Gulf Keystone Petroleum (LSE: GKP) (NASDAQOTH: GFKSY.US), the oil explorer with operations in the Kurdistan region of Iraq, reiterated today that its operations our progressing in line with previous guidance. Despite unrest and escalating violence in Iraq — which sent Gulf Keystone shares down more than 10% on Wednesday — the firm is on schedule to reach 20,000 gross barrels of oil per day (bopd) by the end of Q2 2014.
The firm added plans to increase production at its Shaikan oil field are on track, and production capacity should increase to 40,000 bopd by year-end 2014. In June the company received its second and third payments of $6.85m and $6.88m respectively for crude oil export sales, as well as a further $1.5m from domestic sales.
To boost production rates and provide spare well capacity then further wells will come online in 2014 and two additional production wells, Shaikan-9 and -11, are planned to be drilled later in the year.
Todd Kozel, the chief executive, commented:
“Our crude oil export sales have now surpassed our historic sales into the domestic market, and our revenues are expected to increase significantly in the second half of 2014 with the establishment of a steady payment cycle for the Shaikan exports sales.”
Shares in Gulf Keystone Petroleum increased by 3.5p, or 4%, to 83.5p during early trade this morning. Before today analysts were expecting that the firm would reveal earnings per share of 8p in its 2014 annual results. After this morning’s price movement, therefore, the shares may trade on a P/E of 11.
Of course, the decision to ‘buy’ — based on those metrics, today’s production update and the wider prospects for the oil industry — is entirely your decision.
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Mark does not own shares in any company mentioned.