GKP

there is strong support at 42.25 but the fact that gkp is hovering around this area is suggesting that this level could have a serious test and a break would be bad for gkp as there aint any major supports until the low 20s.
The recent triangle break to the downside is also bearish for this share..
Support...42.25,,,,37,,,23.75,,,21.5


monthly chart of gkp so as you can see the levels more clearly


dl.dropboxusercontent.com/u/4899609/gkp11thfeb2015montly.png

For those looking to trade the fall, here is a reminder of the key levels. The GAP has to be a reasonable target but IMO any trading tomorrow is very risky. Best to let things settle and get fully digested.





GL
F4T

Thank Monkeyz. Here is the other article. I know that this is a technical site but this is important for those holding and is why I have, on a few occasions in posts, noted their dubious cost structure. The face value of the bonds are more than the market cap at close yesterday, though they would be trading much lower than par value.
All the equity investment from shareholders over the years has been eroded. We can see what crippling bond costs have done to Afren. Not sure selling crude cheap on the domestic market will do it. They may have to revert to an equity issue/placing and dilution. Sub-43 is a given now the following article has spelled out the problem clearly.

GL
F4T


February 6, 2015 5:37 pm
Gulf Keystone abandons oil exports from Kurdistan
Michael Kavanagh

Gulf Keystone Petroleum has abandoned exports of oil from Kurdistan because of delays in payment from the region’s autonomous government in Erbil.
Shares in the London-listed company slid 6 per cent to 49.25p on Friday after it said it had suspended crude oil deliveries by truck to Turkey for eventual sale to the international market amid the logjam on payments.

The abandonment of exports from Gulf Keystone’s flagship Shaikan field, where production hit an average of 40,000 barrels of oil a day in December, comes in spite of an apparent agreement to secure regular payments from the Kurdistan Regional Government in December.
Gulf Keystone said on Friday that instead of delivering further cargoes for sale through the KRG’s oil marketing agency, it would instead divert smaller volumes of production for local sale that, though it would command a lower price, offered “the prospect of receiving revenues in the near term”.
The decision to abandon its export efforts — which has seen convoys of up to 360 vehicles a day departing Shaikan to deliver oil for export across the Turkish border — comes amid a continuing financial crisis facing the KRG caused by its attempts to counter incursions by insurgents from the Islamic State of Iraq and the Levant, also known as Isis, across northern Iraq.
The company, which carries $575m of debt in high yield and convertible bonds, faces an April deadline to pay $26m. In December it received a downpayment of $15m from the KRG against monies owed of about $250m, following a release of funds to the autonomous government from federal authorities in Baghdad aimed at helping to finance Kurdish peshmerga fighters battling Isis.
However, since this initial payment neither Gulf Keystone, nor its exporting peers Genel Energy and DNO of Norway, have received any further funds in spite of the KRG’s commitment to begin payments to its oil exporters.
John Gerstenlauer, Gulf Keystone’s chief executive, said on Friday: “We remain confident that a stable payment cycle will be established in the near term, and we expect to receive payment for all past and ongoing oil sales from Shaikan.”
However, he conceded the stress on the company’s balance sheet, stating: “A number of longer term financing options are currently being progressed by the board.”
Gulf Keystone is owed about $100m for crude exports to date, with a similarly sized amount additionally owed by the KRG to cover the company’s early-stage investment in cranking up production from fields.
London-listed Genel Energy, run by former BP chief executive Tony Hayward, and DNO of Norway are the largest oil exporters from Kurdistan and are also owed hundreds of millions of dollars from the KRG. Neither, however, faces the same financial strain in the short term as it awaits overdue payments from Erbil.
Bijan Mossavar-Rahmani, DNO’s executive chairman, said on Thursday his company would also be diverting production to Kurdistan’s less lucrative local market to boost short-term cash flow. He added that DNO would scale its capital spending in the year according to “the timing and extent” of payments for previous and ongoing exports from Erbil.
He described DNO’s stance in Kurdistan as having “one foot on the accelerator and one on the brake”

I think this is the article from the other week. They have run another story on GKP ceasing exports from Kurdistan today.

---

January 28, 2015 5:34 pm
Smaller oil explorers’ borrowing costs soar as crude prices fall

Christopher Adams and Henny Sender


Investors are dumping bonds in oil and gas explorers seen as most vulnerable to the plunge in crude prices, with borrowing costs for some smaller companies soaring amid fears they could struggle to repay their debts.

Yields on bonds issued by groups including Afren, the London-listed African oil group, Kurdistan-focused explorer Gulf Keystone Petroleum and EnQuest, the North Sea producer, have leapt since crude tumbled from last year’s highs of more than $115 a barrel. Bond yields, a gauge of implied borrowing costs, move inversely to prices.


The bond market flight reflects investor nervousness over how severe the drop in oil prices will be and how long it will last, said bankers. The debt sell-off has spread from US producers such as Swift Energy and Sandridge Energy, at the forefront of America’s shale boom, to groups based elsewhere.

The impact of falling oil prices is expected to hit many smaller producers harder than energy “majors” such as ExxonMobil and Royal Dutch Shell.

If prices remain at current levels, up to 40 per cent of energy companies that have issued US “junk” bonds could default by 2017, according to a publication by JPMorgan’s private bank. “These companies can still raise money, but it’s hard,” said one banker.

As analysts’ future earnings estimates slide, doubts have grown about the ability of smaller companies to continue exploration and production.

“Some very small companies we deal with are in real trouble. They might just have months left. Larger companies have more options,” said another banker.

The yield on one Afren bond, with a 6.6 per cent coupon, has risen to 35 per cent from less than 6 per cent last July.

The yield on an EnQuest security with a 5.5 per cent coupon has jumped from less than 5 per cent to 13 per cent over the same period. Yields on GKP debt have jumped from 15 to 20 per cent to about 30 per cent.

Afren is among the worst hit. It is negotiating with lenders to delay a $50m debt repayment due by the end of January and on Tuesday warned that it would need to raise more than its market value in fresh equity to repair its balance sheet.

EnQuest has announced an easing of lending terms with its banks, triggering a rally in its bonds. GKP may look at options including renegotiation of debt covenants and equity issuance.

Producers could also hunt new investors. GSO, the credit arm of Blackstone, is taking advantage of the plunge in oil prices to create two new funds.

One fund, about $500m in size, will invest in the publicly traded debt of energy companies. The other fund, with a target size of about $1bn, will offer rescue finance to energy companies in the private market, people familiar with Blackstone said.

---

My view is that if it closes below 43 things will get bad.

Cheers,
M.

F4T

Any chance you could copy that article/information please as the FT are asking for a subscription

Many thanks

www.ft.com/cms/s/0/4b7b28e0-a61c-11e4-ab...e.html#axzz3Qyy7yAd5

Some info I found on the soaring bond yields...............

"Yields on GKP debt have jumped from 15 to 20 per cent to about 30 per cent."