Gulf Keystone to accept new board members

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Gulf Keystone Petroleum (GKP) is to accept the nominations of four new independent directors to its board following a row over their credibility, according to Sky News.

The quartet will include Jeremy Asher, a former director of the company, who quit the board several years ago after falling out with Todd Kozel, the chief executive.

Under the proposed agreement, Gulf Keystone will also appoint at least two of its own candidates to join the board, including Philip Aiken, a former head of BHP Billiton's (BLT) energy operations.

The current chairman of the remuneration committee, Mehdi Varzi, and Ali Al-Qabandi, another non-executive director, will step down from the board.

In return, Gulf Keystone's most vocal shareholders, including M&G Recovery Fund and Capital Research Global Investors, would agree to support the election of Simon Murray as Gulf Keystone's chairman, and the continued chairmanship of board committees by other directors.

M&G, which owns 5.1% of Gulf Keystone, has been in conflict with the company since early July, when it accused the oil explorer of poor corporate governance and "excessive" executive pay. It said the board needed to be "strengthened" by the appointment of independent directors, and should also review remuneration policies.

Gulf Keystone hit back at these claims by pointing out that not only was it splitting the roles of chief executive and chairman for the first time by appointing Simon Murray as non-executive chairman, but would also recruit at least one additional non-executive director.

Still, investors were warned that volatile nature of discussions in recent weeks between Gulf Keystone and its shareholders meant that the proposed deal could still fall apart.

Analyst view

"Excellent news all round as this clears the air and means that the company can get on with the serious business of developing its Kurdistan portfolio," stated Malcolm Graham-Wood, oil analyst at VSA Capital.

"Also it means that we will not get a messy week of rumour and counter rumour and Gulf Keystone should get more respect from institutions."

He added: "I expect that subject now only to the court case on 23 August, the shares can now look up to the 224p recent peak as an interim target."

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