One to watch: Gulf Keystone Petroleum

81.75p -0.75pScotsman says HOLD

GULF Keystone Petroleum is focused on the exploration and production of oil and gas in Algeria and the Kurdistan region of northern Iraq.

Gulf has stakes in four production-sharing contracts in Kurdistan. Although it is very early days, there are some quite informed assumptions that this region could have enormous reserves of hydrocarbons.

Prospective investors must understand the risks. Exploration companies are, by definition, speculative but when the prospective site is surrounded by Turkey, the Kurds, Iraq and Iran, there is further added frisson.

On the other hand, the governments of these regions are more progressively pragmatic, acknowledging the need for allowing western expertise to develop whatever the potential there might be in these areas.

There would be a commercial cost in bringing a product to the market, but it is possible this region could be potentially as exciting as that which transformed Cairn Energy in India or, indeed, the fortunes of those companies operating in the North Sea in the early 1970s.

• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.