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Some rumors just won’t die. Or as a former CEO friend of mine used to say, “The best way to handle rumors is to ignore them.” But ignoring them in the financial news reporting business is probably an exception to the rule. In the stock market it’s the rumors and speculation that make things exciting.
They make for building hopes or dashing them. And they are wonderful at building anxiety. Gulf Keystone Petroleum (LSE:GKP) is one of the prime mills for rumors on the London Stock Exchange, and it appears that it will be for some time to come.
The rumor mongers keep insisting that someone is about to pounce on GKP and gobble it up in an expected consolidation of the oil exploration and production movement in Kurdistan. If it took this long for my cat to pounce on a mouse, the mouse would be in Thurso by now. Let’s face it, there is no question that GKP is attractive as a potential acquisition as it sits on one of the country’s largest oil deposits estimated to be able to produce a quarter of a million barrels of oil per day. GKP has been developing the Shaikan site for about six years now – Just about as long as the rumors have been spreading.
Thing that has been fueling (Get it? Oil? Fueling?) the most recent rumors is the expected completion of a pipeline that would be able to deliver oil directly to Turkey, giving the West access to the estimated 45 million barrels of oil in the region. We all know that oil in the ground only has potential value. Even oil above ground has inherent value, but it is, in reality, worth nothing until it can be delivered to market. The fruit may be ripe for the picking, but unless you can get it to the consumers, it doesn’t really matter.
By the end of 2013, if all goes well, the oil should be moving through the pipeline and the business of making a profit will, at long last begin for all of the relatively small companies that have been breaking the initial ground in the oil-rich region. That is, typically, when the majors knock on the door with offers of an exit strategy that, hopefully, is a dream come true for investors. But, there are at least two things that are preventing GKP from being acquired in the near future as some would predict on ADVFN message boards.
First, there is a nasty bit of litigation instigated by a former U.S. Special Forces officer who claims that the discovery of the Shaikan field was his. Until this suit is settled, no one is going to be interested. Depending on how the court rules, no one may be interest for some time to come. Then there is the matter of Todd Kozel’s recent comment that, “We are a public company, and consolidation is the next phase in Kurdistan. But that’s not in our plans now.” Kozel is the founder and CEO of GKP.
Some people just like to stir the pot. I’ve never had much use for pot-stirrers. They stick their hand into a bucket of water and create a lot of ripples, but once they remove their hand (usually to stir another pot) the water returns to normal.
Here’s a dose of reality. Kozel is not ready to sell. You can listen to the harbingers of fate if you wish. I suggest that it is far better to sit back and study the news, which you can easily do right here at ADVFN.
GKP share price is at 185.00.
