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.

Sold out at 189p, thats enough for a day trade.

More than likely its a false rumour created so the big boys can dump stock into PI buying and T-traders.

Just like DES before the first Rachel failure where it went to 170p and then crashed in the days following.

Is it a real rumour ? or a false one to allow "friends" to dump stock before bad news comes along ?

No failures for GKP,no concern of SP short term tis not an issuefor me, as i rather be in than out.
cyril

At a guess ...more to come tomorrow morning.....

.....Pros /DES lost a larger percentile in the three days prior tothe Rachel drilling result being made known than in the actual announcement via RNS itself .........via the old pals act ect ect ... ....

This is not a rumour... 220p tomorrow.

my chaps in the market had already kept me informed .... at cost i was only running a 75% stake, but am certainly a happy bunny both here and on the day in general

Perhaps it will break the 200p tomorrow morning...should do...fantastic share...

It seems that they had another visit ,the last couple of days from a bunch of ANALYISTS,now have they got word back???
cyril

pro's licking his wounds here.....think he called it a load of sh*t not long ago......5 figure profit is not a load of s....lol.

Post from dalesman,glas i didn't write it.
cyril

Blue Sky Thinking 2 or Red Sky at Night!

Its been a while since I put out my Blue Sky Thinking post. Many of the blue sky assumptions have now come to pass and I thought it may be an opportune moment to update the NAV and revisit my post.

The newest NAV is here
http://img560.imageshack.us/img560/5419/screenshot20101102at212.png


The main updates are:

1. Shaikan has been increased to 7.2billion from 4.2b in line with the Miraboud note. Akri Bejeel remains at 7.95billion OIP inline with the UBS note.
2. The recovery factor has been set at 33% re John Gs guidance.
3. The base / barrel price is still $3.5 (my NPV 10) assumption.
4. The chance of success at Shaikan and Akri Bejeel has been set at 75%
5. An additional OIP 2.25 billion barrels have been added for the shallow zone (Shaikan 3) drill. This is the mid case scenario
6. 5TCF of gas have been included for the Triassic with a boe of $35 as opposed to the $70 oil price assumption used for oil.
7. Sheik Adi has been increased to 3.75billion in line with guidance (half that of Shaikan)
8. Ber Bahr remains at 1.9billion OIP per pre drill guidance.
9. This gives a base case valuation of 5.09

From here on in I will update the old post, which started off with the following



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.

***As you can see the updates have almost doubled the NAV before we actually get underway!

Applying the DNO 8% to the new NAV gives us 8.55 as opposed to 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.

***Well OK, I have now adopted the 33% in my standard NAV ! ***


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.
.

*** Using the new base NAV and applying this tweak we now get 9.12 ***
..
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.

*** Indeed, a bid of 8 now seems to undervalue GKP!

Any potential bidder running their sliderule over GKP will need to include these calculations in their M&A plans and realize that we have already done this kind of valuation.

Returning to the NAV: ****
......................................................................................
Lets increase the COS on the Shaikan drill to 70% from 60% and do the same for the Triassic Gas. We are now up to 9.40
....................................................................................

**** With the new NAV we now get 14.63 ****
..
ARE YOU GOING TO SELL AT 3 NOW?.

****From all the posts on the GKP boards I now can say with some certainty that most holders will say quietly say No!****

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.

**** I now include 5TCF in the base nave but tets factor in the upper guidance of 10TCF this is equivalent to 1.666 b boe and the NAV rises to 15.72 using 35 boe price assumption****


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.

***Increasing Sheik Adi to 10b in the new NAV gives 19.15***

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.

*** New valuation 21.41***

ARE YOU GOING TO SELL FOR 3 NOW? *** Silly question! :0) ***

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

*** Ber Bahr 27.90 ***

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.

***Akri Bejeel 28.90***

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

The numbers add up to 62 billion barrels of OIP.

***Since my first post 60billion barrels has been mentioned in a broker note so perhaps this too is no longer blue sky thinking***


It has been conjectured that the true fig is nearer 100 billion. Ill leave you to work that one out!

***Using back of a fag packet this would equate to
around 46.31***

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!

***Or I suspect you :0)***


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 ***36.73***

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!

No advise offered!
Only questions are posed!
BUT arent they good ones! :0)


Sweet dreams and kind regards

Perhaps we have moved on from Blue Sky Thinking to Red Sky at Night investors Delight!

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!

More down to earth.
cyril


Gulf Keystone improves oil discovery test rate in Iraq
11-08-10 Gulf Keystone Petroleum reported a stable test rate of 1,250 bpd of 19.7 degrees gravity oil at the Shaikan-1 discovery in Iraq's Kurdistan, up from 128 bpd on a test in 2009.
The natural flow, which the company said resulted from a much-improved test setup, came from the Jurassic Mus formation at 1,627-67 m at 50 psi flowing wellhead pressure with a gas-oil ratio of 10 cf/bbl.

Furthermore, tests using a low-capacity electric submersible pump resulted in rates up to 2,250 bpd of oil.
The workover rig will now test Jurassic Sargelu at 1,450-1,510 m and then configure the well for long-term production testing. The 283 sq km Shaikan block is 90 km northwest of Erbil.

John Gerstenlauer, chief operating officer of Gulf Keystone, said, "This retest of the Mus formation demonstrates that even this very low GOR zone is capable of substantial natural flow production rates when properly configured".
"In addition, it gives us further encouragement for future development, having demonstrated significantly increased production values even with a low capacity ESP."



Source: http://www.ogj.com

IF a bid does materialise at 220 and there is no counter-offer or likelihood of same, then 200/210 is about the upper limit, bearing in mind that there is always a "time discount" of 5/10%

From davy,interesting read.
cyri

lREAD THIS



Mornin all, sorry been a bit quiet of late but have been 'under the weather'.

But cannot resist highlighting some new stuff as follows:

- page 8: the 3D seismic footprint encompasses Hunt's Simrit-1 well, goes west into Komet's area, has a healthy overlap with Atrush to the north, and of course goes north-west to give full Sheik Adi coverage. Now I can understand the Atrush overlap (don't want those guys claiming more than their share), and likewise the Komet coverage of the Shaikan western extension. But the extension covering Hunt speaks much louder than that MEES report a couple of months ago saying that Simrit-1 was dry. This 3D confirms (to me) that Simrit-1 really was the FIRST Shaikan appraisal well. It would seem that Shamaran also agree:
http://www.shamaranpetroleum.com/i/pdf/Kurdistan_Oil_Gas_Activity.pdf
Note that Hunt was "Testing" as of September 2010! Given that the Simrit-1 rig was already at SA, Hunt must have either found themselves a WO rig or already have an EWT running?? Doesn't sound like a duster to me!

- page 11, good of them to finally give the Bijeel-1 pressure data point (and the Butmah-15 well data point) to us after all this time; a shame that they saw fit to give heads-up to Mirabaud (and clients) first. The case for Jurassic filled to spill is evidently extremely likely (as Mirabaud concurred). I can in fact independently PROVE that Jurassic is filled to spill but that post is still saved for a special occasion (I also hate shorters).

- pages 14 & 15: as before SH-4 is still at the 'D' location, west of SH-1. But we now see the relevance of the tender at the 'G' location, this is the location for SH-5. Interesting that GKP see a need to 'protect' the Shaikan interest at the northern end (keeping a close eye on Atrush development?)

- page 17: in case people need more spelling out about the importance of Headless Horseman, note that the BB structure (circled in white) spans all three blocks (HH, BB and SA). Say no more. Just get that Block Todd.

- page 19: Akri Bijeel seismic section, hold this thought for now, it speaks volumes to me about why GKP told us that Bijeel is an EXTENSION of Bekhme. No time to expand right now - I will, soon, I promise. Maybe MOL were not so dumb after all when they drilled the smallest structure ... When we finally get Bijeel-1 OIP it may surprise some ...

- page 20: great to see both BB-1 and Bekhme-1 firmly on the programme.

- page 6: GKP still saying that Akri Bijeel is 80% MOL, 20% GKP undiluted. Check out the September 2010 Shamaran map (link above), who indicate that the current interest is:
MOL: 64%
GKP: 16%
KEPCO: 20%
So has third party interest been awarded to KEPCO? Or does KEPCO's 20% signify that Akri Bijeel has been declared commercial? I wish good luck to all fellow investors who may try to get a clearer answer than I got from GKP on this matter!

All looking good to me, good luck all,

BBBS

We all know that the amount of oil in the ground is simply staggering it seems...but how far is this sp going to go ?.....not a clue myself.....200p plus..now...phew !....

We just need that goverment formed,which looks to be near,but then it's IRAQ?
cyril

the only thing near in Iraq, as in Pakistan, is the outstretched hand for your wallet

Ahhhh... this rumour is all false... nobody has made any bid at all.

such rumours often are, though just because there has been no announceent of same does not mean there is not one in the wings either

cynic just another ramp,but at least they have produced 4 truckloads of oil!

probably, but it's actually not a bad stock to have in the portfolio

btw, what miners do you rate ..... i have CEY and KAH (and POG - oh dear!)