Board's Recommendation to Shareholders

Not for release, publication or distribution in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.

 

 

 

13 July 2013

 

Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")

 

Gulf Keystone Board Unanimously Recommends Voting AGAINST ALL of the M&G Candidates

 

Gulf Keystone's Independent Non Executive Chairman, Simon Murray, C.B.E. and Legion d'honneur, and Field Marshal the Lord Guthrie of Craigiebank, Chair of the Nominations Committee, on Friday 12 July 2013, met with senior representatives of the M&G Recovery Fund ("M&G"), a 5.1 per cent. Shareholder in the Company, to discuss the Company's current process to enhance Gulf Keystone's Board (the "Board"), the proposed M&G Candidates, and the Board's views on those M&G Candidates.

 

Despite being unable to have a substantive dialogue with M&G until the afternoon of Friday 12 July 2013, with regard to the M&G Candidates, the Nominations Committee nevertheless sought, during the course of the last week, to interview each of the M&G Candidates. The Nominations Committee interviewed Philip Dimmock, John Bell and Thomas Shull and has not, at this time, been able to conduct a full interview with Jeremy Asher.

 

Following the meeting, the Board unanimously recommends Shareholders to vote against all of the proposed M&G Candidates, for the reasons set out in the Circular to Shareholders, a copy of which is set out below, is intended to be posted to Shareholders on 13 July 2013 and is available on the Company's website: www.gulfkeystone.com.

 

Additional information for Shareholders, since the release of the Company's Circular on 13 July 2013, responding to M&G's statement of 13 July (the "13 July M&G Statement")

 

Responding to the 13 July M&G Statement, the Company believes that the Circular clearly states the Board's position with regard to the M&G Candidates and that the 13 July M&G Statement contains no new material information.

 

Accordingly, the Board of GKP reiterates its recommendation that Shareholders VOTE AGAINST the election of the M&G Candidates to the Board and vote for the re-election of the existing Board members.

 

In addition, the Company is happy to confirm that the remuneration of Simon Murray, the Independent Non Executive Chairman of Gulf Keystone, is in keeping with the guidance of the Combined Code and, as such, does not involve any form of share incentive package.

 

Given that GKP had already stated that Simon Murray was an Independent Non Executive Director, the Company is surprised that M&G needed to raise this issue in the 13 July M&G Statement.

 

In summary:

 

·       In conclusion, in the view of the GKP Board, the M&G Candidates do not have, collectively, or in most cases, individually:

·      the consistent track record of successful operational and commercial experience, in any sector, that is required for a FTSE 250 sized company;

·      the knowledge base and track record of oil and gas expertise, experience and achievement that is required to contribute to the Board of a successful major oil and gas company in Kurdistan;

·      the track record of fostering successful relationships with local partners and stakeholders, critical to winning and progressing business in the type of environment in which GKP operates; and

·      the senior level public company experience, whether UK or overseas, to contribute to the Board of one of the largest companies on AIM, a company that is seeking to move to the Main Market and ultimately aspires to become a leading member of the FTSE 250.

·       The Board believes that the appointment of the Company's candidates for the additional Independent Non Executive Director roles, being sought by the process, being undertaken by the Gulf Keystone Nominations Committee, may be seriously impacted by the appointment of the M&G Candidates. The Board is confident of attracting candidates of a high calibre in the absence of the M&G Candidates being appointed

·       The competent authority in Kurdistan has declined to meet Jeremy Asher (one of the M&G Candidates) and refused to enter into any discussions, following Mr Asher's decision to correspond directly with the competent authority without reference to the Company. This correspondence sought the views of the competent authority regarding potential changes to the Company's Board composition

·       The Board believes that Mr Asher's interest in a significant shareholding in Gulf Keystone, being 1.71 per cent., is such that he is not independent, under the guidelines of the UK Corporate Governance Code which refer to both "significant" shareholdings and "relationships or circumstances which are likely to affect, or could appear to affect, the director's judgement"

·       The Board believes that it would be inappropriate to reappoint to the Board an individual who has previously been a disruptive presence on the Board and who was removed from the Board on 31 March 2010

·       The Board believes that the existing Board will not be enhanced by the appointment of any of the M&G Candidates, who the Board are concerned would principally be acting in the best interests of their nominating Shareholder

 

First interviews with three outstanding candidates have been held this week for appropriate, qualified, Independent Non Executive Directors. The Board will update Shareholders once the recruitment and regulatory approval process, as required by the AIM Rules, has been completed.

 

 

Please see below the full text of a Circular (excluding the diagrams which it is not possible to include in a press release) which is expected to be posted to Shareholders on 13 July 2013, setting out your Board's recommendation to vote AGAINST the election of the M&G Candidates.

 

 

Enquiries:

 

Gulf Keystone Petroleum:	+44 (0)20 7514 1400
Todd Kozel, Chief Executive Officer
Simon Murray, Non-Executive Chairman
Anastasia Vvedenskaya, Investor Relations
Strand Hanson Limited	+44 (0)20 7409 3494
Stuart Faulkner / James Harris / Rory Murphy
Mirabaud Securities LLP	+44 (0)20 7878 3362
Peter Krens
Pelham Bell Pottinger	+44 (0)20 7861 3232
Mark Antelme / Henry Lerwill

 

or visit: http://www.gulfkeystone.com/ 

 

Notes to Editors:

§ Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company focused on exploration in the Kurdistan Region of Iraq.

§ Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four exploration blocks in Kurdistan, including the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks.

§ GKPI is the Operator of the Shaikan Block, which is a major commercial discovery, with a working interest of 75% and is partnered with Kalegran Ltd. (a 100% subsidiary of MOL Hungarian Oil and Gas plc.) and Texas Keystone Inc., which have working interests of 20% and 5% respectively.  Texas Keystone Inc. holds its interest in trust for Gulf Keystone, pending transfer of its interest to the Company.

§ Gulf Keystone is moving into the large-scale phased development of the Shaikan field targeting 150,000 barrels of oil per day of production within three years, following the approval of the Shaikan Field Development Plan, announced on 26 June 2013.

 

 

Disclaimer

 

Not for release, publication or distribution, directly or indirectly, in or into the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction.  This announcement(and the information contained herein) does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States or jurisdictions other than the United Kingdom and Bermuda where to do so would constitute a contravention of the relevant laws of such jurisdiction. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.  No public offering of the securities will be made in the United States.

 

"

Letter from Todd Kozel, Chief Executive Officer

 

We are writing to you today, as promised, to set out your Board's recommendation with regard to the four proposed candidates (the "M&G Candidates") for election to the Board of Gulf Keystone Petroleum Ltd (the "Board") ("GKP" or "the Company") nominated by the M&G Recovery Fund ("M&G"), a 5.1 per cent. Shareholder in the Company.

Set out in this Circular are letters from myself, as your Chief Executive Officer, Field Marshal the Lord Guthrie of Craigiebank, as Chair of the Nominations Committee and Simon Murray, C.B.E. and Legion d'honneur, as your newly appointed Independent Non Executive Chairman, as well as an assessment of the qualifications of the M&G Candidates, based on the information provided to the Company by M&G and augmented by analysis undertaken by the Company and its advisers.

Before Lord Guthrie addresses you regarding the Company's process for the appointment of additional Independent Non Executive Directors and the process used to review the M&G Candidates, and Simon Murray addresses you with respect to corporate governance and his role in the Company, I would like briefly to review how far this Company has come since our entry into the Kurdistan Region of Iraq in 2007.

·          We have drilled 18 wells in the Kurdistan Region of Iraq and are currently drilling the 19^th. Every well drilled since 2009 has detected hydrocarbons, a remarkable track record of exploration success

·           We have discovered the Shaikan field, a major commercial discovery and the largest onshore oil development in the world in the hands of an independent

·           We have made five discoveries, giving GKP a share of approximately 19 billion barrels of gross oil in place, which makes up approximately 42 per cent. of the estimated 45 billion barrels of gross oil in place in the Kurdistan Region of Iraq for a total capital expenditure of approximately US$780 million over the last six years, up to the end of 2013

·           PF1 is complete with imminent production of 20,000 bopd expected shortly and PF2 is due for completion in Q3 2013, which will enable a steady ramp up to 40,000 bopd

·          The Ministry of Natural Resources of the Kurdistan Region of Iraq ("MNR") has recently approved the Field Development Plan ("FDP") for Shaikan, which is the first to be approved since 2007 and currently only the third FDP awarded out of over 50 companies operating in the region today

·           An agreement to build an approximately 10 kilometre long spur pipeline and blending facility has been reached with the MNR, to connect the Shaikan field to the export pipeline to Turkey

·           We are close to achieving our aim of becoming self funded, i.e. without recourse to further equity, funding due to our ability to source various forms of significant debt financing as a result of expected cash flow generation and the team's ability to mitigate country risk, which should result in significantly reduced future dilution for Shareholders

·           We have significant further exploration potential at Shaikan, which is currently being targeted with the Shaikan-7 deep exploration well, as well as at the Sheikh Adi, Akri-Bijeel and Ber Bahr Blocks, all of which have at least one discovery. My team and I are particularly excited about our Sheikh Adi Block, where one discovery was announced last year, and where significant exploration potential is being targeted in 2014

·           In line with our production milestones agreed with the MNR, we are targeting production of 100,000 bopd in 2015 or soon thereafter, which, at an oil price of US$100 per barrel of oil minus US$20 discount for the price of Shaikan crude, would generate anticipated cash flow of approximately US$730 million per annum

·           We have vigorously disputed and contested all the claims asserted by Excalibur Ventures LLC ("Excalibur") in the course of the trial in the English Commercial Court, which was completed on 1 March 2013. We remain highly confident that the court will rule in our favour

·           We have appointed Simon Murray as Independent Non Executive Chairman and he has also been proposed as the new Chairman of the Remuneration Committee

·           We are advancing the Competent Persons Report to be completed by ERC Equipoise, as part of the planned Standard Listing and move to the Main Market, intended to be later this year

·           We intend to achieve a Standard Listing later this year and a Premium Listing in due course, thereby potentially attracting significant new Shareholders both to our register generally on our Standard Listing and as a result of our expected inclusion in the relevant FTSE indices, when we obtain a Premium Listing

As demonstrated to Shareholders at the recent Investor Day, these remarkable operational successes have only been possible because of the dedicated, experienced and, above all, united team that we have at GKP, both at a Board level and running all the way through the organisation to our colleagues working in our offices and in the field.

We are immensely proud that we discovered and operate Shaikan, the largest oil field in the Kurdistan region. We are one of the most active and successful explorers in the region and are the first operator to have a FDP approved by the MNR since the Oil and Gas Law of the Kurdistan Region of Iraq was put in place in August 2007 and only the third in the history of Kurdistan.

I know that all of you are very familiar with our assets and our achievements, which is why I have kept this deliberately brief, but as a reminder, and for those unable to attend our recent Investor Day, held on 4 July 2013 in London, we have included a copy of the presentation along with this Circular.  You can also watch the webcast of this successful Shareholder event at http://www.investor-day-gulfkeystone.com/.

The presentation sets out in detail our progress since first entering Kurdistan in 2007 and, more importantly, it sets out the challenges and opportunities ahead of us as we seek to grow your Company into a strongly cash generative oil producer with significant exploration upside.

The GKP share price has increased approximately 376 per cent. since the PSCs were awarded in November 2007. Nevertheless, we are still disappointed in our current share price, as we do not believe it reflects the fundamental value of GKP as it is now, let alone what we anticipate it will achieve over the coming months and years.

I believe that sustained production from Shaikan, including the ramp up to 40,000 bopd planned by the year end, completion of the oil export pipeline, a positive result from the Excalibur litigation and the Standard Listing and move to the Main Market, including publication of a new Competent Persons Report by ERC Equipoise, will together lead to a significant re-rating of the Company's share price.

For the reasons set out in this Circular, it is the Board's recommendation that you should NOT vote for the proposed M&G Candidates to be appointed to the GKP Board.

The decision to make this recommendation NOT to vote for these M&G Candidates was taken by the Board, including your Independent Non Executive Chairman, in conjunction with our advisers, and it was unanimous.

In your Board's view, the M&G Candidates lack the requisite skills and track record that the Board believes are required for a company the size and complexity of Gulf Keystone, and to support the Company as GKP seeks to achieve a Standard Listing and move to the Main Market later this year.

This is your Company and this is your choice, arguably one of the most important that you will make since becoming a Shareholder of the Company - I wish you well in your decision.

 

Todd Kozel

Chief Executive Officer

 

 

 

 

Letter from Field Marshal the Lord Guthrie of Craigiebank, Chair of the Nominations Committee

 

I am writing to you today, in my capacity as Chair of the Nominations Committee, to explain to you the process that I have undertaken with your Company's Nominations Committee to appoint additional Independent Non Executive Directors to your Board and to review the M&G Candidates' suitability in the context of that process. As you will be aware, this process is still ongoing, as we seek to identify first class candidates to join the Board.

I apologise that it has taken some time for the Company to write to you on this matter and I know some of you have felt frustrated by the lack of information provided by both us and M&G on their proposals - this Circular is designed to address that from your Company's perspective.

As you will appreciate, the delay in writing to you has been because your Company wanted to treat M&G's proposal in a serious manner and undertake, along with our advisers, a comprehensive due diligence exercise on each of the M&G Candidates, and this has taken some time.

As you know, we have for some time recognised that the Board needed to be strengthened to meet the demands of being one of the largest companies on AIM and in conjunction with our intention to move to the Main Market. We also believe this will address the expectations of stakeholders and Shareholders, both institutional and private.

Whilst we had planned to appoint a new Independent Non Executive Chairman and additional Senior Non Executive Directors to strengthen the Board during 2012, our ability to attract the quality of candidates of Simon Murray's calibre was also significantly impacted by the Excalibur litigation. It has only been since all the evidence was presented, by both sides, the great majority of which was witness testimony in open court, that potential Independent Non Executive Directors have been able to form a view as to the likely outcome of the litigation.

The technical accounting implications of the ongoing Excalibur litigation meant that the move to the Main Market had to be delayed, and with that, I admit, with the best interests of the Company at heart, our focus on Board changes was distracted by the time and energy taken up by the Excalibur litigation. For that, I apologise.

It was for this reason after the completion of the Excalibur trial that your Board asked me to re-invigorate the search process, with the appointment of Odgers Berndtson on 11 June 2013, to assist with the appointment of an Independent Non Executive Chairman, a Senior Non Executive Independent Director and a further Independent Non Executive Director. Odgers Berndtson are the largest search firm in the UK and their global oil and gas practice, with a team of 19 in the UK and 40 worldwide, was selected due to their pre-eminence in the oil and gas sector.

We were specific with our expectations and tasked Odgers Berndtson to prepare a short list of candidates who we could then assess against certain key attributes we believe the Board and the Company requires, namely candidates with, collectively or individually:

·            the consistent track record of successful operational and commercial experience in a FTSE 250 or larger sized company or equivalent;

·            the knowledge base and track record of oil and gas expertise, experience and achievement that is required to contribute meaningfully to the Board;

·            the track record of fostering successful relationships with local partners and stakeholders, critical to winning and progressing business in the type of environment in which GKP operates; and

·            senior level public company experience, whether UK or overseas, to contribute to the Board as the Company seeks to move to the Main Market of the London Stock Exchange

Odgers Berndtson produced a shortlist of high quality, appropriately qualified, public company directors, a select number of which your Nominations Committee are currently in the process of interviewing in relation to the appointment of further Independent Non Executive Directors.

As a direct result of the process, we are delighted that Simon Murray has recently accepted the role of Independent Non Executive Chairman following his selection from the short list and appointment on 4 July 2013. He has set out his views on GKP, the current recruitment process and considerations around the M&G Candidates in his letter, which follows mine. This appointment has been well received by the MNR, who recognise his wealth of international business experience and strong network of global contacts. Please join me in welcoming him to the Board.

Against this background, which was well known to M&G, we were surprised to be served with the nomination papers for the M&G Candidates on 19 June 2013, particularly as a member of the Nominations Committee had met with M&G only a few days previously to update them on our progress. We would note that, at this meeting, no mention was made of their planned initiative to nominate these M&G Candidates, which we believe must have already been significantly advanced and we would have welcomed the opportunity to discuss this with them.

Notwithstanding the process outlined above, we therefore felt it appropriate to seek to enter into a meaningful dialogue with M&G. Despite our best efforts, we were only able to arrange a meeting between GKP and M&G, on 9 July 2013, which took place in the afternoon of 12 July 2013, to discuss our current process to enhance your Board, their proposed M&G Candidates, and your Board's views on those M&G Candidates.

Despite being unable to have a substantive dialogue with M&G until the afternoon of Friday 12 July 2013, with regard to the M&G Candidates, we nevertheless sought, during the course of the last week, to interview each of the M&G Candidates.

We have interviewed Philip Dimmock in person and John Bell and Thomas Shull have been interviewed by phone and we would like to take this opportunity to thank them for making themselves available. We have not been able to conduct a full interview with Jeremy Asher.

It is, in the Board's view, essential that Non Executive Directors should not only be individually independent, as per the guidance of the UK Corporate Governance Code, but also be independent of each other and not represent the interests of any significant Shareholder. We have serious concerns that the four proposed M&G Candidates do not meet these important tests of independence.

In the view of the Board, Mr Asher's interest in a significant shareholding in GKP, being 1.71 per cent., is such that he is not independent, under the guidelines of the UK Corporate Governance Code which refer to both "significant" shareholdings and "relationships or circumstances which are likely to affect, or could appear to affect, the director's judgement". Compliance with the UK Corporate Governance Code is particularly important, given the Company's stated ambition to achieve a Standard Listing and move to the Main Market and subsequently to achieve a Premium Listing, and with its intention to meet the highest standard of corporate governance.

There are further specific reasons as to why your Board are recommending you vote AGAINST the appointment of Mr Asher.

Firstly, the Board believes that it would be inappropriate to reappoint to the Board an individual who has previously been a disruptive presence on the Board and who, as a result, was removed from the Board, in accordance with the bye-laws, on 31 March 2010.

Secondly, Todd Kozel has reported to the Board that he was recently called into a meeting by the competent authority in Kurdistan who questioned him on unsolicited correspondence that they had received directly from Mr Asher with regard to GKP. In the correspondence, Mr Asher declared himself as "one of the largest shareholders in Gulf Keystone" and sought a meeting with the competent authority to seek the views of the competent authority regarding potential changes to the Company's Board composition. In addition, Mr Asher sought the views of the competent authority on the Company's strategic direction, performance and management. The Board is unaware of what Mr Asher's alternative strategy for the Company is, as neither he, nor M&G, his proposer as an M&G Candidate, have shared this with the Company.

The competent authority responded shortly thereafter by declining to meet Mr Asher and refused to enter into any discussions with him. The competent authority also further indicated that any interference in GKP's management would not be tolerated.

I am told that the correspondence was received by the competent authority at the end of May 2013. I would like to remind Shareholders of the competent authority's quote on 26 June 2013 on the FDP approval:

"Gulf Keystone has done outstanding work during the exploration phase, exceeding its minimum contractual requirements from two wells to seven wells, and making substantial progress in defining and delineating the Shaikan Field. The Ministry of Natural Resources looks forward to working with Gulf Keystone, and its partner in the block Kalegran, to continue to achieve Shaikan's production targets."

The search for appropriate, qualified, Independent Non Executive Directors continues, and I am delighted to be able to report that first interviews with three outstanding candidates have been held this week. Your Board looks forward to updating you, as soon as we can, with regard to further appropriate Board appointments generated by this process, once the recruitment and regulatory approval process, required by the AIM Rules, has been completed.

We would ask you to note that our advisers believe that the ability of your Company to complete the appointment of the preferred candidates for the additional Independent Non Executive Director roles, with whom the Company is already in advanced discussions, may be seriously impacted by the appointment of the M&G Candidates, if the Board appeared divided and of an unmanageable size.

In conclusion, I, along with the Nominations Committee and Board of Directors believe, for the reasons set out in the main body of this Circular, that the proposed M&G Candidates do not meet the requirements we have set out in our engagement to secure additional Independent Non Executive Directors, with the assistance of Odgers Berndtson.

In addition, it is your Board's view that the existing Board and team, with its proven track record of operational and commercial success and our strong relationships in Kurdistan, bolstered by the appointment of Simon Murray as Independent Non Executive Chairman, will not be enhanced by the appointment of the M&G Candidates, who we are concerned would principally be acting in the best interests of their nominating Shareholder.

Your Board of Directors, including your newly appointed Independent Non Executive Chairman, therefore recommend unanimously that you vote AGAINST the candidates on this basis.

 

 

 

Field Marshal the Lord Guthrie of Craigiebank

Chair of the GKP Nominations Committee

 

 

 

Letter from Simon Murray, C.B.E. and Legion d'honneur, Independent Non Executive Chairman

I am pleased to take this opportunity to address you, the owners of this Company, having been recently appointed as Independent Non Executive Chairman of your Company.

GKP is a company that I decided to join, after being approached by Odgers Berndtson and then conducting my own due diligence. I was quickly impressed with the quality of your Company's assets and operations and by the Board and management team and especially their combined unity and passion to make GKP even more of a success than it is already.

I have over forty years experience of international business and I know that it is passion and drive to succeed that marks out the true entrepreneurs and value creators - those that can see the future and have the expertise, drive and determination to make it a reality, which I strongly believe is what, your CEO, and the team have achieved in Kurdistan over the past six years.

GKP has already achieved so much operational success in a short period of time and clearly has the ambition and ability to do much more, which is one of the primary reasons I have joined the Board as Independent Non Executive Chairman.

This success is underpinned by the exceptionally strong relationships between senior members of the Gulf Keystone team and key stakeholders in the Kurdistan Region of Iraq which have been built up over many years and is founded upon mutual respect, understanding and six years of close co-operation.

The Minister of Natural Resources of the KRG has kindly invited me shortly to meet with him and it is evident to me how key the close relationships in Kurdistan were and are to the Company's success and it is also clear to me that these relationships have meant that the Company has been able to achieve the drilling and discovery success of the past four years. I also firmly believe that relationships such as these are key to us achieving future success and I, and the Board, will seek to strengthen these relationships further to develop Shareholder value.

Quite simply, without these close relationships in Kurdistan, it would, in my view, not have been possible to have drilled 18 wells, made five discoveries in four years and to have created the biggest onshore oil development opportunity today not held by an international oil major.

Equally simply, without maintaining and nurturing these deep seated relationships, I believe there is a real risk that our progress will stall and our ambitious targets will not be met. This is a risk that your Board does not wish to take and it is a risk that we do not believe that Shareholders will wish to take either.

In my role as Independent Non Executive Chairman, I intend to ensure that your Company meets the highest standards of corporate governance. I will bring strong leadership to the Board and it is my job to ensure the Board functions properly and that the structure and experience of the Board are appropriate for a company seeking a move to the Main Market.

I also intend to work with the Nominations Committee, led by Lord Guthrie, to identify suitable candidates to ensure the overall effectiveness of your Board and its various committees. It is with that in mind that I have reviewed both the shortlist of candidates identified by Odgers Berndtson and the M&G Candidates.

As you are aware, I will be taking the chair of the Company's Remuneration Committee from its next meeting, and one of my first actions will be to appoint third party remuneration consultants to review every aspect of the remuneration and incentivisation of the Board and senior management team to ensure that your Company's remuneration is appropriate.

I am committed to improving the ongoing dialogue between the Company and both its institutional and private Shareholders. Over the next few weeks, I will be endeavouring to meet as many of the Company's institutional Shareholders as possible and I also look forward to meeting as many of you as can attend the AGM and future Investor Days.

Finally, it is inevitable that as GKP endeavours to meet its ambitious targets, there will be bumps along the way and issues that Shareholders will want addressed - I am here to tell you that, as a genuinely independent voice on the Board, committed to the highest standards of corporate governance, I will always be available to address such matters, insofar as public market rules permit, and to that end, you may contact me via the investor relations team at [email protected].

Turning to the M&G Candidates, I concur with the analysis set out in this Circular and the conclusion reached by Lord Guthrie and endorsed, unanimously, by the Board.

The appointment of these M&G Candidates would, in my opinion, be a backward step at a time of critical development for the Company, which I feel will disrupt the unity of the management team, as well as damage the vital relationships Mr Kozel and the team have established and maintained in the Kurdistan Region.

This is not a personal criticism of the individuals, but in our judgement, based on their business experience and expertise, they do not meet our requirements, as set out by Lord Guthrie earlier in this Circular.

 

Accordingly, for the reasons set out in this Circular, it is my strong personal view, as Chairman of the Company, that Shareholders should vote AGAINST the appointment of the M&G Candidates to the GKP Board.

 

Simon Murray

Independent Non Executive Chairman

 

 

 

AN ASSESSMENT OF THE M&G CANDIDATES

The assessments, set out below, are based both on the CVs and the other biographical information submitted by M&G on behalf of the M&G Candidates and other information in the public domain.

 

Attached for your reference, in Appendix A, is the summary information sent to the Company by M&G, on the M&G Candidates, which the Company is permitted to share with Shareholders.

 

Whilst reviewing the information below, Shareholders should also be aware of the apparent links between Jeremy Asher and the three other M&G Candidates, which are that:

 

·      Thomas Shull was at Harvard Business School, at the same time and undertaking the same MBA
course, as Jeremy Asher; and

 

·      John Bell and Philip Dimmock worked together at British Petroleum for over a decade and the Board of GKP understands that, in 2012, both were interviewed for the role of CEO of Tower Resources, a company chaired by Jeremy Asher.

 

 

Mr Jeremy Asher

 

·            Mr Asher was previously a director of GKP, before being removed from the Board, in accordance with the bye-laws, on 31 March 2010

·            Mr Asher is the lifetime beneficiary of Agile Energy Limited, an Asher Family Trust, which owns 1.71 per cent. in Gulf Keystone and it is therefore the Board's belief that Mr Asher would not be regarded as Independent as per the guidance of the UK Corporate Governance Code. In reaching this conclusion, the Board has considered the significance of this shareholding

There are a number of areas of concern with regard to Jeremy Asher's track record, of which Shareholders should be aware.

·            Gulf Keystone Petroleum Limited: The GKP Board feels obligated to point out that, whilst he was a member of the GKP Board, Mr Asher was highly disruptive and, as a result, was removed from the Board, in accordance with the bye-laws, on 31 March 2010. Many members of the GKP team, both on the Board and on the operational side in London and Erbil, have expressed a strong preference not to work with him again

·           Accordingly, there can be no assurances that the appointment of Mr Asher will not result in key members of the executive and operational team choosing to resign and taking their valuable expertise to one of the other companies that have followed GKP into the region

·            Furthermore, Mr Asher has, for a considerable period of time subsequent to his removal from the GKP Board in 2010, been militating to make a return, approaching existing board members and staff, institutional Shareholders and private Shareholders alike

·            In addition, as set out in more detail in the letter from the Lord Guthrie in this Circular, Mr Asher, earlier this year unilaterally approached the competent authority in Kurdistan, causing significant embarrassment to your Company. This contact was, in your Board's view, inappropriate, and potentially highly damaging to GKP's relationship with its key stakeholder

·            Projector Group: Mr Asher served as an "informal director" (as stated in his CV) between 2003 and 2005. Projector was eventually wound up in 2008 after ING successfully brought proceedings against it in Singapore in a bid to reclaim US$90 million. At this time both Samsung and Mitsui had obtained judgements against Projector for US$9.4 million and US$69 million, respectively

·             Better Place LLC: Mr Asher served as a director of Better Place LLC and its subsidiaries, from February 2008, and remains a director of two subsidiaries, having resigned from Better Place in 2010. Better Place is an electric car venture which has raised over US$850 million from investors since its formation. In May 2013, the Better Place group of companies collapsed with the loss of shareholder funds and was placed into a liquidation process. The Company notes that the now insolvent Better Place declared on its website "Oil isn't working, if you ask us, the last drop can't arrive a minute too soon"

·           Tower Resources plc: Mr Asher has been an investor in Tower Resources since December 2006 when he acquired an interest in approximately 10 per cent. of the company for £1.04 million. He was subsequently appointed a non executive director on 9 February 2007 and, on 28 November 2011, Mr Asher became non executive Chairman of Tower Resources, a role he again holds, having been interim CEO between March and June 2012

·            Tower Resources' operational track record has been chequered

·           Until 2012, Uganda was the principal focus of Tower Resources' activities - following the completion of a third unsuccessful commitment well, the company relinquished its Ugandan licence in March 2012, after six years of unsuccessful exploration, leading to a write off of approximately US$34 million

·          Almost every stage of exploration activity in Uganda seems to have been subject to significant delays, compounded by inadequate test work, with consistently disappointing results and two JV partners choosing to exit at an early stage, with one partner citing risk of the project as the reason for withdrawing

·          Tower Resources is currently focused on Namibia and SADR (where no work is being undertaken as "the sovereignty of the SADR territory remains in dispute and until this is resolved there is little that can be done to advance exploration of these blocks" (Tower Resources Annual Financial Statements ("AFS") 2012))

·           Therefore, despite all the funds raised and spent since its admission to AIM, the company's only active asset of any substance is a 30 per cent. working interest in three offshore blocks in Namibia, where it is reliant on drilling a successful exploration well, the Welwitschia-1, scheduled to commence in H1 2014, a prospect which appears challenging

·           The GKP Board notes that drilling by Chariot Oil & Gas and others on neighbouring blocks to Welwitschia-1, in 2012, failed to discover commercial quantities of hydrocarbons

·            The company swapped its previous 15 per cent. free carry on the Welwitschia block (stemming from a 2007 farm-out to Arcadia Petroleum) for a 30 per cent. stake, paying US$5.3 million in back costs, on completion of the transaction, in July 2012, effectively "doubling down", in cash, its gamble on this asset

·            In the 2012 AFS, the directors estimated that up to US$30 million may be required to cover its 30 per cent. share of the costs of the Welwitschia-1 well, versus free cash resources at the most recent year-end of only approximately US$4.5 million

·            Given these issues in SADR and Uganda and the uncertain prospects in Namibia, it is interesting to note that on 3 July 2013 Tower Resources entered into yet another potentially high risk jurisdiction with the conditional purchase of a 20 per cent. stake in an onshore Madagascan block, for US$4.7 million (US$1.75 million cash, the remainder in shares) in initial consideration, and deferred consideration of US$4.0 million, although the GKP Board would note that closure of the deal is subject to Tower Resources raising a minimum amount of £4.0 million from the equity markets, before the end of next month

·           As a result of its operational performance, the share price of Tower Resources has declined approximately 47 per cent. since Mr Asher's appointment to the board of Tower Resources in February 2007 and approximately 41 per cent. since his appointment as Chairman, to near an all time closing low of 1.65 pence per share, as at 11 July 2013

·            It is the view of the GKP Board that Mr Asher is not appropriate to act as a Non Executive Director and leave operational business of any company to its executives. Mr Asher by his own admission, in an interview in National Business Review, said: "I'd rather have a personal interest in something and manage it myself rather than leave it to others." Mr Asher's own words and track record sum up your Board's fears for our Company if he were to return to the Board of GKP

 

In summary, as a result of our review, it is the Nominations Committee and the Board's view that Mr Asher does not possess the requisite strength of experience in the upstream oil and gas sector and, importantly, does not meet the Board's requirements to be viewed as an Independent Director, in line with the UK Corporate Governance Code.

On the basis of our review, the Nominations Committee and the Board also believe that Mr Asher would create instability amongst the Board and senior management and are concerned he could fail to act in the best interests of all Shareholders.

The Nominations Committee and the GKP Board therefore unanimously recommend that shareholders vote AGAINST the appointment of Mr Asher.

 

 

 

 

Mr John Bell

 

·            Mr Bell has been active in the oil and gas sector for over 20 years, but the Company notes that, between 1993 and today, Mr Bell has worked for 10 companies with a maximum tenure at any one company of only three years. As a comparator, the senior oil and gas team at GKP currently have an average tenure of 9 years

·            The Company notes that Mr Bell has been involved in a number of other businesses, both in the UK, as shown by the three UK company dissolutions at Companies House, and overseas including his employment as an Executive Vice President at Kepis & Pobe Financial Group, Inc., a Canadian Investment Company, which is not disclosed on his CV or in his Director's declaration

·            The GKP Board also notes that Mr Bell is Chief Executive at a private equity backed exploration company, Babylon Petroleum Limited ("Babylon"), which has oil and gas interests in Iraq, which Mr Bell confirmed in his interview with Lord Guthrie

·            In our view, Mr Bell's role at Babylon would almost certainly place him in a conflicted situation with regard to his responsibilities as a GKP director, given that Mr Bell also confirmed in his interview that Babylon would be seeking oil and gas opportunities in Kurdistan

·            Furthermore, Mr Bell represented in his interview that he is well known in the very senior echelons of the competent authority of Kurdistan. GKP's independent verification of this representation, has strongly suggested that this is not the case

·             Mr Bell has worked predominantly at a mid management/country head level. His CV does not list any experience on the board of a listed company in the UK or on any overseas market

·             His role as a mid level executive within large oil and gas companies demonstrate that, whilst he has some small field operational experience, he does not have experience that would assist the executives of your Company in developing and operating a large, world class, field such as Shaikan

·            In addition, the Board believes that Mr Bell does not have the overall strategic experience of running a substantial company, which we believe is a prerequisite to being a plc Director at a company the size and complexity of Gulf Keystone

·            Mr Bell's CV describes himself as "a key team member of a US$2.2 billion acquisition of a privately owned Canadian Oil Company". Our retained third party due diligence advisers were informed that senior figures involved in the transaction had no memory or knowledge of Mr Bell and suggested that his role in the deal must therefore have been at a lower level

 

In summary, as a result of our review, it is the Nominations Committee and the Board's view that Mr Bell currently has a significant conflict of interest in his current executive role at Babylon and does not possess any UK public company board experience, which the Board is seeking.

The Nominations Committee and the GKP Board therefore unanimously recommends that shareholders vote AGAINST the appointment of Mr Bell.

 

 

 

 

Mr Philip Dimmock

 

·             Since leaving BP, where he spent 26 years, Mr Dimmock has worked at a selection of smaller companies, with a mixed set of outcomes

·             Equator Exploration Limited ("Equator"): One of the major board roles Mr Dimmock has undertaken in recent years was with, previously AIM quoted, Equator, an oil company focused, initially on Nigeria, and Sao Tome & Principe in West Africa. Mr Dimmock was appointed as an Executive Director and Chief Operating Officer on 28 June 2005, a few months after the company's initial public offering ("IPO")

·             The background of Equator is set out below:

·            The company was floated in December 2004 at a share price of 100 pence per share (156.5 pence per share when Mr Dimmock was appointed) and was effectively sold to a Nigerian company, Oando plc, in a control passing series of transactions in 2009. During Q4 2011, Oando plc acquired further shares in Equator, raising its stake to 81.5 per cent., at a reported price of 3 pence per share, representing value destruction of approximately 97 per cent from the IPO price.

·            During Mr Dimmock's tenure, Equator was twice suspended from trading on AIM, for extended periods of time

·          Once, in 2007, due to a prematurely disclosed and aborted reverse takeover (as the company was, in the board's opinion, unable to produce an AIM compliant admission document within an immediately foreseeable timeframe)

·          And again, in June 2008, due to its failure to publish accounts within the prescribed six month timeframe of the company's financial year end, leading to its ultimate mandatory delisting in March 2009. The share price at the time of suspension was 20.5 pence per share, representing value destruction of approximately 87 per cent. since Mr Dimmock's appointment

·           GKP has received unsolicited correspondence from a number of GKP Shareholders expressing deep concerns with regard to Mr Dimmock's tenure at Equator, in the context of his proposal as a director of the Company. These are concerns that the Board of GKP is obligated to reflect upon seriously in reaching a decision on his appropriateness to be an Independent Non Executive Director of the Company

·            Peak Petroleum Industries Nigeria Limited ("Peak"): Equator's main operational partner in Nigeria, identified and chosen by Equator, consistently failed to perform as operator and failed to meet numerous cash calls during 2006 and 2007, despite Equator choosing to extend payment deadlines several times. As a result, Equator had to assume a greater financial burden to fund Peak's obligations, particularly as a result of the significant capital commitment of the five year FPSO Contract that the partnership entered into with BW Offshore AS ("BW") in October 2006 - as a result of this debacle, BW terminated the FPSO contract in August 2007 and Equator had to pay US$30 million in damages to BW

·            Equator failed to achieve any commercial success in Nigeria, becoming involved in a series of complex disputes with local partners, creditors and authorities with the end result that, in its financial years ended 31 December 2006 and 2007, Equator wrote off, in aggregate, approximately US$268 million of sunk costs in connection with the Nigerian project

·            The GKP Board notes from Mr Dimmock's CV that he claims, inter alia, to have directed FPSO development, recruited and supervised the project team, negotiated major contracts with suppliers and PSCs and JOAs with consortium members and managed the interface with the Nigerian partner. As a result, the Board has concerns around Mr Dimmock's role and his responsibility for the value destruction at Equator

·          From IPO to the date of its last published accounts for the year ended 31 December 2011, despite the considerable funds raised and spent, no commercial quantities of oil have been produced by Equator. Oando plc continues to support Equator and shareholders are thus stranded, having been heavily diluted, in a high risk, underperforming unlisted company with minimal liquidity

·             The Board also notes that there appears to have been significant upheaval during Equator's time as a listed company, with 17 changes to the board and senior management, including both the CEO and CFO stepping down during 2007

·            Certain shareholders in Equator felt disempowered and disenfranchised by the actions of their board, such that in 2008, they created a Shareholder Liaison Group to further the interests of minority shareholders by seeking to combine in order to achieve effective dialogue with the company during this time

 

In summary, as a result of our review, it is the Nominations Committee and the Board's view that Mr Dimmock does not possess the requisite senior level public company experience to contribute to the Board of Gulf Keystone, which the Board is seeking.

The Nominations Committee and the GKP Board therefore unanimously recommends that shareholders vote AGAINST the appointment of Mr Dimmock.

 

 

 

 

Mr Thomas Shull

 

·             Mr Shull has not held any direct role in the oil and gas sector, nor on any UK listed public companies

·             His current position is as Chief Executive of the Army & Air Force Exchange Services, which manages retail outlets on US military installations

·            The majority of his employment roles, subsequent to his distinguished US Army career, have been in the retail sector or in turnaround company consulting, with the great majority of his consultancy clients being in the retail or food and beverage sectors

·            Whilst Mr Shull was on the board of a listed company as a non executive director, in the last decade, it was of a US listed company, Zale Corporation, which is a jewellery retailer. The company was, during or shortly after his resignation from that role, the subject of litigation (in which he was named as co-defendant) regarding "improper statements" regarding the financial health of the company which had been made during Mr Shull's period of directorship

·            Mr Shull does appear to have a level of advisory expertise in turnaround situations of heavily indebted/bankrupt US companies

 

Whilst impressive, this seems to have little relevance to the position of GKP as a well capitalised, fast growing, oil and gas exploration and production company with assets in Kurdistan

 

In summary, as a result of our review, it is the Nominations Committee and the Board's view that Mr Shull does not possess the requisite skills, any UK public company experience or sector experience which the Board is seeking, to contribute to the Board of Gulf Keystone.

The Nominations Committee and the GKP Board therefore unanimously recommends that shareholders vote AGAINST the appointment of Mr Shull.

 

 

 

 

CONCLUDING OBSERVATIONS ON THE M&G CANDIDATES

In conclusion, in the view of the GKP Board, the M&G Candidates do not have, collectively, or in most cases, individually:

·             the consistent track record of successful operational and commercial experience, in any sector, that is required for a FTSE 250 sized company;

·            the knowledge base and track record of oil and gas expertise, experience and achievement that is required to contribute to the Board of a successful major oil and gas company in Kurdistan;

·            the track record of fostering successful relationships with local partners and stakeholders, critical to winning and progressing business in the type of environment in which GKP operates; and

·            the senior level public company experience, whether UK or overseas, to contribute to the Board of one of the largest companies on AIM, a company that is seeking to move to the Main Market and ultimately aspires to become a leading member of the FTSE 250.

As set out in this Circular, the GKP Board would again draw Shareholders attention to the links between Jeremy Asher and the other three M&G Candidates.

Accordingly, the GKP Board unanimously advises all Shareholders to vote AGAINST the appointment of the M&G Candidates to the Board of your Company, as they intend to do with regard to their own shareholdings.

 

 

Set out in the Circular are two diagrammatic representations of the Forms of Proxy that you should have received with the circular dated 28 June 2013, convening the Annual General Meeting, and subsequently, on 9 July 2013 and putting forward the relevant resolutions, either directly from the Company or from your broker. The copies of the Forms of Proxy show how to complete the Form of Proxy, or if relevant the Form of Instruction, to vote for the Board sponsored resolutions and against those, proposed by M&G (against resolutions 2.4, 2.5, 2.6 and 2.7) to appoint the M&G Candidates. The Form of Instruction follows the same format as the Form of Proxy and Shareholders using a Form of Instruction should complete said Form of Instruction in the manner set out below in the illustrative Form of Proxy, should they wish to follow the Boards unanimous recommendation.

Should you not have received the aforementioned circular and Form of Proxy or Form of Instruction, please immediately contact Orient Capital on:

·      Toll free number: 0800 294 5236

·      International number: +44 207 206 4029

·      Email: [email protected]

In any event, Orient Capital, a proxy solicitation service provider, will be contacting Shareholders by phone and by email over the coming days to give each shareholder the maximum opportunity to exercise his vote at this critical time.

Whichever way you intend to vote, as this is YOUR Company, please consider the information in this
Circular and ensure that you do so in good time for the deadline for receiving Forms of Proxy of 23 July 2013.

 

 

INSTRUCTION TO FILL IN THE FORMS OF PROXY

 

Set out in the Circular is a copy of the Form of Proxy sent to Shareholders on 28 June 2013, completed in a manner consistent with the recommendation of your Board to:

·           Reappoint Deloitte LLP as auditor

·           Reappoint Mr Ali Al Qabandi and Mr Mehdi Varzi as Directors of the Company

·           NOT TO APPOINT the M&G Candidates as Directors of the Company

Also set out in the Circular is a copy of the Form of Proxy sent to Shareholders on 9 July 2013, completed in a manner consistent with the recommendation of your Board to reappoint Simon Murray, the current Independent Non Executive Chairman of the Company, as a Director of the Company.

 

Appendix A

 

Please find, set out below, for your reference, the summary information sent to the Company by M&G, on the M&G Candidates, which the Company is permitted to share with Shareholders.

 

"Jeremy Asher

Jeremy Asher is Chairman of Agile Energy Limited, a privately held energy investment  company; Chairman of Tower Resources plc, an AIM-listed oil explorer; and a director of Pacific Drilling SA, an NYSE-listed operator of ultra-deepwater drill-ships, where he chairs the Nomination and Remuneration Committees. Until 2010, Jeremy was also Deputy Chairman of Gulf Keystone Petroleum Ltd, and chaired its Audit Committee. He is also a member of the London Business School's UK regional advisory board and the Engineering Advisory Board of Imperial Innovations, the commercial arm of Imperial College. Following several years as a management consultant, he was co-head of the global oil products trading business at Glencore AG and then acquired, developed and sold the 275,000 b/d Beta oil refinery at Wilhelmshaven in Germany. Between 1998 and 2001 he was CEO of PA Consulting Group, and since that time has been an investor and director in various public and private companies. He holds a BSc (Econ) from the LSE and an MBA from Harvard Business School.

 

John Bell

John Bell has been a senior oil executive for over 20 years, working on and delivering conventional and non-conventional upstream oil projects for major oil companies including BP, Statoil AS and Suncor Energy plc. Between 2008 and 2010, John headed BP's new multi-billion dollar developments in Egypt and, and between 2010 and 2012 he was managing director of Suncor Energy's exploration and production business in Syria, significantly increasing reserves and substantially improving IRR on these operations worth over $1 billion, while also successfully negotiating additional licenses. Since 2012 he has been Chief Executive of Babylon Petroleum, a private-equity-backed exploration company with a focus on Iraq and Africa. He holds and B.Eng. Hons. from the University of Strathclyde, and attended the Executive Leadership Program at the Haas Business School at UC Berkeley.

 

Philip Dimmock

Philip Dimmock has over 40 years' experience in upstream oil and gas, both in the UK and internationally, and is currently a consultant to various oil and gas companies, including Equator Exploration Ltd where he was chief operating officer. Philip spent a significant part of his career at BP in a wide variety of senior positions including manager of the Forties oil field, and at Ranger Oil where he also held the post of vice president of the international division, and served as chairman. He has also been an executive officer of the UK Offshore Operators Association. Philip was a non executive Director of Nautical Petroleum plc until its acquisition by Cairn Energy in 2012. Between 2005 and 2012 he served as chairman of the Remuneration, Nomination and Strategy Committees and was a member of the Audit Committee. He holds an MA in Physics from the University of Oxford where he was an Open Scholar at Pembroke College.

 

Thomas Shull

Tom Shull is currently Chief Executive of the Army and Air Force Exchange Service (Exchange). The Exchange is the 47th largest retail organisation in the US with current revenue of $10 billion and employing 43,000 civilians. It manages retail outlets on military installations in all 50 US states, 5 US Territories and more than 30 other countries, including 44 facilities operating in the Middle East. Tom had a distinguished career in the US Army, culminating in an active duty assignment as Military Assistant to Robert C. Macfarlane, Assistant to the President for National Security Affairs. Subsequently Tom built a highly successful business career as a turnaround specialist including as President of Barneys, New York and CEO and Chairman of other leading US consumer concerns. During this period he also co-founded and served as CEO of Meridian Ventures Inc where he advised numerous clients both in the retail sector and elsewhere. These included Mobil, whom he had advised on developing Caspian Sea pipeline strategies to monetise oil and gas in landlocked regions. From 2004 - 2010 he was also a director of NYSE-listed Zale Corporation, where he served on the Compensation Committee and was Chairman of the Audit Committee for three years."

 

 

 

DEFINITIONS AND GLOSSARY OF TECHNICAL TERMS

 

"AGM"	the forthcoming Annual General Meeting of the Company to be held on Thursday 25 July 2013 at 12.00 noon (local time) at the Fairmont Hamilton Princess, 76 Pitt's Bay Road, Pembroke HM08, Bermuda;
"AIM"	the AIM market of the London Stock Exchange;
"Akri-Bijeel"	the Akri-Bijeel block, covering an area of 889 km2, situated to the east of the Shaikan block;
"Ber Bahr"	the Ber Bahr block which covers an area of 280 km2 and lies to the north-west of the Shaikan block;
the "Board"	the Board of Directors of the Company, from time to time;
"bopd"	barrels of oil per day;
"Circular"	this document, dated 13 July 2013;
"Competent Persons Report" or "CPR"	the updated competent persons report to be completed by ERC Equipoise later this year in 2013;
"ERC Equipoise"	ERC Equipoise is an independent reservoir evaluation and reserve certification company with offices in London, Dubai and Libya. ERC Equipoise provides consulting services for an international client base, including GKP. ERC Equipoise is responsible for the preparation of the updated CPR;
"Excalibur"	Excalibur Ventures LLC;
"Field Development Plan" or "FDP"	the development plan for the Shaikan field, as agreed with the MNR, further details of which are included in the Gulf Keystone announcement dated 26 June 2013;
"FPSO"	floating production storage and offloading vessel;
GKP", "Gulf Keystone" or the "Company"	Gulf Keystone Petroleum Limited, a Company registered in Bermuda under the company number 31165, with a registered office address at Cumberland House 9th Floor, 1 Victoria Street, PO Box 1561, Hamilton HMFX, Bermuda;
"hydrocarbons"	a compound containing only the elements hydrogen and carbon. May exist as a solid, a liquid or a gas. The term is mainly used in a catch all sense for oil, gas and condensate;
"Investor Day"	the day on which the Board presented to Shareholders on all aspects of the Company's business and corporate strategy, which took place on 4 July 2013 in London;
"Kalegran"	Kalegran ltd, a 100 per cent. subsidiary of MOL Hungarian Oil & Gas plc;
"KRG"	Kurdistan Regional Government of Iraq;
"Kurdistan"	the Kurdistan Region of Iraq;
"London Stock Exchange"	London Stock Exchange plc;
"Main Market"	the main market of the London Stock Exchange;
"M&G"	M&G Recovery Fund
"M&G Candidate(s)"	the four candidates for the Board of Gulf Keystone proposed by M&G, or any one of them individually;
"MNR"	Ministry of Natural Resources of the KRG;
"Odgers Berndtson"	IRG Advisers LLP, a company registered in England and Wales under the company number OC354226 and a registered office at 20 Cannon Street, London EC4M 6XD;
"Official List"	Official List of the UK Listing Authority of the Financial Conduct Authority;
"Ordinary Shares"	the ordinary shares of par value US$0.01 each in the Company;
"PF1" and "PF2"	Shaikan Production Facility 1 and Shaikan Production Facility 2;
"Premium Listing"	admission of the Ordinary Shares to the premium segment of the Official List;
"SADR"	Saharawi Arab Democratic Republic, the democratically elected government of the territory known as Western Sahara;
"Shaikan"	the Shaikan block which covers an area of 283 km2 and is situated about 85km to the north-west of Erbil Shaikan field, a major commercial discovery, operated by GKP;
"Shareholder"	holder(s) of Ordinary Shares in the Company, from time to time;
"Sheikh Adi"	the Sheikh Adi block covering an area of 180 km2 and lies to the west and on-trend with the Shaikan structure;
"Standard Listing"	Admission of the Ordinary Shares to the standard segment of the Official List;
"UK Corporate Governance Code"	this code sets out the standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders,  overseen by the Financial Reporting Council;
"UK"	the United Kingdom of Great Britain and Northern Ireland; and
"US", "United States" or "USA"	the United States of America.

"