(Alliance News) - Gulf Keystone Petroleum Ltd and Genel Energy PLC on Thursday said the Kurdistan regional government, which pays both London-listed companies for oil produced and exported, has asked to reduce the pace at which it is paying arrears.
The regional government cited the impact of Covid-19 on Iraq and the improved global price of oil for the amended payment schedule, which will be applied from the March invoices.
Kurdistan has been paying both companies for invoices outstanding for November 2019 to February 2020. For Gulf Keystone, this debt amounts to USD65 million.
The monthly repayment of arrears will now be calculated as 20% of the difference between the average monthly Brent price and USD50 per barrel, multiplied by the gross crude oil volumes produced by Gulf Keystone's and Genel's fields each month. This is down from 50% of the difference previously.
Brent was quoted at USD68.04 early Thursday in London.
Payment of invoices will be 60 days after submission.
The two companies said they have not discussed the proposal with the Kurdistan government, nor do they accept it.
Genel noted that the 4.5% override payment that it receives of monthly Tawke gross field revenue will continue.
More positively on Thursday, Gulf Keystone declared a special dividend of USD25 million. Added to its previously declared dividend of USD25 million, it will be proposing USD50 million in total payouts at its annual general meeting on June 18.
"Given continuing strong oil prices, improving macroeconomic conditions and our robust financial position, we are pleased to deliver on our commitment to consider further shareholder distributions," said Gulf Keystone Chief Executive Officer Jon Harris.
Gulf Keystone said the dividends will be converted into sterling at rates applying at the record date for each, which will be June 25 and July 30.
Gulf Keystone shares were down 4.7% at 165.23 pence in London on Thursday morning, while Genel was down 11% at 154.62p.
By Tom Waite; thomaslwaite@alliancenews.com
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Gulf Keystone Petroleum (GKP)
Genel Energy (GENL)