Gulf Keystone Petroleum Limited (LSE: GKP) 

Gulf Keystone Petroleum Limited (LSE: GKP) is an FTSE Main Market company, focused on oil and gas exploration and production. Moreover, the Company operates in the Kurdistan Region of Iraq and through segments, including the Kurdistan Region of Iraq and the United Kingdom. This report covers the key recommendation rationale and conclusion for the stock.

Key Recommendation Rationale – Sell at GBX 183.20

• Resistance near Current levels: GKP’s stock price has breached Resistance (R2) which was stated in the previous report on 30 April 2025 therefore, there can be a possibility of a decline from resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Significant Revenue Discount Highlights Ongoing Market Challenges: Despite strong production growth, Gulf Keystone’s realised oil price in 2024 was just $26.8/bbl, marking a 34% year-on-year drop and a $53.9/bbl discount to Dated Brent. This sharp differential reflects the company’s reliance on the Kurdistan local market due to the continued suspension of pipeline exports through the Iraq-Türkiye Pipeline. The local sales model, while crucial for near-term cash flow, underscores a persistent strategic vulnerability. Until international exports resume, GKP’s revenues remain exposed to volatile and discounted pricing dynamics, limiting its ability to fully capitalise on strong global oil prices.
• Uncertainty Over Export Restart Remains a Structural Risk - While management maintains optimism around a near-term resolution to the pipeline export shutdown, there is still no clear timeline or binding agreement in place to resume exports via the ITP. The company continues to stress the need for agreements on payment guarantees, receivables, and contractual terms—but after two years of stalled negotiations, the lack of concrete progress introduces continued uncertainty for investors. The long-term development of the Shaikan field and broader capital allocation remain contingent on this unresolved geopolitical and regulatory bottleneck, which could dampen investor confidence in the absence of tangible breakthroughs.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

GKP is expected to trade at a discount, considering the Uncertainty Over Export Restart Remains a Structural Risk and fears of global slowdown. For conducting the valuation, the following peers have been considered Rockhopper Exploration PLC (LSE: RKH), Pharos Energy PLC (LSE: PHAR) and Union Jack Oil PLC (LSE: UJO).

Given its current trading levels, Significant Revenue Discount Highlights Ongoing Market Challenges, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current Market Price of GBX 183.20 as of 04 July 2025 at 09:25 AM GMT+1.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 04 July 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.