Source: Sharecast
Canaccord Genuity said Gulf Keystone now would have access to immediately higher realised oil prices, with the firm set to receive $16 per barrel in the "interim" period for entitlement oil, which converts to $30/bbl for production oil. It also said that was sweetened by the inclusion of other non-GKP production in the wider process, resulting in an expected >$30/bbl receipt.
"For now, we assume $32/bbl Shaikan pricing to YE25 compared with local sales at $27-28/bbl," said Canaccord. "During this 'interim' period, there will be independent evaluation of invoices leading to reconciliation to full PSC terms at international prices."
The Canadian bank also highlighted the FGI's recognition of the GKP's Shaikan licence and its terms, putting to bed historic uncertainty concerning FGI's non-ratification of various IOC licences in KRI, and the fact that GKP will be marketing its own crude will reduce credit risk
"It will take time for the new sales process to bed in, principally in terms of pricing and payments (there will be some lag on receipts - we expect about two months - compared with no lag for local sales)," said Canaccord, which has a 'speculative' buy rating on the stock.
"But as the systems become established there is also scope for further upside as risks diminish (our risked NPV12.5 valuation = 277p, unrisked NPV12.5 285p). Furthermore, if the pricing discount reduced to $20/bbl (from assumed $25/bbl) our risked NPV12.5 valuation would increase to 302p (unrisked 311p)."
Reporting by Iain Gilbert at Sharecast.com
