LONDON--Kurdistan-focused Gulf Keystone Petroleum Ltd. (GKP.LN)
said on Friday it has stopped exporting crude because of a payments
dispute with Kurdistan's regional government, hitting shares in the
oil explorer.
Gulf Keystone received an initial export payment in December,
along with Genel Energy (GENL.LN) which is also owed money by the
Kurdistan Regional Government, or KRG. Hopes that regular payments
would follow soon were boosted when the KRG struck an oil export
deal with Iraq's central government.
The company has now suspended the trucked export shipments and
returned to selling crude from its Shaikan field in the domestic
market to keep cash coming as negotiations continue. In its results
for the first half of 2014, the company said crude sold for export
fetched $51 to $56 a barrel, versus $42 a barrel for domestic
sales.
"Gulf Keystone Petroleum is still struggling to establish a
stable payment cycle with the Kurdish government," wrote Marc
Anis-Hanna, an analyst at VSA Capital Ltd. "This situation will
have a negative read-across for all the companies operating in the
Kurdish region."
Shares in Gulf Keystone fell as much as 17% before paring losses
to trade six pence or 11% lower at 47 pence at 1340 GMT.
"This is expected to be a short term measure until a regular
payment cycle can be established for sales via the export route,"
Gulf Keystone said. "The company is actively working towards an
early pipeline access solution for Shaikan crude, which will
provide significantly improved margins than trucking to the export
market."
Gulf Keystone said the return to domestic sales is part of a
prudent approach to its near-term finances, adding that it's also
progressing a number of "longer term financing options."
Write to Ed Ballard at ed.ballard@wsj.com
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