I intend opening a position in any stocks mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
18 March 11.17am: I finally managed to open a spreadbetting account with a firm that will actually let me short this stock at 39.14.
I have to agree with Lucien Miers at Shareprophets – Gulf Keystone (LSE: GKP) is a storming short.
Although this company has been on my radar for months due to the coverage by Shareprophets.com I’ve seen and heard enough to finally convince me to open a short position on this stock.
As Shareprophets had warned on 14 March 2015:
Gulf Keystone (GKP) reminded potential suitors on Thursday why there was no reason to pay top dollar for it with the news that permission was needed from the 13% bondholders to avert the exercise of a put option which has been triggered by a fall in its asset value…embedded in the statement was an admission that oil production had halted since mid-February and that an equity raise was amongst the options being considered to make good the intention to meet debt obligations
To read the whole sorry saga you can access their 12 March RNS here.
In a nutshell, Gulf are in negotiations to sell either little bits of the company or if they can the company as one entity to whoever would be stupid enough to buy it.
At the same time they’re considering an equity raise and are begging their bondholders not to exercise a put option in order to make the company look more valuable than it is, which it is not.
And let’s not forget that Gulf Keystone has it’s operations in the Kurdistan Region of Iraq.
Not exactly the kind of environment that instills confidence.
Gulf Keystone finances do not look too good either:
Pre tax losses of $60 million a year, a halt in production and begging bondholders not to exercise put options is all I need to know.
I’m shorting this stock at the open and will update the current holdings page with the price in due course.