Gulf Keystone Shares Dive on News from Iraq

PUBLISHED: Mar 06 2012 @ 10:48 | Comments (0) | More info about Kenneth G. Mondero

Independent oil and gas explorer and producer Gulf Keystone Petroleum (LSE:GKP) saw its shares drop nearly 30% on the London Stock Exchange as news from the Middle East and Asia appeared to extinguish a potential takeover bid from Exxon Mobil. The share price had been on the increase as rumours of a takeover were spreading over the past weeks.

The Background

GKP is currently developing several oil fields in Iraqi Kuridstan. In November 2011, Exxon Mobil announced plans to enter into an exploration agreement with the Kurdistani Regional Government. It has been widely believed that Exxon would enter that market by the takeover of several smaller companies, such as GKP, thereby utilising the infrastructure already in place. The initial speculation had a major effect on the share price of GKP over the recent duration.

The News

Exxon has also been negotiating for exploration rights in Baghdad-controlled portions of Iraq. As the Iraqi government does not recognise Kurdistan’s right to issue exploration licences, they have exercised their negotiating power, whilst threatening to break off discussions with Exxon Mobil if the company continues with its plans in Kurdistan. They have already been excluded by the Iraqi government from the next round of exploration licencing as tension between the two have escalated. The office of Iraq’s Deputy Prime Minister for Energy Hussein al-Shahristani reported that Exxon has asked for a few more days to make a final decision. If Exxon Mobil decides to explore the Iraqi controlled site, it is anticipated they will lose their bid to develop one of the largest oil fields in Iraq with proven reserves of 8.7 billion barrels of oil.

Company Spotlight

Gulf Keystone Petroleum is an independent oil and gas exploration and production company incorporated in Bermuda, with assets in the Kurdistan region of Iraq and in Algeria. The company has been relinquishing its assets in Algeria to concentrate on the development of its interests in Kurdistan.

Gulf Keystone Petroleum is publicly trading on the AIM of the London Stock Exchange under the symbol “GKP”.

References
↑ Market Watch
↑  IFA Magazine
↑  Wall Street Journal
↑  Official company information

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