Operational & Corporate Update

15 December 2020

Gulf Keystone Petroleum Ltd. (LSE: GKP)

("Gulf Keystone", "GKP" or "the Company")

Operational & Corporate Update

Shaikan production currently c.42,000 bopd 

80 MMstb cumulative production achieved

Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq, today provides an operational and corporate update.

Jón Ferrier, Gulf Keystone's Chief Executive Officer, said:

"We have made significant operational strides in recent months, ensuring we remain on-track to achieve our revised targets for the year. I am pleased to update stakeholders on further success in executing the previously reported, low-cost, high-impact investments that have so far increased gross production to 42,000 bopd, in excess of the initially targeted increase of 5,000 bopd.

The Shaikan Field recently achieved an important milestone of cumulative production of 80 million stock tank barrels. This is a clear testament to not only the quality of the asset, from which there remains significant untapped potential, but also the professionalism and dedication of the team. We look forward to updating the market on further progress early in 2021."

Operational

· Following on from the successful workover of the SH-12 well, the Company has progressed the previously announced low-cost, high-impact investments to further increase field production.

· The SH-9 well, on which activity was suspended in March 2020 due to COVID-19, has now been successfully tied-in to PF-1 and is on production. PF-1 is now operating at its current maximum processing capacity of c.27,500 bopd. Debottlenecking activities at PF-1 remain on-track to further increase production capacity to over 30,000 bopd during Q1 2021.

· Gross Shaikan production is currently at c.42,000 bopd, c.20% above the November 2020 average rate.

· Average gross production for the year is expected to be at, or slightly above, 36,000 bopd, the top end of the guidance range.

Financial

· The Company remains on track to achieve targeted G&A and Opex savings of at least 20% compared to 2019 and 30% on a run-rate basis.

· Net capex for 2020 is expected to be at or slightly exceed the top end of the guidance range of $48 million, following the $3 million investment in high-impact projects.

· The Kurdistan Regional Government ("KRG") has maintained regular payments for eight months, including the recent October receipt.

· The Company has extended its hedging programme, establishing a H1 2021 floor price of $35/bbl on c.60% of production, based on current production levels.

· As at 14 December 2020, the Company had a cash balance of $142 million.

Outlook

· With completion of the debottlenecking of PF-1, GKP is expected to deliver a further increase in production in Q1 2021.

· In line with the KRG's commitment to review the outstanding November 2019 to February 2020 invoices totalling $73.3m (net) when oil prices reached $50/bbl, we are pleased to confirm receipt of a proposal to repay the arrears. We look forward to further engaging with the KRG on this matter and will provide an update in due course.

· GKP is well positioned to restart its drilling programme to achieve 55,000 bopd when circumstances permit.

· The Company remains committed to maintaining its strong financial position and aims to return to a balance of production growth and shareholder distributions, as conditions continue to improve.

· The search process to identify a successor for CEO, Jón Ferrier, is ongoing.

AGM Update

In accordance with the 2018 UK Corporate Governance Code, the Company can confirm that following the Annual General Meeting held on 19 June 2020, where three of the proposed Resolutions did not attain the support of 80% of the votes, members of the Board and executive management team have consulted with several of the Company's large shareholders. Mr Garrett Soden has been reappointed to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria, GKP's largest shareholder. The Company continues to actively engage with its shareholders.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Enquiries:

or visit: www.gulfkeystone.com

Notes to Editors:

Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading independent operator and producer in the Kurdistan Region of Iraq. Further information on Gulf Keystone is available on its website www.gulfkeystone.com

Disclaimer

This announcement contains certain forward-looking statements that are subject to the risks and uncertainties associated with the oil & gas exploration and production business.  These statements are made by the Company and its Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent risks and uncertainties, including both economic and business factors and/or factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy.  This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.

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