Yesterday’s RNS from Gulf Keystone is a good example of a company trying to publish any good news it can to divert attention away from the fact that it is losing $60 million a year and is at the mercy of it’s bondholders.
At the risk of being accused of talking up my own book, I do think that yesterday’s RNS is a non-event and that lower prices are inevitable when you consider just how diabolical things are at Gulf Keystone:
- Cost of sales are huge as are operating expenses ($16.5 million and $23.5 million respectively) against revenue of $18.5 million for the six months ended 30 June 2014.
- Non current assets makes up two thirds of total assets and includes intangibles ($257 million) and PPE ($572 million).
- Total current assets ($383 million) is mostly made up of cash and equivalents ($223.5 million)
- And let’s not forget those bonds ($300 million) and the images below which are taken directly from note 12 of Gulf Keystone’s half yearly report:
Let’s also not forget:
This is a loss making company with massive liabilities and operating costs plain and simple.
I think I’ll hold onto my short.