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Kurdish oil producers surge

Regional government moves to offer certainty over payment for oil
August 4, 2015

Is there finally light at the end of the tunnel for oil producers in Kurdistan? Shares in Kurdistan-focused oil producers Genel Energy (GENL) and Gulf Keystone (GKP) leapt this week after the Kurdistan Regional Government (KRG) moved to confirm regular payments for companies involved in producing oil from the region.

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Operators, Genel and Gulf Keystone included, have continued increasing their output in recent months despite an ongoing dispute between the KRG and the central government in Iraq over payments, which has resulted in operators building up considerable receivables under production sharing contracts. In turn, this and the ongoing security concerns in the region - as well as the weakness in the oil price - have contributed to sustained falls in the share prices of both companies.

This was partially reversed on Tuesday when shares in both leapt on news that the KRG would, from September, "allocate a portion of the revenues from its direct crude oil sales to the producing IOCs, to cover their ongoing expenses". There was also mention of addressing the receivables that have built up from early 2016.