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Eyes Down For Gulf Keystone Petroleum Limited’s Results

Gulf Keystone Petroleum (LSE: GKP), the oil and gas exploration and production company with operations in the Kurdistan Region of Iraq, is due to announce its half-year results next Thursday (19 September).

At the time of writing, the shares of this £1.8bn AIM-listed giant are trading at 207p — 6% up on six months ago, in line with the rise of the AIM 100 index.

How will Gulf Keystone’s business have performed in the first half compared with last year’s first half? And will the company be on track to meet forecasts for this year’s key full-year numbers? Here’s your cut-out-and-check results table!

  H1 2012 FY 2012 H1 2013 Forecast
FY 2013
Forecast
FY growth
Revenue $15.5m $32.2m ? $85m +164%
Profit before tax -$29.4m -$80.2m ? -$26m
Earnings per share (EPS) -$0.037 -$0.096 ? -$0.03

Revenue

The analyst consensus has full-year revenue accelerating to $85m during 2013 from £32.2m generated during 2012. We should note, though, that the $85m consensus includes estimates ranging from a high of $190m to a low of $30m!

The revenue consensus has fallen drastically over the past 12 months from $243m a year ago. This time last year Gulf Keystone said within its half-year report that it intended to commission two early production facilities “to increase production to 30,000-40,000 barrels of oil per day by mid-2013”.

However, during June this year the increase in production was pushed back to “by the end of 2013”, the company claiming that “prolonged cold, snowy and rainy weather conditions from January to April and delays in the shipping schedule impacted our original schedule”.

The analyst revenue estimates suggest some increase in production in the second half of the year, but we shouldn’t expect to see much in the way of revenue progress within the upcoming results covering the first half.

Profit and EPS

As with revenue forecasts, profit and earnings-per-share (EPS) estimates have also deteriorated considerably over the past 12 months. This time last year, analysts reckoned accelerating revenues during 2013 would see profits and EPS turn positive for the first time by the year-end.

Analysts now have Gulf Keystone remaining a loss making operation for 2013, before moving into the black during 2014. The losses for 2013 are expected to show a marked improvement on 2012, though — the loss before tax falling to $26m from $80m. However, with production and revenue increases coming in the second half, we can expect to see profit and EPS still deeply in the red in the upcoming first-half results.

Recent news

The market has been pleased with recent newsflow from Gulf Keystone. The company had been under the cloud of a long-running legal battle with Excalibur Ventures LLC, which claimed it had been cheated out of a 30% interest in Gulf Keystone’s multi-billion-barrel assets.

On Monday this week, trading in Gulf Keystone’s shares was suspended ahead of the Commercial Court’s decision on Excalibur’s claim at 10.30 a.m. on Tuesday. Gulf Keystone released a brief statement at 11.30 a.m., saying Excalibur’s claims had been dismissed and that the hearing had been adjourned to a later date, for argument on costs and any application for permission to appeal. Look out for more expansive comments in the upcoming results.

Also this week, Gulf Keystone updated on its plans to move from AIM to London’s Main Market. The company has shaken up its board in recent months to raise corporate governance standards, and yesterday announced it had engaged Deutsche Bank to act in connection with the proposed move.

Gulf Keystone is expecting to be listed on the Main Market “by the end of 2013”. There’s not much the company can add within the upcoming results, but I can tell you that Gulf Keystone’s current market capitalisation is big enough to give it a place in the FTSE 250 index, and that the next index review is during December.

Spectacular returns

Gulf Keystone’s shares leapt as much as 34% on this week’s newsflow, but the company isn’t the only oil play in town with the potential to deliver spectacular returns for shareholders.

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> G A Chester does not own any shares mentioned in this article.