Debt-laden oil exploration and production (E&P) company Gulf Keystone Petroleum (GKP) is up 3% to 2.1p as interims confirm a restructuring of the group's borrowings is on track ahead of a crunch vote of the company's creditors later today.

As we explain in today's issue of Shares, we have shifted from our cautious view of the stock as we look through to the conclusion of the group's painful transition from basket case to relatively stable oil producer from its Shaikan field in Kurdistan, northern Iraq.


Alongside its results Gulf Keystone confirms 90% of the guaranteed noteholders and 84% of the convertible bondholders have agreed to the restructuring plan which should make the looming vote a formality.

The planned debt-for-equity swap, expected to be complete by mid-October, will reduce indebtedness from more than $600 million to $100 million, with $25 million of extra liquidity provided by the recently concluded open offer (16 Sep).

The first half numbers show positive cash flow from operations of $46.7 million with production up 28% year-on-year.

Mirabaud comments: 'Once complete, we believe that GKP has the ability to fulfil its potential, with a strong balance sheet, material production, a track record of being paid, and the finances with which to grow capacity into a recovering oil price environment.

'While little was said today about the recent DNO approach, it's hard to see why shareholders would entertain the current bid ($300 million) in these circumstances.'

Issue Date: 22 Sep 2016