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Gulf Keystone - monies received but the cash is disappearing fast - its toast!

By Tom Winnifrith | Tuesday 8 March 2016

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.

Gulf Keystone (GKP) has announced that the $15 million gross it announced it was getting on 19 February has arrived which is good news. The bad news, and boy it really is bad news, is that cash post payment is just $56 million.

You will remember that the $15 million gross is in in fact just $5.8 million for current output (down from $15 million) while the rest is chipping away at historic arrears owed by the KRG of $294 million. One small chip has now been made. $15 million gross works out at $12 million net.

Cash as at 15 October was $76.2 million but shortly afterwards the bi-annual interest bill on Gulf's mountain of debt ($26.4 million) was made so in effect it was $49.8 million. By mid February ( ie 3 and a bit months later) cash was $58 million. It is now $56 million.

My assumption will be that another $12 million net will arrive in one month's time and we know that operating costs are now running at just over $8 million a month. That means that by mid April cash will be just under $60 million at which point interest of $26.4 million is due. So cash then falls to, shall we say, $33 million.

I put it to you that the chances of Gulf being able to repay either of its bonds due in 2017 are zero, absolutely zero. That is why they trade on junk bond on steroids yields and that is why the equity is completely and utterly worthless.

The shares are now c14p (yes you can thank me later, by sending me a bottle of ouzo, for saying sell at 180p) and the target remains 0p.

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More on GKP



  1. It’s clear that KRG trying to save GKP? Hence being paid far more than they deserve re Genel/DNO.

    KRG strategy appears to be trying to keep GKP alive until markets pick up YE and M&A options improve. Agree what’s left over for equity, if anything, the big Unknown.

    The problem is that the pipeline is down and KRG not receiving any export revenues. Hence bust unless pipeline back up soon and/or receive international aid. If KRG can keep GKP alive, they will since Shaikan a flagship asset. They don’t want lousy valuation for obvious reasons.

    Issue is can they…..

  2. Quick someone nominate PC for BB moron of the week. He admits KRG getting no export revs as pipeline down but thinks KRG is prioritising bailing out BB Morons over things like ammo for its troops. yeah right…

  3. Drunken Sailor

    Paul quite clearly is not saying KRG are bailing out BBMs: “Agree what’s left over for equity, if anything, the big Unknown”

    What he is saying is the field is a national asset and they would not want to see it shut down by sending GKP bust right now. Their best interests are served by doing what little they can (given they are the biggest debtor) to keep things ticking over, until the oil price improves and hopefully they can solve their pipeline issues so that it gets bought out at a decent price by someone with the resources and knowhow to maintain it as a national asset, which will still leave BBMs potentially on 0p.

  4. Tom

    Try being objective

    Why did KRG pay $15m, same as last few months, when they paid Genel and DNO about two thirds of previous month?

    Go on, tell me or nominate yourself for Moron of Week

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