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Millions paid to Kurds, oil player says

British energy company reveals payments made under production sharing contract.

By Daniel J. Graeber
Millions paid to Kurds, oil player says
British energy company paid out millions of dollars last year to the Kurdish government under its contractual agreement. Photo courtesy of Gulf Keystone Petroleum

LONDON, Sept. 12 (UPI) -- More than $100 million was paid out to the Kurdish government as part of a production-sharing contract, struggling Gulf Keystone Petroleum said.

The company said Monday it paid out $112.5 million to the Kurdish Ministry of Natural Resources as part of its production-sharing contract for the Shaikan reserve area in northern Iraq. Royalties equated to around $23.5 million.

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Total considerations were made for production of 5.3 million barrels for the year ending Dec. 31, the company said in its disclosure.

Last year, Gulf Keystone said it was looking for partners or potential buyers as part of a long-term strategic review. Struggling during the market slump, the company in late August launched an open offer for around 2.3 million common shares in an effort to raise $25 million in capital.

The company, which lists headquarters in London, reached an agreement this year with the majority of its creditors and shareholders to restructure its debt obligations and new management was appointed to help steer a $500 million debt conversion proposal.

The company is focused on developing the Shaikan oil field in the Kurdish north of Iraq. It said restructuring would support near-term plans to raise production from 40,000 barrels of oil per day to 55,000 bpd.

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Norwegian oil and gas company DNO, which also has a strong Kurdish portfolio, made a $300 million bid in July for Gulf Keystone Petroleum. Gulf Keystone executives said, however, that restructuring was the best possible option to maintain value for its shareholders.

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