Gulf Keystone Technical Analysis Update

I've been calling a move to the upside in Gulf Keystone Petroleum (GKP) for a few months now, but it's taken a little longer than I expected for the company to begin this process. Nevertheless, it seems to me that the breakout is now on (again...)!











































The key indicator here is the 50 day Simple Moving Average (50 SMA), which has been a consistent obstacle to any rally in GKP over the last year. In fact, the stock has never held a move above the 50 SMA for more than two days until now.


I have a slow stochastic and RSI on my chart above, but I would recommend ignoring them, as historically they've both had worse that 50% accuracies when it comes to picking GKP's future price movements.


Current major resistance levels are at:

40p
41.2p (100 SMA)
42p
52p


These factors combined with the latest fundamental news that the company is beginning to be paid by the Kurdistan Regional Government for its exports gives a positive backdrop to the improved technical situation.


The next catalyst for an expansion in volatility here is the expected CPR on the Akri-Bijeel oil field, that GKP hold a 20% stake in. If this (as currently expected by the market) is revised up, this could be another reason to be bullish on the stock.


With the news that the data room was to be closed at the end of the summer, there is also a chance that we may begin to hear news on the M&A front, which has been quiet for a very long time now.



Good Luck,


The Masked Stock Trader

Gulf Keystone Petroleum: New Payment Analysis

DISCLAIMER: I don't have a licence to give financial advice,etc, therefore none of the below is to be viewed as such advice.


Morning,


As we found out last night, the Kurdish government is expected to begin the repayments to oil producers in the near term:


@ashm_ya: #Kurdistan govt. is expected to spend $150mln per month on repayments to oil producers in the #KRG & spend up to $700mln on govt.expenses


If we assume that this intention is correct and that this does indeed happen over the coming months, then the significance of these payments across all of the companies operating in the region will vary due to many factors.


For shareholders and traders, we must look towards the market capitalisation of these companies in relation to the potential payments they may receive:


e.g.


£5 million as a percentage of Gulf Keystone's current market capitalisation is 1.47%, whereas the same figure as a percentage of Genel Energy's market capitalisation is a mere 0.38%.



In simplified terms, a payment to a smaller capitalised company is more significant than that of the same payment to a larger capitalised company, which in turn makes Gulf Keystone Petroleum (for me at least) a continued buy at these levels and above across the short and medium term.


Enjoy,

The Masked Stock Trader

Gulf Keystone Petroleum - Positive Fundamental Changes

DISCLAIMER: This should not be seen as financial advice to buy or sell stock!



Morning,


I'm a technical fan of Gulf Keystone Petroleum (GKP), but I'm going to put that to one side for the moment and briefly discuss the positive changes that have occurred recently that have made me decide to add to my long position here:



1. Independent Oil Sales:

- To quote the 29/06/2015 RNS: "Currently, sales of Shaikan oil comprise crude oil export deliveries by truck to the Turkish coast and sales to a domestic buyer under a new six months contract which provides for off-take of between 12,000 and 40,000 bopd." 


- This suggests to me that we're finally in a place where the cash position can be allowed to either grow slightly and or remain in a neutral position.


- In addition to this, the chances of a placing being required to satisfy the bond holders of the company in accordance with the general overheads is now significantly reduced.


- If this 12,000-40,000 is sold at the rumoured market rate of $29/barrel (see LSE.co.uk), then this gives a daily revenue stream of between $348,000 and $1,160,000, which should certainly provide some stability to the company in the short term.


- Added to this, the rumour on the market (see LSE.co.uk) is that the current production rates are been split between this independent and the Kurdistan government at a 50/50 ratio, giving a daily revenue figure of £580,000.



2. Kurdistan Bond Raising:

- This is a possible fundamental change in the region that will allow for the possible repayment of debt to GKP by the Kurdistan government along with the future payment of oil produced - this begins to reassert the company's potential dominance in regards to both its production expansion and its asset size.



3. Kurdistan Vs ISIS:

- Kurdistan have proven themselves to be a very good weapon against ISIS in conjunction with US Army technical drone support, which places GKP in a much more geopolitically safer place toil companies in the region.


4. Recent Institutional Activity:

- According to Morning Star, the following funds have recently added positions in the company:

iShares MSCI EAFE Small-Cap
iShares Core MSCI EAFE
SPDR® S&P International Small Cap ETF
iShares Core MSCI Europe
iShares MSCI Europe Small-Cap
iShares MSCI United Kingdom Small-Cap
iShares MSCI Global Energy Producers


http://investors.morningstar.com/ownership/shareholders-major.html?t=GKP



5. Asset Sale Probability:

- All of these factors (especially the increased chances of an increase in payment consistency) add to the potential value of the company to potential bidders and a cashflow positive environment for the company would make GKP a significantly more viable bid for larger companies.


- We must also remember that they are sat on what can only be described as a "world class" asset, which under the current low share price makes GKP a screaming target for M&A in the Kurdistan region.


- On a balance of probabilities the chance of a significant increase in the share price seems more likely over the coming months and years than a major fall, but as ever, do your own research.



Enjoy,

The Masked Stock Trader

Turmoil In The Oil Market.

I've never traded oil futures before, in part because the high inherent volatility of the commodity combined with a leveraged environment would throw me significantly out of my current comfort zone, but also because I would rather learn to trade on sector of the global markets really well rather than many to a mediocre level.


Nevertheless, falling oil prices have hit the AIM substantially knocking back the majority of junior oil explorers/producers, so I have to keep a vague eye on the market even if I don't directly trade it.


In my opinion the major falls we've seen in oil prices ca be split down into a few major points:


1. OPEC Vs Shale

- Personally, I feel that one of the major reasons why OPEC has decided to maintain its current supply levels is due to a desire to try and drown-out the US Shale Oil producers from the market and allow the status quo within the OPEC to continue undisturbed by foreign input and disruption.


- Moreover, intra-OPEC there seems to be certain parties who don't want their dominance with the OPEC to fall, with Saudi Arabia being possibly the best example of this. From the outside looking in, it would seem that they don't want to relinquish their supply into the hands of other members of the OPEC and will therefore hold at their current levels for the meantime.


2. Global Growth

- The next fundamental point is that global growth levels over the past quarter really haven't been anything to write home about, especially in the major growth markets, with China growing 7.3% in its third quarter - its slowest growth rate in five years. This coupled with China being potentially described as a "statistically generous" country with regards to its economic figures, means that the downwards pressure we've seen regarding oil prices was on a balance of probabilities going to be reasonably likely.


3. Reducing Sanctions on Oil Producing Nations

- Another key point that we shouldn't ignore for indication for the future direction of the oil price, is Iraq, Iran and Libya, all of whom have said they intend on increasing their production levels by 2015. This does in part depend on the sanctions currently in place on Iran over its nuclear program, but I certainly would not be surprised by more downwards momentum in the oil markets assuming a global state of ceteris paribus.


All the best,

The Masked Stock Trader

Union Jack Oil - A brief look.

Good afternoon.


Today I'm going to have a brief look at Union Jack Oil (UJO) an AIM listed company that has become popular recently among bulletin board traders. 


To cut to the chase, Union Jack Oil are expected to announce the results of their "Wressle-1 conventional exploration well - PED180." in July following groundwork completion and the mobilisation of rigs.


For those of you who don't know, The Wressle Prospect is located on the margin of the Humber Basin (close to the currently producing Crosby Warren oil field and the Brigg-1 oil discovery).


"The gross mean Prospective Resource volumes at Wressle, as calculated by independent consultants, Molten Limited ("Molten"), are estimated to be 2.13 million barrels of oil."


Now, let's have a look at some numbers produced by the independent consultants:


What does this mean?


Well, if the consultants are correct (and they probably will be pretty close) this could translate into a petty hefty discovery! Let us use a very crude and grotesque fifty percent discount to account for costs, (even though in reality there will probably be farm-outs for a percentage of the resource), this could be a resource currently worth $112,890,000 or about £66,405,882. Rather bizarrely this method of value calculation is often about about right (yes, even though it doesn't account for discounted value projections, inflation, costing changes, etc). 


Even if we take this horribly basic method of resource valuation as vaguely accurate, we can see that against the current market capitalisation of the company (£2.93m - accounting for the last placing to institutions), Union Jack Oil could well see an astronomical rise in its share price. 


I shall therefore be buying shares prior to July while the market is a bit quieter.


Good luck traders and do your own due diligence,

The Masked AIM Trader.