LONDON (Reuters) - Gulf Keystone Petroleum, an oil producer in Iraq’s Kurdistan region, managed to lower its annual losses after cost cuts and a debt-for-equity deal that saved the company but uncertainty remains over raising output from its main oilfield.
Gulf Keystone reported an annual pretax loss of $17 million on Thursday, down from a $213 million loss in 2015 after it swapped $500 million of debt for equity last year and made stringent cost cuts.
Having turned a corner financially, doubts remain over whether it will be able to make needed investments in time to prevent a natural production drop at its Shaikan oilfield.
Gulf Keystone said discussions were still ongoing with the Iraqi Kurdistan Ministry of Natural Resources about regular payments for, and the marketing of, oil exports. An agreement is expected by mid-year, it said.
“The company is in better shape post restructuring with Shaikan performing well, although the outlook remains uncertain with further clarity on payment required before it can commit to proper capex spend,” said analysts at Cenkos Securities.
Shares in Gulf Keystone were down 2.8 percent at 0726 GMT.
Gulf Keystone said it had a cash balance of $112.7 million as of Wednesday, meaning it has enough money available to invest in increasing production at Shaikan once the necessary agreement with the government is in place.
If it cannot make needed investments, Gulf Keystone said annual production would come in at the lower end of its guidance range of 32,000 to 38,000 barrels per day (bpd). That would mean a drop from its 2016 average of 34,794 bpd.
At the height of its financial troubles last year, Gulf Keystone was approached by fellow Iraqi Kurdistan oil producer DNO with a $300 million takeover offer for the company that was once worth $3 billion.
Gulf Keystone went through with its restructuring instead.
“We don’t need a deal in M&A. We can dictate our own future and that’s what I’m planning to do,” Chief Executive Jon Ferrier told Reuters.
He declined to comment on whether other potential suitors had had access to the company’s data.
Editing by David Holmes and Jason Neely