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.

Up again this am, so staying with it, good read on their November presention, lots happening in next two years.

Sold too early as usual.....

sometimes going to work has it's benefits...lol

Some reading for the weekend.

From Gramacho on III 22.42 5th November



Hi Scaramouche,
I got a call from Ewen today returning my call re the November presentations as he is now back in the UK. It sounds like he will definitely be fronting the Manchester and Dublin presentations. He expects John G and Todd to head back to the US for thanksgiving (week of Thursday 25th Nov).

I raised the question again about updates to the Nov company presentation using Shaikan 3 as an example. He said there was a very good chance that there would be additional news from Shaikan 3 prior to the presentations. He did mention however that any amendments would not say any more than what would be covered in an RNS. This was chiefly due to problems gaining timely approval for presentations. In my experience it is customary in the industry to get partner approval for presentations covering joint ventures so I imagine they would have to pass it by MOL.

Before anyone asks, I messed up and forgot to ask him if his trip involved a well site event. I guess we will get the answer to that at the London presentation.

The 1st Nov update said The well is currently in the Cretaceous Garagu Formation at 1,229 metres, measured depth. Oil shows have been observed both while drilling and also in a core. The wellbore is being conditioned prior to logging the well. Subsequently, the well will be drilled to TD and a 7-inch casing string will be run, finally, the pay interval will be tested.

They would have to be most of the way through the Garagu in order to stop and log since the Garagu is a possible pay section and GKP would not want a large portion of a potential pay section to remain unlogged. They would not want to run logs, drill another 50m or so and then log again; too wasteful and inefficient.

The well is quite shallow so rough schedule from 1st Nov would be:
1.5 2 days to rig up and run logs and rig down

3 days to RIH, drill 8-1/2 hole to TD in Chia Gara, condition hole and POH

1 day to run and cement 7 liner and POH

1 -2 days to run and land the completion depending on the completion design and complexity. I assume they will need to run the ESP GKP owns.

1 day to nipple down BOPs and nipple up the production Xmas tree.

1 day to hook up and test surface equipment

Hence by about 11-12th Nov Shaikan-3 will be ready to produce.

There are numerous uncertainties such as when and how the well will be perforated, whether GKP chooses to conduct a DST though the BOPs or complete it as a production well as the above schedule assumes and whether there is more than one zone to test. This leads to uncertainty in timing.

evertheless, whatever the overall program, IMO we should have first production from one zone by about 12th Nov. A healthy allowance will need to be made for cleanup of drilling fluids assuming they suffered significant losses. So by about 15th Nov they should have a representative flow rate. RNS on 16th just in time for London presentation!

Mind you Ewan did say the timing of news often differs from investor perceptions of when news should be available lol!

Regards,

Gramacho


Followed by.


From BBBS On iii
Good observations scaramouche and Jackozy. I fully agree that all of the evidence - both what has not been said, and also anecdotal - points to a realtime delay in the 1st November RNS of around 3-4 weeks. Not dissimilar from the known delays on Shaikan-1 drilling updates last year.

So scaramouche, I agree that the absence of SH-3 in the the outstanding work programmme for 2010 and 2011 (in the November 2010 Investor Presentation) suggests that SH-3 is already completed.

And I agree with you Jackozy that the schematic on page 10 of the November Presenation suggests that the SH-3 TD is already set in stone (or more specifically, set in the anhydrite seal of the Chia Gara Formation).

Furthermore, if one was to believe that the 1st November RNS reflects a close to realtime status, then one would have to conclude that Wingy is a liar. I do not believe that Wingy is a liar, he has been correct on many things in the past. Indeed, in recent times, he has posted the following on LSE concerning the status of the 3D seismic acquisition:

- 15th October: 'Just a quick update, it looks like the surveying may creep over into the new year, although good progress is being made, weather is starting to impact and by next month it will be one muddy place to- work making it diffucult to even get to the lines.'

- 19th October: 'I cant remember if I posted but the siesmic will slip on into the new year pretty much. Other than that ill get my ears on'

Compare his statements with the 1st November RNS confirming delay into the new year: "Acquisition of approximately 525 square kilometres of 3D seismic data for the Shaikan block is 98% complete and data processing and evaluation have commenced. On Sheikh Adi, approximately 300 square kilometres of seismic data acquisition is 10% complete". Wingy was spot-on again concerning the seismic delay with respect to the RNS of 25th May 2010 which indicated "To date, fourteen per cent of the acquisition has been conducted, with completion expected by September 2010".

However, I do have a bone to pick with Wingy (and/or MikeyA for not forwarding my message) because a few months ago I indicated that the commencement of seismic on Sheik Adi could be the first indication that SA has found oil (the RNS of 25th May 2010 also stated that "The survey follows on from the 2D seismic programme on Shaikan in 2008 and will be extended to cover the Sheik Adi block in the event of encouraging early results on the exploration well at Sheikh Adi"). Come on Wingy, the seismic was being shot from east to west so the 10% complete acquisition on SA must surely be visible on the ground? Never mind, we now know that there are "encouraging early results on the exploration well at Sheikh Adi"!

Then there is Wingy's most recent posts about the Board's visit for a party / celebration:

- 2nd November: 'Big Tea party going on today, lots of guests etc, news crews- may even see something on the telly.'

- 3rd November: 'Sorry could not post yesterday. There is a big VIP visit going on, all the board are in country. Journ'os kicking around etc. It should finish today.'

Gramacho has since confirmed to us that Ewan, John G, Todd et al have all been in Kurdistan this past week. So Wingy is spot-on here as well.

(An aside, do you think that they killed two birds with one stone?:

(a) We know from the SH-1 TD celebration - the biggest field since 1976, reserves so big we cannot even calculate etc - that major discoveries get the party treatment. So was this for Bijeel-1? We already know that Akri Bijeel holds something special because KEPCO has already taken a 20% stake (according to the September 2010 Shamaran map) although GKP are quite coy with regard to whether this 20% is the third party back-in rights or the 20% due on the declaration of commerciality. I guess the latter.

(b) We know that commencemnt of production gets a fanfare as well, both Brave and Tango showed up when they opened the taps on Tawke:
http://www.youtube.com/watch?v=YZ3iyD0zCl8&feature=related
I am sure that the celebration to mark the "FORMAL" start of production from Shaikan will also be attended by more that just our BofD. Maybe it is this event that has been holding up any announcements on Shaikan production? Did they even wait for slippery Micky to join too?)

Anway, back to SH-3. This is what Wingy has told us recently:

- 7th October: 'not a peep on AB but I hear SH3 is a "good un"'

- 14th October: 'Morning all. Just to let you know more testing has been going on SH-3 you can see the smoke from miles away and the local village had been moved out for the testing period. Nothing more at the moment.'

If we believe the 1st November RNS that "The well is currently in the Cretaceous Garagu Formation at 1,229 metres, measured depth. Oil shows have been observed both while drilling and also in a core. The wellbore is being conditioned prior to logging the well. Subsequently, the well will be drilled to TD and a 7-inch casing string will be run, finally, the pay interval will be tested", then we have to conclude that Wingy is spouting porkies with regard to AT LEAST two tests at SH-3 ("MORE testing has been going on SH-3"). And I would also expect at least two tests - one for each of the Samord and Garagu Formations. Why would he lie? With his superb track record and all. I think it's more interesting to believe him for a moment and review how his report of positive tests at SH-3 on 14th October fits very well with the massive surprise 109m Placing first rumoured one day later on friday 15th October and confirmed monday 18th October. We have had no RNS's to indicate change of holdings from any ii, with the obvious conclusion that this was another mates rates or "safe hands" Placing.

If that's not deja vu, I don't know what is. We had confirmation in GKP's 2009 Annual Report that "On 3 August 2009, the Sargelu formation was tested at an initial rate of just over 5,000 barrels of oil per day (bopd) and ultimate rates of almost 7,500 bopd with a gas oil ratio (GOR) of
120 cubic feet of gas per barrel of oil and an oil gravity of 21 to 22 degrees, API. At this point, the Shaikan-1 exploration well and indeed the Shaikan Block itself, based on the robust nature of the initial test, became a success story. (John G's review on page 5). And of course on that same day, 3rd August 2009, there was a mates rates Placing at 9p. And on that same day, 3rd August 2009, I made my first significant post on GKP BB giving my reasons for going close to 'all-in':
http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&threshold=0&action=detail&id=5130567
Please note my opening statement - "Of course oil has been discovered at Shaikan. The main Sehkaniyan reservoir zone (P50: 968 mmbbls) was drilled, logged, (and probably also flow-tested) BEFORE THE 14TH OF JULY 2009" - which I then justified in the remainder of that post. There was no way that GKP would walk from Algeria and hook-up with E-man WITHOUT knowing that SH-1 was a significant discovery. The discovery was finally announced 3 days later on 6th August. I make that a minimum three week delay between realtime (14th July) and RNS time (6th August). I expect no different this time around. Of course SH-3 tests were completed as indicated by Wingy on 14th October. Followed by a Placing the next day. And what did the lucky placees know? That the Cretaceous flows oil. That the DGA report only ascribed 0.75 billion barrels Pmean to the Cretaceous due to missing logs in the Garagu reservoir below. So make that 1.5 billion Pmean for the Cretacous (the missing log interval was in fact more than twice the thickness of the logged Samord interval). That welltest pressure measurements in SH-3 imply that the Cretaceous, like the Jurassic, is also filled to spill. And that the P1 (filled to spill) volumes for the Cretaceous are around 6 billion barrels (the Samord alone is around 3 billion barrels as previously posted by Gramacho). So another 3 billion barrels IN ADDITION to what DGA reported last January. I would buy at 140p too ... I actually made my "last" top-up at 150p on 27th October - very happy with that.

Yes, all IMO only. But I wasn't born yesterday. And I'm still happy to ride much much further on this wonderful gravy train.

GLA,

BBBS

Thats should keep youall busy?
cyril

anything from a BB deserves to be read with great scepticism, so shan't waste my time i'm afraid

True,but without reading you'll never know who to trust or not,so defeating the whole point of a BB.To share info and views,while keeping in mind to treat with caution..
cyril

i'll read stuff here from posters whose opinion i rate by experience .... as i know none from other BBs, and also know the well-deserved reputation of many such sites, i find i have better things to do - btw, there are 4/5 posters mentioned in the above ramble, so you take your pick as to which if any know what the hell they are talking about

over and above that, those who claim to have the inside leg measurement of the CEO's PA, or even to have the CEO's ear are guaranteed to be talking from their fundament

You cynic, cynic!!

In the headlines today :

Gulf Keystone Petroleum started with sell rating at Goldman Sachs

No GKP RNS?
cyril

Surprize---- MOL MOL MOL

http://www.bse.hu/topmenu/issuers/issuersnews/105473481.html
Testing of Bijell-1 well in Akri-Bijeel block in the Kurdistan Region of Iraq successfully closed
MOL Hungarian Oil and Gas Plc. hereby informs the capital market participants that it has finished the
testing of the first well, Bijell-1 in Akri-Bijeel Block in the Kurdistan Region of Iraq. The cased hole test
performed in the depth of 3,804 3,967 m from Jurassic formations produced 2,700 bbl/d 12-13 API
oil through 40/64 choke. Earlier, the Bijell-1 well produced during an open hole test 3,200 bbl/d 18
API oil and 933,000 scf/d (150 boe/d) gas through 48/64 choke from interval 3,646 3,831 m,
Jurassic formations. Finally, a joint cased hole test was performed for the above two intervals (3,729
3,967 m) as well, with a result of 3,743 bbl/d 13 API oil and 618,826 scf/d (99 boe/d) gas through
48/64 choke.
Based on the above mentioned results, MOLs fully owned subsidiary, Kalegran Ltd. as operator of the
block, has notified the Ministry of Natural Resources of the Kurdistan Regional Government of Iraq
confirming the presumed existence of the discovery. The testing results have proven the validity of our
geological model providing a solid basis for planning the appraisal program for this formation. The
exploration of the block entered automatically into the second subperiod of the initial exploration phase
in November 2010, where during the next two years, as a consequence of the results obtained from
Bijeel 1 well, we implement an appraisal program and also continue the exploration of the block
potential with appropriate capex investment.

Goldman Sachs ratings on a few companies out today.



BUYS

Rockhopper started with buy rating at Goldman Sachs
Nautical Petroleum initiated with buy rating at Goldman Sachs
Northern Petroleum started with buy rating at Goldman Sachs
Nighthawk Energy started with buy rating at Goldman Sachs
BowLeven initiated with buy rating at Goldman Sachs
Desire Petroleum initiated with buy rating at Goldman Sachs
Borders & Southern initiated with buy rating at Goldman Sachs
Falkland Oil & Gas initiated with buy rating at Goldman Sachs


------------

NEUTRALS

Tullow Oil downgraded to neutral from buy at Goldman Sachs
Sterling Energy initiated with neutral rating at Goldman Sachs
Valiant Petroleum initiated with neutral rating at Goldman Sachs
Max Petroleum initiated with neutral rating at Goldman Sachs
EnQuest initiated with neutral rating at Goldman Sachs
Tower Resources initiated with neutral rating at Goldman Sachs
Dominon Petroleum started with neutral rating at Goldman Sachs
Cove Energy started with neutral rating at Goldman Sachs
Faroe Petroleum initiated with neutral rating at Goldman Sachs
Melrose Resources initiated with neutral rating at Goldman Sachs

------------

SELLS

Gulf Keystone Petroleum started with sell rating at Goldman Sachs
Encore Oil started with sell rating at Goldman Sachs

Proselenes...at times you are ridiculous trying to deride things....remember when this was 65p...?...hmmmm...

Can't understand why no News released by GKP,they are after all partners?
cyril

i like the fact that goldman is covering gkp. usually when they say "sell" you will be selling and they will be buying.

StockMarketWire.com
Gulf Keystone says it holds a 20% working interest in the Bijeel-1 discovery well which has been successfully tested by MOL Hungarian Oil & Gas.

The cased hole test, performed at a depth of 3,804 - 3,967 meters in the Jurassic formations, produced 2,700 barrels per day (bbl/d) of 12-13 API oil through a 40/64 inch choke.

Gulf says that the results supports its belief that the Bijeel-1 well is the possible southern flank of the potentially significant Bekhme structure.

COO John Gerstenlauer, Chief Operating Officer adds:"Today's announcement by MOL brings the testing of the Bijeel-1 well to a successful conclusion and highlights the clear potential of the Akri Bijeel block, in which Gulf Keystone holds a 20% stake.

"In addition to this further positive exploration development, we are pleased that the Weatherford 842 drilling rig will now be able to be moved to the nearby Shaikan-2 location, as part of the ongoing Shaikan appraisal programme."

Heavy oil !

Thats the problem. By the time a production license is rubber stamped and everyone and their dog takes a cut there is little left to make a profit with, especially if the oil is heavy.

Unlike say XEL who have heavy oil but also have excellent tax incentives from the government and the ability due to that to turn a very good profit, Iraq is a different kettle of fish and its going to be difficult to turn a decent profit per barrel, what do you think ?

1 US$ per barrel profit ? Maybe 2 ? If it ever gets sorted ?

Haven't paniced here as Pro would have liked, sp seems to be holding up ok, maybe on the back of new drilling at Shaiken2 prospect......imo

Comment from Goldman Sachs today :

Gulf Keystone (GKP.L): Vast volume potential already in the price; Sell

Upgrades to reserves estimates at the companys Shaikan field in Kurdistan as the oil water contact is sought are a distinct possibility in our view. We believe, however, that the share price is reflecting a positive outcome to such a revision fairly aggressively. We give the company credit for over 1.6 bn net, risked barrels of reserves in Shaikan (prior to political risking for Kurdistan) on a net basis after accounting for the KRG back-in ahead of the P10 case assuming a 30% recovery rate. We believe that the potentially huge size of Shaikan could be of interest to strategic buyers (i.e. NOCs) and therefore see the potential for M&A involving the stock. Offsetting these potential attractions, however, is our more bearish view on Kurdistan relative to the market and relative to other regions as a result of the uncertainty surrounding exports and the licences granted by the KRG; we typically apply an additional 50% discount to the valuation of barrels in the region to account for this uncertainty.

Therefore despite the volumes we attribute to the stock and the M&A potential we include in our valuation, we continue to see more attractive upside in other stocks in our coverage universe. We also believe that Heritage offers a less expensive way in which to gain exposure to Kurdistan and therefore initiate coverage of Gulf Keystone with a Sell rating and a 12-month price target of 160p.

.

We will see.,.