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Gulf Keystone – Why I do not give it the benefit of the doubt

By Tom Winnifrith | Saturday 30 August 2014

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 Turney wrote HERE that he gave Gulf Keystone (GKP) the benefit of the doubt after its analysts presentation last week. I do not.

Gulf says that if it can get key personnel into Kurdistan within three weeks it will hit its target of Q4 output reaching 40,000 bopd. Hmmm. I was just watching a Kurd soldier being beheaded by ISIS in Mosul yesterday. His 15 mates will be beheaded over the next few days unless the US stops airstrikes. Sadly that will not happen so the Kurds will be beheaded.

And this is in Mosul.  Contrary to suggestions from some Bulletin Board morons I do not celebrate these murders, ISIS is a vile organisation but the hard facts are that despite weeks of US bombing the Islamofascists still gold onto strongholds such as Mosul (less than 120 kilometres from Gulf’s field) and the front line in both Syria and Iraq is in flux. ISIS falls back here but pushes ahead there.

Reports that I read indicate that Western workers still there are keen to leave and those who have left are less keen to return. The risks for me are not of a delay in hitting 40,000 bopd but that things could at some stage get much worse.

Meanwhile Gulf still seems to have very slow systems in place for turning oil actually delivered into cash. The company is overburdened with debt and if there is a military setback for the anti ISIS forces the pressures on cashflow could become very real.

As a bear of Gulf all the way down from 180p I remain a bear at 78p – I still see this stock heading for well under 50p at some stage.

Tom Winnifrith and Ben Turney 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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