The new version of Gulf Keystone Petroleum Limited (LON:GKP) is a ‘buy’, so says broker Cantor Fitzgerald, which with a 2.7p target sees some 85% upside to the current share price.
It comes after a bruising restructuring saw some indebtedness reduce by US$500mln, to US$100mln, as the majority of the company’s equity was handed over to its lenders.
Summing up recent events, analyst Sam Wahab in a note says: “Following a turbulent period of corporate activity, GKP has effectively transformed its balance sheet, shredding debt, diluting equity, and divesting assets.
He added: “GKP is now a well-capitalised entity, with sufficient resources to grow its production base for sale to the export market in Kurdistan, Iraq.”
GKP’s full focus is now on the Shaikan field, Wahab highlights, though he says the key issue will continue to be whether or not a consistent payment mechanism can be established with the Kurdistan Regional Government (KRG).
He notes: “2016 has already seen the semi-autonomous government miss a number of monthly payments.”
Wahab expects arrears will now have grown to US$64mln, from around US$28mln in June.
Nevertheless he highlights that following the restructuring, against a challenging market and civil uncertainty in Iraq, there remains material upside to the GKP share price now that the company’s ‘burdens’ are now partially clear.