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.

Excalibur has deposited a further £3.5 million into court as security for the costs of Texas Keystone, a company founded by Gulf’s chief executive Todd Kozel.

It has also made interim payments of £110,000 to Gulf Keystone and two of its subsidiaries and £60,000 to Texas Keystone, following the English Commercial Court’s order on March 14.

Gulf Keystone holds Production Sharing Contracts for four exploration blocks in Kurdistan, including the Shaikan block, one of the largest oil discoveries in recent years.

In December 2010, Gulf advised investors that Excalibur was claiming entitlement to an interest of 30 per cent in its companies’ blocks in Kurdistan.

Gulf Keystone continues vigorously to dispute and contest the allegations and claims asserted by Excalibur.

Gulf Keystone’s share price was down 5.04 per cent to 241.90 pence per share as at 3.09 pm.

The plans include a provision for a share-based bonus in the event that the company, or more than 50 per cent of its assets, is sold. This ‘exit event’ would see the Gulf Keystone board receive 2 million shares, worth around £5 million.

Other GKP employees would share a further 8 million shares, worth more than £20 million today.

Additionally, GKP said that directors and employees would receive a maximum of 10 million shares between them as part of the 2011 bonus and it set out some terms for future share-based bonuses. 

A cash bonus was also being paid in respect of the company’s performance in 2011, it said.

"The performance-related awards announced today are in recognition of the company's remarkable growth and outstanding drilling success in the Kurdistan Region of Iraq,” said deputy chairman Mehdi Varzi.

“These plans fully align management and employees with shareholders' interests by incentivizing company employees to continue to achieve significant value creation for the benefit of all shareholders.”

Varzi said the firm had achieved considerable growth, reflected in the increase in the share price from £0.05 pence in March 2009, before the first Shaikan well was drilled, to today's levels, of £2.63, which would place the company in the FTSE 100 index by market capitalisation. 

He added: “While the AIM index fell by almost 20 per cent between the end of 2010 and today, the company's growth rate in terms of its market capitalization in the same period has been 76 per cent, reflecting our outstanding success in finding billions of barrels of oil.

“Since we made one of the largest world class discoveries of the last decade at the Shaikan field in 2009, our independently audited mean resource estimates for Shaikan have increased by 375 per cent. 

“In combination with preliminary resource estimates for the equally massive structures of Akri-Bijeel, Ber Bahr and Sheikh Adi, today Gulf Keystone has a share of gross, P50 oil-in-place resources of at least 16 billion barrels across our four licences in the Kurdistan Region of Iraq, one of the last frontier oil provinces in the world."