The shares of Gulf Keystone Petroleum (LSE: GKP) climbed 4p to 162p during early trade this morning after the oil explorer slammed corporate governance concerns raised at the weekend.
The AIM-traded favourite, which has discovered up to 15 billion barrels of oil in the Kurdistan region of Iraq, said some of the claims made by investment house M&G were “disingenuous“.
M&G, whose £7.4bn Recovery Fund owns 5.1% of Gulf Keystone, said the standards of corporate governance at the oil group offered “much room for improvement“.
At the weekend, M&G reiterated an earlier proposal for fresh non-executive directors and said the true value of Gulf Keystone’s assets would not be reflected in the share price until there was a “significant strengthening” of the board.
M&G also claimed a strengthened board would review Gulf Keystone’s director remuneration, which it considered to be “execessive“.
In particular, M&G cited Gulf Keystone’s chief executive, Todd Kozel, receiving $13.6m, plus $9.1m deferred cash, during 2012 despite the oil company declaring an $80m pre-tax loss.
Gulf Keystone responded to M&G’s claims by noting last week’s appointment of a new chairman, revealing meeting arrangements with potential new directors, and disputing the independence of an M&G-nominated director.
Gulf Keystone also believed outstanding litigation, a “market sell-off“, as well as the “public perception of uncertainty surrounding exports and payment of oil” in Kurdistan, were the reasons why the share price did not reflect the value of the group’s assets.
Anyway, today’s share-price gain has helped Gulf Keystone’s market cap soar from £122m to £1.4bn following the group’s 2004 flotation.
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> Maynard does not own any share mentioned in this article.