Gulf Keystone made no revenue and a $26.4m loss in the first half ended June.
The company expects to be producing 40,000 bopd by the end of the year.
Kurdistan is one of the cheapest places in the world to produce oil. The
region has one of the lowest break-even prices at $27 per barrel of oil. So,
with oil in the local market at about $43 a barrel, the revenue and profit
potential is clear.

A recent court ruling has cleared the way for potential takeover bids for the
oil explorer. Gulf Keystone emerged victorious from a legal battle over the
ownership of its oil fields last week. With this risk removed, potential
suitors may take more interest.

Political risk is always an issue. Investors need to be aware of the fluid
nature of local politics. The area of Iraqi Kurdistan is itself disputed
territory and recent unrest in bordering Syria could further destabilise the
region.

Gulf Keystone shares are high risk and not for widows and orphans. Questor is
not blind to the political issues. However, the risk looks priced in, buy.