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How Gulf Keystone Petroleum Limited (GKP) Measures up as a GARP Investment

The company is expecting production to ramp up massively from this year onwards, and is looking to hit production of 40,000 barrels of oil per day by the end of the year as activity at its two Shaikan field production facilities ramp up. Gulf Keystone also announced last week that it had begun work on the first deep exploration well at the Shaikan field, an area which is estimated to contain some 14 billion barrels of oil.

However, huge question marks continue to hang over the company owing to its fierce court battle with Excalibur Ventures, a case that dates back to 2011. The latter has staked a claim for almost a third of Gulf Keystone Petroleum Limited (LON:GKP)’s assets in Kurdistan, and a ruling is expected any day now after the court adjourned in March. The result of the case could clearly have huge ramifications on future earnings potential, and I believe that current risks remain too lofty to justify investment at present.

There’s gold in them there wells
Like all natural resources plays, Gulf Keystone Petroleum Limited (LON:GKP) comes attached with a heightened risk profile. Drilling for oil and minerals mining is often a “hit and miss” business where the timing, and indeed quantities, of potential payloads are extremely unpredictable.

The article How Gulf Keystone Petroleum Measures up as a GARP Investment originally appeared on Fool.com and is written by Royston Wild.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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