Publically listed companies responding to spurious nonsense on social media bulletin boards? Sounds ridiculous doesn’t it? But that’s where we are today. The new media channels like Twitter, Facebook and other bulletin boards have taken off so fast that the lawyers and libel perimeters are left playing catch up.
It wasn’t that long ago when NightHawk’s sp was battered by negative bulletin board comments by investors, traders or bashers – call them what you like. They are giving an opinion and that opinion can often turn into cyber ‘fact’. This hyper reality then has the most incredible effect on private investors making them jittery and forcing the unaware into selling or impulsive decisions.
The markets have been rife with rumours since the days of the coffee house. The difference is, they were normally confined to the ‘house’ and those in the house were institutional members. Those members had more insight and knowledge of what exactly was a ‘good’ rumour and what was a ‘throw away’ not to be entertained rumour.
With social media and the increasing ease of accessibility to the markets for any individual through online trading, CFD’s and spread betting – suddenly the markets really have gone all global village on us. And in every village, there’s normally an idiot or two.
The idiot which GKP are referring to is someone that has tweeted several comments that could impact the share price of GKP. It’s questionable whether these tweets have had an effect on the gkp share price as the latter has been falling heavily since the Independent newspaper cited a ‘rumour’ that Exxon was mulling a deal with GKP. GKP’s sp shot up from 190p to 450p and curiously management did not dispute the rumour specifically linked to Exxon, but did issue an RNS that said they were not selling the business. A carefully worded RNS which would still enable them to sell an Asset.
The recent falls from 250p to yesterday’s lows of 183p was undoubtedly to do with a broader market sell off which has seen many E&P’s sold into due to a risk off strategy employed by many shareholders/investors to guard against the possible fall out of the Greece and Euro crisis.
Today’s RNS by GKP is a welcome sign for shareholders as it shows that management are sensitive to the growing doubts over the cash balance and their need for funding. The AB sale is ongoing but based on today’s comments appears to be the only source or option of funding moving forwards after the company has just categorically denied that it will be doing a placing at 160p.
This is not the best signal to send to your potential bidders. When a company has few options on funding – bidders are hardly going to offer top whack for the asset. That said – demand is high in Kurdistan and bidders may be ‘desperate’ to gain a slice. The AB sale has been ongoing since September 2011 but got an official boost when GKP appointed experts ‘PWP’ to manage the sale process in Feb 2012.
The internet and social media is here to stay – perhaps it’s time for the FSA to start clamping down on poor journo stories or rumours that we see in the press time and time again – and of course the likes of twitter and bulletin boards need firm warnings or guidance in place. It’s also worth noting that several FSA regulated broker notes were also responsible for GKP’s sp decline from 450p to 200p ranges. Both Canaccord and HSBC’s notes were shoddy and proven to be over discounting risk – more so on HSBC’s note. The FSA and GKP did nothing to disapprove those. Then there’s the broader issues over the likes of Moody’s and S&P who seem free and unregulated to issue severe downgrades to any country they see fit. The consequences in losing triple A ratings is massive. And these companies are shareholder owned which makes it a profit orientated business. Crazy stuff and a clear sign that the markets are still firmly in the dark ages.
Speed bumps normally get added to roads after there have been a few accidents (unfortunately normally only after a fatality) – a bit late for the deceased. The FSA would be wise to lay the speed bumps now rather than wait for further casualties.
In terms of GKP’s position – the company clearly needs the AB sale to go through and go through swiftly. The longer it takes, the more likely that funding uncertainties will return to their door step. If they do a placing in the near future – it will be embarrassing for all involved.
10 May 2012, Gulf Keystone Petroleum Ltd. (AIM: GKP)
Response to Speculation
Gulf Keystone notes the continued and unfounded speculation on various bulletin boards and other social media sites regarding an alleged planned placing of the Company’s shares at 160p per share.
Gulf Keystone does not normally comment on such unfounded speculation. However, due to the damaging and misleading nature of these various comments which have been posted on bulletin boards and other social media sites during the past 24 hours, the Company feels it must respond.
Accordingly, Gulf Keystone is pleased to confirm categorically that it has no current intention of undertaking an institutional fundraising.
The Company is also pleased to confirm that the process regarding the sale of its 20% stake in the Akri-Bijeel block in the Kurdistan Region of Iraq, is continuing and negotiations are ongoing with several interested bidders. The Company will issue further updates as appropriate.
The Company is currently taking legal advice with regard to the continued and unfounded speculation on various bulletin boards and other social media sites and will be taking all available legal action to prevent further repetition of similar speculative comments on bulletin boards and other social media sites.
Todd Kozel, Executive Chairman and Chief Executive Officer, commented:
“We are working hard to create shareholder value via the continuing 2012/2013 exploration and appraisal programme on our world-class assets in the Kurdistan Region of Iraq. We will not tolerate malicious attempts to damage the Company’s reputation and share price. We have instructed the Company’s lawyers to use all means necessary to protect our shareholders from this malicious and unfounded attack.”