Operational & Corporate Update

Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq (“Kurdistan”), today provides an operational and corporate update. The information contained in this announcement has not been audited and may be subject to further review.

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:

“2023 was a challenging year for GKP and our industry as Kurdistan crude exports were suspended in March and payments from the Kurdistan Regional Government for oil sales were further delayed. By adapting to the new environment and commencing sales to the local market we have been able to protect our business and balance sheet. I’m proud of the GKP team, who have swiftly transitioned from a focus on profitable production growth to preserving liquidity and restarting trucking operations, maintaining an excellent safety record throughout.

While local market demand remains variable, we are actively working to increase volumes and remain focused on at least covering our estimated monthly capex and other costs of c.$6 million in 2024, while proactively managing our accounts payable.

We continue to engage with government stakeholders to push for the restart of exports and payment surety for past and future sales. We see considerable upside should the operating environment improve, underpinned by the attractive fundamentals of the Shaikan Field and our historic track record of value creation.”

Operational

Zero Lost Time Incidents for over a year, demonstrating GKP’s rigorous commitment to safety despite significant operational and project changes in 2023

2023 gross average production of 21,891 bopd (2022: 44,202 bopd), reflecting the suspension of exports and subsequent initiation of local sales

Gross production averaged 49,165 bopd between 1 January and 24 March 2023 prior to the Iraq-Turkey Pipeline closure

Gross average sales of 23,331 bopd between the initiation of local sales on 19 July and 31 December 2023

Gross average sales in 2024 year to 29 January of c.21,600 bopd

Continued fluctuation in volumes reflects seasonal logistics and demand challenges, refinery capacity constraints and supply from other producers in the region

Realised prices are currently c.$27/bbl, in line with local market pricing (current breakeven at gross sales of c.20,500 bopd); reduced from an average of $30/bbl in the second half of 2023

The Company continues to receive advance payments for its net entitlement of 36% of gross sales revenue

No operational impact from regional tensions; we continue to closely monitor the security environment and have taken precautions to protect the organisation

Financial

Total 2023 revenue receipts of $109.2 million (2022: $450.4 million), reflecting:

$65.7 million related to invoices paid for export sales in August and September 2022, received in January and March 2023 respectively

$43.5 million proceeds from local sales in H2 2023

Capital expenditures and costs were significantly reduced in 2023 to preserve liquidity in response to the suspension of exports

Aggregate net capex, operating costs and other G&A monthly run rate reduced to c.$6 million in H2 2023 that was covered by local sales revenues

2023 net capex of c.$59 million (2022: $114.9 million), of which c.$12 million was in H2 2023, as the Company suspended all Shaikan Field expansion activity

2023 operating costs of c.$36 million (2022: $41.9 million), reflecting the shut-in of production for the majority of Q2 2023 and cost saving initiatives

Prior to the suspension of dividends, $25 million interim dividend paid in March

Cash balance of $82 million at 30 January 2024 with no debt

Proactively managing and reducing accounts payable with balances trending towards levels in line with ongoing monthly expenditures

The Kurdistan Regional Government (“KRG”) owes $151 million net to GKP for October 2022 to March 2023 export sales

Outlook

The Company remains focused on maximising local sales to at least cover monthly costs while proactively managing accounts payable

While local market demand remains variable and difficult to predict, we are actively pursuing opportunities to increase sales volumes

Expect to maintain aggregate net capex, operating costs and other G&A monthly run rate at c.$6 million in 2024:

Estimated 2024 net capex of c.$20 million, comprising safety critical upgrades and production maintenance expenditures

Continuing to focus on minimising costs while retaining operational capability to increase local sales and resume exports

Production and gross Opex per barrel guidance remains suspended

The Company continues to actively engage with government stakeholders to push for the restart of pipeline exports:

Political and commercial negotiations between the Government of Iraq (“GOI”) and the KRG are ongoing

First tripartite discussions between the GOI, KRG and International Oil Companies recently held in Baghdad, at which GKP was present

We continue to emphasise the importance of payment surety for future oil exports, the repayment of outstanding receivables and the preservation of current contract economics

With the resumption of exports and normalisation of KRG payments, GKP will consider incremental field investment to realise Shaikan’s substantial reserves base and return to previous production levels