Gulf Keystone restarts exports and chases $80M top-up as Iran conflict eases
Resilient H1 despite shut-ins, but the real story is the shift to international pricing and a potential production growth phase.
GKP.L · Earnings Call · 2026-08-25
Gulf Keystone Petroleum's H1 2026 results were framed by the US-Iran conflict, which forced two precautionary production shut-ins totaling nearly five months. Yet the company reported a resilient financial performance, and the tone on the call was decidedly forward-looking as exports have restarted and the path to full international pricing appears clearer than ever.
Back online after a bruising half
After a shut-in starting February 28, production only restarted on June 24 before another shutdown on July 19. The field is now back above 40,000 bopd and management expects to reach prior levels of 44,000–45,000 bopd within about three weeks. “We are pleased to have recently restarted production and exports with volumes continuing to ramp to prior levels.” — Jon Harris, Chief Executive Officer · 2026-08-25 The company emphasized that international prices are the ultimate goal, but even at the interim local sales price of around $30/bbl, the financial results were solid: adjusted EBITDA rose 26% to $52 million, helped by higher realized prices in entitlement invoices and lower opex. Operating costs were cut 25% to $20 million, with the company showing it can quickly moderate expenditure when needed. Management also declared a $10 million interim dividend, maintaining a robust balance sheet while returning cash to shareholders.The $80M top-up receivable: from invoices to cash
A key theme was the $80 million top-up receivable, representing the difference between the $30/bbl cash received under the interim export agreements and the international prices reflected in the entitlement invoices. Gabriel Papineau-Legris explained the recovery mechanism: “To begin recovering the receivable, we are seeking the allocation by SOMO of additional liftings of crude in September 2026 with payment expected no later than 30 days after scheduled cargoes.” — Gabriel Papineau-Legris, Chief Financial Officer · 2026-08-25 This is a deliberate step toward Export sales at full international prices. The interim agreements were extended to end-January 2027, and the company is working to replace them with longer-term arrangements. The consultant review of invoices has been submitted, and the focus is now on turning the receivable into cash. Jon Harris noted that the Shaikan discount to Brent has narrowed to about $9/bbl for H1, reflecting strong demand for Kirkuk blend crude.Security and the long-term plan: gas management and Field Development Plan
The security environment remains the wildcard. Jon Harris provided a detailed assessment of why the company felt comfortable restarting production:That assessment, combined with a reduction in militia activity, has enabled the restart. Looking forward, management is working on a revised Field Development Plan that targets more than doubling Jurassic production, testing the Triassic reservoir, and eliminating routine flaring via a gas management plan. The draft FDP is under discussion with the Ministry of Natural Resources, and the company is positioning for a return to drilling in H2 2027. This is a significant shift from last year when management was still waiting for the pipeline to open and stated: “We've been very clear about what we expect to get in order to put oil in the export pipeline.” — Jon R. Harris, CEO · 2025-08-28 Now, with interim agreements in place, the focus is on converting those expectations into long-term contracts and reinvesting in growth. The company has historically relied on a robust balance sheet and limited debt, but as Gabriel said last year: “So, we would look at the beginning of next year to start drilling.” — Jon Harris, CEO · 2025-03-20 That financial strength provides the flexibility to fund growth when the time comes. The FDP, with an estimated capital cost of $800-$925 million (gross), could be partially funded through debt given the improving cash flow picture. Last year, Jon had said:We continue to look at what's been going on, obviously, between the U.S. and Iran. We've kind of continued to see that there was a buildup in military hardware by the U.S. kind of up until about 10 days, 2 weeks ago. Then the U.S. has kind of backed off, going full tilt militarily and continued with its rhetoric about going full tilt, but it hasn't done it, plus connected with the kind of the conversations around having sufficient Patriot missiles and other interceptors of drones and ballistic missiles, having a reduced number of those in the region and therefore, wanting to potentially go move to a negotiated solution.
That moment may now be approaching as exports ramp up and the receivable gets recovered.So, if we saw very strong positive cash flows, then absolutely, we would look at potentially, recommending some further development of the field.