One of London’s most controversial listed companies will effectively put itself in play on Wednesday by disclosing initial takeover discussions with potential buyers.
Sky News can reveal that Gulf Keystone Petroleum is poised to say that its board is considering a sale or merger amid protracted talks with the Kurdistan Regional Government (KRG) over delayed payments for oil exports.
The news may pave the way for an end to a torrid few years on the public markets for Gulf Keystone, which has fought a succession of battles with institutional shareholders over pay and corporate governance.
Its former chief executive, Todd Kozel, stepped down from the role last year following hints of a further revolt by leading investors.
The company’s shares have slumped by more than 75% during the last year, valuing it at just £322m.
Deutsche Bank is understood to be advising the company on its options, according to City sources.
A sale of Gulf Keystone is by no means certain, although it is likely to attract interest from possible buyers including rival oil explorers in the region.
Earlier this month, the company said it was suspending exports while it held discussions with the KRG’s Ministry of Natural Resources about outstanding payments “and establish a stable payment cycle for export crude oil sales in the future”.
John Gerstenlauer, Gulf Keystone’s chief executive, said at the time that it was “taking a prudent approach to its capital expenditure in 2015 [while] a number of longer term financing options are currently being progressed by the board”.
London-listed oil companies have been hit hard by the fall in the price of crude, with Afren among those which are facing urgent restructurings as they buckle under the financial strain.
Another Kurdistan-focused group, Genel Energy, which is run by Tony Hayward, the former BP chief executive, has also been impacted by the payments delay, although it has a much stronger balance sheet.
The ongoing unrest in Iraq has been a significant factor in obstructing payments for oil exports as the KRG has devoted resources to countering incursions by Islamic State insurgents.
A Gulf Keystone spokesman declined to comment on Tuesday.