The share price of Gulf Keystone Petroleum (LSE: GKP) is currently up 6.6%. The rise comes on a morning when news was released that a group of shareholders have increased their stake in Gulf Keystone above the 3% notification threshold.
The group — the Joyce M. Kuok Foundation, Kerry Asset Management, Kuok Khoon Hua, Natalon Company, Shield Group, and the Zheng Ge Ru Foundation– who are represented by Morgan Stanley Securities, bought close to 900,000 shares (worth around £622,000 at yesterday’s closing price), to take their holding in Gulf Keystone to 3.02%.
Despite this morning’s rise, Gulf Keystone’s share price has had a terrible 2014 so far, falling close to 60% since the start of the year. Even securing a main market listing and starting commercial production has failed to shore up the share price.
Over half of the year’s price slide happened on just one day in March, when the first Competent Persons Report (CPR) on Gulf Keystone only confirmed reserves of 299m barrels of oil in the Shaikan field, putting Gulf Keystone’s share at just 163m barrels. Whilst the company pointed out that it had so far only drilled 25% of the 109 wells it plans for Shaikan, with future wells likely to increase reserves, the CPR really didn’t make the market happy.
And only last week, Gulf Keystone’s share price fell to its lowest point for four years, following news of heightened security at its operations in the Kurdistan region of Iraq, made necessary because of the current hostilities between Islamic State militants and Kurdish forces.
Of course, Gulf Keystone’s seriously depressed share price could represent a real opportunity to bag a bargain. If the company’s share of oil reserves in the Shaikan field prove to be anywhere near as large as previously estimated, and if it can meet its predicted production targets, Gulf Keystone’s share price could easily rocket back up the dizzy heights it reached in early 2012, when it hit 412p. But that’s a decision only you can make.
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Jon Wallis has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.