http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

was short at 6.25 but got bored so finally cashed in at 5.00 or perhaps a fraction lower

Worth shorting now???

ask yourself what upside

So you think it is still worth shorting then?

did i say that?

So you answered a question with a question????.....
Thank you.

ok, i'll be more blunt ...... make up your own mind

That's m ore like it....:-)
Thanks.....

chuckle

Most unpleasant.

Balance sheet restructuring
http://www.moneyam.com/action/news/showArticle?id=5379391

Cantor comment:
"Our view: GKP has announced today a significant, and much needed, balance sheet restructuring. Effectively, the company will undertake a debt equitisation of over US$500m of its current indebtedness (including accrued interest) in addition to an equity capital raise of between US$20m and US$25m through an open offer. This would leave GKP with a much reduced debt position of US$100m, and a sufficient capital position to continue to develop its flagship Shaikan field in Kurdistan, Iraq. Whilst there will be significant dilution to existing equity holders, we are encouraged by GKP’s approach to retaining a proportion of value for shareholders, given the extremely challenging sector environment, particularly for operators in Kurdistan. We keep our TP and recommendation Under Review whilst we update our numbers following today’s announcement.

· Significant debt reduction will improve liquidity – GKP has transformed its balance sheet following a significant debt reduction from over US$600m to US$100m through the conversion of over US$500m of existing debt into equity by way of a UK scheme of arrangement among the company, the Guaranteed Noteholders and the Convertible Bondholders. Liquidity will be boosted through an equity raise of US$20-25m, a reduction of financing costs and the removal of the US$32.5m Debt Service Reserve Account covenant. This increase in liquidity will allow GKP to continue trading and developing the Shaikan field. It is expected to allow the implementation of the company’s near-term investment plan to maintain production at 40,000bopd with the potential to increase production to 55,000bopd

· Shareholder dilution and re-investment option – Current shareholders’ ownership of the company will be diluted to 5%; however, shareholders will have the ability to re-invest in GKP by participating in the US$25m Open Offer for 10% of GKP’s equity at closing of the restructuring.

· Pro forma capitalisation post restructuring – Upon completion of the restructuring and assuming the open offer is fully subscribed, Guaranteed Noteholders will retain US$100m of reinstated notes and will receive new common shares representing 65.5% of the equity of GKP post-closing, and convertible bondholders will receive new common shares representing 20% of the equity of GKP post-closing. Assuming the Open Offer is fully subscribed, Shareholders will own up to 14.5% of the equity of GKP post-closing."

great shenanigans going on here this morning
sp up about 38% with 30m traded .... but no news
just a big bear squeeze? ..... who knows

http://www.alignresearch.co.uk/oil/gulf-keystone-petroleum-arbitrage-opportunity/

GULF KEYSTONE PETROLEUM – ARBITRAGE OPPORTUNITY
I last wrote about GKP HERE in which I highlighted that there was “value” potentially to be found in the capital structure of GKP and in particular the Convertible bonds. As it turned out, the proposed restructuring agreement handed the lion’s share of the company value to the Senior note holders with the Cnv bonds holders having a seat at the table and the crumbs being left for the Ord shareholders (and for which they potentially have to stump again per the open offer element of the restructure proposal).

In recent days the stock price has risen from the lows of c.2.5p and set the bulletin boards alight with a multitude of theories. Here are the reasons we see for the rise:

1. As Danny Fortson highlighted in the Sunday Times yesterday, the recapitalised GKP is likely to be a tasty target for a number of potential oil majors as, say what you will, their Shaikan fields DO hold voluminous amounts of the black stuff.

2. “Borrow” on the stock is now being called and it is damn near impossible to short the shares (I know I tried today) – this is causing a scramble for the exit amongst the shorters and is always an ever present danger when shorting a company.

3. More speculative rumours that the company is now a takeover target (I personally do not see this) and,

4. A realisation that the restructured company could be worth anywhere from £500m-£800m with a largely debt free balance sheet and production ramped to 55,000 bopd this equates to around 2.13 – 3.5 pence per share post the issue of a circa 23bn new shares.

To conclude, we personally see the equity as too risky to purchase at this level and indeed open to a sharp downwards de-rating in the event that the restructuring agreement is voted through (and I would be absolutely amazed if it wasn’t). The senior bonds are probably too expensive to purchase due to the minimal nominal amount required ($200,000) for all but the most well heeled of investors (but we do still see value in them even after the rise back to par given the sheer cut of the equity they are taking). So that leaves the convertible bonds…

At a recent price of 24c on the dollar and assuming a purchase of the minimum $200,000 nominal, the holder of these bonds will receive approx 2.8m Ord shares on the restructure. Cost of this at the current FX rate is around £36,000. With the equity current trading at 5.6p then these shares are worth approx £156,000. This is a massive arbitrage opportunity but before you go out and try to put the arb on there is one glaring problem – that is that the underlying stock is currently unborrowable! Should the restructuring agreement not be voted through then you would actually win in this instance however with a 100% hedged arb as you would make £156,000 on the equity short whilst potentially losing £36k on the bonds (should the Senior note holders take all the value and there be nothing left for the convertible holders).

In the alternate, should the equity be bid for as has been speculated, then depending on the bid level your losses are open ended on the short equity side whilst the gain is capped at @ £113,000 on the bonds. In fact any such bid would need only to be north of 10p to incur losses. There is no guarantee the Conv bonds would trade towards par too. However, I reiterate that I personally see a bid for the equity as a real rank outsider.

All the above being said, for the convertible bonds to thus lose a holder money the stock would have to trade below 1.28p on a post restructure basis at the current offer price of 24c on the dollar. With c.23bn shares in issue this equates to an equity value of c.£300m. I personally expect the stock to trade with a cleaned up balance sheet with a value of around 5-6 times cash flow which would be approx £700m depending upon the price of oil assumed.

Looks like another heavy day's trading a head again.

still looks well avoided having read the above
the brave may short

I see a 1p a share bid has been tabled by DNO.....

Canaccord comment yesterday:
"Gulf Keystone has proposed a balance sheet restructuring, which would see the equitisation of $500m outstanding debt and coupons for 95% of the equity, leaving current shareholders with 5%. In addition, the company proposes an open offer of 20 new shares for each 9 held, at 1.09 dollar cents to raise $25m. The new equity would then own pro-forma 10% of the company, existing shares 4.5%, convertible bondholders 20%, and guaranteed noteholders 65.5% and the market value of the equity would be $250m. In addition, guaranteed noteholders would own $100m ‘reinstated notes’ with maturity October ’21 (currently $575m maturity April and October ’17) at 10% coupon (or at GKP’s option 13% PIK to October ’18). GKP would also have the right to raise a further $25m debt. In addition the debt service reserve account, DSRA, which required a minimum $32.5m cash to be maintained, would be removed. Assuming full subscription of the open offer the company would then have cash of c.$85m and net debt of $15m. An SGM to approve the plan is scheduled for 5th August.

Canaccord Genuity view
We think this restructuring is a lifeline for the company and current shareholders. Considering the balance sheet stress – coupon payments of $26m due in April had not been paid, $575m debt maturities looming in ’17, and likely diminishing production due to limited investment capacity – shareholder dilution seemed inevitable and current equity could have suffered more than the plan elicits. Assuming approval and a fully subscribed open offer, the company’s cash resources should allow it to invest in the Shaikan field (WI 58%), initially to maintain gross production around 40 kbopd, and then in the longer term to increase towards full recovery of the field’s reserves (2P gross 639 mmbbls at September ’15). If the restructuring is not approved, then current equity holders can expect to receive little or no value for their shares.

Valuation and rating
We have assumed that the restructuring is approved and that the open offer is fully subscribed. On that basis, with a much more sustainable foundation, we think it is appropriate to base our TP on NPV15 (from NPV20) central valuation, in line with our treatment for Gulf Keystone’s peers in KRI under our coverage (Genel,LSE | BUY, 91p : TP 195p; DNO, OSLO | HOLD, NOK8.35 : TP NOK10).

It is important to bear in mind that holding or buying the stock today provides the right to the open offer. So, for example, a pre-restructuring SP of 7.5p/sh would correspond to a post-restructuring average price of 2.9p/sh assuming full take up of the open offer, close to our NPV15 central valuation of 2.8p/sh.

We expect that the restructuring will be approved but beyond that there are still risks concerned with the asset and Gulf Keystone’s ability to maintain and then grow production, as well as more general operational and political uncertainties in the region. Neverthless, assuming approval, we raise our rating to Speculative BUY (from Sell) with a revised TP of 7.5p/sh pre-restructuring (equivalent to 3p/sh post restructuring). Failure to pass the plan at the SGM would result in a significant downgrade for equity valuation and the future of the company."

A little strange that this share is still been traded @ around 5p when the dilution has been approved.
Would have expeceted it to be nearer 1p by now but it is not..
Why?

Open Offer Launch
The Company announces that it has today launched an open offer (the "Open Offer") for up to 2,294,295,672 new common shares in the Company (the "Open Offer Shares") at a price of 0.8314 pence per share, to raise up to US$25 million.

Subject to certain exceptions, the Open Offer is being made to the Company's shareholders who are on the register of members on the record date, being 5:00 p.m. (London time) on 30 August 2016, on the basis of 20 Open Offer Shares for every nine existing common shares in the Company. The Open Offer will close at 11.00 a.m. on 15 September 2016.

The Open Offer is being conducted in connection with the Company's Balance Sheet Restructuring Transaction ("Restructuring") announced on 14 July 2016, and the Open Offer is conditional on implementation of the Restructuring.