Company suing Gulf Keystone has specialist litigant funding

LONDON Wed Nov 21, 2012 2:34pm EST

LONDON (Reuters) - A company suing UK-listed oil explorer Gulf Keystone Petroleum (GKP.L) is being funded by hedge funds which specialize in litigation finance and two brothers involved in shipping, a London court heard on Wednesday.

Gulf Keystone is locked in a battle to defend its ownership of giant oil fields in the Kurdistan region of Iraq after its former partner, a company called Excalibur, launched legal action claiming it is entitled to a stake of the assets.

Shares in Gulf Keystone, a stock closely watched by private investors, closed 11 percent higher on Wednesday on speculation that the outing of Excalibur's backers could work in the company's favor in the lawsuit.

Private investors pack the court room on a daily basis and post frequent messages on websites tracking the shares, hungry for a steer on how the case will affect a stock which has soared by 885 percent since oil was discovered in 2009.

Analysts cited private investor speculation on websites that the disclosure of Excalibur's funders was positive for the company as the reason for the rise in the shares.

Excalibur founder Rex Wempen said on Wednesday that his company had received funding to help it pay for the court case from New York hedge fund Platinum, and New York litigation funding specialist BlackRobe, as well as Andonis and Filippos Lemos, two brothers involved in the shipping business.

One private investor speculated that the Lemos brothers could pull their funding for the lawsuit given that their backing of Excalibur had now been made public.

The claimant was ordered by a London court to pay 9.5 million pounds as security for the defendants' costs before the trial started, and questions have been asked about how Excalibur, a small company run by Wempen and his brother which has few financial records, accessed such sums.

Under questioning from lawyer Jonathan Gaisman, Wempen told the court that the law firm representing him, Clifford Chance, had introduced him to the Lemos brothers.

Gulf Keystone, which declined to comment on the rise in its shares, has been touted as a takeover target for an oil major looking for a foothold in the attractive Kurdistan oil province but the legal battle is cited as an obstacle to any deal.

The company said in October that it expected the court case to run for up to three months.

(Reporting by Sarah Young; Editing by Mike Nesbit)

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