Gulf Keystone rises strongly on rumour mill

Kurdistan focused oil explorer Gulf Keystone Petroleum was up 9% today to 252p on reports of the initial ratification of a new export deal between the KRG (Kurdistan Regional Government) and the Iraqi central government, allowing a new oil and gas law to be enacted early next year. Such a law will allow the formalisation of the various agreements which have been signed between the Kurds and various international oil companies and so greatly increasing the commercial attractiveness of the signficant Kurdish oil assets.

It was announced last week that the Iraqi central government will pay $850 million to the KRG for past exports thus enabling the KRG to pay oil companies. The KRG will receive 17% of products refined in Iraq and 17% of the crude allocated in order to generate electricity. 

However, fellow Kurdistan operator, Genel Energy was barely higher at 745p, a rise of just 1%, meaning that there may be more to the story than just the export deal… Speculation also centred on a potential out of court settlement between Excalibur and GKP who are currently in litigation. 

At 252p, GKP is still way short of the highs of 425p achieved in the spring of this year as takeover mania swirled around the company and there was talk of a potential FTSE 100 listing at the time given the company’s large market cap. Since then, the froth has disappeared around those companies drilling in Kurdistan but with GKP sitting on substantial oil reserves and the legal uncertainties around the region seemingly dissipating, this may be the start of a significant re-rating upward.

Contrarian Investor UK

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