I’ve had an awful lot of enquiries regarding the recent surge in Gulf Keystone Petroleum. It’s been one of the shares high-lighted many times on the blog over the last couple of years. So just what’s holding the share-price back after all the company have announced further improvements on their P90 volumes which have increased from 4.9 billion barrels to 8 billion barrels on Shaikan. The revised gross oil-in-place volumes for the Shaikan discovery, as calculated by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants, are a P90 value of 8 billion barrels to a P10 value of 13.4 billion barrels of oil-in-place with a mean value of 10.5 billion barrels. These figures are absolutely enormous why then isn’t the share-price £10 plus?
It’s actually falling as I write this! You can forget about the nonsense being written about Exxon/Chevron tentatively dipping their oily toes into Kurdistan, although this is good news it isn’t going to sustain any share-price surge over the long-term. Welcomed by most in the city as further proof that the rewards in Kurdistan are beginning to out-weigh the risks the news has pushed the sp. Hence the recent rise in GKP. It doesn’t matter what nonsense people post online their views are not on the map and generally are wide of the mark the “£5 before Xmas” brigade are living in cloud cuckoo land and should NOT be viewed as any thing other than background noises from inmates living in the local asylum. Every one in the city knows that GKP on Shaikan alone should be worth £10+ unfortunately GKP are operating in a region that could go up in flames at any time. That’s the truth of the matter however unpalatable it is.
THE MAJOR STUMBLING BLOCKS ARE POLITICAL.
Until Baghdad and Kurdistan settle their long running dispute on how oil revenues are to be split then there will be no reflection of the GKP true value. It’s all about risk v reward for small private investors here. After all this region is a war-zone. Institutions run their investment models on this. They see the whole Iraq/Kurdistan dispute as high-risk hence the reluctance to become joined at the hip. As a close watcher on Kurdistan puts it “One bomb detonated in Kurdistans oil-producing regions and there will be a huge knee-jerk reaction from the market” It’s as simple as that! This in a nutshell is how Institutions weigh up the risk v reward in Iraq/Kurdistan.
You pays your money you takes your chances!