Gulf Keystone Petroleum - Re: GKP Stream Log - Gulf Keystone (LON:GKP) has been...

Gulf Keystone (LON:GKP) has been downgraded to ‘sell’ by Canaccord after the publication of a competent person’s report on its key assets in Kurdistan. The broker said the CPR highlights a number of key points especially over its flagship Shaikan field. The target price is slashed to 100p/share (from 195p/share) with the rating now ‘sell’ from ‘hold’. “Shaikan remains the jewel, but it looks smaller and more complex than before. Oil-in place on the field is now put at 9.2 bbls (from 13.7 bbls), and the recovery factor is 11% (substantially lower than previous indications). The other assets (Sheikh Adi, Akri Bijeel, Ber Bahr) provide only slender support to the resource figure. “Shaikan itself is revealed by the CPR to be a very complex development with still plenty that is unknown, and we wonder whether the exploration-oriented GKP is best placed to carry through the field's development. “Financing too remains a concern. We estimate cash today at c.$90m, and given the ongoing drilling and little op.cashflow the coffers look likely to run very low by summer, and there is already a $325m outstanding convertible note. “Finally, we are still unclear about the long-term marketing of Shaikan crude, and we question now if the field really has the scale to appeal to a potential buyer.”