http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

This should keep everyone interested:
Gulf Keystone announces the arrival of the initial loads of production facility equipment to the Shaikan field location and the commencement of the rig move by the AOS Discover-1 drilling rig to the Sheikh Adi-1 exploration well site.



The first pre-packaged production equipment units have arrived at the production facility construction site near the Shaikan-1 well location. This equipment together with the oil storage tanks and truck loading facility will form the basis of an 18,000 bopd capacity oil production treating and truck loading facility.



This facility will be used during the long term production testing of the Sargelu (upper Jurassic) oil reservoir in the Shaikan-1 discovery well (reference 12 July 2010 announcement with respect to workover rig operations). Production testing will last for at least 18 to 24 months and accumulate valuable data related to reservoir characteristics and oil recovery factors. The test volumes (estimated at 8,000 to 10,000 bopd) will generate Gulf Keystone's first oil production revenue in Kurdistan.



In addition, the AOS Discoverer-1 drilling rig has arrived at the Sheikh Adi-1 well site and rig up is 10% complete. This well will be Gulf Keystone's first exploration well on the Sheikh Adi block in which the Company has an 80% working interest. The well is planned to spud in August and will target the Cretaceous, Jurassic and Triassic formations. Planned total depth, depending on well results, is 3,850 meters and drilling is expected to take 6 months. The Company's estimated oil-in-place resource potential for the Sheikh Adi structure is in excess of one billion barrels.

Would have to be tempted at 60p

in 4 months the company will be producing 10,000bopd and selling???
that got to be worth double 60p

todd is not telling the whole picture. he is dishonest.

who is todd and what do you have to support your allegation?

cynic todd kozel is executive chairman.

assumed he must be something along those lines, but main Q not answered

has some "form" from the days when GKP made some highly speculative assesments of oil/gas reserves in Algeria a couple of years ago.

thanks hali .... another wannabe timis perhaps

A bit of patience is needed here,......we were over 120p not so long ago....if then you could have bought at this price : there would have been a scramble !.

'A bit of patience'!!!! These have been in steady decline for the last 10 months, with no obvious sign of reversing the trend! I suspect even certain biblical characters would have lost patience by now!

At the top I sold out but have been back in for several months,.....not so many shares... the testing of Shaikan is resuming.....that's good and more wells are being drilled.....

Up 12% on very vague bid rumour.

Looks like my 60p entry is out the window then!

Now up 23%. Maybe there is some truth in the rumour.

or one lemming following another .... i already hold (at a loss!) so am delighted

on second thought - 23m now traded .... that's an awful lot of stock!

4m is the norm - 27m traded today!
i guess watch this space, but one can easily be led astray by such volumes

Nice to see this rising....about time...incredible amount of oil discovered...

Food for thought?

dalesman - 24 Jul'10 - 00:31 - 27113 of 27402


Blue Sky Thinking!

From what has been released from the DNO bid the price / barrel achieved appears to be around $6 this roughly equates to 8.5% using $70 oil which if plugged into the Daniel Stewart NAV, ( this uses reduced entitlement but otherwise uses the same parameters and variables set out in the general NAV in the header) gives a figure that comes out at 2.89.

The way Daniel Stewart uses to calculate the NAV applies the ASIP tax at the front of the calculations. Thus Shaikan is reduced from 51% entitlement down to 30.6%. By using the reduced block entitlement you can then apply the full PSC % which should be 15% . The DNO bid reduces this 15% down to around 8.5% on $70 oil. This seems to allow considerable upside for the bidder while giving a fair value to DNO. As I mentioned above plugging 8.5% into the NAV gives IMHO 2.89.

This figure does not allow anything for future finds / appraisals which will increase the OIP over the 4 blocks. As appraisal wells are drilled there will be a movement from oil in place figures (and associated recovery factors) to 2P reserves. The COS will also rise, providing of course that the drill bit continues to be successful

So Lets tweak the NAV and apply some blue-sky thinking!

Using John Gerstenlauer statement that GKP expect to achieve industry standard recovery rates of around 33%, increases the NAV significantly.

2.89 becomes 3.76.

Still working with known figs (7.950 billion at AB UBS note, 4.185billion at Shaikan DGA figures, 1.9 billion for BB Genel pre drill estimates and a measly 1 billion on SA- GKP) and increasing the Chance of Success at Shaikan and AB to 85% produces 4.20.

A bid at 4 therefore seems to be cheep and cheeky now doesnt it, as NOTHING is included in the figs for further upside due to drill bit revelations or an increasing oil price.

Lets start to factor in a few upside possibilities starting with Shaikan. Lets say that Shaikan is full to spill 22 billion has been mentioned but lets not be greedy, lets use 18 billion. We now get to 11.20 !

ARE YOU GOING TO SELL AT 3 NOW?.

But wait, we have not finished with Shaikan yet. Lets factor in 6TCF of gas (DGA figs) and that should conservatively add another 1.50 - 3 per share we will leave this out for the moment but return to it later.

Now lets have a look at Sheik Adi.

Using Daniel Stewarts method, the entitlement is reduced to 48%. 1 billion seems to me to be vastly down beat if Shaikan is full to spill.

We know that GKP believe that SA is an extension of Shaikan. Lets err on the low side and attribute 10 billion OIP. The NAV now jumps to 15.40. However if we use say 70% COS we get 17.27. Lets bring it into line with Shaikan and attribute a COS of 85% now we get 18.27.

ARE YOU GOING TO SELL FOR 3 NOW?

And so we come to block 4: BerBahr

We learn that this could be the biggest block of all. Lets not be greedy, lets equate it to Shaikan a much smaller anticline. We will give Ber Bahr 18 billion OIP and we are up at 22.43. Apply a 85% COS and we get 25.38

Now, lets tidy up Akri Bejeel.

UBS have stated 7.95billion OIP but again this is based on the smallest of the three targets . Let us double that to 16 billion. The NAV has just risen to 26.40.

All blue sky thinking! Yes indeed but is it really far from the truth?

The numbers add up to 62 billion barrels of OIP. It has been conjectured that the true fig is nearer 100 billion. Ill leave you to work that one out!

And so we return to the gas.

25TCF (a reasonable assumption if Shaikan has 6TCF) of associated gas could add between 5 10 to the figs. Remember the Nabuco pipeline is coming!

AND MANY HOLDERS WILL BE SATISFIED WITH 3 NOT ME!

Remember these figs are after tax and allow the next man around 6.5% on top of these figs thats 15% as opposed to 8.5% all under the KRG PSCs

One last thing, if instead of $70 oil price assumption $80 is used, $30 is achieved!
$90 oil and we have 33.90

To paraphrase Mrs T sell if you must , this punters not for selling well not at 3!

AND THEN LADIES AND GENTLEMEN THERE IS THE UNEXPLORED PERMIAN!

Please rework my figures, please do your own research the figs above are for my interest only and it is my imagination that is applying the figs they represent just one possible scenario. Some would say the picture I have painted is nowhere near the best case scenario, others will naturally disagree!

Remember, it is your decision, and your decision alone to sell hold or buy and no advice is offered from this quarter on any of these decisions! All the above is my opinion only and my opinion has been known to be wrong!

Only questions are posed!
BUT arent they good ones! :0)

Well thats passed a pleasant hour on the Ben McCree , after a good day on the markets as we travel at 19 knots towards England from the IOM - the first leg of the journey as we start our holiday.


Sweet dreams and kind regards

Dalesman

PS

FB if you think it helps, please feel free to reference the post in the header next to the NAV. Im happy for the post to be reposted so long as it is done in its entirety with the caveats intact!

And to all GKP longs, - when you are tempted to sell just mull over the validity of my figures, they may just help!
cyril

Today's Mail thinks the Chinese are coming....

http://www.dailymail.co.uk/money/article-1297230/MARKET-REPORT-Microsoft-ARMs-licensing-agreement.html?ito=feeds-newsxml

"Heavy speculative buying amid revived talk of a possible bid from China saw Gulf Keystone gush to 100p before closing 15p, or 21 per cent, higher at 84.75p. Turnover swelled to almost 27million as punters responded to gossip that a deal hungry Chinese conglomerate is anxious to get its hands on the oil explorer's Shaikan prospect in the Kurdistan region of Northern Iraq."

Abd from the times,


Market report
The TimesPublished: 24 July 2010Markets Business
...That was greeted by a healthy degree of scepticism from wary traders, who said they had heard it all before, but nevertheless GKP rose 15p to 85p. Another of Salamander Energys test wells in Vietnam proved dry. The oil and gas explorer dipped p...

cyril