Thank you. Welcome to Gulf Keystone's 2024 half-year results presentation.

I'm Jon Harris, the CEO, and I'm joined by Gabriel Papineau-Legris, our CFO. Over the next few slides, we will discuss our operational and financial performance in the first half of 2024 and the current outlook for the business.

We will then open the line for questions. Next slide, please.

This is our regular legal disclaimer, and I'll leave you to review at your leisure. The presentation slides are available um to view on our website.

Next slide, please. Gulf Keystone um delivered a resilient operational and financial performance in the first half of 2024 during a period of significant regional disruption caused by the conflict between the USA and Iran.

Our priority throughout has been the safety of our people. Despite the challenging circumstances, we are pleased to have extended our track record of of zero lost time incidents to over 3.5 years.

Decisive action to reduce expenditures following the the production shut-in enabled us to minimize cash flow cash outflow, maintain a robust balance sheet, and pay a $12.5 million dividend to shareholders. We are pleased to have recently restarted production and exports with volumes continuing to ramp to prior levels.

Looking ahead, we are focused on unlocking full production sharing contract entitlement for export sales at international prices, which could bolster cash flow generation in the second half of the year and support a return to production growth in 2025. Turning now to operational to the operational review.

Next slide, please. Production in 2024 year to date has been impacted by two precautionary shut-ins related to the regional security environment, totaling almost 5 months.

Gross average production in the first half of 2024 was 14,600 barrels of oil per day compared with 44,100 barrels per day in the first half of 2023, reflecting the shut-in from the 28th of February to the 23rd of June. Shaikan Field and the team on the ground responded exceptionally well to these disruptions.

Prior to the first shut-in, production had exceeded 44,000 barrels of oil per day on several days in late February, thanks to the completion of several well workovers. Following the restart on the 24th of June, the field ramped up quickly to exceed 45,000 barrels of oil per day before the second shut-in on the 19th of July.

On August 16th, we were able to restart production again following the extension of the tripar- tripartite interim export agreements and our view of the regional security environment. Gross volumes are currently approaching 40,000 barrels of oil per day, and well activities are underway to increase production to prior levels soon.

Our focus for the remainder of 2024 is completing the ongoing ramp-up and maintaining stable export sales, subject to the state- stable security environment continuing. Next slide, please.

Investment and activity in the first half of 2024 has focused on the enhance production and in- enhancing production and improving safety and reliability of our facilities. Almost half of the $18 million net CapEx in the period was spent prior to the shut-in on the on 28th of February.

Subsequently, we moved quickly to moderate expenditures and preserve cash. Nonetheless, we have actively continued to progress safety-critical and strategic projects during that period, in particular, the installation of water handling facilities at PF-2.

We are making good progress and remain on track for full startup in Q1 2025. Once operational, the project is expected to unlock 4,000 to 8,000 barrels of oil per day of incremental gross production above the baseline, expand total capacity to around 77,000 barrels of oil per day, and reduce reservoir risk.

Looking ahead to the remainder of the year, we are we will continue to further progress the work program provided production remains online. We're also predi- positioning for a return to field development and drilling in 2025 once we have unlocked full production sharing contract entitlement for export sales at international prices.

Next slide, please. Despite the disruptions to production this year, the tripartite interim export agreements signed in September '23 between the IOCs, Kurdistan Regional Government, and Federal Government of Iraq have worked effectively.

IOC remuneration has improved relative to local sales, and payments have been consistent without delay following crude liftings. Realized prices in entire- realized prices in entitlement invoices have been very robust, with the Shaikan discount to Brent in the first half of the year at around $9 a barrel.

The decrease in discount relative to to Q4 2023 has been driven by strong demand for Kirkuk blend of crude, marketed at Ceyhan from the Iraq-Turkey Pipeline. Due to the market disruptions caused by the US-Iran conflict, some cargoes of Kurdistan crude were sold at the net at a netback price, which included a premium to the Kirkuk blend official selling price.

We will keep a close eye on how the discount evolves going forward, but it is too early at at this stage to provide long-term guidance. In June, the independent consultant's review of IOC invoices and contractual costs was submitted to the Government of Iraq.

Gulf Keystone and other IOCs are now focused on reconciling export sales since Sept- since September '23 to international prices. As you can see from the chart, we have a top-up receivable on our balance sheet of around $80 million net to Gulf Keystone.

This is estimated value for the differential between cash received to date of $30 a barrel and international prices in the entitlement invoices. It remains subject to the implementation of the independent consultant's review.

We are seeking to recover the receivable through the commencement of additional liftings in September 2024. The interim exports agreements have also been extended for 6 months to the end of January 2025.

This was the final step enabling the recent restart of exports and followed the 1-year extension of the Iraq-Turkey Pipeline agreement earlier this month. Our focus is now on replacing the interim arrangements with longer-term agreements at international prices.

Next slide, please. Shaikan remains a large, long-life asset with significant growth potential.

As at the end of 2023, the Jurassic reservoir had 416 million barrels of internally estimated gross 2P reserves, implying a reserve life of 27 years at 2023 production levels. The field also contained 311 million barrels of estimated gross contingent resources, including 157 million barrels in the Triassic reservoir, based on the latest CPR from 2022.

Returning to stable exports and payments at international prices would provide the foundation for renewed investment in production growth. In preparation, we are discussing a revised field development plan with the MNR and positioning for a potential return to field development and drilling in 2025.

The draft field development plan targets a more than doubling of current production from the Jurassic, a test of the Triassic reservoir at 10,000 barrels a day, and the elimination of routine gas flaring through a gas management plan. We will provide further updates as we firm up our plans.

With that, I will now hand over to Gabriel for the financial review.

Thank you, Jon. We delivered a resilient financial performance in the first half of 2024.

By reducing expenditures, we were able to minimize the free cash outflow, protect our balance sheet, and return cash to shareholders, while continuing to progress safety-critical and strategic projects. Next slide, please.

Adjusted EBITDA increased 26% to $52 million in H1 2024 compared with $41 million in the first half of 2023. The increase was driven primarily by considerably higher realized prices reflected in entitlement invoice for export sales and as well as lower operating costs.

This more than offset the impact of lower production from the temporary shut-in of the Shaikan Field. Next slide, please.

By taking decisive actions to reduce costs, we have been able to protect our balance sheet through the shut-in while maintaining our ability to quickly restart production at full capacity. Operating costs reduced by 25% to $20 million in the first half of the year relative to H1 2023, while other G&A expenses were 6% lower at $4.3 million.

Opex per barrel, while elevated over the entire period due to the lower production denominator, was around $4.4 per barrel prior to the February shut-in, in line with prior years. G&A expenses were also down in H1 despite incurring the one-off costs related to the Oslo dual listing.

Looking ahead, we remain focused on exercising strict cost control following the recent restart of production and exports. Next slide, please.

The reduction in CapEx and costs during the period enabled us to limit the free cash outflow to $2 million. Working capital outflow primarily reflects the difference between cash received at around $30 per barrel and the international prices reflected in the entitlement invoices.

As Jon mentioned, the difference is accrued as a top-up receivable, which increased to around $80 million net to GKP at the end of the period. To begin To begin recovering the receivable, we are seeking the allocation by SOMO of additional liftings of crude in September 2024, with payment expected no later than 30 days after scheduled cargoes.

GKP's net entitlement of Shaikan Field sales was approximately 36% in the first half of the year, in line with prior periods. Future net entitlement will depend on realized prices, production levels, and the outcome of the ongoing commercial negotiations with the Ministry of Natural Resources.

A return to international prices would quickly deplete the current reported cost pool, incentivizing future investment. Next slide, please.

GKP's robust balance sheet and ability to moderate expenditure enabled us to weather the disruptions in first half of the year while paying a $12.5 million semi-annual dividend in April. We remain committed to returning excess cash to shareholders.

We are therefore pleased today to announce an interim semi-annual dividend of $10 million for payment in September 2024. The dividend decision follows careful consideration by the board of GKP's operating environment, outlook, and cash balance.

Achieving full PSC entitlement for export sales could strengthen cash flow generation in the second half of the year, while the company maintains significant flexibility to reduce CapEx and costs if required. As Jon mentioned, export sales at international prices would also support a return to field development and drilling in 2025 as we firm up our plan with the Ministry of Natural Resources.

Looking ahead, we will remain true to our strategy, balancing disciplined investment in production growth with shareholder distributions and a robust balance sheet. With that, I will hand back to Jon for closing remarks.

Thanks, Gabriel. To summarize, our performance in the first half of 2024 demonstrated the resilience of our business during challenging conditions.

By acting quickly and decisively, we've been able to protect our people, our assets, and our balance sheet, while continuing to progress strategic pro- projects and returning cash to shareholders. Following the recent restart of production and exports, we are focused on completing the current ramp-up to prior levels and unlocking full production sharing contract entitlement for past and pres- present export sales.

Achieving the latter would bolster cash flow generation, supporting our decision today to announce a semi-annual dividend of $10 million, and provide the foundations for a return to production growth in 2025. As I conclude, I would like to say a big thank you to our staff, shareholders, and wider stakeholders for your continued support.

With that, I will now open the line for questions. Thank you.

Thank you. Um morning, guys.

Um just a question on reserves. Um you mentioned that your estimates of 2P reserves shows 27 years of of productive life based on last year's production.

Um what when I look at the license expiry, in including the fact the two 5-year extensions, um the the license expires well before this. I'm thinking Well, I'd like to kind of hear your thoughts.

Do Do the Do the revised discussions you're having on the new FDP um with the MNR, do they factor in a development period that will allow you to produce all of those reserves? Or or how how do those two things marry together?

Werner, thank you. Thanks for your question.

Um the simple answer is yes. Um those are those are our reserves, and they are the reserves produced within the license period.

The essentially, I think, I uh during the presentation I mentioned that we were looking to uh ramp up production to some 85,000 barrels a day, um which is nearly double what we're producing now, clearly that would shorten the uh 27-years life based on last year's production considerably. Um not quite sure it halves it, but nearly uh basically.

Yes, they are the reserves, they are produced within the period, and it does assume a production ramp-up.

Okay. Where with the revised FDP, it's possible that we'll see an extended license period as well to kind of enable you to do that?

Um we are not uh we

That's not part of the field development plan um at the moment. Of course, it might be might become part of future negotiations.

Okay. All right, thank you.

Um Um may maybe one for Gabriel. Just am wondering how much of the H1 um operating cost reduction reflects the temporary shut-in versus, I guess, more sustainable structural efficiencies?

I I would

Yeah. You were producing less and it was E-

Exactly. I think I I would say the majority is related to the um to the the fact that we were shut in.

We were spending less on diesel, on on uh chemicals. Uh obviously, we had to implement some some uh other um staff-related um savings.

Um so, but as you can see, in in the first half in the first two months, um we were bang in line with historical historical cost, and we always look for opportunities to to find savings that can carry on, but for for the first half specifically, given the the high level of production going down, it's primarily related to the shut-in.

Yeah. Okay.

Thank you.

Good morning, guys, and thanks for taking my my questions. Uh, I have three questions from me.

First, on the ongoing ramp-up uh you discussed. Uh, you indicated you you aim to to increase production back to the pre-shut down level around 40,000 barrels per day.

How should we think when will you reach that level, and what should we expect uh production for the second half assuming that there won't be any more more shutdowns? Uh, second question, that is on the reserves.

Um how should we think around any potentially impact on the reserves because of uh production uh shutdown and then uh production restart and then shutdown again? Uh, will there be any impact at all?

Um, and final question, that that is on on the receivables. I understand it's it's difficult to to precise precisely answer it, but but how should we think about like the repayment profile, and and how much do you think could be recovered uh this year?

Thanks. All

right. Okay.

Um I think your first question was around how quickly do we get back up to previous levels. Um I I think I said during the the sort of production ramp back in June through to July, which is like the 23rd of June to the middle of July, so that was like 3 3 to 7 3 weeks we got to 45,000.

We've just started on the 16th of of August that we've restarted production, here we are not even 10 days into that. Um coiled tubing is in the field lifting wells um as we speak.

We I'd expect to be over 40,000 uh by tomorrow in terms of production run rate, and it's really about 3 weeks since we start. I'd expect us to be back close to 44, 45,000.

That's on the production ramp side. I hope that answers that question.

You said with the production shutdown and start and shutdown again, do you expect the the reserves to be affected? The numbers we're talking about, um I I wouldn't expect those to really materially affect the overall reserves position um because we will be producing at a much higher rate and the fact that we haven't been producing, that kind of obviously plays into how we produce in the future.

I don't expect the reserves to be affected materially uh by that.

I I think of what you've seen uh in the the activity in on the field, it hasn't, as we ramp up the the the wells, they've all come back and there hasn't been any issue. That's from a mechanical or subsurface perspective, so that's positive.

On your your point on on the receivable, um basically we're really focused at the moment uh dealing with the the Q4 2023, that is following the the submission of the independent um consultant's review, and we're working quite hard with the other IOCs uh and the MNR and SOMO to get some some cargoes allocated uh from September. Um so we we'll have to see.

We also need to to recognize that uh in the summers the the volume, the throughput of oil um going through has been uh impaired by the security concerns. The fact that us and others, other fields, have been limited, that impairs uh, I suspect, a little bit, at the the ability for a quick uh handover of ad- additional cargoes.

Now that we are back online, production is ramping up, um we we hope that we're going to be able to see some of those cargo coming up soon. The priority is really get get that first cargo, get Q4 over the line, and then basically then you you start a program to deal with with the first half of this year.

As as Jon mentioned, production uh the the first part of this year was essentially January, Fe- February for the large part. We we'd expect it should be also uh rela- relatively quick to get the um the top-up for that period at an elevated oil price that we're seeing at the moment.

Let's focus on Q4. That's the priority right now, and we'll we'll then move ourselves to Q1 after that.

Uh understood. One final question, if I may, that is on CapEx.

Given accelerated production in in second half, should we also expect you to to spend more in second half than than in first half?

At At the moment, it's it's a little bit too too early to to tell. If it's just I don't think we could say it's going to be double.

Um we still have um some some discre- discretionary spend that we can put forward in order to kind of prep for next year's activities, um but that's also kind of tied with international pricing and the recovery of cash flows. It's that's why we didn't reinstate guidance, um but, for example, on strategic projects like the the wet train and the shutdown and some of the things that we we had decided to carry on, uh regardless or not of of the production shut-in, those are carrying on, but some well activities and and planning for for next year's activities like long leads and stuff like that are more discretionary, and we will um navigate those as we go through the uh the remainder of this quarter and Q4.

Understood. Thank you.

That's all for me.

Thank you.

thank you very much for taking my question. Um, a couple of uh questions actually if I may.

Uh, in terms of the recovery of the Q4 true-up, uh do you think you need to have agreement on the full export pricing um before you get that, perhaps September uh lifting? Uh and has that Q4 receivable for the true-up being agreed with the various authorities?

Basically, the

the Q4 receivable was part of the uh the independent consultant's review, and so now that that number has been validated, um it's now moving to uh allocation of additional cargoes to turn those receivables into money. Um, but you There is also a longer-term uh element to discuss about kind of future production, long-term uh prices to ensure that we move away from that interim period to get uh future production.

We're also in parallel having conversation with the the different stakeholders to put in place long-term exports agreements, uh which would allow us to get um international prices right from the beginning. I see those as as being disconnected.

You can still recover the the the receivables from the Q4 um in advance of of agreeing long-term agreements related to ongoing production.

That's great. Thank you.

One uh short follow-up. Uh, you talk about um maybe a return to growth next year uh and drilling next year.

Uh, do you have in mind a possible timetable for that drilling? Would that need, in your mind, to have agreement on the FDP or approval of the FDP?

Um, well, I mean

Charlie, we're out uh we're out tendering at the moment for a rig. There's obviously it'll be and also some long lead items which will which will dictate the exact start date, which we haven't got the answer to.

Our expectation is it's H2 next year. Um and yes, we would we would like to have the field development plan agreed.

Um, but we might consider drilling without it, but I think our our very strong preference is to drive towards agreeing the field development plan.

That's great. Thank you.

Thank you.

Great. Morning, guys.

Um just firstly on the the draft FDP, obviously that that's been around a while. I I was interested whether it's changed much in in recent years, um thinking particularly around the gas management system or or whether you've just sort of dusted off the old one.

I think, I mean correct me if I'm wrong, I mean I the last number I saw was sort of $800 to $900 million for that next phase. Does that still stand?

Um are you able to break that down for us at all and and how you think about funding it? David,

based on the the FDP in terms of uh development planning, in terms of expanding capacity, um both in the facilities and from wells perspective, is is similar. Um we have a few more wells than we had previously uh towards the back end of the program, we'd have a continuous drilling program.

Gas management plan, we are considering uh a number of um alternatives. One is One is, as per the original plan, which was to to reinject all the all the gas that we can uh it's not needed for use in the plant.

The second one is to just reinject the acid gas into a deeper reservoir and produce the sweet gas and make that available for um sales. Um so that's that's the that's the difference.

We haven't kind of uh con- concluded on that yet, but we are sort of honing in on on those two solutions to the to the gas side of things. I think the next question was around um On

On the CapEx.

CapEx. Thanks.

Yeah. To account for those additional um wells which come later in the life of the asset, um as well as the gas management program, we haven't come yet um publicly for what those come in because we still need to go to the tendering of the of the the gas project.

I think the the estimate that you said at at the starting point on a gross basis, um we'd probably expect to see this going a little bit higher obviously because there there would be more more wells in the back end, um and we'll have to see how ultimately the the costs come from the uh the the the gas management. The one thing worth noting is that the the the cost pool has been mostly depleted since, if you move back, 2022, 2023, just before the the the shut-in of the ITP and moving to local sales.

Essentially the the the the recycling of the CapEx is going to be a much shorter um shorter balance. Um, and that being said, we we think that the the cash flow generation of the asset will be improved.

As well, we we talked even back in the days to to raise um some debt. Uh we know that the the high-yield market has been quite supportive of recent players over the years.

Um and depending essentially how the the gas management program turns around, there could be some some other uh providers of capital, but we were uh looking into this uh as we speak um to make sure that we're we're well-funded and it's our our pace of investment ties with the the robust balance sheet and and ensuring that our shareholders are are seeing some distribution as we pace the investment over time. Um, well, once we get the FDP over the line, we'll be in a much better place to come with kind of the full full story to to investors.

Great. Can I just sneak in a follow-up, please, just on um on the uh the discounts?

The The The numbers you show on slide seven, are they a discount for the the Kurdistan Blend, or or are they sort of specific Shaikan discounts? Can I ask just what you're assuming going forward in your um in your own estimates?

To to clarify, this is really related to to Shaikan, it takes into account the the quality, as well as the uh the transportation, the line of the the pipeline we use. Um, as as Jon said, it's a little bit too early to to call that 9% will be will be forever, um, but in my we I suspect it's going to be low single-digit uh double-digit.

Um, I think going forward, um and we are um looking forward to see how that's going to evolve. If you look back compared to the $23, $25, or even $27 per barrel that we saw uh before, this is a net net material improvement from from where we are.

Um so we're we're really pleased to have those those agreements in place with this reduced discount.

Okay. Great.

Very clear. Thanks.

Thanks, Danielle. Um thanks, everyone, for submitting your questions.

First question from uh investors is, what's management doing to unlock the value of the assets as the stock is undervalued um and has underperformed over the last few years against industry peers? Jon, maybe I can pass that to you.

Thank you. Thank you.

Um, well, I I would say we've outperformed many of our international peers over the past 3 years on a total shareholder return basis, accounting for dividends. Um, I recognize that nonetheless, um I agree that there's been an impact on our share price this year due to the deterioration of the regional security environment and our prudent response to shutting production, while many other peers have benefited from ongoing sales of, of course, at international prices at the inflated international oil price.

Now that we're back into production and seeking to get back to international prices with targeted recovery of the top-up receivable for for the actual production we did we had produced during this period, we expect our performance to to very much recover. Um this would enable us to drive uh production growth from the the Shaikan Field, which we believe would unlock significant value for for shareholders.

Thanks, Jon. Um, second question on there's actually been a few questions on the um overdue receivables uh between 2022 to 2023.

Um, what's the update on those receivables, and is there a resolution forthcoming anytime soon? Gabriel?

Yep. Thanks, Aaron.

The the recovery of the those historical receivables, including '23 and '22, is part of the ongoing discussion with the MNR as part of the other outstanding uh Shaikan commercial matters. The talk The talks are progressing, um and regarding the timing and form of the the potential settlements of of all um of all the the historical receivable.

What I I'm happy to to point is that, as you can see in our account in note note 12, we are actually effectively continuing to recover the cost oil portion of some of those 2022 and 2023 arrears. That balance has been going down um since since the back end of last year.

Um so it's it's positive, and derisks that that position.

Great. Um, next question is just on M&A.

Um, do you envisage opportunities to merge or diversify the asset base, and therefore, enhance revenue streams in the next 12 months? Jon, would you like to take that?

Thank you. Yeah.

Our our primary focus remains unlocking the full um production sharing contract entitlement from export sales and returning to disciplined investment in production growth from the Shaikan Field. Um, but of course, we also look at opportunities to grow production and diversify our portfolio inorganically that would be value-accretive and consistent with our current um financial profile.

Great. Um, a few here on the top-up.

I think Gabriel's covered that quite extensively, but there's one here just on um regarding the September liftings that we've talk talked about. Um, are you now supposed to receive international oil prices for those liftings, or is it still the interim deal with local prices with a potentially later top-up?

The way it works that there's a dollar amount of receivables owed to the to the uh to the IOCs, and basically they take the international pricing that you kind of divide that amount at that at that point in time. It determines the number of barrels.

Then the IOCs are allocated some barrels. We sell those barrels, and as well this is converted back to cash.

We're able to deplete our our receivables. The short answer is yes, it would be on international pricing.

Great. Um, next question is just on the the CPR.

The last CPR was from 2022. When will there be a new CPR?

Jon? Uh

yeah. We with with us progressing to a field development plan um agreed with the Ministry of Natural Resources, we would move quite swiftly to uh also to re- uh reinvigorate the the last CPR.

One thing I would say is is the field has continued to perform as expected. Um it's continued to produce as we thought it would, um with you know it's been very, very reliable.

Um from that perspective, that's why it's quite easy to say our reserves haven't changed significantly, albeit, obviously, we're still looking at doing a major development to liberate those reserves. Um, but it is behaving predictably, uh it gives us confidence to to state the numbers, having not done a uh a CPR since '22.

Thanks.

Great. Just for you, Jon, again.

Um, can you elaborate on how the security situation has changed in such a way that you've decided to restart production? Uh

yeah, very much so. Um we we continue to look at and what's been going on obviously between the US and uh and Iran, um and we've kind of continued to see that there was a build up in um in military hardware by the US uh kind of up until about 10 days, 2 weeks ago.

Um, and then the US has kind of uh backed off um going full tilt militarily uh and continued with its rhetoric um about going full tilt, but it it hasn't done it. That's connected with the kind of the conversations around uh having sufficient uh Patriot missiles and other interceptors of drones and ballistic missiles, um having a reduced number of those uh in the region, and therefore, wanting to potentially go move to a negotiated solution.

Then obviously you'll have heard recently um yesterday, the uh Secretary of State for the US has come out, well, it may not be the Secretary of State, but the press has come out and said um that they're going to go full tilt on trying to bring Iran to the negotiating table through through economic hardship means. Um, so, from from our perspective, uh we've seen obviously the militia, who are uh the Shia militia sponsored by Iran, have been largely responsible for most of the ordnance fired into um Kurdistan.

Certainly, some has come from Iran, but the vast majority has been fired by the militia, and we've seen the militia um basically um in negotiations with the Iraqi government um about political power, um, but also uh kind of getting to a place where they are have backed off military activity as well whilst people are talking about the US uh leaving um leaving Iraq, um also connected with uh the the new Prime Minister of um of of Iraq saying that uh uh he's expecting the militia to disarm, albeit there are, rumblings about the timing of that and how how that's going to be effected. Our overall assessment is that um we've seen less uh less hostilities towards Kurdistan, less hostilities towards um uh IOCs, not for a considerable period of time actually, and therefore, that's led us to uh go back to being able to produce.

We are we're going to continue to monitor the situation, and of course, it also it may it may deteriorate again, um in which case we might have to shut in, but our our hope is that we can continue to produce.

Great. Thank you, Jon.

I don't have any further questions from the webcast, I will hand back to the operator to close the call.