Launch of Convertible Bonds Tap Issue

NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW

 

 

 

30 October 2013

 

Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or the "Company")

 

Launch of a "tap issue" of Convertible Bonds, to be consolidated and form a single series with the US$ 275,000,000 6.25% Convertible Bonds issued in October 2012 and due October 2017

 

Gulf Keystone announces today the launch of an offering (the "Offering") of senior unsecured convertible bonds which will be issued in a principal amount of US$ 50 million (the "New Bonds"). The New Bonds are to be issued on the same terms (save for the issue price) as, and shall be consolidated and form a single series with, the US$ 275,000,000 6.25% Convertible Bonds due October 2017, issued by the Company on 18 October 2012 (the "Original Bonds" and together with the New Bonds, the "Bonds"). The Offering is being made by way of a Reg. S. institutional private placement.

 

The issue price of the New Bonds, to be determined after book-building, will be announced as soon as it has been finalised.

 

The Company, as at 25 October 2013 had cash and cash equivalents of US$ 72.3 million and the funds raised via the Offering will enhance the Company's cash position as it seeks to complete its ongoing transition to the short-term production target of 40,000 barrels of oil per day ("bopd") from the Shaikan commercial discovery in the Kurdistan Region of Iraq. Following completion of the Offering, excluding any cash generated from the sale of oil, the Company expects to have cash resources to fund its operations at least through to the middle of 2014.

 

The Company believes that stable production and oil sales of between 20,000 bopd and 40,000 bopd will underpin the Company's cash-neutral approach to growing operations in the short-term, while completing its existing commitments on the Shaikan (early development and production; deep exploration), Sheikh Adi (appraisal), Ber Bahr (appraisal and early development) and Akri-Bijeel (exploration, appraisal and early production) blocks in 2014. Upon achievement of stable oil production and sales in excess of 20,000 bopd, expected in early 2014, the Company intends to access long-term debt funding to take it into the next stage of its development.

 

As announced in June 2013, the large-scale phased development of the Company-operated Shaikan field ("Shaikan FDP") was approved by the Ministry of Natural Resources of the Kurdistan Regional Government ("KRG"). The Shaikan FDP envisages a number of the production milestones approved by the KRG, including achieving the phase 1 production capacity of 100,000 bopd, which will require drilling of an additional 19 development wells (26 wells in total taking into account existing producing wells), construction of at least two additional production facilities and commissioning sour gas re-injection facilities.

 

Commercial production from the first Shaikan production facility ("Shaikan PF-1") commenced in July 2013 and, after a temporary suspension in early September, is currently ramping up to previous levels from two wells, Shaikan-1 and -3. Connection of the third well, Shaikan-4, to Shaikan PF-1, expected to be completed by the year end, will increase its production capability to 20,000 bopd. The mechanical assembly of the second Shaikan production facility ("Shaikan PF-2") is nearing completion. First production from Shaikan PF-2 is currently expected in early 2014, which will also have the capability to produce 20,000 bopd, once the flow lines have been completed to the three producing wells, Shaikan-2, -5 and -10. Shaikan-10, the Company's first development well, has recently been completed.

 

Closing and settlement of the Offering is expected on 6 November 2013. An application will be made to admit the New Bonds to trading on the EuroMTF market of the Luxembourg Stock Exchange prior to 30 November 2013.

 

BNP Paribas is acting as Sole Bookrunner and Lead Manager in respect of the Offering.

 

Natixis is acting as Co-Bookrunner in respect of the Offering.

 

Enquiries:

 

Gulf Keystone Petroleum	+44 (0) 20 7514 1400
Ewen Ainsworth, Finance Director
Anastasia Vvedenskaya, Investor Relations
Strand Hanson Limited Stuart Faulkner / James Harris / Rory Murphy	+44 (0) 20 7409 3494
Pelham Bell Pottinger	+44 (0) 20 7861 3232
Mark Antelme / Henry Lerwill
BNP Paribas
Florence Sztuder (Syndicate Desk)	+33 (0) 144 95 4100
Ben Canning (Equity Capital Markets)	+44 (0) 20 7595 1000

 

or visit: 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 Region of Iraq, 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 bopd of production within three years, following the approval of the Shaikan FDP, announced on 26 June 2013.

 

THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED ("REGULATION S"). THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY CONVERTIBLE BONDS, NOR SHALL THERE BE ANY OFFER OF CONVERTIBLE BONDS IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL. THE CONVERTIBLE BONDS OR OTHER SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF US PERSONS (AS DEFINED IN REGULATION S), ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THERE WILL BE NO PUBLIC OFFER OF THE CONVERTIBLE BONDS OR OTHER SECURITIES MENTIONED IN THIS ANNOUNCEMENT IN THE UNITED STATES.

 

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY CONVERTIBLE BONDS.

 

THIS ANNOUNCEMENT IS DIRECTED AT AND IS ONLY BEING DISTRIBUTED IN THE UNITED KINGDOM TO (I) PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"), (II) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED FALLING WITHIN ARTICLE 49 OF THE ORDER, AND (III) PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT MUST NOT BE READ, ACTED ON OR RELIED ON BY PERSONS IN THE UNITED KINGDOM WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM. BY READING THIS ANNOUNCEMENT, THE READER ACKNOWLEDGES THAT IT IS A PERSON EITHER (I) OUTSIDE THE UNITED KINGDOM OR (II) FALLING WITHIN ONE OF THE FOREGOING CATEGORIES.

 

THIS ANNOUNCEMENT DOES NOT PURPORT TO IDENTIFY OR SUGGEST THE RISKS (DIRECT OR INDIRECT) WHICH MAY BE ASSOCIATED WITH AN INVESTMENT IN THE CONVERTIBLE BONDS.

 

THE LEAD MANAGER AND THE CO-BOOKRUNNER (TOGETHER, THE "MANAGERS") ARE ACTING ON BEHALF OF THE COMPANY AND NO ONE ELSE IN CONNECTION WITH THE CONVERTIBLE BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO THEIR RESPECTIVE CLIENTS, OR FOR PROVIDING ADVICE IN RELATION TO THE CONVERTIBLE BONDS.

 

NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS OR WILL BE MADE AS TO, OR IN RELATION TO, AND NO RESPONSIBILITY OR LIABILITY IS OR WILL BE ACCEPTED BY THE MANAGERS, OR BY ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS AS TO OR IN RELATION TO THE ACCURACY, COMPLETENESS OR VERIFICATION OF THIS ANNOUNCEMENT, PUBLICLY AVAILABLE INFORMATION ON THE COMPANY OR ANY OTHER WRITTEN OR ORAL INFORMATION MADE AVAILABLE TO ANY INTERESTED PARTY OR ITS ADVISERS AND ANY LIABILITY THEREFOR IS HEREBY EXPRESSLY DISCLAIMED.

 

IN CONNECTION WITH THE OFFERING, THE MANAGERS AND THEIR RESPECTIVE AFFILIATES MAY, FOR THEIR OWN ACCOUNT, ENTER INTO ASSET SWAPS, CREDIT DERIVATIVES OR OTHER DERIVATIVE TRANSACTIONS RELATING TO THE CONVERTIBLE BONDS AND/OR THE UNDERLYING ORDINARY SHARES AT THE SAME TIME AS THE OFFER AND SALE OF THE CONVERTIBLE BONDS OR IN SECONDARY MARKET TRANSACTIONS. THE MANAGERS AND ANY OF THEIR RESPECTIVE AFFILIATES MAY FROM TIME TO TIME HOLD LONG OR SHORT POSITIONS IN OR BUY AND SELL SUCH SECURITIES OR DERIVATIVES OR THE UNDERLYING ORDINARY SHARES. NO DISCLOSURE WILL BE MADE OF ANY SUCH POSITIONS OTHER THAN AS REQUIRED BY APPLICABLE LAWS AND DIRECTIVES.

 

IN CONNECTION WITH THE OFFERING, THE MANAGERS AND ANY OF THEIR RESPECTIVE AFFILIATES ACTING AS AN INVESTOR FOR THEIR OWN ACCOUNT MAY TAKE UP CONVERTIBLE BONDS OR THE UNDERLYING ORDINARY SHARES AND IN THAT CAPACITY MAY RETAIN, PURCHASE OR SELL FOR THEIR OWN ACCOUNT SUCH SECURITIES AND ANY SECURITIES OF THE ISSUER OR ANY RELATED INVESTMENTS AND MAY OFFER OR SELL SUCH SECURITIES OR OTHER INVESTMENTS OTHERWISE THAN IN CONNECTION WITH THE OFFERING. THE MANAGERS DO NOT INTEND TO DISCLOSE THE EXTENT OF ANY SUCH INVESTMENT OR TRANSACTIONS OTHERWISE THAN IN ACCORDANCE WITH ANY LEGAL OR REGULATORY OBLIGATION TO DO SO.