Gulf Keystone announcement sparks sale rumours

Gulf Keystone Petroleum has revealed details of performance-related awards for its board, management and employees and sparked talk of a sale by launching an 'Exit Event' strategy.

The company said that it had drawn up the awards following its continued growth and operational success achieved in 2011 and early 2012.

The executive bonus scheme will see five directors awarded a total of £3.2 million in cash and up to 10 million common shares which will be released in tranches over the next two years. The share value will be 251.75p - the closing price on 21 March.

The beneficiaries are chief executive Todd Kozel, chief operating officer John Gerstenlauer, finance director Ewen Ainsworth, legal and commercial directorTony Peart and vice president of operations Chris Garrett.

But it was the news that the five directors will also reap 860,000 common shares in an 'Exit Event' if all or a substantial part - more than 50% - of the company is sold which sparked investor interest on Thursday.

Mehdi Varzi, Gulf Keystone's deputy chairman, who also chairs the firm's remuneration committee said the awards would incentivise company employees "to continue to achieve significant value creation for the benefit of all shareholders".

He commented: "Gulf Keystone's management and employees have achieved considerable growth with the increase in the company's share price from £0.05 pence in March 2009, before the first Shaikan well was drilled, to today's levels, which would place Gulf Keystone within the FTSE 100 index by market capitalisation."

He pointed out that while the AIM index had fallen almost 20% since the end of 2010, Gulf Keystone's growth rate in terms of its market capitalisation in the same period has been 76%.

"Since we made one of the largest world-class discoveries of the last decade at the Shaikan field in 2009, our independently-audited mean resource estimates for Shaikan have increased by 375%.

"In combination with preliminary resource estimates for the equally massive structures of Akri-Bijeel, Ber Bahr and Sheikh Adi, today Gulf Keystone has a share of gross, P50 oil-in-place resources of at least 16 billion barrels across our four licences in the Kurdistan Region of Iraq, one of the last frontier oil provinces in the world," Varzi said.

Investor reactionThe Interactive Investor discussion board for Gulf Keystone was buzzing with many users commenting on an expected sale of some sort:"Loving that one Todd! In all my years of investing I don't ever recall an ESOS being issued that was so specifically geared to the forthcoming sale of the company that it was called an Exit Event scheme!" said  user 'Doctorh'User 'jjjo' agreed: "Not long now to either Shaiken sale or company sale methinks.""Not exactly subtle Todd old boy!" said user 'Stokie2'Meanwhile, 'Golfguy31' commented: "So basically...The directors have taken up an additional 20 million shares with an exit event award plan firmly in place...nice!"Another theme was picked up by 'Bonobo77': "Do they mean an Exit Event or an Exxon Event?"

'Grimace' noted: "The RNS clearly states that the preparation for these awards began in June 2011. The reason I think this is important is because the board do not want it to look like this has been implemented because a takeover or sale is imminent. They would be heavily criticised if a takeover or sale of Shaikan happened in the next 3 to 6 months so by mentioning June 2011 they can easily counter such an accusation. I think this could be an indication that we do not have long to wait like some deramping fools have suggested. Very clever Todd and Co."

Read more... Should I buy shares in Gulf Keystone?