Gulf Keystone under fire from big shareholder

Michael Bow
Follow Michael
IL firm Gulf Keystone Petroleum (GKP) was rocked by a shareholder revolt yesterday after M&G, the fund manager, broke ranks to publicly censure the firm’s leadership.

GKP, one of the market’s most actively traded energy stocks, is 5.1 per cent owned by M&G, via the fund manager’s long-standing recovery fund which invests money for private clients.

In a rare public statement, the fund said it had “concerns” about corporate governance standards at the Aim-listed company over the level of pay given to executives at the oil company last year.

Fellow shareholder Capital Research Global Investors, which owns around five per cent, has also gone on record to oppose the running of the company. The boardroom rumblings, first revealed in City A.M. last month, centre on the fund manager’s bid to install more independent directors.

M&G is seeking to vote four non-executive directors onto the GKP board at a forthcoming annual meeting on 25 July and oppose the re-election of remuneration committee head Mehdi Varzi and business development director Ali Al-Qabandi.

“M&G believes the true value of the company’s assets will not be reflected in its share price until there has been a substantial strengthening of GKP’s board,” a statement said. “(The) potential directors have considerable experience of the oil and gas industry…they are therefore well placed to enhance the quality of governance.”

Yesterday’s statement follows the appointment of former Glencore chairman and French Foreign Legion soldier Simon Murray as GKP’s chairman.

It comes after the separation of roles for current chief executive Todd Kozel, who was previously both chair and chief executive.

Despite a warm reception from analysts after Friday’s appointment, M&G said it was seeking a meeting with Murray “as soon as possible”. It is thought the firm will back his appointment at this month’s annual meeting, to be held in Bermuda.

Gulf Keystone, which last year posted an $81.8m loss, announced in May plans to switch to a premium listing in London away.

A spokesman for the firm had no comment yesterday.

Gulf Keystone’s prized asset, an oil field in the Kurdistan region of Iraq, has offered hopes of a turnaround for the company. A person familiar with the matter described operational progress in the region as “staggering” yesterday.

The person also said the company had concerns about one of the names put forward as an independent director, who the company say has already been a director of the company.