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.

remotely

.

Worth a read,a little rampy and fanciful but by a respected pi.




Lets look at a $19b offer for the company.

The first thing to do is to is to increase the shares in issue to a new total, to fully reflect the options awarded to Todd and other directors.

There are 853m shares currently in issue, they increases to 893m on exercise of the options.

Dividing $19b by 893m = $21.28 / share

Current exchange rate $1.55=£1

So $21.28 /1.55 = £13.73 / share.

How can the NAV reflect this figure?

Three little tweaks is all that is needed.

Tweak 1 –the OIP figures.

John B. Gerstenlauer has said that we can expect two further upgrades of OIP at Shaikan.

Lets assume that the pattern continues of the P10 figure becoming the new P50 figure, so 13.500b becomes the new P50. And perhaps 15.billion barrels becomes the new P90.

On the second iteration the 15b would become the new P50 and perhaps 18billion the new P90. I think these figures will already be postulated by after the 3 D seismic, pressure gradients and core samples have been analysed by GKP but SH5 /6 may still be needed to prove them up.

Lets plug these figures into my NAV. My base figure is very similar to BBBs at $6.01 after a yearly discount has been applied over a 30year term. (25 yrs + 5 year allowed extension) This figure is then reduced further as I apply a 85% risking on Shaikan to get $5.11/ barrel. This figure is based on a $100 long term oil price assumption.

Tweak 2 – the long term price assumption

This long term price of oil over the 25/30 years of the contract seems to me ,and indeed to Goldman Sachs to be a little on the low side. So the next tweak is to increase the Oil price assumption to $120 over the term of the contract. (I personally think this is also conservative.) This increases the price paid for a Shaikan barrel to $6.11 – again in or around BBBS ballpark figure of $6 for a 2P barrel at Shaikan.

Of course at the moment only contingent resources are ‘booked’ but the fracture report is due out in February ; this will inform the recovery factor and I would not be surprised if the initial findings are not already know to our BOD. At this point 2c could become 2P reserves and the translation could be very soon. The price/barrel used in these calculations then become realistic, even conservative.

As long term readers of this board will realise the recovery factor is a key variable. We should look forwards to what could be achieved using horizontal drills and enhanced recovery methods over the 25/30 year contract period. I am leaving the RF at 30% - for now!

Tweak 3 OIP at Ber Bhar.

Here I am using a 44% COS on the drill (Hayward) which results in $3.46/barrel. The OIP has been tweaked upwards to a conservative 5bbls an increase of 3.1b over GKP guidance 4.5b on Genel’s pre drill guidance.

Bekhme has been reduced to 3bbls (step out planned 5km from current drill site) Akri Bijeel remains at 2.4 billion. 3billion is inserted for Barkman and 1 billion for Aqra. I maintain a 25% COS across the block which gives $1.92/barrel for these contingent resources.

Sheik Adi has 3bbls up from 1.9bbls looking towards the SA 2 drill costed at $3.46/barrel

The result gives £13.89 against an alleged offer of £13.73.

It seems to me there is plenty of upside left for the next man! The OIP figures, when added up come to 32.4 bbls of OIP across all blocks and with BBBS hinting at 100bbls, Exxon/ Chevron/ Total etc will be paying for only 33% of the true potential.

So all in all, CJ’s £19 billion for the company seems very do-able! A screenshot of the tweaked NAV can be viewed at dalesmann.com and for those who have bought the workbooks, it is but a moment to tweak the figures and drool :0)

Finally, I have had personal contact with CJ via an e-mail, subsequent to his post. He is a man not prone to making outrageous statements, a kind and thoughtful man , a real gentleman who has been a severe critic of TK and the KRG. I hold him in the highest esteem both as a man and as a very credible well-connected source.

As always we will have to wait for developments and as always I implore you to do your own research – no advice given etc.

I have a feeling that Happy Days are here again!

Kind regards

Dalesmann

Now this i can believe.


Schlumberger testing on SH-4...according to oilman63 over on tother BB

I was told this by Schlumberger at the SPE conference

And by john Stafford of gkp

All the best
Oilman63

For all those that say the proposed takeover offers are too high and it never happens, I would remind people it does.

Take for example OSH (Oasis Healthcare) an unloved stock I purchased at 9p. Takeover offers came when the price was 16p. Eventually it was taken over at 94p a share.

600% over when the talk of takeovers started.

If this follows the same principle we will see the price rise, to 220, then 240, then 300 then 400 (as big boys behind the scenes build their stakes ahead of what they expect to happen) and then talk of takeovers and offers will increase and so will the share price until by the time if becomes official the share price will be much nearer the rumoured figures.

If you believe its going to get taken over then just keep holding and resisting the temptation to sell - for the ultimate prize.

http://ikjnews.com/?p=1372

9 January 2012



Gulf Keystone Petroleum Ltd. (AIM: GKP)

("Gulf Keystone" or "the Company")



Kurdistan Operational Update

Gulf Keystone today provides an update on its ongoing exploration and appraisal programme in the Kurdistan Region of Iraq, which includes the Shaikan block, a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels calculated on the P90 to P10 basis with a mean value of 10.5 billion barrels.

Shaikan-4 Appraisal Well



Gulf Keystone continues a well testing programme for the Shaikan-4 appraisal well, drilled 6 km to the west of the Shaikan-1 discovery well, targeting several formations in the Jurassic and Triassic. One well test in the Triassic has been completed and six further tests are planned. Once the testing programme has been completed in all target formations the Company will make the appropriate announcement.



Shaikan-5 Appraisal Well



The Shaikan-5 appraisal well, 6 km to the north-east of the Shaikan-2 appraisal well, is currently drilling at a measured depth of 1,008 metres. After slower than expected drilling progress due to temporary hole stability issues encountered in the shallow formations, the well is now drilling ahead to the estimated total depth ("TD") of 3,500 metres subject to technical conditions.



Shaikan-6 Appraisal Well



The Shaikan-6 appraisal well, 9 km to the east of the Shaikan-2 appraisal well, has drilled to a measured depth of 362 metres and 26" casing has been set. The well will drill to the estimated TD of 3,800 metres subject to technical conditions.



Shaikan Extended Well Test



As part of the ongoing Extended Well Test ("EWT") on the Shaikan block, the output from the Shaikan-1 & 3 EWT facility has been at an average level of 2,520 barrels gross of oil per day from the latter part of November through to the end of 2011, totalling 103,328 barrels gross as of 31 December 2011.



At the end of 2011, Shaikan test production levels were in excess of 4,000 barrels gross of oil per day and are due to increase further after the ongoing upgrade of the Shaikan-1 & 3 EWT facility has been completed and additional test production facilities have been designed and built. The upgraded and additional EWT facilities will allow test production of Shaikan crude to export specification and a subsequent ramp-up of the Company's export operations.

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.

Akri-Bijeel Block



According to the Operator's Akri-Bijeel block operational update and 2012 outlook issued on 28 December 2011, the exploration and appraisal programme will continue with two exploration wells (Barkman-1 and Gulak-1) and four appraisal wells (Aqra-1, Bijell-2, Qalati-1 and Qandagul-1) to be drilled in 2012. Following the completion of the Bekhme-1 exploration well testing programme, after the well reached TD at 5,000 metres in the Triassic, the rig is currently moving to the Aqra-1 appraisal well drilling location with the well expected to be tested in H2 2012.



While no commercial inflow of hydrocarbons was encountered in Bekhme-1, new data gained during the well testing programme is a significant contribution to the continuously improving knowledge of this unexplored region, decreasing uncertainty for the remaining Akri-Bijeel prospects.



In addition to the envisaged acquisition of a significant amount of 3D seismic data over the Bijell discovery area, an extended well test is planned for the Bijell-1 discovery well in 2012, similar to the ongoing successful Shaikan-1 & 3 extended well test. The Operator plans to build a surface facility with 10,000 barrels of oil equivalent gross capacity and a 30,000 barrels storage capacity by Q3 2012.



Gulf Keystone has a 20 per cent working interest in the Akri-Bijeel block operated by Kalegran Ltd., a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc., which holds 80 per cent working interest in the block. Operator's P50 resource estimate for the Akri-Bijeel block is 2.4 billion barrels of oil-in-place.



Ber Bahr-1 Exploration Well



The first exploration well on the Ber Bahr block is drilling at a measured depth of 2,418 metres in the Triassic to the estimated TD of 3,000 metres subject to technical conditions.



Gulf Keystone has a 40 per cent working interest in the Ber Bahr block operated by Genel Energy, which holds a 40 per cent working interest in the block. The Kurdistan Regional Government has a 20 per cent carried interest in the Ber Bahr Production Sharing Contract. The Operator's resource estimate for the Ber Bahr block is 1.5 billion barrels of oil equivalent-initially-in-place.



John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:



"As an important addition to Gulf Keystone's aggressive exploration and appraisal campaign, the Shaikan Extended Well Test provides us with an opportunity to continue to gain new data and better understanding of this world-class discovery in the Kurdistan Region of Iraq. This early test production is also important to enhance the Company's already extensive commercial and marketing relationships on the ground in anticipation of further optimization of the Shaikan test production facilities and the commencement of the Bijell-1 extended well test on the Akri-Bijeel block in 2012."

The first exploration well on the Ber Bahr block is drilling at a measured depth of 2,418 metres in the Triassic to the estimated TD of 3,000 metres subject to technical conditions.
BB's original TD was 2100mtrs so 900mtrs deeper?

wonder what the day will bring here after rns and persistent rumours?

That you're having an abortion ?....gossip...gossip.....gulk keystone gossip....dear oh dear...

i concur, but nevertheless it is certainly of note that volume is very high yet again at 7m+ already, whereas as that is the daily normal average

lol!!

i am comfortable with my risk here - meanwhile:

Gulf Keystone Petroleum (LON:GKP) (BUY, 300p) (GKP, 203.5p, ▲ 1.24%) has released an update for its exploration and appraisal programme in the Kurdistan region of Iraq, including the Shaikan block discovery. Well testing continues at the Shaikan-4 appraisal well, targeting several formations in the Jurassic and Triassic with one well test performed so far and six further tests planned. The Shaikan-5 appraisal well is currently drilling at a depth of 1,008 metres after delays due to hole stability problems at shallow depths. The Shaikan-6 Appraisal Well has been drilled to 362 metres of the estimated total depth of 3,800 m. Output from the Shaikan-1 and 3 Extended Well Test facility stood at an average level of 2520 barrels gross of oil per day through late 2011 but had reached excesses of 4000 barrels gross of oil per day. This is due to increase with further upgrades of the facility.

GKP also provided news on the Akri-Bijeel block with plans of two exploration wells and four appraisal wells for 2012, although no commercial inflow of hydro carbons at the Bekhme-1 well. Additionally, the first exploration well on the Ber Bahr block is drilling at a measure depth of 2418 metres.

8m + now

nice ticks today

breached the 210 at last roll on 220 - excellent volumes :-))

yeeeeeeeeeeeeeeeeeeeeehaaaaaaaaaaaaaaaaaaaaaaaaaaaa!!!

Halifax has a £3.95 deal on between 12 & 3pm so just topped up with afew more from rkh proceeds.,.

blimey thats good!! well done and gl

you know it makes sense :-))

now rkh ground to a halt for now and the potential argy problems and reversing i would expect more rkh'rs to switch to gkp :-)

we are flying - onwards & upwards rodders!!!