(Corrects units to barrels per day in paragraph 8)
* Islamic State advance raises fears for Kurdistan oilfields
* DNO Petroleum shares down as much as 24 percent
* Gulf Keystone Petroleum down as much as 13 percent
By David Sheppard
LONDON, Aug 7 Shares in energy companies
operating in Iraqi Kurdistan plummeted on Thursday after Islamic
State militants advanced closer to oilfields in the
Oil producers, including Oslo-listed DNO Petroleum
and London-listed Gulf Keystone Petroleum saw
double-digit declines in their share prices as the radical Sunni
militants seized at least three more towns near
While the firms said their Kurdish fields continued to
operate, there are growing concerns about the security risks
faced by firms active in Iraqi Kurdistan, seen as a beacon of
relative stability in the region.
Shares in Oslo-listed oil producer DNO fell up to 24 percent
and London-listed Gulf Keystone Petroleum was down 13 percent at
their lowest point on Thursday, before paring losses.
Kurdistan oil producer Genel Energy also saw a 6
percent fall in its shares traded in London.
"Investors are now taking into account the risk," ABG Sundal
Collier analyst Oeyvind Hagen said, adding it remained difficult
to judge how far into the Kurdish region the islamists could
Gulf Keystone said it had increased security at its flagship
Shaikan field, Iraqi Kurdistan's largest, but added that
production and trucking operations were continuing safely.
DNO operates the Tawke field, in which Genel is also a
partner, which produces around 120,000 barrels of oil per day.
Other Kurdistan oil producers including London-listed Afren
and Toronto-listed Oryx Petroleum - which
operates the fields closest to the militants advance - declined
Two car bombs killed nine people in the Kurdish-held Iraqi
oil city of Kirkuk on Thursday, police and medical sources said.
PESHMERGA PULL BACK
Energy companies have flocked to Iraqi Kurdistan in recent
years, hoping to access what is believed to be one of the
world's last huge conventional onshore oil deposits.
The regional capital Arbil houses many western oil workers
and executives, and has seen an investment boom despite tensions
with Baghdad over the control of oil sales and revenues.
Most worrying for investors this week has been the pullback
of the Kurdistan Regional Government's peshmerga soldiers.
Facing militants freshly armed with U.S.-made heavy weapons
seized from the Iraqi army, the peshmergas have given up several
towns since Sunday.
Witnesses on Thursday said the militants had seized the town
of Makhmur, around 40 km from the regional capital Arbil, but
Kurdish officials told local media their forces remained in
control there and television channels broadcast footage of
peshmerga fighters driving around the town.
The militant group said in a statement on its Twitter
account that its fighters had seized 15 towns, the strategic
Mosul dam on the Tigris River and a military base.
DNO, which describes its prospects in Iraqi Kurdistan as
'the jewel in the crown' on its website, was the first
international energy company to enter the Iraqi Kurdistan region
Production from the region accounted for 55 percent of its
revenue last year.
(Additional reporting by Karolin Schaps and Sarah Young in
London, Ole Petter Skonnord, Terje Solsvik and Balazs Koranyi in
Oslo; editing by David Sheppard and William Hardy)