Gulf Keystone (GKP) is either the cheapest stock on AIM or is a horror waiting to blow. None of us knows which it is but on balance, after events yesterday, I would sell the shares. And for a variety of reasons.
The bull case is that the company sits on c14 billion barrels of oil. A market capitalisation of just £1 billion fails to discount that. Here endeth the bull case. If the company can start to produce that oil (and it targets output of 400,000 bopd by 2020) its shares are dirt cheap.
However, the bear case is extensive. My first contact with this company was when a then NED Lord Truscott oiled up to me to introduce himself. He was a Labour peer who took money from companies for getting legislation changed. Having a creep like him in charge of remuneration and corporate governance was like hiring Jimmy Savile as your babysitter.
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