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I you ask me – Thank you. I’m glad you asked. – Gulf Keystone Petroleum’s (LSE:GKP) biggest problems are the pusillanimous pipsqueaks who apparently comprise too large a portion of company shareholders. It seems that, regardless of how much progress the company makes, any hint of negative news engenders a decline in the company’s share price. Before the London Exchange had even opened this morning the GKP share price had dropped from 98.25 to 94.00 in early trading. Approaching the 15:00 hour, it stands at 92.25.
We’ve been telling the GKP story for some time now.
- 12 May – Turm-Oil at Gulf Keystone
- 30 April – Monthly Forecast on Gulf Keystone
- 24 April – What’s Going on with GKP’s Share Price?
- 25 March – GKP Shares Up On Move to Main Market
- 24 March – For GKP It’s “Tomorrow, Tomorrow, I Love Ya, Tomorrow.”
- 17 March – Gulf Keystone at the Crossroads
- 13 March – Gulf Keystone Operations Update
- 10 March – Gulf Keystone Speaks
- 03 March – All’s Quiet on the GKP Front
- And the list goes on . . .
I, for one, cannot comprehend the misgivings that investors seem to be having. The headaches that GKP has been having are not of migraine magnitude. I am not alone. Yesterday, Deutsche Bank started covering GKP and gave the company a “buy” rating (good pick) and a target of 145.0. The bank noted that “The Kurdistan region of Iraq (KRI) is close to initiating pipeline export sales. While we don’t anticipate GKP’s heavier crude to benefit immediately, freeing up trucking capacity and confidence in the region is likely to be supportive.”
I agree. The weak of heart have been jumping ship so much so that they have created an opportunity for others to get on board and enjoy the exhilaration of enjoying the sunny days and calmer waters on the other side of the storm.
The first wave of weak-minded wastrels departed upon news that the Shaikan oil field may not have quite the colossal amount of reserves it was initially thought to have had. The last of the leapers had barely made it over balustrades when the company disclosed in its interim management statement this morning that there could be a time lag between their shipments, which have begun with consistency, and receipt of payment. GKP has received $6.46 million in payments so far, with another $24 million outstanding. The company is expecting total 2014 revenues to be between $150 million and $180 million, calculated at today’s prices and production levels.
The only reason for the gap between shipping and receipt of payment is that the company accounting is on a cash basis. Therefore, the cash is not on the books until it is in hand. I’m hard pressed to understand why that would drive the share price spiraling downward. Whatever is being perceived as bad news is not bad news at all. It may not be idyllic, but that does not make it bad.
