Gulf Keystone and other Kurdistan based oil explorers hit by ISIS advances

Earlier today Gulf Keystone Petroleum released an RNS to try and calm nerves following the recent advances by the Islamist ISIS forces further into Northern Iraq. Unfortunately for GKP, Genel and others, reassuring words don’t seem to be working with the both companies shares down around 8%.

GKP’s RNS read, “Gulf Keystone Petroleum Limited today confirms that the Company’s operations in the Kurdistan Region of Iraq, including ongoing production and trucking operations at both Shaikan production facilities, remain safe and secure. While there is no immediate threat to any of the Company’s operations in the region, we continue to monitor the situation closely and operate with increased security as a precaution.”

Earlier this week Genel’s Chief Executive Tony Hayward, said  “The Isis insurgency is not good for Iraq or the world – but Kurdistan does remain safe and secure. The facts on the ground speak for themselves – the peshmerga are doing a good job securing the Kurdistan region – there’s no reason that won’t remain the case.”

Investors seem a little sceptical on Kurdistan based oil explorers given Isis’s recent progress very close to Kurdistan and whilst the oil fields in the autonomous region remain secure for now, the military situation on the ground seems fluid. The militants are claiming that its fighters had seized 17 towns and targets including the strategic Mosul dam on the Tigris River and a military base in an offensive that began at the weekend, though Kurdish forces have denied that the Mosul dam is in enemy hands. Residents of Qaraqosh, Iraq’s biggest Christian town, are now threatened with the demands the Sunni militants have made in other captured areas – leave, convert to Islam or face death. A widening humanitarian crisis seems to be in play as tens of thousands of civilians head to the mountains.

With the world more worried about Gaza and the Ukraine for now, Iraq’s latest troubles mean that investors in the likes of GKP will be hoping that the peshmerga remain resilient if the borders of Kurdistan are threatened by the militants.  With the shares at less than 80p, some stabilisation of the situation is badly needed after the recent board room bust ups and management changes including the resignation of Todd Kozel as Chief Executive. Revenue growth from the upgraded Shaikan production facilities and the potential for easier exports via the new Turkish pipeline remain key to a rerate in the face of all this anxiety.

Contrarian Investor UK

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