Presentation

HKN Energy was founded by majority shareholder Ross Perot Jr in 2007. HKN Energy is a privately held independent energy company with oil exploration and production operations in the Kurdistan Region of Iraq (KRI). The company holds a 62% operated PSC interest (77.5% W.I.) in the Sarsang block. Gross production at the field in H1 2020 was 22,900 bpd.

The Sarsang block is located in the northern part of Iraqi Kurdistan and two large oil discoveries (Swara Tika and East Swara Tika) have been made on the block to date. The field is very large with gross 2P reserves of 380 mill boe and 2C resources of 427 mill boe. In 2019, the company raised a USD 100m bond to finance a new production facility which will increase capacity to +50,000 bpd in 2021-2022e. A 21km pipeline with 100 kbopd capacity from the Sarsang block boundary to the Atrush receiving terminal is currently being constructed and is expected to become operational near-term. With higher volumes, the already low lifting cost of around USD 6/bbl is expected to come down to below USD 4/bbl in 2021-2022e. Swara Tika crude is light and enjoys a low USD 7/bbl discount including transportation costs, which is low compared to other Kurdistan fields. To growth beyond the near-term target, gas handling will be needed on Sarsang. While still responsibility of the government according to the PSC, HKN may decide to contribute to the needed financing that is expected to be a fairly modest amount net to HKN and be funded by cash flow from production.

The Perot family is the main sponsor of HKN. The family has been active as an operator/investor in upstream oil and gas for over 40 years. In 2014, Kerogen Capital invested USD 100m in convertible preference shares in HKN Holding, and thus far a total of USD 500m of equity has been injected.