What’s this, a full-year profit for Gulf Keystone Petroleum (GKP)? For the first time since entering Kurdistan, the struggling driller’s bottom line is painted black, thanks in large part to much lower finance costs. In turn, Gulf is starting to build something approaching a cash buffer, having increased bank deposits to $203m (£143m), against $100m of debt, on the eve of these results’ publication.
It’s not all happy families. Although operating costs fell in 2017, limited investment in the Shaikan field means production is expected to fall by 9 to 24 per cent from last year’s average output of 35,298 barrels of oil a day (bopd). That intensifies the need to finalise commercial and contractual arrangements with the Kurdistan Regional Government’s (KRG) ministry of natural resources. A crude oil sales agreement, announced in January, is yet to provide Gulf with a definitive operational framework. Until it does, and despite a more consistent flow of payments from the KRG, the company will not sign off on an investment plan that would take Shaikan output to 55,000bopd.
Consensus forecasts are for adjusted pre-tax profit of $26.9m and EPS of 12¢ in 2018, compared with estimates of $8.2m and 3.5¢ last year.
GULF KEYSTONE PETROLEUM (GKP) | ||||
ORD PRICE: | 153.8p | MARKET VALUE: | £353m | |
TOUCH: | 152.8-154.8p | 12-MONTH HIGH: | 153.8p | LOW: 86p |
DIVIDEND YIELD: | nil | PE RATIO: | 35 | |
NET ASSET VALUE: | 206¢ | NET CASH: | $63.4m |
Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
2013 | 6.7 | -31.8 | -3.7 | nil |
2014 | 38.6 | -246 | -28.5 | nil |
2015 | 86.2 | -213 | -2284 | nil |
2016 | 194 | -17.3 | -30.8 | nil |
2017 | 172 | 14.1 | 6.2 | nil |
% change | -11 | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
£1=$1.42 |