Shares in Gulf Keystone Petroleum (LON:GKP) shot up more than 300% after the oiler weighed in with updated report that essentially confirmed the world class potential of the company’s Shaikan field in the Kurdistan region of northern Iraq.
Not a great deal has altered since the last reserve statement a year ago – if anything the numbers look slightly lower.
However, the data has been compiled after pumping 25mln barrels of crude from Shaikan and they continue to underpin the previous, bullish assumptions about what GKP has tapped into.
The numbers show the proven and probable reserves are little changed at 622mln barrels of oil while the technically recoverable volumes of crude remain intact at above 1bn barrels.
“This updated competent persons report, prepared as part of the company's restructuring, is highly positive as it reiterates our assumptions of last year about the quality of the Shaikan field, and reinforces its prominent position in the region,” said chief executive Jon Ferrier.
The stock raced up 2.71p to 3.6p after earlier being as low 1.29p.
The share price initially took tumble after the launch of a US$25mln open offer as part of a survival bid, before staging a Lazerus-like revival.
It refinancing also includes plans to convert US$600mln into equity, leaving it with borrowings of around US$100mln and the current investor base with a paltry 5% of the company.
In the mix also is a US$300mln cash-and-share takeover bid from Middle East-focused Norwegian oiler DNO, which the company has still to decide upon.
DNO is one of the biggest operators in the volatile region, owning 55% of the Tawke Field, which produces 120,000 barrels of crude a day.
GKP owns another premier asset in the area, Shaikan, which churns out 40,000 barrels.
Analysts pointed out that if it could sort out its financial problems, the company and its holding in Shaikan still had intrinsic value due to the amount of oil it is sitting on.
The reserves update would appear to endorse this point. CEO Ferrrier said: “Our near term objective of restructuring the company's balance sheet continues to be our primary focus, following which we will be armed with the leadership, knowledge, technical capability and funding to work with our partners to realise the field's full potential."