Berenberg lowers target price on Gulf Keystone Petroleum

Berenberg said Gulf Keystone's first-half results demonstrated "strong operational performance", as well as the potential for near-term incremental growth and highlighted the company’s net cash balance sheet, which it added remained "a differentiator" versus most peers.

However, the German bank added that working capital outflows should result in a lower year-end 2020 cash position than previously forecast and also highlighted that uncertainty remained around the path to completing its 55,000 barrel of oil per day expansion.

"The lower expected investment in 2020 will result in a reduction in payables, which was not previously captured in our forecasts," said Berenberg, which now assumes a working capital outflow of roughly $13.0m in the second half.

"The net effect of those changes, and incorporating the H1 numbers, is a reduction in our year-end cash forecast to $146.0m (from $170m) and a 9.0p reduction in core net asset value."

The analysts, which reiterated their 'buy' rating on the stock, also said they flagged no concerns about Gulf Keystone's balance sheet, given that it had no debt maturity until 2023.