SP Angel analysts discuss Gulf Keystone PLC this morning: “While ordinarily today’s update would represent a disappointment, isn’t he face of the headwinds that operating in northern Iraq can bring, we believe today’s update is a strong positive. While the full valorisation of the Company’s asset base remains elusive as the fully productive capacity of Shaikan has not been utilised (we estimate is could produce up to 400m bpd), that the cash generated from the field is meeting corporate needs is a step in the right direction.
In the past we have said of the new management team that:
| We are not certain, however, that this was the appointment that was required. We can understand from a market perspective how Ferrier would be a preferred choice, but we believe that the political and strategic appointee is of considerably less use to Gulf Keystone at this point in its development cycle than a CEO that is willing to roll their sleeves up and get on with the business of delivering barrels into the market. |
and we don’t see anything new to change our minds, but in essence, we believe that the next steps to unlocking the Company’s value (export line, regular access to the international markets), are more macro to the region, opposed to micro to the Company, and as such we believe that our statement (repeated above) is becoming de-emphasised.
While the Company’s owners have seen significant losses in the value of their company, we see the point at which the value of the asset base being unlocked as approaching, and with greater confidence. We estimate that within 3 years the operators will have announced and export line and the KRG will have established a track record of payment management. This is of course assuming that the Company is not bid for in the intervening period.”
