(MENAFN- ProactiveInvestors) Gulf Keystone Petroleum () shares advanced after the Kurdistan based oil firm revealed it stepping up production to its 40000 barrels per day target.
It comes with the completion of a three-well programme at the Shaikan field.
The new wells as they come online will lift production from the current range of 23000 to 25000 barrels per day to 40000.
"Despite numerous challenges earlier this year Gulf Keystone has completed the work on the three additional producers on time” said chief executive John Gerstenlauer.
In London GKP shares climbed 6.75p 13.5% to trade at 56.5p each.
Completing the three new producing wells represents an important milestone in the group’s expansion plan. It has overcome operational challenges including the disruptions relating to the conflicts in Iraq against militant group ISIS.
And the achievement comes amid improving relations between the Kurdistan regional government (KRG) and officials in Baghdad. New export agreements have been agreed and last month Kurdistan based producers received payments for export oil sales.
GKP today added that oil exports trucked via the Turkish coast continue uninterrupted.
Export payments are still in the spotlight for investors according to City broker Cantor Fitzgerald.
“Currently 100% of Shaikan production is being trucked to the Turkish port of Dortyol and sold to the international market by an authorised transportation and marketing agent of the KRG” said Sam Wahab Cantor analyst.
“However receiving regular payments for these exports remains the focus for the market despite an initial sum of US$15m being paid to the company in receipt of Shaikan export oil sales in November.
“With a further payment expected before the new year if achieved will go some way to establishing a pattern of regularity and to alleviate this particular investor concern in our view.”
Cantor in a note today repeated a ‘buy’ recommendation with a 154p price target which is some 175% higher than the current price of 56p.
Cantor also highlights that a new gas treatment plant detailed by the company today could save around US$4.8mln per year by allowing the generators at the Shaikan production facilities to be fuelled by gas rather than diesel.
Elsewhere in the City Westhouse securities described today’s project update as “slightly positive” in the context of challenges the company experienced during the year.
Northland Capital meanwhile opined it was “encouraging” though this is tempered by the broker saying GKP was not for the faint-hearted investor.
“Despite ongoing problems in the territory it now has all of its operating personnel back on site and is on track to meet its targeted 40k bopd production” Northland’s Andrew McGeary said.
“Whilst the impact of weaker crude price will dampen margin (Gulf receives a significant discount to Brent) the company recently announced that its production cost per barrel was around $9/bbl.
“There remain significant geopolitical concerns not least in terms of security but also in terms of payments for oil sales from the authorities though the company recently announced progress with its payment cycles.”
Shares added 11.56% to 55.5p.
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