GULF Keystone Petroleum is an independent oil and gas exploration and production company that operates in the Kurdistan region of Northern Iraq. The company was originally founded and incorporated in 2001 by a large number of private equity investors situated in The United Arab Emirates, Kuwaiti, Saudi and The US. The company obtained a listing on the Alternative Investment Market of the London Stock Exchange on the 8th September 2004. Gulf Keystone Petroleum’s strategy is to bring the company into production and to explore, appraise and develop their current drilling platforms.
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In January 2011 following an independent evaluation by oil and gas consulting firm Ryder Scott Co. Gulf Keystone Petroleum’s oil discovery in Kurdistan was estimated to be in the region of 1. 9 to 7. 4 billion barrels of oil. On 18th of March 2011 at 07:00 am GMT Gulf Keystone Petroleum released their first of two RNS statements which reported a significant oil flow from one of their appraisal wells. Although the RNS statement gave no quantifiable figures it did state that further testing would be needed to estimate the oil quality and flow rate.
After this news was announced the share price rose that day by 12. 1%, opening at 141p and closing at 158. 04p. On the 21st of March the share price rose again by a further 4. 8% opening at 166. 5p and reaching a high of 192. 95p and finally closing at 174. 21p. The actual results of testing were released on the 22nd of March at 07. 00 am GMT, revealing that the appraisal well housing the discovery was currently achieving short term, indicated rates of 10,144 barrels of oil per day.
The share price for that day opened at 184.25p and reached a high of 192. 5p, eventually closing that day at 174. 61p. On the 23rd of March the share price began to stabilise opening at 167p and eventually closing at 164. 01p. Financial Performance Indicators The Financial performance indicators below highlight the security price movement of Gulf Keystone Petroleum. Diagram 1 shows the share price movement of GKP before and after both RNS announcements. The stock chart clearly shows that during the dates 18th and 21st there was a greater demand for GKP shares causing the price to rise rapidly.
This significant rise suggests that investors were optimistic even though no quantitative data had yet been released within the initial RNS statement. After the release of the subsequent RNS on the 22nd quantifying the oil discovery, the share price began to rapidly decline. Over the next four days the GKP’s security price eventually settled at 158p. Diagram 2 shows the volume of GKP shares traded before after both periods of announcement. This basic line graph shows that immediately after the initial announcement on the 18th of March the amount of shares that traded hands that day greatly increased.
Over the next six days the trading volume steadily dwindled, until volumes reached a similar level to those prior to the announcement. Finally diagram 3 shows a line graph of the percentage increase/decrease of Gulf Keystone Petroleum’s share price compared with the UK’s oil and gas industry average (NMX0530) over the past 6 months. It can be seen from the results that GKP’s share price movement does show slight similarities when compared with NMX0530. Although it is clear that GKP’s variance is much more volatile.