Gulf Keystone Petroleum (GKP) intends to cut 30% of costs this year, including a workforce reduction of 40%.
Of jobs lost, the reduction in expatriates will be more than 60%, GKP said, driven by scaled back work plans. Capital expenditure will be $40-48 million, down 50% from 2019.
The company took “decisive actions to preserve liquidity and safeguard the long-term health of the business” in response to the coronavirus pandemic and oil price crash, GKP’s CEO Jon Ferrier said.
“We are now well placed to weather the current environment and are able to move quickly back to growth at the right time. Our cost reduction initiatives have been thorough, and I am grateful to our staff and contractors for their commitment and support.
“Whilst uncertainty around the timing of the end of the crisis persists, the partial oil price recovery gives us some grounds for optimism about the future and our return to delivering the significant untapped value in Shaikan.”
One problem remains payment from the Kurdistan Regional Government. Invoices from November 2019 to February 2020 have not been paid. The company is owed $73mn under these.
Production is running at around 36,000 barrels per day, falling slightly. During this downturn, GKP is working on plans to return to its 55,000 bpd expansion project.
Previously, the company had planned to achieve 55,000 bpd by the third quarter of the year from the Shaikan field.
Operational expenditure should run at $2.7-3.1 per barrel this year, down from $3.9 per barrel in 2019.
The company has stacked the DQE Rig 40 on site. Once conditions improve, this should allow drilling to resume quickly.