UK 00:43 Tuesday, 6 October 2026
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
After my Gulf Keystone (GKP) piece last week (HERE) drew the predictable furious response from Winnifrith (HERE), I’ve been looking into the company’s numbers in a bit more detail. There’s no denying that Gulf is teetering on the edge. However, it is not dead yet. Although it has little to no room for error, so long as the Kurds keep up their regular payments, it is possible that Gulf will be able to pay down its debt and refinance its balance sheet by April 2017. A broker note found its way into my inbox today, broadly supporting this view. It contained some interesting observations on Gulf’s debt position worth sharing.
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Comments
Steve
‘Gulf’s cash balance in the middle of October was $76.2million’
Ben this was before the last coupon payment payable in October – post the coupon payment the cash dropped to below $50million at which point Gulf must engage in dialogue with bondholders although I doubt much will happen.
Whats still not clear is at what level they can keep OPEX and CAPEX at to preserve cash, while at the same time continuning to maintain production and develop.
Even if they can manage to struggle on servicing debt, I still don’t see the equity as being worth very much beyond what the debt is worth. At some point they will have to go back to CAPEX spending and that will require more funding. The other alternative is to sell out, but in this oil environment and in a country with an uncertain future and poor at paying its a buyers market.
wildrides
Oh dear ………. I have a feeling its “gonna hurt in the morning” but good luck with it anyway.
Daniel Victor
There has to be more to it than that.If Gulf Keystone could just about make its interest payments,surely its bonds would be a steal at current levels.
Ben Turney
@Steve – yes good point. I should have added that. Mistake on my part, apologies.
@wildrides – I’m not in this one, but thought I should publicise these numbers
@Daniel – I made a similar point in my last piece. So long as Gulf’s assets stay about $200million – $250million the bonds look an incredible steal at the moment. I believe they sell in parcels of $200,000