Gulf Keystone Petroleum Ltd. (AIM: GKP) is an independent oil and gas exploration and production company focused on exploration in the Kurdistan Region of Iraq. It holds a majority working interest in the Shaikan, Sheikh Adi and Ber Bahr exploration blocks and a further interest in the Akri-Bijeel block. Gulf Keystone is the Operator of the Shaikan and Sheikh Adi Production Sharing Contracts. Following a major discovery at Shaikan in 2009 and a discovery at Akri-Bijeel in 2010, the Company is undertaking an ambitious 2011-2012 exploration and appraisal programme across the four adjacent blocks. Gulf Keystone is also focused on continuing domestic oil sales and increasing oil export operations in order to move towards the Company’s production target of over 5,000 barrels of oil per day (“bopd”), increasing to 10,000 bopd thereafter.
City firm FoxDavies has reiterated its 'buy' stance on oil company Gulf Keystone Petroleum (LON:GKP) following an analysts site visit.
The broker points out there is "little doubt" that the company's Shaikan asset is world class, which will provide further upgrades to net reserves.
But also adds that the full value of the firm's assets have yet to be unlocked via effective access to Kurdistan's export market.
Analyst Dr Zac Phillips said Kurdistan and Baghdad were currently locked in a battle for Kurdistan's share of the export revenues and until Kurdistan achieved access to those revenues, GKP's production would be limited to revenues generated by sales into the domestic market.
Highlighting in the note how far the company had come, Dr Phillips said that besides the Shaikan asset, the firm's Sheikh Adi discovery had "excellent" potential.
"Add to this the fact that security fears have been overdone, and that the region is largely trouble free, the outstanding issues relate to access to exports, or more specifically, export revenues," said the analyst.
He said following the visit, he had adjusted the target price for the stock to 350 pence (current price: 203.75 pence), believing it better reflected the risks associated with the portfolio.
"Further upgrades cannot be ruled out, and as a result, we are reiterating our BUY recommendation," he said.