Broker snap: Court case could provide some negativity at Gulf Keystone

11th Apr 2011 11:07

Matrix keeps its 'buy' for oil explorer Gulf Keystone Petroleum (GKP), but highlights its caution in regards to the group's ongoing dispute with procurement firm Excalibur Ventures."Excalibur asserted certain contractual and on-contractual claims against GKP and is claiming up to 30% interest in the company's licences in Kurdistan [Iraq]," notes analyst Vugar Aliyev.Last week, GKP obtained an injunction stopping Excalibur from pursuing the International Chamber of Commerce arbitration proceedings in New York. The English Commercial Court will decide whether GKP is bound by the agreement.The broker says that in the worst-case scenario (if GKP loses this case), the valuation of the stock could be slashed by 50p, reducing its current target price of 190p to 140p."However, this case is likely to drag on for some time, and we think that a risked 10-20p of negativity could be built into the stock medium term," said Aliyev.Nevertheless, a 'buy' rating is kept.---bc