guidance for average production of 40,000 to 45,000 barrels of oil per day. The company anticipates stable local sales demand and ongoing cost control measures to support this outlook.
Challenges in Export Restart
Despite the positive performance, Gulf Keystone faces challenges in restarting pipeline exports. Discussions with the Kurdistan Regional Government and the Federal Government of Iraq remain inconclusive, with the company seeking agreements on payment surety, receivables repayment, and contract terms.
Reduced Realized Prices
In 2024, realized prices averaged around $27 per barrel, reflecting the transition to discounted local sales and the absence of international pricing. This presents a challenge for Gulf Keystone in maximizing revenue.
Operational Disruptions
Operational disruptions were noted, with production temporarily affected by a lack of trucks during regional holidays and politically motivated road closures related to regional elections in Kurdistan.
Forward-Looking Guidance
In its forward-looking guidance, Gulf Keystone reported a strong operational and financial performance for 2024, with gross average production reaching 40,689 barrels of oil per day and a peak of 48,500 barrels in September. The company plans to maintain a cash balance of $115 million and outlined plans for $25 million to $30 million in net capital expenditure focused on maintenance and production optimization for 2025. Ongoing discussions with the Kurdistan and Iraqi governments about restarting pipeline exports could significantly enhance cash flow and shareholder value.
In conclusion, Gulf Keystone Petroleum’s earnings call highlighted a year of strong operational and financial performance, with significant improvements across key metrics. While challenges remain in export logistics and pricing, the company’s forward-looking guidance reflects an optimistic outlook for 2025, underpinned by stable production and cost management strategies.