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.

Also.

TOKYO (Thomson Financial) - Brazil's state-run oil firm, Petroleo Brasileiro
SA (Petrobras), will acquire a majority stake in Nansei Sekiyu KK, an Okinawa
refinery affiliated with US oil giant Exxon Mobil Corp, the Nikkei reported on
Friday.
Petrobras will acquire the entire 87.5 percent interest in the Japanese oil
refiner owned by Exxon Mobil subsidiary TonenGeneral Sekiyu KK, the business
daily said.
The two companies are likely to reach an agreement valued at several billion
yen this month, it said.

Anothe r4 million traded today,looks to being held at 190p,any attempt to break out,is
greeted with sustained selling?

ON THE MOVE. 195p+

I think we reached a high of £220 in a days trading before now, I doubt that GKP can be held back much longer.

order book looking very strong again too

Looks like news is coming :)

200p broken.

that's a bit premature, but it's trying quite hard which is encouraging in a dull market

It all kicked off at 9am.

So possible someone at broker/nomad/something like that became aware of information and slipped off to the toilet to have a pee (eg SMS their buddies)

RNS coming later today or tomorrow one suspects ;)

hard to know ..... i doubled up this morning at about 196, so it'll be either champagne or sackcloth in due course ..... meanwhile, though price is now nicely through 200 (it needs to hold), the order books remain very strong at 3/1

Shooting up......any news anybody ?....

Genel who is the Ber Bahir operator is presenting next Monday.

http://www.macquarie.com/dafiles/Internet/mgl/msg/iConference/documents/Europe/ExplorersAgenda.pdf

i don't think that has too much to do with today's rise, as otherwise it would be reasonable for AFR to have reacted similarly

Looking at the trades 202.75/203.5p,their is a gap up to 220p+yo fill,just maybe ?

just for info, i attach below the full release of 20th december re shaikan 6 appraisal

20 December 2011
Gulf Keystone Petroleum Ltd. (AIM: GKP)
("Gulf Keystone (LSE: GKP.L - news) " or "the Company")
Kurdistan Operational Update
Spudding of Shaikan-6 Appraisal Well
Gulf Keystone is pleased to announce that the Shaikan-6 appraisal well has spudded on the Shaikan block in the Kurdistan Region of Iraq on 16th December 2011.
Shaikan-6 is the fourth deep appraisal well to be drilled on the Company's major oil discovery with independently audited gross oil-in-place volumes of between 8 billion barrels and 13.4 billion barrels calculated on the P90 to P10 basis with a mean value of 10.5 billion barrels.
Shaikan-6 is being drilled 9 km to the east of the Shaikan-2 appraisal well to an estimated total depth of 3,800 metres subject to technical conditions. Shaikan-6, the last appraisal well to be drilled as part of the Shaikan appraisal programme, will target prospective intervals in the Jurassic and Triassic
Shaikan-6 will be followed by the Shaikan-7 exploration well in 2012, which will target potential untapped resources in the lower Triassic and the Permian, the Company's deepest undrilled horizon to date.
Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively.
John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:
"Shaikan-6 is the tenth well to be drilled across the Company's four adjacent blocks and the seventh well to be drilled on the blocks which Gulf Keystone operates in the Kurdistan Region of Iraq. This number of completed and current exploration and appraisal wells comfortably places Gulf Keystone among top three operators in the region. As part of our high impact drilling campaign, planned and funded through 2012, the Shaikan-5 and Shaikan-6 appraisal wells will provide us with better understanding of the flanks of the massive Shaikan structure and its yet untapped resources."

What would be a realistic value, £5+?

qui sait?

Depends on what part for sale,but £8 has been mentioned shailkan alone.

O/Topic PTR are to present on Monday,5 weeks after the OilBarrel one..They were 3 weeks out of synic for news of the fraccing of 5 wells,why present so close unless they
have something worth adding?
Depending on how the fraccing went,3000/4000bopd possible,which if achieved should give some well needed boost to the SP?With 90million P2 reserves and a lot more to prove up,this imho is well undervalued?

Another off topic, but might have bearing on
other oil cos prospects/valuations.
Cove Energy has put itself up for sale.

Something for the weekend?

From Bah Bah Black Sheep on triple eye


Much talk lately about a deadline for the KRG to award Back-In Rights (BIR) to a third party Company. But, IMO, thoughts about the apparent PSC deadline of 31st December 2011 are misplaced. Furthermore, may I be so bold as to say that focus on 'just' the BIRs is also misplaced! As Bill Clinton might have said - 'It's the 20%, Stu-pid'. Let me try to explain:



1. KRG 20% entitlement and BIR

The KRG have an OPTION for a 20% entitlement in all four of GKP's blocks; in principle, the KRG may exercise this option once commercial viability has been proven. The KRG's 20% optional entitlement is often referred to as a 'carried interest'; this description is accurate during the Exploration and Appraisal phases - where the participating Oil Companies pay for all costs in proportion to their respective 'Working Interests', (the KRG pays nowt). HOWEVER, the KRG's 20% is NOT 'carried' during the Development phase - once the Field has been declared Commercial, (specifically, from the "First Commercial Declaration Date"), the KRG have to pay their 20% share of the forward Development costs. THIS IS IMPORTANT (imo!) and I will come back to this point again later on in this post.

In addition to the KRG's 20% entitlement in all four blocks, the KRG may also award BIRs to a third party Company - but only in the Shaikan and Akri Bijeel blocks. Shaikan BIR =15%. Akri Bijeel BIR =20%. The PSCs show that the deadline for the KRG to award the BIRs falls within the Exploration and/or Appraisal phases; consequently, dilution of Working Interest due to BIR (in Shaikan and Akri Bijeel), precedes the dilution due to the KRG's 20% entitlement (indeed, the latter dilution will not take place if there is no commercial viability!). However, we have to be positive and ASSUME that there will be commercial discoveries when calculating the final fully-diluted Working Interest in each block. IMO, the final fully-diluted Working Interests in each of our blocks are as follows:


SHAIKAN:

Current Working Interests:
GKP: 75%, MOL: 20%, TKI: 5%

Post 15% BIR (multiply above WI's by 0.85):
GKP: 63.75%, MOL: 17%, TKI: 4.25%, BIR holder: 15%

Post 20% KRG entitlement (multiply above WI's by 0.8):
GKP: 51%, MOL: 13.6%, TKI: 3.4%, BIR holder: 12%, KRG: 20%


AKRI BIJEEL:

Current Working Interests:
MOL: 80%, GKP: 20%

Post 20% BIR (multiply above WI's by 0.8):
MOL: 64%, GKP: 16%, BIR holder: 20%

Post 20% KRG entitlement (multiply above WI's by 0.8):
MOL: 51.2%, GKP: 12.8%, BIR holder: 16%, KRG: 20%


SHEIKH ADI:

GKP: 80%, KRG 20%


BER BAHR:

GKP: 40%, GENEL: 40%, KRG: 20%


Some general comments and observations on the above as follows:

- For Shaikan, GKP have informed us in Investor Presentations that "Texas Keystone Inc. (TKI) holds its interest in trust for GKPI pending transfer of its interest". Consequently, GKP's final fully diluted interest - including TKI's share - will be 54.4%

- For Shaikan, the KRG controls a final fully diluted interest of 32% (BIR 12% + KRG 20%). And, to state the obvious - 20% is onehellava lot more than 12% ... I'll come back to this point again later.

- For Akri Bijeel, the KRG controls a final fully diluted interest of 36% (BIR 16% + KRG 20%)

- For Sheikh Adi, the KRG controls a final fully diluted interest of 20%

- For Ber Bahr, the KRG controls a final fully diluted interest of 20%



2. BIR: what, where, who, when?

What and where is easy: BIR is 15% at Shaikan and 20% at Akri Bijeel.

Who and when is, in the absence of recent disclosure, a bit more tricky... We have to go back nearly eighteen months to find GKP's last 'official' statement on this matter in their RNS of 9th August 2010:

" The parties to the Shaikan Block and Akri-Bijeel Block PSCs have agreed to extend the period that the KRG may exercise the Option of Third Party Participation to enable the KRG to nominate a Third Party Participant until 30 June 2011."

Moving then to only six months or so ago, we have an 'unofficial official' statement from the 2011 AGM by way of theperpetualoptimist:
http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&action=detail&id=8405431

"The KRG has told GKP that KNOC have the BiRs to Shaikan but this has not yet been officially confirmed. The deadline of 30th June for the BiRs allocation is still in place."

Then we can refer back to just two months ago and that 'special' Presentation in Manchester where Chris Garrett let slip about "the KNOC Back-in Rights".

And finally, now that the KRG have kindly published the PSC's, we can confuse ourselves even further with reference to the additional deadline of 31st December 2011 (Article 4.11A).


FWIW, my own comments and conclusions concerning the current status of BIR are as follows:

- since September 2010, (yes, the past 15+ months), Shamaran's Kurdistan Activity map has shown the "Post 20% BIR" status for Akri Bijeel (refer tabulation above) with the particpants being: MOL 64%, GKPI 16%, KEPCO: 20%. 'KEPCO' is Kurdistan Exploration and Production Company. I emailed GKP IR in September 2010 and was tersely informed that the status remained as per their RNS of 9th August 2010. They stated categorically that neither the 20% BIR nor the 20% KRG entitlement had been awarded at Akri Bijeel, and that investors would be duly informed by RNS when the status changed. There has been no RNS on this matter since that time - hence the status has not yet 'officially' changed. i.e. the KRG have not yet informed GKP. But the Shamaran rumour-mill map does in fact suggest that the BIR have been, perhaps 'temporarily', placed in the care of KEPCO (at least as far as Akri Bijeel is concerned).

- given that GKP have NOT issued an RNS concerning BIR in 2012 thus far, the second contractual deadline of 31st December 2011 would appear to be non-relevant. The primary contractual deadline was 30 June 2011, and based on GKP's comments at the AGM ("The KRG has told GKP that KNOC have the BiRs to Shaikan but this has not yet been officially confirmed") and Chris Garrett's slip ("the KNOC Back-in Rights") it seems likely that the KRG have also 'temporarily' placed Shaikan's BIRs into the care of another Kurdistan Company. Nothing to do with Korea - Kurdistan National Oil Company was mooted several years ago as being on the wish-list of the KRG (and why not, every self-respecting country should have one!). IMO only of course. But the FACT - as evidenced by the absence of an RNS on this topic - remains that the KRG have still not 'officially' informed GKP about the 'final' recipient(s) of the BIR's.

- The KRG have a perfect role model in Exxon when it comes to 'disclosure' (or rather, the lack thereof). Does anyone seriously expect that either the KRG or GKP will make any kind of announcement in this area - ahead of someone managing to find their tongue?



3. Exxon

Thus far, we only have the 'known knowns' - that Exxon have signed PSC contracts for six Exploration blocks in Kurdistan. Even the areal extent of each of these six blocks is 'open to interpretation' if you compare the maps of Shamaran and PCI:
http://www.shamaranpetroleum.com/i/pdf/Kurdistan_Oil_Gas_Activity.pdf
http://www.petroceltic.ie/~/media/Files/P/Petroceltic/presentation/2011/kurdistan-update.pdf?

- Al Qush is due west of Shaikan, and consequently must be viewed as 'extraordinarily prospective' (at least at the eastern end)! Shaikan definitely runs into Al Qush. Indeed, IMO, as much as 20-25% of the Shaikan anticline volumes may spill over into Al Qush. And, IMO, the pathway that links Shaikan with Sheikh Adi also runs through Al Qush. I have commented about the Al Qush connection in many previous posts - I will endeavour to make an update post at some point to further justify those two IMO's. The previous 'occupant' at Al Qush was Komet with an 80% interest - the implication being that the KRG retained their usual 20% entitlement. However, according to Shamaran's latest map, Exxon is now the proud owner of a 100% interest - hmmmm, a change of 'policy' by the KRG with regard to their usual 20% entitlement? On a separate matter, some sources report that Al Qush is in "disputed territory", (between the KRG and ICG), but I find this hard to believe given that the KRG have controlled this area since 2003. In the limit, the KRG could always 'pull-back' from the eastern-end with no loss of anticlinal contents if you know what I mean, (also refer next section on Baeshiqa for other similes).

- Baeshiqa is a 'new' block assignment south of the Hunt/Afren Ain Sifni block. This block is also allegedly in "disputed territory". But it may not be as 'disputed' as some people make out - because there is a huge difference in block areal extent if you compare the Shamaran and PCI maps. There is also a large difference in the Ain Sifni block areal extent between the Shamaran and PCI maps - the PCI map shows that the western end of Ain Sifni has been 'released' or 'given-up'. The PCI map of Ain Sifni is correct - just go to the Afren website and check if you don't believe me. So I would also conclude that the PCI map is also more likely to be correct (than Shamaran) with regard to the Baeshiqa block areal extent. Why is this important? Well, it would seem that the KRG have already voluntarily pulled in their horns and moved their block boundaries back behind the de-facto 'green line' (the present-day facts-on-the-ground boundary delineating definite Kurdish controlled lands). Nice move KRG - Shari will be p155ed when he finds out that he's been mouthing off about nothing again. Further corroberation can be found by viewing the surface topography of the small area shown in the PCI map - it's hilly (has got the anticlines in it lol) - whereas the rest of the alleged block area according to the Shamaran map is in the Nineveh plains. (Without wishing to offend anyone, my simplistic view is that the Kurds are 'hill/mountain people', whereas the deserts and plains have been historically inhabited by the Arabs, Assyrians and Turkmen). Finally, again no sign of Kurd partners (Exxon 100% according to Shamaran).

- Qara Hanjeer, a very nice looking looong block, sandwiched between Kirkuk (oil) and Chemchemal (gas/condensate). Nice neighbourhood, what do you think GRH1 - can you tell whether it's oil or gas?! But is it a 'new' block? Heavens no, it previously had that nice 'temporarily reserved' tag on it - KEPCO. Well there you go Shari - why has it taken four years for you to receive the enlightenment from which you now suddenly proclaim "disputed territory"? Not a hope mate, Qara Hanjeer is well behind the de-facto 'green line'. And of course, 100% Exxon again (leave that here now - all six blocks are Exxon 100%).

- Pirmam, a nice looking block, surrounded by Austrians, Indians and Cowboys - sorry, Americans (just find it on the Shamaran map yourselves). But it is a bit small (area-wise).

- Betwata, north-east of Hess/PCI Shakrok block. Starting to get a bit 'iffy' here - high mountains, probable breached seals and potential oilfield graveyard (IMO only). But you never know...

- Penjwin, next to Iran border. Very iffy now - not just a potential oilfield graveyard (as above), but also looking rather 'strategic' LOL. Good luck Exxon.

So, IMO, Exxon's 'known knowns' consist of - much less than would first appear from the declaration of 'SIX blocks'! Al Qush is defintely a good'un if you're interested in the neighbour, and Qara Hanjeer must be worth a punt given its zip code (between Kirkuk and Chemchemal). Baeshiqa is small area-wise (assuming PCI map is correct) and heavy oil may be expected (similar structures trending north-west from Afren's Bardarash). Pirmam looks good - but is small area-wise. Betwata and Penjwin both rank as 'outsiders' in my book. AND, all six blocks are pure Exploration (although maybe not Al Qush lol!) with associated Exploration risks. My conclusion? No way did Exxon jeopardise West Qurna for this lot. When will we be told about the 'unknown knowns'? You know, the Jewel in the Crown bit (or rather, bits of)?



4. Mark Leftly

We started out hating you - but you're our best mate now. I think it's time for an 'unemotional' review:

A. 24th April 2011 "Gulf Keystone's boss has his shares frozen in $100m divorce battle":
http://www.independent.co.uk/news/business/news/gulf-keystones-boss-has-his-shares-frozen-in-100m-divorce-battle-2274004.html

B. 24th April 2011 ""Kozel vs Kozel":
http://www.independent.co.uk/news/business/analysis-and-features/kozel-vs-kozel-2274016.html

C. 22nd May 2011 "Directors in loss-making Gulf Keystone earn over $1.1m each":
http://www.independent.co.uk/news/business/news/directors-in-lossmaking-gulf-keystone-earn-over-11m-each-2287379.html

D. 16th Oct 2011 "Kozel v Kozel: Finance director accused in $100m divorce":
http://www.independent.co.uk/news/business/news/kozel-v-kozel-finance-director-accused-in-100m-divorce-2371186.html

E. 13th Nov 2011 "Chevron to join slick of oil supermajors in Kurdistan":
http://www.independent.co.uk/news/business/news/chevron-to-join-slick-of-oil-supermajors-in-kurdistan-6261405.html

F. 11th Dec 2011 "Kozel's $100m divorce settlement will unfreeze his GKP stock":
http://www.independent.co.uk/news/business/news/kozels-100m-divorce-settlement-will-unfreeze-his-gkp-stock-6275208.html

G. 18th Dec 2011 "Exxon woos GKP to gain Kurdish base":
http://www.independent.co.uk/news/business/news/exxon-woos-gkp-to-gain-kurdish-base-6278531.html


Well folks, I aint gonna do the spoon-feeding for you here - just read each link again and form your own opinion on the veracity of Mark Leftly's articles. I did. Much as I disliked reading about the divorce dirt, (apart from the ETAMIC and 9p placing revelations lol!), I cannot find anything that is materially incorrect in A, B, C, D and F. There was just a tad of truth-stretching in C (the massive numbers for Todd's remuneration were indeed about right - just that most of it came from performance rewards rather than 'salary'). IMO, given that the guy has also put his (significant) reputation on the line with regard to his claims in articles E and G - my own conclusion is that he has GREAT contacts. And at least one of these contacts has probably been feeding him constantly since day-1 (go figure for yourselves, I'm saying nowt more here).



5. Mark Leftly and the KRG's 20% entitlement

This is about one of the - as yet undisclosed - 'unknown knowns'. i.e. what else did the KRG give Exxon to get them to 'sign up'? Over to you Mark Leftly, and this extract from article E:

======

"However, it is believed that the Shaikan field, which is estimated to hold an extraordinary 10.5 billion barrels of oil, is actually the subject of one of the six licences that Exxon has taken. The details of the six licences did not emerge on Friday. But, sources suggest that Dr Ashti Hawrami, Kurdistan's Minister for Natural Resources, plans to open today's conference by revealing the specifics of the deal.

It seems likely that Exxon has taken a 20 per cent stake in Shaikan. The Kurdistan government had an option of taking this stake once the field was proven to be commercially viable, and it is this that has been sold on rather than a portion of Gulf Keystone's undiluted 75 per cent holding.

Gulf Keystone owns other interests in Kurdistan, and sources close to the company believe that at least another two of Exxon's six interests relate to these fields. However, this could not be confirmed yesterday."

======

Wow, that middle paragraph. How could a journalist make a connection - that requires a strong dose of lateral thinking - to the KRG's 20%? He could not have made that up. We all, (myself included), have only been thinking about BIR when it comes to considering what the KRG may award to a third party Company. We have taken as read that the KRG will of course maintain their 20% entitlement in ALL Kurdy blocks - why wouldn't they? I'll say that again - why wouldn't they? In a word - money. I'm sure that the KRG do still nurture dreams about a (Kurdistan) National Oil Company - be that KNOC or KEPCO or both - but the harsh reality is that KEPCO/KNOC will have to pay 20% of all Development costs - from the "First Commercial Declaration Date" - just like all the other PSC participants. The problem is - they just don't have the wherewithall to do this for a MASSIVE project in the near-term. They will have no choice other than foreign investment when it comes to funding the Shaikan Development in the near-term (2013), IMO. It actually seems rather obvious when you think about it.

And now that I've started thinking about the KRG's 20% entitlement, Mark Leftly's third paragraph above also makes sense. The "sources close to the company" who believe that "another two of Exxon's six interests" relate to GKP's "other interests in Kurdistan": are 'they' also talking about the KRG's 20% entitlement when it comes to Ber Bahr and Sheikh Adi? These two blocks, if/when proven to be part of the same SH-SA-BB mega-structure, will of course need to be developed as part and parcel of the same Development Plan. N'est-ce pas?

Thank you Mr Leftly - for forcing me to think. Your sources are sound, IMO.



6. Conclusions

A. Maybe I was a bit ott when I stated in the introduction that 'It's the 20%, Stu-pid'. I was just trying to emphasise that, for Shaikan, the KRG's 20% entitlement is much more significant than the (nominal) 15% BIR which reduce to only 12% when fully diluted. Both are of course important - and when added together - give the KRG a nice chunky 32% for use as a 'sweetener'. Did the Tiger get the cream? And/or - for our friends across the pond - will the Tiger also eat the canary?

B. Concerning our previous perceived concerns that the KRG may be 'pushing their luck' when trying to convince the ICG that a 20% KRG stake is 'in the interests of ALL Iraqis': did another leg just drop off your chair Shari?


GLA,

BBBS

P.S. Regarding the "final" 'known unknown' - who is actually going to take-over GKP - putting articles E and G together, I'll go with Exxon. Or Sinopec. Or Chevron. Or Total. Or ENI combo..

P.P.S. Nice rise yesterday - did someone let the Tiger out of the bag?