After a series of alarm bells over available capital, Iraq-focused Gulf Keystone Petroleum says it reached a deal with bondholders to delay interest payments. Photo courtesy of Gulf Keystone Petroleum
LONDON, June 14 (UPI) -- For the second time, Gulf Keystone Petroleum, a British company focused on Iraqi oil, said it extended an agreement with its lenders 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 later extended that agreement until the end of May and now says the agreement will expire July 1.
"While the standstill agreement remains in effect, the company does not intend to make the April 2016 coupon payments," the company said in a statement. "The continuing failure to make those payments constitutes an event of default under the bonds and notes, respectively
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 in the Kurdish north of Iraq were moving toward the goal of returns on investments and increased production.
Gulf Keystone Petroleum has already relinquished non-core assets in the Kurdish north and is working to "aggressively manage" its costs. Over the past few months, the company has been supported by regular 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 at one point this year said it plans to move into the large-scale phased development of its Shaikan field in the Kurdish north of Iraq, targeting a production capacity of 110,000 barrels of oil per day.
Gulf Keystone Petroleum last year said it was looking for partners or potential buyers as part of a long-term strategic review.