The investment giant Blackrock is stocking up in shares of former punters' favourite Gulf Keystone Petroleum PLC (LON:GKP).
A regulatory filing shows the American group on Wednesday passed the 5% ownership threshold.
While the last year has seen stock in the Kurdistan-focused oiler rise from 100p to 250p, over the recent week the price has become rangebound.
Validation?
The Blackrock investment could be seen as third-party validation for the company, which two-and-a-half years ago underwent a painful refinancing.
More recently, it has been focusing on achieving an output of 55,000 barrels of oil a day – impressive for a company valued at just over £500mln. However, GKP receives payments directly from the local government of Kurdistan, which is in the northern corner of Iraq, and therefore is drip fed the cash. Also, it has to accept a fairly hefty discount for its output – around US$21 a barrel less than the prevailing Brent crude price.
However, with oil creeping above US$70 a barrel the ‘net back’ (profit on production) should be rising significantly, even with the financial harnesses holding Gulf Keystone back.