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Gulf Keystone; watch Kurdish oil sales

By Ben Turney | Monday 18 August 2014


Disclosure: I own shares in one or more of the stocks mentioned. 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.


As Iraq adjusts to a new Prime Minister (not a military coup, Tom) and the US Air Force rains down fury on IS fighters, the Kurds have quietly continued to make progress in supplying the international market with their oil. Reuters is on top of this story and over the last few weeks I’ve had a couple of Google Alerts trigger with news of the status of different Kurdish oil shipments. Of all the reports and rumours currently circling around Gulf Keystone (GKP), this could well prove to be the most significant in the long run.

On Friday, I retweeted this article from Reuters, which reported that the Kurds had delivered their third “major cargo of crude oil" from a Turkish port. Despite opposition from Iraq’s central government, which appears to have held up the unloading of at least two tankers ferrying Kurdish oil, it is clear there are countries more than happy to accept crude from wherever they can get it. 

While the dispute with Baghdad rumbles on about who has the right to export oil, it seems probable that the Kurds sell their oil at a discount to international rates. The secrecy surrounding the tanker, which turned off its tracking equipment for four days only to be sitting much higher in the water once it turned it back on, is heavily suggestive of some of the difficulties the Kurds face in delivering their oil. 

Despite this, the fact remains they are establishing sales channels. According to the Reuters piece, the Kurdish Regional Government hopes to increase oil sales to around 1million bpd by the end of 2015. If the Kurds meet this goal, or even nearly meet it, there will be very little that Iraq’s central government can do to stop future sales, short of invading Iraqi Kurdistan. It is nearly impossible to second guess what might happen next in Iraq, but I can’t imagine such a move would be acceptable globally. 

This is all very good news for Gulf’s shareholders. Currently priced at 73.5p (last seen), Gulf is valued at c.£650million. Tom believes Gulf is overvalued fundamentally. I disagree. Although I accept the great risks that come with owning this stock, for the proved reserves which Gulf possesses, the potential of its licenses and the huge following this stock attracts, I expect that in twelve months time a lot of people will be kicking themselves that they didn’t load up on this stock when they had the chance.

As I’ve said before, much will depend on Gulf being able to meet its production targets for 2014. We already know these are towards the lower end of original expectations, but so long the company is able consistently to produce 40,000bpd by the end of year, the future will look bright, notwithstanding the need for more finance.


Tom and I have just published a new e-book, “The 49 Golden Rules of Making Money from oil, gas and mining shares” and it is now available on Amazon for £6.25 or you can order a FREE copy HERE



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Comments

3 comments

  1. Somebody pull Kebab out of Bens arse and put him back on the spit dripping fat where he belongs .
    His sycophantic “divide and rule” tactic is more than a man can bear .

    Your missing some big news Ben . Lemongas is doing something with his African “Tucks” what ever they are . Share price is romping away . Prehaps he is delivering Ebola proof white suits ?


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