LONDON (ShareCast) - (Sharecast News) - Gulf Keystone's shares dropped on Thursday even as the company declared its maiden dividend following a leap in annual profits as revenues hit record levels.
The independent oil and gas operator and producer recorded a profit before tax of $79.7m for 2018, up from $14.1m the year before, as revenue leapt by 45% to reach $250.1m and full year gross average production reached the upper end of guidance at 31,563 bopd.

Given what the London-listed company called its "current financial strength", it announced its intention to pay an ordinary dividend on the ordinary shares of $25m in 2019 and is also proposing to complement the ordinary dividend in 2019 with a $25m supplemental dividend to shareholders on the ordinary shares.

The total dividend of $50m will be subject to approval at the next AGM in June, with a third of the dividend to be paid following approval.

Jón Ferrier, Gulf Keystone's chief executive, said:"The new dividend policy represents another major milestone for the Company. It crystallises returns to shareholders while we preserve the ability to fully fund the Shaikan development and maintain a strong balance sheet; our platform for growth."

Both Keyston and its partner MOL have agreed to restart investment into the Shaikan field in order to increase production to a target of 55,000 bopd gross by the first quarter of next year, ahead of a further development up to 110,000 bopd.

Keystone invested $37.5m in the Shaikan development through the year and expects to be fully funded for all phases of the Shaikan expansion programme, under its current set of assumptions.

The company had cash and cash equivalents of $295.6m at the end of the year, up from $160.5m at the same point the year before.

"Throughout 2018, our focus was on laying the foundations for the delivery of the company's phased growth plans, which envisages a step change in production profile. The company is on track to achieve its near-term production target of 55,000 bopd in Q1 2020, and with our partner MOL continues to work towards delivering the staged investment programme. The remarkable Shaikan reservoir presents a straightforward, low-cost onshore development opportunity with unrivalled near-term upside," said Ferrier.

Analysts at Canaccord said: "Over the past couple of years Gulf Keystone has delivered very strong performance from the company's operated field, Shaikan, in KRI, which has translated to impressive free cash flow generation. We believe that all-round operational and financial delivery has provided the foundation for the next step up in production. Over the next 12 months production is expected to grow by 70% through investment that is entirely, and comfortably, supported by the strength of the balance sheet."

Gulf Keystone's shares were down 4.23% at 249.00p at 1628 GMT.

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