Announcing its interim results for the six months to 30 June Gulf Keystone said it had recently evacuated international contractors from the site because of escalating violence in the region. A target of achieving production of 40,000 barrels of oil equivalent a day remained in place for the short term, but this might not happen until next year rather than by the end of 2014 if security problems remain, the company warned.
The results statement said however that operations in the region remained secure and production and crude sales from Shaikan had so far not been affected 'in any material way'.
The company said ramp-up of Shaikan production in the first half from 10,000 gross barrels of oil per day ("bopd") to rates of over 20,000 gross bopd through the tie-in of an additional producing well to Shaikan PF-1 and the commencement of production operations from Shaikan PF-2 had been achieved.
Non executive chairman Simon Murray said: “Despite the recent security crisis in Iraq, which clearly affected the lives of many people in the Kurdistan Region and refugees from elsewhere in Iraq, I strongly believe that Gulf Keystone's footprint as one of the key oil producers in this strategically important area is assured.“
The company hopes to achieve 40,000 bopd of Shaikan production through the tie-in of three additional producing wells (Shaikan-7, -8 and -10). Discussions are on-going with the Iraqi Ministry of Natural Resources on establishing a regular and predictable payment cycle for past and future Shaikan crude oil export sales, said by the company to be of critical importance to its funding position.
This would affect decisions on investment in additional production facilities, development wells and infrastructure in line with the approved Shaikan Field Development Plan.
The company reported a US$29.8 million loss after tax for the first half of the year on revenues of US$18.7 million