Gulf Keystone Petroleum Launches $200 Million Convertible Bond Offer

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LONDON -- Gulf Keystone Petroleum  (LSE: GKP.L) slipped 6 pence, or 3%, to 223 pence in early trade this morning after announcing the launch of a convertible bond offer.

The oil explorer -- a favorite among many private investors -- said the bonds would raise between $200 million and $250 million and mature during October 2017.

The firm also said the bonds were expected to carry a coupon of between 5.875% and 6.625% per annum, and have a conversion price set between 25% and 30% higher than the price seen during today's trading.

Todd Kozel, Gulf Keystone's chief executive, commented:

We welcome this important financing initiative, which, in addition to being an important milestone for the Company in support of our transition from the exploration and appraisal phase to the fully fledged development of the world-class Shaikan discovery, shows an increasing confidence of international markets in doing business in the Kurdistan Region of Iraq.

Gulf Keystone said the bonds, together with the company's existing cash resources of $137 million, would help fund a "large-scale staged development" at its Kurdistan oil discovery during 2013. The group's goal is to produce 150,000 barrels of oil a day by 2015.

Gulf Keystone's Shaikan block was declared a commercial discovery in August this year and is estimated to contain 13 billion barrels of oil.

The discovery currently underpins Gulf Keystone's £2 billion market cap and position as one of the largest companies traded on AIM.

The discovery has also supported a meteoric share price rise. Since March 2009, Gulf Keystone's shares have jumped from 5 pence to as high as 425 pence on the prospect of the Shaikan field becoming a cash flow bonanza.

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