Gulf Keystone Petroleum (GKP) recorded a net loss of $248m (£169m) in 2014, which flattered a loss of $32m in the previous year. Profits and cash flows have been held in check by payment delays from Kurdistan's regional government (KRG) - a problem exacerbated by the security situation in the region. Management remains in negotiations with parties with regard to a possible asset sale, or full takeover. So 2015 could well be a make-or-break year for the frontier oil and gas driller.
The company did gain a little breathing space after the reported period as discussions progressed. It successfully redefined a trust deed governing its outstanding convertible notes, and raised $40.7m through a discounted placing with both new and existing institutional investors. The KRG did cough up $26m as prepayment for crude oil sales from its principal field in Shaikan. But GKP is still owed upwards of $200m in receipts for oil exports and covered costs on early-stage investments.
Despite turmoil in the region, there was progress on the operating front. GKP did achieve its year-end production target at Shaikan, and output is expected to fall within the range of 35m-40m barrels of oil per day (bopd) in 2015. That rate could potentially move towards 250m bopd once Shaikan reaches its full potential - a material draw for any would-be suitors.
Mirabaud Securities gives a risked valuation of 70p a share.
| GULF KEYSTONE PETROLEUM (GKP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 38p | MARKET VALUE: | £372m | |
| TOUCH: | 38-39p | 12-MONTH HIGH: | 117p | LOW: 33p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 35¢* | NET DEBT: | 129% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 0.8 | -26.8 | -4.2 | nil |
| 2011 | 6.9 | -63.8 | -8.0 | nil |
| 2012 | 32.2 | -80.2 | -9.6 | nil |
| 2013 | 6.7 | -31.8 | -3.7 | nil |
| 2014 | 38.6 | -246 | -28.5 | nil |
| % change | +476 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of $276m, or 28¢ a share £1=$1.47 | ||||
