Gulf Keystone Petroleum Stocks Spike Over Renewed Rumours

PUBLISHED: 11 Jan 2012 @ 02:11 | Comments (0) |

Stocks of AIM-listed Gulf Keystone Petroleum (LSE:GKP) closed on a high after GKP affirmed the authority of Government of the Kurdistan Region of Iraq over the company’s interests in the region, sparking renewed talks that a giant oil company may be interested in joining the oil exploration in the area or offering to buy the company.
GKP shares closed 45.75 pence more representing a 20.7% increase from last day’s trading. The stock price opened at 225p and reached as high as 315p in intraday trading before settling to 266.75p.

Exxon Mobil Offer Speculation
Old rumours of Exxon Mobil to buy GKP buzzed around investors following the issued statement that the Kurdistan Regional Government (KRG) has a right to nominate and assign interest to the third party player, in accordance with the Third Party Assignment Option provision of the Product Sharing Contract (PSC) signed by both GKP and KRG relating to the Shaikan and Akri-Bjieel blocks.

The speculations dated back in December 2011 when The Independent published an article that Exxon Mobile had “sounded out” GKP over a possible offer to purchase the company at GBP7 billion. GKP market capitalisation at that time was valued at GBP1.5 billion. At 266.75p per share, market capitalisation to date is at GBP2.3 billion. GKP Board issued a statement toe following day nullifying the rumours.

According to the statement, KRG has a “back-in” rights, which when exercised, the company’s interests may be lowered down to 51% in Shaikan block and 12.8% in the Akri-Bijeel block. Currently, KRG holds 75% stake in the Shaikan block with another 5% held in trust by Texas Keystone and 20% in the Akri-Bijeel block.

Potential Oil Reserves
Independent audits of the Shaikan block estimates the gross oil-in-place volumes of between 8-13.4 billion barrels with a mean value of 10.5 billion barrels calculated on the P90 to P10 basis. On the other hand, Akri-Bijeel block has an estimated 2.4 billion barrels of oil-in-place at P50 resource estimates.

P90, P50, and P10 values represent 90%, 50%, and 10% probability, respectively, that the quantities determined to be in place will equal to or exceed the low, medium, or high estimate, in the same order. These blocks are two of the four Contracts that the GKP has in the region.

OTCBB Trading
In the US, Gulf Keystone ADR is trading at USD88.25 representing a 31.17% increase from its previous close of USD67.28, as of press time. Pink trading (GUKYF) is at USD4.47, 26.99% higher than previous close of USD3.52 at the Over The Counter Bulletin Board (OTCBB). These upward trend is also perceived as a reaction to the developments declared in the GKP release.

Company Spotlight
Gulf Keystone Petroleum Ltd is the parent company of Gulf Keystone Petroleum International (GKPI), a 100% wholly-owned company holding the four Production Sharing Contracts for four exploration blocks in the Kurdistan Region of Iraq. GKP also holds six blocks and two operationg fields in Algeria.
GKP also trades American Depositary Receipts (ADRs) at the US Over-The-Counter securities market (OTC) with the ticker symbol GFKSY.

References
↑  Company history and highlights
↑  Gulf Keystone ADR Trading
↑  Gulf Keystone Petroleum (Pink GUFKY) OTC Trading
↑  GKP Operations

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