Gulf Keystone Petroleum PLC (LSE: GKP) are sitting on the largest onshore oil discovery in a decade. Their Shaikan series of fields are set to go into production of 40,000 barrels per day by the year end and are sitting on massive reserves. The political situation in reality looks to be improving rapidly as the Turkey to Kurdistan pipeline construction is thought to be well under way.
GKP would seem to have had the slide rule run over them by Majors that are likely to include Chevron, Exxon and Sinopec. The Majors are hungry for reserves and a cash offer for GKP at up to £6 per share is according to major shareholders very likely to emerge as soon as the court decision is announced in a case brought against GKP by Excalibur. A positive result in this case, where the decision is expected in the next 21 days, is considered to put the company into a Dutch Auction.
Sinopec of China failed to takeover Genel’s assets despite out bidding the Tony Hayward consortium and it emerged in the GKP-Excalibur court case that a high level team from GKP had visited China with its advisors. It is thought that Kurdistan Regional Government would approve an acquisition by Sinopec as it would add balance to the already existing presence of Chevron and Exxon in the Northern Province.
We conservatively expect the shares to double in price to over £3.60 in the next couple of weeks in the run up to the court decision. A positive decision would likely send the shares well northwards of this level. We rate the stock a strong buy and unique opportunity.