Gulf Keystone Petroleum Ltd (GUKYF)

[JD400]

GUKYF 65.85% intra

Shares in Gulf Keystone Petroleum (LSE:GKP) have surged 31% higher today after the company's restructuring deal lifted investor sentiment in the northern Iraq-based oil producer. The deal will see investors' stake in the business fall to just 14% in return for a reduction in Gulf Keystone's debt to just $100m. This is a reduction in debt of $500m, with lenders having their debt converted into equity in the company.

Alongside this, Gulf Keystone will have around $95m of cash, with an equity raising of up to $25m helping to boost its balance sheet strength. And with Gulf Keystone having a lucrative asset base that's already producing around 40,000 barrels of oil per day (bopd), it could be argued that its future is now relatively bright.

However, Gulf Keystone is still at risk from a falling oil price. And the potential for disruption in production due to the conflict taking place close to its asset base, as well as the squeeze on equity holders in the restructuring, mean it may be prudent to wait for further news before buying a slice of the business.