General Discussion on Gulf Keystone Petroleum

Jpgh

What better way to get the sp up (if someone's feeling vulnerable and there is big news - oil law - "imminent") than to say "review of strategic options"?

Has Todd's divorce settlement been set yet? If so then he's in the clear to get a bid and much higher price to replenish the coffers without the ex getting any more.

In reply to djpreston, post #41

Has Todd's divorce settlement been set yet? If so then he's in the clear to get a bid and much higher price to replenish the coffers without the ex getting any more.

Doubt it. AFAIAA his shares are still frozen ...and they haven't sorted the Excaliber suit either.

V difficult to know how its all going to play out......

For those interested GKP Investor Presentations:

DUBLIN - Wednesday 12th October:
http://www.proactiveinvestors.co.uk/register/event_details/124


MANCHESTER - Thursday 13th October:
http://www.proactiveinvestors.co.uk/register/event_details/125

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Half yearly report this morning. Forward strategy worth a read.

http://www.investegate.co.uk/Article.aspx?id=201109140700121869O

fuiseog

Copied in from Fool thread, all thread worth agood  read
http://boards.fool.co.uk/gkp-rns-half-yearly-report-12360823.aspx?sort=whole

Quite a lot to read through in this RNS.
Main new "news"/development for me is the announcement of the sale of GKPs 20% WI (12% post KRG back-in) stake in Akri Bijeel block. I sense a deal is done already here to be announced after result of Bekhme drill (so presumably this too is known to whoever is buying....Valares/Chinese/Korean/Indian IOCs or whoever). How much? Well much of block is undrilled and no appraisal wells to date but it does contain one discovery possibly another at Bechme so could be P50 mean OIIP of 5 billion barrels or 1.5 billion recoverable or 300 MMbbls net to GKP pre back-in. also numerous other structure identified fro drilling so maybe somewhere north of $1 billion to GKP?

Other quick notes

(i) cash position (June 31 2011) is $138 million which is probably enough to cover all G&G/Res Eng/drilling/wages bills for next 6 to 9 months but just about.

(ii) cash burn is as expected considering the co-current drilling programme across 4 blocks and EPS facilities bill.

(iii) Plans for studies for an export pipeline capacity of 440,000 bopd minimum indicates the development plan anticipated for Shaikan.

(iv) Not much revenue coming in to date for EWT crude sales so will need to get a move on with exports or asset sale or else a placing/dulition could sneak up on us smaller shareholders.

(v) Some excellent drill results (Shaikan-4 net pays to date of 278m)

(vi) For Sheikh Adi (GKP 80%).................although there seems to be a huge column (>2000m gross pay) Company says "the natural flow characteristics of many of the pay zones are much poorer than the same zones at the Shaikan Field and artificial fracturing will be necessary. The upcoming series of flow tests will help to confirm this theory. In addition, the eastern side of the field appears to be more folded and thus more likely to be naturally fractured than the western side. Thus, a second exploration well is currently being considered for 2012, prior to commencing an appraisal program for Sheikh Adi".
Due to ownership % and slighly different T&Cs of taxation of Sheikh Adi block then it follows that barrels of oil here are worth (NPV10/bbl) a lot more (maybe as much as 20 to 30%) than those found in Shaikan block hence the considered approach here to ensure a thorough appraisal.

All in all very satisfied with progress to date.

If only the Oil & Gas Law was proceeding with same positive progress......

JPGH

JPGH

Very positive news....Kurdistan focused O&G explorers up across the board on the back of the Exxon news...

http://uk.reuters.com/article/2011/11/11/markets-europe-stocksnews-idUKL5E7MB1Y120111111?rpc=401&feedType=RSS&feedName=marketMovers&rpc=401

http://www.proactiveinvestors.co.uk/companies/news/35501/?

I would not rule out a significant jump to Fridays 175p or so close over coming weeks....

(i) XOM are rumoured to have bought 20% of Shaikan (KRG back-in rights) in addition to the announced 6 blocks they bought into on Friday. KRG may not reveal the T&Cs of deal as they don't have to but they may or it may leak onto internet or XOM may say what it is....this will put a value on GKP's share of Shaikan.

(ii) Also, again rumour, is that Chevron are sniffing around GKP. With Valares deal (producing 2P + to be produced 2C + unexplored upside) and DNO offers from RAK/Petrolia as go-bys then developed/near developed producing 2P values of $5/bbl (Working Interest basis) and this based on Pre Oil Law/Pre XOM deal then GKP's share of Shaikan alone could be taken out for min of $10B or close on $11/share. Throw in Oil Law ratification reality and GKP's other blocks and I can't now not see £7 or higher as a sale price. I was quite pessimistic on GKP take out price last year and would have bitten off the hand of anyone offered >£3....but not any more.

(iii) KRG/Iraq have agreed a draft oil law that is same as the 2007 draft i.e. KRG issued PSCs are legitimate and recognised by Oil Ministry/Iraq Law.

JPGH

Response to press reports - confirm they intend to move from AIM to Main market this year. http://www.investegate.co.uk/article.aspx?id=201202201521067505X&fe=1

Response to press reports - confirm they intend to move from AIM to Main market this year.

As already indicated by them last year.

Buffy

In reply to thebuffoon, post #49

As already indicated by them last year.

There is of course a difference between an indication and a confirmation.

Yours pedantically! ;-)

Unwelcome news:

Iraq's autonomous Kurdistan region halted its oil exports on Sunday, accusing the central government in Baghdad of failing to make payments to companies working there in the latest clash in their long-running dispute over oil rights......

"After consultation with the producing companies, the ministry has reluctantly decided to halt exports until further notice," Kurdistan's Ministry of Natural Resources said in a statement.

"There have been no payments for 10 months nor any indication from the federal authorities that payments are forthcoming," it said.

There is little doubt that GKP (and others) have reserves which can be valued at many times their share price. It was only a couple of months/weeks/days ago that people were talking about £10/12/20share. They might be right but the real question is how do you value something that might be worth £20/share or might be worth £0/share? Just what "political risk" percentage can you apply? It's decided at the whim of an unstable and corrupt (IMO) political regime, with the very oil reserves in question being openly disputed. I've never invested in GKP because I just can't see the majors willing to spend £many billion on any form of a maybe like this one. And by the time it's not a maybe, the potential for multi-bagging will be well and truly in the past. Not one for me....but really WTHDIK, I thought the smart money was on VST! (and acted to that effect!) ;o)

Best,
JS123

I would imagine significant fall out to Kurdistan exposed companies if Exxon do cancel the contracts. They can play this now, if they want, by asking what they get in return for canceling the Kurd contracts, what will the IOM offer to them ? If the IOM offers them something nice I am sure they will perhaps happily cancel their Kurdish contracts.


http://www.kurdsat.tv/news.php?id=634&type=kurdistan


............Exxon last month told the government last month that it froze its deals with the KRG, but the government wants the deals completely canceled.

"We want more action from Exxon," said Sabah Abdul Kadhim, deputy of the Iraqi Oil Ministry's petroleum contracts. "We want Exxon to cancel its Kurdistan deals."

Abdul Kadhim warned that Exxon could face further action if it didn't terminate its deals with Kurdistan. He didn't explain what action would be taken, but he is thought to be referring to West Qurna-1..............

Pro, why would IOM "offer" Exxon something nice? Other IOCs would cry foul and demand same or cancel their own legally questionable contracts (no oil and gas law in place so legal status of all Contracts awarded by whoever in Iraq/Kurdistan remain questionable).
No, Exxon, who have played ALL these scenarios out and KNOW the final outcome have allowed this Kurdistan Contract situation to be played along ornindeed even may have opted not to bid. A more likely answer is XoM will continue in both parts of IRaq and will await IOM to make next move whether with SHastrani at its helm or maybe not if the IRaqi coalition falls apart.
Exxon and going nowhere.
JPGH

Canaccord note today:

"This morning, Gulf Keystone announced Shaikan-4 test results, which achieved an aggregate flow rate of 24,000 bopd over several intervals. Of note is the 14,000 bopd achieved from the Sargelu formation following acidization and retest. Shaikan-4 will now be completed as a producing well tied to the Shaikan-1 and Shaikan-3 Extended Well Test facility.

We currently value Gulf Keystone on the basis of our calculated total NAV of 172p/share using a 15% discount rate and US$90/bbl flat real oil price. We arrive at our 210p/share target price by applying a 22% premium, which accounts for a potential takeout of Shaikan using a 12% discount rate.

Share performance catalyst

Possible sale of Akri Bijeel in the next one to two months, Ber Bahr exploration results in May/June, and a further operations update from Shaikan.

Following the decision not to test portions of the well that appeared to be high quality oil reservoir on the electric logs, and where proven commercial flow rates had been achieved by testing previous wells on the Shaikan block, most of the tests have been conducted in zones which looked marginal on the well logs. Within the total maximum aggregate number, flow rates of about 4,500 bopd have been achieved in a new zone in the Jurassic Upper Sargelu, previously untested, and producible oil has been established in the Cretaceous Chia Gara for the first time, albeit at relatively low rates (130 bopd). Following the conclusion of the Shaikan-4 well testing programme, the well is being completed as a producer and will be tied to the Shaikan-1 and Shaikan-3 Extended Well Test facility.

The Discoverer-4 rig will move to the drilling location of the Sheikh Adi-2 exploration well, north of the Sheikh Adi-1 exploration well, which is expected to spud in June 2012."

Seeing as you highlighted the valuation Pro then consider this....

By using a 12% discount factor for putting potential value on a field that GKP cannot develop themselves and hence will sell on, when the only known buyers are Big Oil (IOCs and semi-NOCs) who value projects, even in risky old Kurdistan, at somewhere between 6% (Chinese, Korean oil companies) and 10%?(Super Majors) Cannacord are showing their incompetence at trying to value ths oil company.
What else have this mob valued incorrectly lately?

JPGH

Long interview, couple of mentions of Kurdistan and the dislike of PSC's.



http://www.iraqoilforum.com/?p=2721

pril 29th, 2012
Abdul Mahdi Al-Ameedi

By Ruba Husari

Abdul Mahdi al-Ameedi, director general of Iraq’s oil ministry’s Petroleum Contracts & Licensing Dept. (PCLD), sheds light on the ministry’s fourth bid round scheduled for May30-31, and the service contract on offer, its advantages and shortcomings, in an interview with IOF editor Ruba Husari in Baghdad. (للنص العربي اضغط هنا)

Q: Offering a service contract t.............

Surprised you didn't link the Kurdistan operational update out today!!!!

Oh it was pretty good. That explains it. :)

http://www.investegate.co.uk/article.aspx?id=201204300700212981C&fe=1

A real multi billion barrel stand alone commercial oil discovery close to major oil and gas infrastructure and close to key markets, followed by successful appraisal programme (and not wet gas, subject to actual confirmation, the alleged discovery that is) and attracting Big Oil interest is just not worthy of a positive post !!
JPGH

Kurdistan players pin hopes on new pipelines Add to ...
MICHAEL KAVANAGH
Financial Times
http://sn.im/24s7k7q