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.

Sorry folks a long post but try to stick with it!

None of what is below is a recommendation to buy, sell or hold GKP. As always the opinions are all my own and my figures should not be relied upon. We all have to do our own research and make our own decisions.

I have mixed feelings on the current situation. On the one hand elated that we have had a small re-rating but also wary that CJ’s warnings of a low-ball offer could conceivably be born out in reality, not because I am concerned about any impropriety rather that I believe that a little more time is needed to prove up the assets.

An offer made now before the two upgrades in the OIP at Shaikan, promised by John Gerstenlaur, would vastly undervalue our assets, particularly if the Shaikan OIP barrels are only valued as contingent resources rather than 2P reserves. A little more time is needed

We need those upgrades now.

According to recent RNS, Shaikan 4 is testing the biggest potential net pay of any well yet announced, and with two new reservoirs, there must be a commensurate upgrade in OIP.

BBBS has made the point in a past post that 2c contingent resources at Shaikan, can, due to the number of wells already drilled, be look upon as 2P reserves. My valuations have been based on this translation from 2c to 2p reserves actually taking place. A little more time is needed for this to happen.

I think an upgrade of the OIP to13.5bbls is the minimum I would expect from John’s two promised upgrades. I am probably still being too conservative.

Your thoughts, BBBS, would be much appreciated on this point.

I therefore can’t believe that our BOD would not release an upgrade in the oil in place figures, based on current testing at SH4, before accepting or recommending any bid proffered. I’m sure that our BOD have our best interests at heart in this respect and I can’t conceive of them not carrying through on John G’s promised upgrade prior to recommending any offer. After all our board of directors has always talked about maximizing shareholder value, I’m sure we can hold them to that and I see no reason to suspect that this has changed. My expectations are high!

The fracture report is due. As I understand it, the publication of this report should verify the recovery factor and greatly help translate contingent resources into 2P reserves.

The DGA representative at the analyst’s conference, which I viewed with interest, inferred that this vital update would soon be ready. I’m sure the board of directors would want to wait for this important document before recommending a TO as it would have a material impact on the valuation of the recoverable oil at Shaikan, particularly if it was instrumental in raising the price per barrel from say $4.5 to between $5-6/bl or above. It will certainly have been worth the wait.

I’m SURE our BOD would not recommend any offer to us, the share holders , before some of the huge value locked into a ‘2P barrel’ of extractable oil at Shaikan is verified by pending results, subsequently validated by independent experts. After all DGA promised at the Analysts Conference that it would be in GKPs hands by the end of February. Just a little more time is needed to get data needed to define fair value.

IMHO, without time to translate 2c resources into 2P reserves we could be offered as little as £7.75 which includes an expected upgrade from 10.5bbls to 13.5bbls. Conceivably, it could be lower without this upgrade. A little more time is therefore needed. But only a little! Am I right on this BBBS?

When reserves are declared at Shaikan I believe that we can expect to get at least the $5.8/bl paid by Genel.

Genel indicated that the Chinese were willing to pay 25% more, so it is not unreasonable to believe that $7.25/barrel figure could conceivably be offered; after all the Shaikan reservoir is many times larger than those at Tawke or Taq Taq and economies of scale should decrease lifting costs with at least 4-500,000 bopd expected at fully capacity .

The first figure ($5.8/b) based on 13.5b at Shaikan would translate to £9.87 for the company, the second to £11.15. Both still risked at 85%. Remember this is based on 13500bbls being announced. If the second upgrade raises this figure to 15bbls the target rises to £12.05 still using less than $7/barrel (Remember Genel implied the Chinese were willing to pay $7.25 for a 2P barrel) A little more time is needed to maximize shareholder value!

Would our BOD accept a bid before Ber Bahr was drilled and tested?

Surely not!

Bar Bher, we were told, has the potential to be 1.5 times the size of Shaikan.

Tony Hayward is applying a 44 % risking, and so am I! This implies that Tony expects us to receive $4.16 for every barrel extracted at BB (Including the additional 40%ASIP Tax) My figures are based on the Tony Hayward / genel figs. I know that Hayward has not got the same ASIP payment (30% as opposed to 40%) but he does have to carry the KRG through the exploration and appraisal stage at BB. Success de-risks the entire block and will raise the COS – I’ve not allowed for this in my figures.

Also remember that the contract at BB is 16% entitlement as opposed to 15% at Shaikan and I repeat, Genel carries ALL of the KRG exploration / appraisal costs ! So the BB drill is very attractive to a predator.

GKP gave a pre drill estimate of 1.9bbls for BB. There is some way to go then to get to the 20250bbls implied by the long range OIP estimate (1.5 x Shaikan). I know that our excellent resident petro physicist, BBBS has a higher ultimate OIP figure – BBBS could you please put me right on what you believe BB could hold, I’m rather sick of being conservative!

An initial uplift to 6bbls from 1.9b GKP pre drill estimate seems reasonable after a successful drill. (Shaikan had an early uplift from 500m to 1.9b approximately X 4 uplift in OIP on success. I’m anticipating a 3X uplift in the declared OIP) ) This gives us £13.43 .

Coincidentally this £13.43 figure is very near to the £13.77 / share figure that equates to a fully diluted $19b offer for the company . The figure referred to by CJ in his post.

I would be very disappointed if the BOD were to accept any offer before Ber Bahr was announced, as I’m sure you all would be! A little more time is needed!

Now all this is based on a long-term oil price assumption of $100. The price of oil is above that now. A $120 long-term oil price assumption lifts the fair value to £16.06 within spitting distance of CJs figure.

This is still IMHO crazily conservative as it postulates only a $10 increase in the price of oil averaged out over 30 years. Is this a realistic figure to use?? – I’ll let you all ponder that one! How many times has the price of oil doubled over the last 30 years?

Now this - £16.06 is IMHO fair value, at least as I see it. Others will no doubt disagree! I for one will be very disappointed if our BOD doesn’t wait until the data room has all the upside from at least SH5 in order that fair value is realised. A full report on SH4 must be waited upon and time is I feel running out.

Just to clarify, my figures are worked out on only 32.3bbls OIP across all blocks, 32.3bbls is less than one third of what BBBS, a practicing qualified petro physicist, has estimated is the potential across four blocks. That is it is less than a third of 100bbls. I have absolutely no reason whatsoever to doubt BBBS figures. The conclusion is there is 66% available for the next man

We learn from CJ that oil analysts in Chicago have upped the ultimate value of our blocks from $43 to $61/ GKP share. He says that 19bbls is on the table, this is around one third of the ultimate value identified by those Chicago analysts. His figures therefore agree with both my own and BBBS ultimate figure. If you accept BBBS figure, and by implication, Chicago based oil analyst do, a predator is effectively purchasing 100bbls at $2/barrel. TPO worked out that a company could expect $7.8 / barrel return based on a $100 oil price assumption. What a bargain!!

The current SP values attributable barrels to GKP at $1/barrel . A tiny amount – we are hugely undervalued. A little more time is needed to get this SP north from here. Yesterday was a start!

It remains to be seen what we will be offered for GKPs assets.

What I view as fair value may not be translated into reality and all of this is only one mans opinion but my numbers are based on what has already been paid; I’ve based my figures on Genel’s. I would welcome any discussion as to how accurate other poster feel my figures are.

It is widely accepted that Hayward’s bid for Genel was at fire -sale prices. We have cash in the bank – NO debt – a rising revenue stream and huge upside to offer the next man as well as around $30m to add to the coffers following the BIR being awarded. These factors, including the scale of the upside were not IMO on offer at Genel.

Without doubt a little more time is needed to achieve this fair value but only a little; particularly as a resolution to the O&G law is looking more plausible. Genel was bought when no O&G law was in place.

Todd you are blessed with a well informed and considerable following, we strive to determine what true value is, and indeed we often try to calculate it and have the benefit of experts from the oil and gas field to guide us . We are behind you in your quest for true value!

DYOR

Kind regards

Dalesmann

auction :-))

why the sellers are increasing than buyers.............................................................

top sliced my last two purchases whilst in profit, think this will drift like yesterday.,.

nothing wrong with taking profit but disagree this time baler - i think between now and friday the sp will head north - seriously would you want to be out of gkp this weekend with what is happening particulary the chinese??? and some results due anytime?

oh and take a look at tsco - you know it makes sense :-))))

You may find this article encouraging

http://oilprice.com/Energy/Crude-Oil/Kurdistan-s-Huge-Oil-Reserves-Lend-Credibility-to-Iraqi-Claims-of-115-Billion-Barrels.html

top sliced some gkp to get more at tsco for now!!! too good an opp to miss there!! still have plenty gkp :-))))

.

not too surprisingly, sp has pretty much gone to sleep after the exertions of the last few days .... accordingly have banked a slab but am still distinctly but comfortably o'weight ..... if sp slips back far enough (not sure to where), i'll re-buy

Not sold any, still stake building going on. The share price will soon in the coming days have another blast upwards..........

possibly, though equally there may be some selling prior to w/e as peeps bank profits

2 large trades after the bell.110k and 200k,helping to push trades fir the day to a mere 12m+.

norm is 7/8m from memory, so therefore heavy but not ridiculous

From iii, don't know who this guy is, but intriguing...

15:38
Across the Pond eastcoaster23

Thought I would join the fun! Love this board and Really love this Share!
So here is what I have to add, I trade threw Pink (OTC) I spoke with a large Broker firm in the U.S after I was trying to do a trade States side on GUKYF there was some a confusion at the time and they got back to me and told me that there was a corporate action in place? Name change ? Share Split ? Never confirmed with me as they where not sure or as I thought they said to much Or just didn't know this, was just b4 the turn of the NY and Boom up she goes! What I think is it's done deal and politics are playing out And Lawyers in place All about the timing now but will keep you up to speed across the pond! GLA See at the T/O Party!!

load of bollocks!

Probably,but in the US side trading at 284p.

http://af.reuters.com/article/energyOilNews/idAFL6E8CC66B20120112?pageNumber=2&virtualBrandChannel=0

From page2,

As well as the deal with Exxon, the KRG was in talks with other oil majors and expected further such deals to be agreed in the next few months.

no doubt, but in the meantime, lots of share fluctuation that can be traded ..... for myself, i have both gkp and afr, and much heavier in the former.

http://www.iii.co.uk/investment/detail/?display=discussion&code=cotn%3AGKP.L&threshold=0&it=le&action=detail&id=9155322