Million-pound payout for the oil baron with no sales

THE chief executive of a London-listed oil explorer pocketed a $1.9m (£1.3m) bonus last year despite recording a $96m annual loss that led its accountants to raise concerns about the firm’s solvency.
Todd Kozel, head of Gulf Keystone, said the “going concern” notice by Deloitte in its annual accounts was “an accounting thing”. The company, he said, was in no danger of running out of cash. “This doesn’t concern me in the least. We are an exploration company, not a production company. Can we raise more cash? Of course. Can we cut back on our exploration programme? Yes.”
Gulf Keystone made a discovery in the Kurdish region of northern Iraq of up to 1.9 billion barrels, one of the largest finds in the sector. The find pushed the firm’s shares from 16¾p to 90p last year. They closed last week at 75Åp.
The company has yet to generate any revenue from the discovery and has raised $200m from shareholders in recent months to fund the development and other fields in Kurdistan. It must also make a $52m payment to the Iraqi Kurd authorities for new exploration rights.

Gulf Keystone introduced several new incentive schemes last year that mean Kozel, who founded the company, and other top managers will benefit hugely from future successes.
Kozel was given 14.7m shares and options payable over coming years if targets were achieved. He was also awarded 3m options that can be exercised if the shares hit 93p. These replaced 2.6m options under an old plan that could have been exercised in tranches when the share price hit 96p, 144p and 192p.
Kozel said the imposition of the easier targets was “part of a worldwide trend” in the wake of the oil price slump and recession. “The old remuneration scheme,” he said, “was illconceived and unreasonable.”
Lord Truscott, the Labour peer caught in The Sunday Times’s cash-for-questions investigation last year, is a non-executive director and a member of the remuneration committee. His firm, Opus Executive Partners, has advised Gulf Keystone on pay and headhunting matters but not on the plans introduced last year.
Kozel said his awards were justified and that he and his executive team get paid only if they deliver. “Show me another chief executive who has found 2 billion barrels of oil and built up one of the largest positions in one of the world’s most promising provinces,” he said.
“I 100% believe in paying for performance. This management team has decided to take its bonuses in shares only. If we don’t deliver, we get nothing. I think that’s damn impressive.”
Kurdistan, which culturally includes southeastern Turkey as well as northern Iraq, where Gulf Keystone has all its assets, is riddled with political risk. Federal authorities in Baghdad say the deals that the Iraqi Kurd regional government struck with Gulf and other foreign oil firms are illegal and need to be renegotiated. Several companies stopped production because they were not paid.
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Million-pound payout for the oil baron with no sales

THE chief executive of a London-listed oil explorer pocketed a $1.9m (£1.3m) bonus last year despite recording a $96m annual loss that led its accountants to raise concerns about the firm’s solvency.
Todd Kozel, head of Gulf Keystone, said the “going concern” notice by Deloitte in its annual accounts was “an accounting thing”. The company, he said, was in no danger of running out of cash. “This doesn’t concern me in the least. We are an exploration company, not a production company. Can we raise more cash? Of course. Can we cut back on our exploration programme? Yes.”
Gulf Keystone made a discovery in the Kurdish region of northern Iraq of up to 1.9 billion barrels, one of the largest finds in the sector. The find pushed the firm’s shares from 16¾p to 90p last year. They closed last week at 75Åp.
The company has yet to generate any revenue from the discovery and has raised $200m from shareholders in recent months to fund the development and other fields in Kurdistan. It must also make a $52m payment to the Iraqi Kurd authorities for new exploration rights.

Gulf Keystone introduced several new incentive schemes last year that mean Kozel, who founded the company, and other top managers will benefit hugely from future successes.
Kozel was given 14.7m shares and options payable over coming years if targets were achieved. He was also awarded 3m options that can be exercised if the shares hit 93p. These replaced 2.6m options under an old plan that could have been exercised in tranches when the share price hit 96p, 144p and 192p.
Kozel said the imposition of the easier targets was “part of a worldwide trend” in the wake of the oil price slump and recession. “The old remuneration scheme,” he said, “was illconceived and unreasonable.”
Lord Truscott, the Labour peer caught in The Sunday Times’s cash-for-questions investigation last year, is a non-executive director and a member of the remuneration committee. His firm, Opus Executive Partners, has advised Gulf Keystone on pay and headhunting matters but not on the plans introduced last year.
Kozel said his awards were justified and that he and his executive team get paid only if they deliver. “Show me another chief executive who has found 2 billion barrels of oil and built up one of the largest positions in one of the world’s most promising provinces,” he said.
“I 100% believe in paying for performance. This management team has decided to take its bonuses in shares only. If we don’t deliver, we get nothing. I think that’s damn impressive.”
Kurdistan, which culturally includes southeastern Turkey as well as northern Iraq, where Gulf Keystone has all its assets, is riddled with political risk. Federal authorities in Baghdad say the deals that the Iraqi Kurd regional government struck with Gulf and other foreign oil firms are illegal and need to be renegotiated. Several companies stopped production because they were not paid.
Five Filters featured article: Headshot - Propaganda, State Religion and the Attack On the Gaza Peace Flotilla. Available tools: PDF Newspaper, Full Text RSS, Term Extraction.

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