Gulf Keystone wins Iraqi oilfield suit
GULF Keystone Petroleum has won a UK lawsuit brought by a former US Special Forces captain who sought a stake in the firm’s Iraqi oilfields he said was worth as much as $1.6bn.
The soldier’s company, Excalibur Ventures, did not live up to its obligations under a contract with Gulf Keystone to develop the oilfields in Iraq’s Kurdistan region, Judge Christopher Clarke said in a ruling yesterday in London. Shares of the company rose 24%.
Excalibur Ventures’ “lack of financial resources prevented it from being able to fulfil its financial obligations” and has no valid claim, Judge Clarke said.
Gulf Keystone’s Shaikan oilfields will produce 250,000 barrels a day by 2018, according to the company. The lawsuit has held back Gulf Keystone’s stock, which had gained 7% this year before the verdict, com- pared with advances for regional competitors of more than 20% for Genel Energy and 50% for DNO International.
The ruling removes uncertainty for Gulf Keystone shares, which were suspended yesterday ahead of the verdict, said Dougie Youngson, an analyst at VSA Capital in London. Once shares resumed trading, the firm rose 24% to 227.28p, according to the company’s website. “People are reluctant to invest when there is ongoing litigation,” Mr Youngson said. “It’s good news for the company and there will inevitably be talk of a takeover now.”
The suit was filed by Rex Wempen, who served in the US Special Forces in Korea and Japan in the 1990s and is a founding member of the US-Kurdistan Business Council. Mr Wempen said he took the idea to Gulf Keystone and was promised a 30% share, which he argued was worth $1.6bn.
“It has been unfortunate that the company and its shareholders have experienced significant uncertainty and concern over the last 2 years,” said Gulf Keystone CEO Todd Kozel in an e-mailed statement.
Mr Wempen’s lawyer Alex Panayides did not immediately respond to a request for comment.
Gulf Keystone’s 2009 oil discovery would never have happened if Mr Wempen had not risked trekking into Iraq during the second Gulf war to make contact with Kurdish leaders, his lawyers said in a sixmonth trial that ended in March.
Mr Kozel argued Mr Wempen had not fulfilled his end of the bargain because he did not help with exploration costs.
Mr Kozel said last month that the company, which has spent $780m in Kurdistan so far, would be able to fund the development of its fields with cash flow generated once production starts at an initial rate of 40,000 barrels a day this year.