# Strategic report

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/LSE_GKP.L_2018/LSE_GKP.L_2018.mmd` · pages 2-8_

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Strategic report

About Us 1
At a Glance 2
Investment Case 3
Chairman's Statement 4
Executive Review 6
Operational Review 10
Business Model 14
Strategy and Objectives 16
Key Performance Indicators 18
Strategy for Future Growth 20
Production growth 22
Reserves and resources 24
Regular payments and steady exports 24
Stakeholder Engagement 26
Corporate Social Responsibility 28
Management of Principal Risks 34
and Uncertainties

## Governance

Board of Directors 42
Senior Management 44
Corporate Governance Report 46
Nomination Committee Report 56
Audit and Risk Committee Report 58
HSSE and CSR Committee Report 62
Technical Committee Report 64
Remuneration Committee Report 65
Directors' Report 78

## Financials

Directors' Responsibilities Statement 80
Independent Auditor's Report 81
Consolidated Income Statement 86
Consolidated Statement of Comprehensive Income 86
Consolidated Balance Sheet 87
Consolidated Statement of Cash Flow Statement 89
Summary of Significant Accounting Policies 90
Notes to the Consolidated Financial Statements 99

## Additional information

Directors and Advisers 117
Glossary 118
Key Shareholder Engagements 2019 120

## About this report

Gulf Keystone Petroleum aims to produce a clear, open and transparent annual report which gives an accurate portrayal of our strategy and performance. We strive to improve our reporting year-on-year and welcome stakeholder feedback on how we are doing.

Please give us your feedback: ir@gulfkeystone.co.uk

For further information about Gulf Keystone, please visit our website at www.gulfkeystone.com.

![](images/2_0.jpg)

Proud to operate in the Kurdistan Region of Iraq

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## ABOUT US

# Gulf Keystone Petroleum Limited is an independent oil company and the operator of the Shaikan Field, one of the largest developments in the Kurdistan Region of Iraq.

The Company's strategy is to increase production significantly from the Shaikan Field, which is currently developed with nine production wells and two production facilities with a combined capacity of 40,000 barrels of oil per day ("bopd"). With expansion to 55,000 bopd currently underway, there is longer-term potential to increase output to 75,000 bopd, install gas re-injection, and further expand to 85,000 bopd and then to 110,000 bopd as we integrate Triassic production with that from the Jurassic which is already onstream.

With safe and reliable operations, a proven production track record and 591 million barrels of 2P reserves, we are in an exciting phase of investment to markedly increase production from Shaikan; the focus is on development.

2018 full-year highlights

31,563 bopd
Gross average production
at upper end of guidance
Growth
On track to achieve
uplift to 55,000 bopd
in Q1 2020

$250.6m
Record revenue

$79.9m
Record profit after tax

Dividend
Distribution from
2019 onwards

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## AT A GLANCE

We are a leading independent oil company operating in the Kurdistan Region of Iraq.

c.400 staff and contractors working in Kurdistan and London

![](images/4_0.jpg)

Located c.60km north-west of Erbil

![](images/4_1.jpg)

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## INVESTMENT CASE

## Near-term production uplift

Initial 55,000 bopd project carries relatively low execution risk and is expected to be achieved by Q1 2020.

pages 20 and 21

## Fully funded for up to 110,000 bopd

With a cash balance of $296 million as at 27 March 2019, the Company is fully funded for all phases of Shaikan's development. The gross capex guidance for the initial uplift to 55,000 bopd remains unchanged at $200 million to $230 million.

pages 20 and 21

## Consistent operational delivery

Gulf Keystone has demonstrated a track record of meeting its production targets, whilst maintaining low operating and G&A costs.

pages 10 to 13

## HSSE a priority

Continued focus on maintaining safe and reliable operations at Shaikan led to another strong year for HSSE performance, with one LTI occurring in the last three years.

pages 28 and 29

## Longer-term upside

GKP and MOL have aligned objectives for a phased development which is expected to grow gross Shaikan production to 110,000 bopd.

pages 20 and 21

## Stable geopolitical backdrop

Safe operating environment with uninterrupted operations supported by regular payments.

pages 24 and 25

## Organisation built to deliver

Team further strengthened during 2018. Fit for purpose to lead Gulf Keystone into the next stage of its development.

pages 42 to 45

## Delivering value to shareholders

Focus on cost control, maintaining safe and secure operations, prudent investment in Shaikan and capital management strategy are expected to yield future returns for shareholders following first dividend in 2019.

pages 4 and 5

## Our history in Kurdistan

![](images/5_0.jpg)

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## CHAIRMAN'S STATEMENT

![](images/6_0.jpg)

I have relished my first year as Chairman of Gulf Keystone and believe the Company has made considerable positive progress during 2018.

Jaap Huijskes
Non-Executive Chairman
27 March 2019