The share price of Gulf Keystone Petroleum (GKP) extended its downward slide on the release of an interim management statement highlighting uncertainty in the timing of revenue recognition and guidance for 2014.
This is hardly a unique problem for GKP; other operators have shipped crude via pipelines through Iraq and payments from Baghdad have been subject to lengthy delays. The company has been trucking oil exports into Turkey since late last year, yet it has received just $6.46m (£3.87m) for the exports, leaving $24m outstanding. Nevertheless, mid-range revenue guidance for this year has been set at $165m
The company's share price has been heavily marked-down following publication of a disappointing competent persons report (CPR) by reservoir valuation specialist ERC Equipoise. In our view, the CPR was overly conservative in its focus on GKP's reserves held within the Jurassic strata - and it was based on less than a quarter of the wells currently planned for the Shaikan development.