Zak Mir’s Monthly Pick
13th June (Alliance News) - Gulf Keystone Petroleum said it continues to be alert to the deteriorating security situation in Iraq but its operations in the Kurdistan region of the country are progressing in line with its previous guidance to reach 20,000 gross barrels of production by the end of the second quarter 2014.
The positives are that a post Kozel era offers the company a fresh start both in terms of strategy, public image and even funding. At the same time, even though the geopolitical strife is knocking on the door of its Kurdistan home, it may very well be that with Iraq in turmoil we finally see this issue sorted once and for all.
“Our operations in the Kurdistan Region of Iraq are progressing in line with our previous guidance, whilst we remain alert to the current security situation in Iraq, which has recently escalated outside the Kurdistan Region,” Chief Executive Todd Kozel said.
What may be key is that the group is able to start to ratchet up production towards the stated 40,000 barrels a day by the end of this year. Indeed, it may be said that if the Iraq issue can be dodged over the next few months, the current position of the shares languishing at three year lows is rather harsh.
The oil and gas exploration and development company said development plans to increase production capacity at its entire Shaikan field to 40,000 gross barrels of oil per day by the end of 2014 are on track, with June 4 cumulative production reaching a record maximum daily rate of 25,000 gross barrels of oil per day.
Fundamentals Gulf Keystone has been, and remains one of the most intriguing plays on the London stock market, both among those companies on AIM and those off it. The outgoing CEO and founder Todd Kozel has been described as colourful, a Marmite character and no doubt many other even more spicy names. On a personal note it has to be admitted that Mr Kozel’s sale of almost all of his shares in Gulf Keystone in April 2013, at just below £1.70 to net some £17 million, was not easy to understand at the time. It is perhaps a little easier to comprehend with the stock near 90p currently. However, the purpose of this monthly pick is to look at one of the most followed stocks around and ascertain whether at current levels we are looking at a bargain basement opportunity or not.
“Mr Kozel’s sale of almost all of his shares in Gulf Keystone in April 2013, at just below £1.70 to net some £17 million, was not easy to understand at the time. It is perhaps a little easier to comprehend with the stock near 90p currently.” However, it is perhaps not as harsh as Gulf Keystone shareholders have been to the company’s founder, in terms of effectively forcing home to take just a perfunctory role, liaising with the Kurdistan Government. But it could turn out that this “cruel to be kind” act on the part of shareholders does work in favour of the share price over the near term, and fundamentally this is what the backing here of Gulf Keystone is largely based upon.
August 2014
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