The Kurdistan-focused oil explorer Gulf Keystone Petroleum is in danger of sinking under its huge debts, it has admitted.
The company has been battered by the slump in oil prices and irregular payments from the Kurdistan government, which is engaged in a struggle with Isis. An interest payment of $26.4m (£18.5m) is due to its creditors next month, as well as debt repayments of $250m in April 2017 and $325m in October 2017.
Gulf Keystone admitted it faced “material uncertainties” in meeting the payments and is making “strenuous efforts” to secure new funding “essential to the group’s ability to continue as a going concern”. Its shares fell 22 per cent or 2.6p to 9.4p.
Bondholders including hedge funds GLG Partners, Sothic Capital Management and Taconic Capital are understood to be working with investment bank Houlihan Lokey on options to restructure the company’s debts.
Gulf Keystone has been looking for a buyer for over a year but admitted that hopes of finding one are slim given the turbulence in both oil prices and the main region in which it operates. It added: “Over the course of 2015 and to date, interest has been expressed by various parties. While there are ongoing discussions with them, we believe that, given the current sector dynamics, a transaction is unlikely in the near term.”
The company discovered oil in Kurdistan in 2009 with its first exploration well at the Shaikan field. It hit its production target there – producing more than 30,000 barrels a day – but said regular payments for the oil were the top priority to ensure the survival of the business.
Its chief executive Jon Ferrier said Gulf Keystone had “just scratched the surface of this giant field” despite producing 21 million barrels of oil so far. But the company nonetheless made a vast loss before tax of $134.3m in 2015.
