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September 20, 2011 9:36 am
Gulf Keystone Petroleum, the Aim-quoted oil explorer, has raised $200m through a share placement to appraise the amount of oil in its concessions in Kurdistan, northern Iraq.
On Tuesday, the company said it had raised the capital by placing 91.1m new shares – representing 10.6 per cent of the company’s enlarged issued share capital – at 140p each, a discount of 18 per cent to last Friday’s close of 170p. GKP said it needed the funds in order “to concentrate fully on the task of proving up the resource base across the Shaikan, Sheikh Adi and Ber Bahr blocks”.
GKP estimates its Kurdistan assets could contain 12bn barrels of oil in total.
The placing was done by the company’s in-house broker, Mirabaud Securities, and comes less than a week after Todd Kozel, GKP’s chairman and chief executive, said the company remained well funded to continue exploration work across its oilfields.
In a statement, Mr Kozel said GKP aimed to move up to the main list in London. “[Our] forward strategy is about successfully proving the full potential of our assets in Kurdistan and becoming one of the top E&P [exploration and production] players in the FTSE 250 index.”
The placement also means GKP, which ended the six months to June with net cash of $137m (£87m), will proceed with a preliminary engineering design to potentially build a pipeline capable of carrying 440,000 barrels a day from the company’s Shaikan field to Iraq’s Kirkuk-Ceyhan export pipeline.
“[We want to] increase production from the world-class Shaikan discovery to 20,000 b/d in 2012 and potentially up to 40,000 b/d thereafter, and to bring Shaikan crude to the international markets via our own pipeline,” said Mr Kozel.
In addition to the latest funds GKP is believed to be looking for about $300m-$350m by selling its 20 per cent stake in the Akri-Bijeel block, which is majority owned by partner MOL Hungarian Oil & Gas, also in Kurdistan.
This month GKP said it expected further progress to be made between the semi-autonomous government of the Kurdistan region and Iraq’s central government aimed at agreeing a formula for revenue sharing on exports. A final agreement would remove the political uncertainty facing operators in the area.
Rising hopes of a resolution of the dispute over rights to Iraq’s oil wealth have helped continue to attract a number of other operators to the Kurdish region over the past year including Repsol, Hess Corp and Marathon Oil. Vallares, the oil investment vehicle backed by former BP chief executive Tony Hayward and financier Nat Rothschild, is the latest to enter through a planned merger with Turkey’s Genel Energy.
Angus McPhail, an oil analyst at Investec, said: “I think it’s positive. Gulf Keystone will have enough cash now to be fully funded to develop its asset in the Shaikan field.
“Tony Hayward described the north-west corner of Kurdistan as being ‘the sweet spot’ of the region, and that’s exactly where Gulf Keystone is. I have lowered my target price from 208p to 191p to reflect the dilution.”
Shares in GKP dropped 11½p, or 7 per cent, to 151p in early afternoon trading in London.
Additional reporting by Mark Wembridge
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