Cantor Fitzgerald reiterates 'buy' on Gulf Keystone after Shaikan progress

Cantor Fitzgerald has repeated its ‘buy’ rating on oil group Gulf Keystone Petroleum (GKP) after the company moved closer to upping output at its key producing asset, Shaikan, in the Kurdistan Region of Iraq.

The company said on Tuesday that it had installed links between the Shaikan-7, -8 and -10 wells and its existing production facilities PF -1 and PF-2, enabling first oil to flow to the facilities this month.

With the addition of the three new producing wells, total production of between 23,000 and 25,000 gross barrels of oil a day will rise to 40,000 a day.

Cantor analyst Sam Wahab explained Shaikan production is currently being trucked to a Turkish port and sold to the international market by a transportation and marketing agent of the Kurdistan Regional Government.

An initial sum of $15m was paid to the company in receipt of Shaikan export oil sales in November.

However, Wahab said that receiving regular payments for these exports “remains the focus for the market”.

“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,” he said.

The broker kept a 154p target price for the stock, which had jumped nearly 12% to 55.55p on Tuesday morning.

“We reiterate our view that GKP is well-funded ahead of an active appraisal campaign across its portfolio and reiterate our ‘buy’ recommendation,” Wahab said.