Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Gulf Keystone – Will the Kurds make good on their promise to start paying?

By Ben Turney

4 August 2015 03:51

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Shares in Gulf Keystone (GKP) surged yesterday from a low of 26p to a high of 36p, triggered by news of a pledge by the Kurdistan Regional Government (“KRG”) that it will start making monthly payments to its oil producers from September. This morning, Gulf’s stock has settled back to 33.5p (last seen), valuing the business at £327.6million. This is towards the bottom of the company’s trading range since the start of the year and after yesterday’s excitement the question is, is Gulf a buy?

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Comments

Daniel Victor

4 August 2015, 13:51

How fast have the Kurds promised to repay the money owed ? They pretty much had to start covering the producers’ expenses or they’d probably have stopped producing.
Paul Curtis

4 August 2015, 14:59

Ben

My view is that KRG are already doing what it takes to keep GKP ticking over. Ie covering overheads and (will cover) bond interest payments. This will continue to be the case until oil price rises and there is more money in the kitty. Hence yesterday’s RNS of little real world at sub $60 oil
Ben Turney

5 August 2015, 01:02

@Daniel – quite probably that is correct.

@Paul – a prolonged period of ticking over looks likely, but I still want to see the figures at the end of the month to try and gauge how insulated Gulf is against another bump in the road.
Daniel Victor

5 August 2015, 01:41

Interesting.I was short and have close on the view that there are better shorts out there than this.Can’t see,however,why the Kurds would care who runs the company – shareholders or bondholders.The cynic in me suspects that they will pay expenses plus a small amount – not necessarily enough to cover bond interest payments.
Daniel Victor

5 August 2015, 01:59

Sorry – typo – ‘have closed’.