Another windfall for Gulf Keystone Petroleum

Gulf Keystone Petroleum shares continue their recovery from a five-year low following news that its long and expensive legal dispute with Excalibur Ventures is almost over. Lord Justice Christopher Clarke has ordered the nine parties who bankrolled Excalibur's lawsuit against the Kurdistan-focused oil company to cover the rest of Gulf's legal costs.

A billion-dollar legal row over ownership of Gulf's vast oilfield in northern Iraq had already been settled in Gulf's favour. In 2010, Excalibur tried to claim an interest of up to 30% in Gulf’'s blocks in Kurdistan. It could have cost the AIM-listed company over £1 billion. But last December, Lord Justice Clarke ruled that the claim was "wholly without merit".

Gulf, which has already received £17.5 million in legal costs, will now get the remaining £4-5 million.

"Another pain that is now behind them and one hopes with the IMS and conference call due on Thursday that better information might just be forthcoming for patient shareholders," said industry expert Malcolm Graham-Wood in his daily blog.

Earlier this month, Gulf said staffing levels at its flagship Shaikan field are back to normal after recent violence forced management to warn that plans to double production there could be delayed.

Since the end of August, production has averaged 23,000 barrels of oil per day (bopd), still some way short of the 40,000 bopd target. Management has already admitted that it's unlikely to achieve that level of production until the first quarter of 2015, but has failed to shed any further light on a possible date.

We'll find out more on Thursday. As we said a few weeks ago, ramping up to 40,000 bopd and agreeing payments with the Kurdistan regional government's Ministry of Natural Resources (MNR) will make the shares more investible. Until then, and with war raging on its doorstep, the share price will remain incredibly volatile.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.