Iraqi-focused oil company reviewing debt options

LONDON, May 20 (UPI) -- Gulf Keystone Petroleum, a British company focused on Iraqi oil, said it extended an agreement with its lenders until the end of May to consider its debt.

The company at the end of April said it was short of the necessary capital to keep output steady and 27 percent short of the funds necessary to raise production to its target rate.

At the time, the company said it reached a deal with a committee of holders of notes and bonds to enter into a "standstill agreement" on interest payments for April. It now said it extended that arrangement until May 31.

The original agreement was pursued in an effort to provide the company with time to review debt considerations. Gulf Keystone Petroleum has already relinquished non-core assets in the Kurdish north and was still working to "aggressively manage" its costs, it said.

"Following the establishment of a regular payment cycle for all oil sales and arrears, and a positive economic outlook, Gulf Keystone plans to move into the large-scale phased development of the Shaikan field [in the Kurdish north of Iraq] targeting 110,000 barrels of oil of production capacity," the company said Friday

The company over the past few months has been supported by payments from the Kurdish government for oil exports from its Shaikan development, but said new capital was needed to lay a foundation for future growth.

The company, which has headquarters in London, started sounding the alarm in March, with CEO Jon Ferrier saying "strenuous efforts" were underway to ensure operations were moving toward the goal of returns on investments and increased production.

Gulf Keystone Petroleum last year said it was looking for partners or potential buyers as part of a long-term strategic review.

"A further announcement will be made in due course," the company said Friday.