Gulf Keystone to miss upcoming coupon payment on convertibles, notes

New York, April 14 – Gulf Keystone Petroleum Ltd. said that it plans to use the grace period for the coupon payments due April 18 on its $325 million of 6.25% convertible bonds due October 2017 and its $250 million of 13% guaranteed notes due April 2017.

The grace periods expire on May 2 for the convertibles and May 3 for the notes, according to a company announcement.

Gulf Keystone also said that its Shaikan wells may show natural declines in production later this year without additional capital expenditure.

It proposed a capital program of $71 million that would maintain production at its current level of 30,000 barrels per day or $88 million to increase production to 55,000 barrels.

Investment would require approval by the Kurdistan Ministry of Natural Resources and the company’s joint venture partner MOL Hungarian Oil and Gas plc.

The company said it released the projections in order to provide a foundation for discussions over fund raising and a possible restructuring of its balance sheet.

“The additional detail on the potential interim investment scenarios being released today ensures an orderly market, and represents an important step as we prepare to embark upon detailed discussions with stakeholders,” said chief executive officer Jon Ferrier in the announcement.

“We are working to achieve the best possible way to restructure our balance sheet. Addressing our funding needs will ensure the company’s longer term future and ability to continue developing the Shaikan field for the benefit of all our stakeholders.”

Gulf Keystone is an oil producer incorporated in Bermuda and with offices in London and Erbil in the Kurdistan region of Iraq.

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