Financial News

  • 10 December 2013, 14:46

Gulf Keystone: Oil Firm Plots Board Shake-Up

The London-listed oil explorer Gulf Keystone Petroleum is plotting a fresh boardroom shake-up that could jeopardise a fragile truce between the company and leading investors.

Oil industry and headhunting sources told Sky News on Monday that Gulf Keystone was in talks about appointing two new non-executive directors which would take the size of the board to 13 members.

Two of the new candidates are understood to be: Joseph Stanislaw, the founder of an energy sector consultancy and a member of the advisory boards of Climate Change Capital and Dana Gas; and Maria Richter, a non-executive at National Grid and former Morgan Stanley investment banker.

The appointments would be sensitive because of a deal struck between Gulf Keystone and unhappy investors earlier this year which restricts the board's membership to a dozen people.

"The Board has agreed with M&G that the size of the Board should be limited to a maximum of twelve Directors in the future," Gulf Keystone said in July.

The company could still conform to the agreement with shareholders led by M&G Investments and Capital Research Global Investors by appointing only one of the candidates to its board, or by asking one of the existing non-executives to step down.

The company is in the process of arranging a transfer from the junior AIM exchange to the main London stock market, although it will miss a self-imposed deadline announced in September of doing so by the end of this year.

Investors have long been unhappy with standards of corporate governance and executive pay at Gulf Keystone, which specialises in exploring for oil in Kurdistan but which has seen its share price slump from its peak level.

Todd Kozel, the chief executive, has been a divisive figure although investors had hoped that the appointment of Simon Murray, former Glencore chairman, as Gulf Keystone's new chair, would pave the way for a more constructive relationship.

Mr Kozel's 8.8m award for 2012 represented a decline on his pay in the previous year, which topped $22.2m (14.4m). He has sought to defend his remuneration by arguing that Gulf Keystone has delivered more than 1bn of value to shareholders and a return of more than 4,000% since the company's listing.

An ally of Mr Kozel said earlier this year that the chief executive's pay reflected an "overall balanced mix of remuneration and reflects exceptional performance for the year and confidence in future cash flows".

However, Gulf Keystone's shares have fallen sharply from highs triggered by takeover speculation, while it has also been embroiled in legal action brought by a former adviser which has claimed it is owed roughly 1bn in compensation.

The company saw its shares jump by around 8% on Monday after announcing that Excalibur had decided not to appeal against a court judgement in Gulf Keystone's favour.

Gulf Keystone, which has a market value of nearly 1.5bn, declined to comment.

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