Wednesday 17 January 2018 ShareProphets: The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares

Gulf Keystone – Ben Turney needs to be locked away for his insanity – the shares are a sell

By Tom Winnifrith, The Sheriff of AIM | Tuesday 17 November 2015

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.

Ben has produced yet another truly awful piece on Gulf Keystone GKP) today, Flip Flop is a stale long and wrong bull, I have called it spot on as a sell from 180p down to today’s 25.75p. But his offering today “facts about Gulf Keystone’s debt” is not based on fact and makes assertions that are ludicrous.

Ben writes

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.

I would mention which broker released the note, but this firm has been unnecessarily pissy with ShareProphets in the past about publishing its work. No doubt, the note is circulating on the Internet, but the key points about Gulf’s debt are as follows:

  • Gulf’s debt is primarily split across two bonds:
    • $325million at 6.25% maturing in October 2017
    • $250million at 13% maturing in April 2017
  •  The next coupons (interest payments) worth $24.6million are due in April 2016.
  • Gulf must maintain its Debt Service Reserve Account above $32.5million to ensure it does not break a key debt covenant.
  • Gulf’s cash balance in the middle of October was $76.2million


Let’s start with the cash balance – that was before a half year interest payment. The most recent statement of cash was 23 October - $48.6 million.  I suggest Ben that you fail #factcheck on that one, or rather you state a misleading fact.

Then let’s come to the payments from the Kurds which run at $12 million a month net to Gulf. It also has costs which run at c$9 million a month. So over the next six months assuming the Kurds play ball you will see a net operating inflow of $18 million before interest payments of $26.4 million kick in again. In other words by April 2016 cash will be down at $40.2 million. Six months later it will be at $31.8 million. In other words even if the Kurds keep making payments by October next year Gulf will be in default on its bonds. #factcheck flip flop.

Finally lets come to the most ridiculous statement made by young Ben “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”. What utter crap. Even with the Kurds playing ball, after interest costs Gulf is burning cash. How on earth can flip flop think that Gulf can thus pay down its debt?

It cannot. There is more chance of me shagging Cheryl Cole and Rita Ora as well as that blond halfwit who co-presents XFactor, all by close of play today than of Gulf repaying a cent of its debt when it falls due. The only question is whether Gulf breaches its bond covenants beforehand.

This is why the 6.25% bonds yield 17% and the 13% bonds yield 21%. Bondholders know that they are unlikely to get all their money back which tells you that equity holders face wipeout.

Please ignore long and wrong for yonks Turney. The shares remain a storming sell with a (generous) target of 10p but quite possibly this is a zero.

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More on GKP



  1. GKP has a world class oil field. Value in this market is clearly diminished by oil price and politics. GKP are talking to potential buyers now and a corporate deal could be imminent. My view is that an outright bid unlikely and a partial sale will disappoint markets. However GKP story is all about surviving until oil price bounces.

    Hence I expect partial sale and this will allow GKP to increase production to 70K bopd. When oil bounces the Kurds will be able to pay back costs and GKP will receive a much better price for oil produced. The political situation should also improve as revenues rise and salaries paid. It’s a virtuous circle but GKP living on the edge until this (or partial sale) occurs

    The bonds can then be refinanced or company sold at a valuation that reflects its 1 bn barrel plus potential.

  2. Whether the KRG pay or not can hardly be called an investment case, would I trust it. Hell no, I spent part of my upbringing living with the Shia, and circa 15% of my own companies turnover comes from the Middle East. Don’t tell me the Kurds are different, because they aint.
    No payment, no oil should be the mantra here. You do not buy Rolex watches in Port Said, Carpets from a trader working the Mazagan and you don’t issue a continuous credit line to anyone, never mind anyone in the Middle east

    Will GKP finally make it. doesn’t look like it. The next failed payment and the SP will tank.

  3. Agreed. No KRG payment this month and Tom will be even more unbearably smug!

    They have to pay or last two months credibility goes up in smoke. Appears no significant pipeline disruptions so should happen but fall in oil price a concern

  4. Drunken Sailor


    You are being a bit unfair on Flip Flop his article continues:

    “For Gulf’s shareholders the risks are clear. This has the potential to be another Afren if anything serious goes wrong.

    So much depends on the Kurdish Regional Government (KRG) maintaining its regular payments. To be honest, the company probably needs the Kurds to increase those payments, but if there are any further delays Gulf has very little in reserve to act as a buffer.

    It is now 17 November and we haven’t heard whether or not the KRG has issued another monthly payment. It should have done by now, so it is little wonder that Gulf’s share price closed down at 25.75p last night. My risky punt of last week grows ever riskier.”

    What is not clear is his own position. This disclosure says he does not hold but the last sentence indicates he does.

    What both your articles expose is how poor the broker note he quotes is. Ben declined to name and shame, perhaps you will not be so coy about it.

  5. At present Saudi Arabia is downing oil prices – however there is an OPEC meeting beginning later this week where that regime will be present. If Arabia shows any hint of supporting production cuts it could be an excuse for punters to up oil junior prices. I have therefore opened a working spread bet short on GKP at 0.22 to allow for this meeting to be out of the way

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