October 15, 2012 / 8:34 PM / in 8 years

Excalibur tells court Gulf Keystone boss not credible

LONDON (Reuters) - The chief executive of Gulf Keystone (GKP.L) should not be considered a credible witness in a dispute over prized Kurdistan oil fields, a lawyer for Excalibur Ventures, which is suing the oil explorer, said on the opening day of the trial.

Gulf Keystone is locked in a battle to defend its ownership of giant oil fields in the Kurdistan region of Iraq after Excalibur launched legal action claiming it is entitled to a 30 percent stake of the assets under a collaboration agreement.

Gulf Keystone has long been touted as a takeover target for an oil major looking for a foothold in the Kurdistan oil province, and the legal battle has often been cited as a potential obstacle to any deal.

The court heard from Excalibur’s lawyers how Rex Wempen, who formerly served in the U.S. Army and set up Excalibur in 2003, trekked from Turkey into Kurdistan during the second Gulf War. Two years later, he introduced Gulf Keystone to the oil license opportunity in Kurdistan, and a collaboration agreement was established.

In his opening argument representing Excalibur, lawyer Simon Picken questioned the credibility of evidence provided by Gulf Keystone’s chief executive, Todd Kozel.

Picken cited a letter that Kozel in an earlier witness statement said he sent to Kurdistan’s natural resources minister, Ashti Hawrami, in 2007, asking the minister to approve Excalibur as an exploration partner.

Picken said that last week Kozel changed his witness statement, saying he believes his recollection that he sent such a letter was incorrect.

Lawyers for Gulf Keystone and private U.S. firm Texas Keystone, a company founded by Kozel and which owns a small stake in Gulf Keystone’s Shaikan field, will lay out their defense later in the week.

Contesting Excalibur’s claims, Gulf Keystone will argue that the Kurdistan Regional Government did not permit Excalibur to participate in the exploration license and that Excalibur could not fund its share of exploration costs.

Gulf Keystone is listed on London’s junior market, where it is one of the biggest companies with a market capitalization of 1.78 billion pounds ($2.9 billion). Its prize asset in Kurdistan is the Shaikan field, which could hold up to 15 billion barrels of oil - a volume which would make it one of the largest discoveries made anywhere in recent years.

($1 = 0.6230 British pounds)

Reporting by Sarah Young; Editing by Leslie Adler

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