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Gulf Keystone still reaching for 55,000bopd

Kurdistan oil producer's long-awaited production goal still just over the horizon
Gulf Keystone still reaching for 55,000bopd
  • Oil crash and and unpaid Kurdistan Regional Government invoices knock Gulf Keystone into loss territory
  • Q1 2022 new goal for 55,000 bopd gross expansion project

Gulf Keystone (GKP) came into 2020 “set for another 12 months of successful, safe, production growth”, in the words of chairman Jaap Huijskes. The company did manage production growth of just over 10 per cent on 2019, but had to postpone its 55,000 barrels of oil per day (bopd) goal for around 18 months, out to the first quarter of 2022. 

Even with the higher production, earnings suffered from the oil price crash. Adjusted cash profits more than halved to $57m (£41m), even with solid cost decreases and capital spending falling by half from the $90m spent in 2019. 

Gulf Keystone is also still chasing the Kurdistan Regional Government for over $70m in unpaid invoices, although said it had started to repay this in March. 

Despite this, Gulf Keystone has stayed in net cash territory and has also announced a $25m dividend this year, equal to just under 12¢ a share. 

Broker Peel Hunt forecasts adjusted earnings per share of 10¢ this year, rising to 51¢ in 2022. 

Last year we said Gulf Keystone was struggling to overcome the oil crash. Since then, its share price has more than doubled thanks to the oil price getting back over $60/bbl. We will wait for the Shaikan expansion coming on stream and the fabled 55,000 bopd target being hit before getting more bullish. Hold.

Last IC View: Hold, 82p, 3 Sep 2020

GULF KEYSTONE (GKP)   
ORD PRICE:177pMARKET VALUE:£373m
TOUCH:176.4-177.4p12-MONTH HIGH:199pLOW: 59p
DIVIDEND YIELD:4.8%PE RATIO:na
NET ASSET VALUE:215¢NET CASH:$43m
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2016194-17.3-30.8nil
201717214.16.2nil
201825179.734.821.79
201920743.319.3nil
2020108-47.3-22.511.85*
% change-48---
Ex-div:24 Jun   
Payment:2 Jul   
£1=$1.39 *Equivalent to $25m payment, subject to approval at June's AGM