Canaccord nudges up target price on Gulf Keystone

Analysts at Canaccord Genuity raised their target price on exploration and production firm Gulf Keystone from 215.0p to 235.0p on Wednesday, stating the group's recent reserves update had confirmed the scale of the Shaikan field, of which it holds an 80% working interest.

Canaccord said the independent reserves and resources assessment of the Shaikan field confirmed the "large scale of the asset" and the running room for "considerable production growth", with the updated competent person's report prepared by ERC Equipoise determining over 500-0m barrels of gross field 2P reserves and almost 300.0m barrels of 2C resources, giving net 2P+2C reserves and resources of 638,0m to Gulf Keystone.

The Canadian bank highlighted that Shaikan had "a strong track record", with the field having already produced over 80.0m barrels and current output at the highest level seen since the field came onstream, averaging over 44,000 barrels of oil per day in January.

"The combination of a lengthy production history, increasing Shaikan output from the dozen or so wells on the field, and the independent verification of the recoverable reserves and resources provides considerable reassurance as to both the large-scale and low subsurface risk of Shaikan," said Canaccord, which reiterated its 'buy' rating on the stock.

"That together with the improved oil prices, the stable revenue payment process, and anticipated start of arrears payment due to the company add up to, in our view, a compelling investment case."