One of the highest ranked oil & gas producers on Stockopedia, Gulf Keystone Petroleum, is continuing to expand production from its Shaikan Field in the Kurdistan Region of Iraq, just as crude oil prices have $100 a barrel in sight.
Having produced over 43,000 barrels of oil per day (bopd) in 2021, GKP is targeting production growth to 55,000 bopd over the next year. This production growth, combined with the strong oil price environment and low operating costs have seen the company’s revenues and profits reach record levels. As a result, the company has materially increased its dividend payments and is carrying out substantial share buybacks.
However, given the historically volatile nature of the region and GKP’s single-asset reliance, the shares continue to trade on incredibly low earnings multiples. This could present an opportunity for investors, particularly if oil price fundamentals continue to strengthen, but GKP remains a higher risk investment.
Profile
What are the company's principal business activities, how does it generate its revenues?
Gulf Keystone Petroleum (GKP) generates the entirety of its revenues from the sale of crude oil from its flagship asset, the 280km² Shaikan Field, which has been in production since 2013. One of the largest oil discoveries in the Kurdistan Region of Iraq, the Shakain Field has produced around 92 million stock tank barrels to date (MMstb) and is estimated to contain gross 2P reserves and 2C resources (recoverable oil) of 798 MMstb. This gives a field life of over 30 years at current rates of production.
GKP produced 43,440 barrels of oil per day (bopd) in 2021, and aims to produce between 44,000 and 50,000 bopd in 2022. Under a production sharing agreement, signed with the Kurdistan Regional Government (KRG) in January 2018, all crude oil exports are purchased by the KRG at Brent minus $22/bbl, reflecting quality adjustments and full transportation costs.
Size, Sector & Exchange
At the current share price of 217.5p, the market capitalisation of the company sits at £464 million. As an oil & gas producer, GKP falls under the wider Energy sector and trades on the LSE Main Market.
Business strategy
GKP’s current business strategy will focus on its Field Development Plan (FDP) for Shaikan. The near-term goal is to raise production to…
