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.

http://www.derrickpetroleum.com/2012/01/23/over-a-billion-worth-ep-opportunities-in-middle-east/

Times - Tempus today notes:
Gulf Keystone
Another of this column's picks for this year, GKP, put out a further encoraging update on it's wells in Kurdish Iraq. The shares are now up 47% since I tipped them at the start of the year, mainly on the assumption that someone will bid. They perforce remain in my portfolio, but investors who are not convinced that an approach is imminent might consider taking some profit in such a volatile stock.

http://www.investorsiraq.com/showthread.php?169487-Parliament-votes-on-eight-draft-laws-decide-to-adjourn-meeting-until-Tuesday-kisses&p=1140158#post1140158

Just came across this,sounds very positive and yes i believe the poster,lowersharpnose.

Yesterday's news release:

"Shaikan-4 tested a thin zone at the bottom of the Kurre Chine B formation achieving a flow rate of 4,970 bopd and 7.0 mmscf/d of gas at a 1,101 psi flowing wellhead pressure with initial results indicating a 39 degree API fluid."

I wanted to get a better idea of what thin means in this context, so I phoned GKP and spoke to John Gerstenlauer.

The Kurre Chine B (KCB) is thick interval. from the schematic diagram onP10 of the June presentation, the KCB stretched from 2582m to 2849m TVDSS. That's 267m gross.

http://www.gulfkeystone.com/uploads/gkp_investor_presentation-june2011.pdf

On Shaikan-1, the test of the KCB gave ~6k bpd + 21mmscfs. They performed this on a section of hole at the top of the interval that "looked good on the logs". I asked how thick the tested section was and JG said that they couldn't be sure because a lot of the tests were conducted open hole.

On SH-4, they picked a section of the KCB that was down at the bottom of the interval and that looked *crappy* on the logs. "We are past testing the good stuff" - they know that is going to flow.

This crappy section flowed at ~5kpd +7mm scfs.

Q: How thin was the tested section?

A: 5m.

Blinking heck, A 5m section, which looked crappy on the logs produced ~5kpd +7mm scfs!!

No wonder the RNS concludes:

"Initial results of the Shaikan-4 well testing programme are very encouraging with logging results indicating that Shaikan-4 may be the best well which Gulf Keystone has logged to date in the Kurdistan Region of Iraq."

It is a monster.

lsn

Fruit n veg

iii

----------

I have long believed that the politics have been overplayed as a risk factor here. It is what the City have been telling us ad nauseam – while lining their pockets, no doubt, with cheap placement shares at the same time.

Over the time span in which I have been invested (since August 2009) these ‘political fears’ have never gone away. We on this BB have had people calling for Shahristani’s overthrow, and worse besides, as if this one individual was the sole reason why GKP’s sp seemingly spent an age in the doldrums.

But as mid-size majors signed deals with the KRG in defiance of official State Department advice not to invest in Iraq – advice which Washington maintains to this day, but only for public consumption - people began asking why these mid-sized players were taking such a massive risk in a territory without a national hydrocarbon law. TK remained sanguine. He was right.

No-one, however, bargained for a joker in the pack. What we have learned with Exxon is that power politics and the big money that backs it up can SUBVERT THE POLITICAL PROCESSES.

Now, you may ask, what is a giant like Exxon doing signing up for six unproven blocks, two of which are in disputed territory? Why on earth would Exxon want to get embroiled in that issue? Have they not courted enough controversy already?

My theory is that these are bargaining chips which they can, or indeed always intended to, relinquish in the political negotiations which would necessarily take place with Baghdad.

A dyed-the-the-wool politician such as Shahristani will be only too delighted if he can wrest either or all of these contentious blocks from Exxon. As others have reminded us, none of these Exxon blocks is proven. But it would be more difficult to persuade Exxon to give up Shaikan, which is why Exxon might be waiting for an O&G law to be approved before going public with its (intended) acquisition. There is every reason, then, to stay tight-lipped.

BRUTAL DIPLOMACY
So what wider game is Exxon playing? I believe Exxon is a proxy for the US in the latter’s abortive diplomatic campaign to secure an O&G law by the time US troops left. Exxon has, in other words, been used by Washington as a powerful backstop, an insurance policy if all else fails. The prize is not the six blocks – it is Shaikan. Why else would Exxon have gone barging into Kurdistan?

So far, this brutal diplomacy has had the desired effect. The evidence is in Shahristani’s soft-peddling on sanctions against Exxon. First he threatens Exxon with exclusion from the south. Now he is in talks to seek a solution!

After saying early this month that the government was “weighing measures” against Exxon, he is last reported as saying: "The minister of oil has been in touch with them [Exxon], and they are going to come to the ministry of oil for a final round of discussion.”

That sound like a prelude to a face-saving climb-down to me.

Shahristani will have been advised by his acolytes, and possibly by Exxon too, that in the absence of an O&G law the legal ground for excluding Exxon from its southern contracts is likely to be challenged through international arbitration.

But an O&G law, once enacted, can retrospectively rubber stamp existing Kurd contracts whilst at the same time side-step the legal mess that might result from a cancellation of Exxon’s southern contracts.

Who knows... Shahristani might, as we speak, be pleading with Exxon to stay in the south. It would be very bad politics and very bad timing indeed to evict Exxon and it is a high-risk tactic which might threaten the shaky coalition.

In any case, if Shahristani were foolish enough to play hardball, Exxon would, I suspect, not hesitate to call his bluff and quit these unprofitable TSC commitments for good.

EXXON’S PAY-OFF
An O&G law needs to be flexible enough to accommodate Exxon in the north and the south and thus save some face in Baghdad. It must recognise that the Exxon-Kurd relationship is a FAIT ACCOMPLI – the first of many deals the Kurds have declared they will do whether Baghdad likes it or not. It is only a fool who will not recognise the KRGs’ determination to have control of its oil.

Left to its own devices, I doubt whether Exxon would have gone public with its six-block deal. But the KRG over-ruled Exxon and wanted to use the affair for propaganda purposes. But what if Exxon had got its way and kept it quiet? Then, it would have been able to approach Baghdad in secret in order to apply pressure for an O&G law on behalf of the US government, where conventional shuttle diplomacy had failed. Exxon could have quietly threatened Baghdad with a withdrawal from west Qurna and the water injection contract.

Seen in this light, we might conclude that Washington saw Exxon as an arm-twisting alternative, to be deployed when the diplomatic channels had been exhausted. Of course, Exxon will want a substantial pay-off for its efforts and it is fanciful, to say the least, that six unproven blocks, two of which are in disputed territory, will satisfy its needs. No, the only pay-off that is big enough for Exxon is Shaikan. What else could it be?

GRAHAM-WOOD VIDEO
Malcolm Graham-Wood, in the infamous video, is clearly referring to Shaikan, IMO. He will not comment to PIs on the video – someone did ask - and it is not too outlandish to suggest that he deliberately made an oblique reference to it as ‘the best ever block in Kurdistan’, knowing that people would draw the obvious conclusion. Many of us have.

Call me a conspiracy theorist, but I conclude that the Exxon ‘six blocks’ might be an utter distraction. For Exxon and for Washington, the object of the exercise is, was and always has been to secure Shaikan for itself before anyone else makes a move. This fits well with what sources have told Mark Leftly.

Politically, by making its mark in Kurdistan, Exxon has at a stroke banged heads together in Baghdad, ‘derisked’ investment in all Kurdistan oilers, hastened the passage of an O&G law - not certain but not a sine qua non either – and given notice to its competitors, notably the Chinese, that Shaikan belongs in US hands. It was never about the ‘six blocks’.

FRUIT N VEG

iii.co.uk

Interesting post.

Beyond Shaikan ( and Akri Bijeel )being sold there is the question of value for the rest of GKP, the Ber Bahr and Sheik Adi blocks.

At Ber Bahr we have a fully diluted working interest of 40%, which it has been said, has potentially 1.5 times of what is at Shaikan. Just the one well there closing in on TD and results eagerly awaited. Could be worth more to GKP than Shaikan with further appraisal.

Sheik Adi with one well drilled and a fully diluted 80% working interest.
Sheik Adi data from RNS 14th Sept 'Sheikh Adi-1 exploration well drilling with core and log data indicating 256 metres of net oil column' 'Gross oil in place numbers announced for Sheikh Adi following independent evaluation by Dynamic Global Advisors assessed at 1 billion (P90) to 3 billion (P10) barrels -- Sheikh Adi-1 exploration well reached TD in the Kurre Chine C section of the middle Triassic and will now be suspended pending further testing once fracture treatment parameters and logistics have been finalised.'

Still a lot to be revealed on Sheik Adi to gain an understanding of value but there are some positive indications from the satellite imagery, courtesy of Scotforth Ltd and superimposed, thanks to Sarah ( from memory ), on the Ber Bahr/Sheik Adi blocks.

The limited amount of Ber Bahr satellite imagery released indicates that there is a major spill over a good way into Sheik Adi.

Looking from the Shaikan end it looks very much like the Shaikan oilfield spills over into Sheik Adi with SH-4 only 2-3Kms from SA.

The Northern half of Sheik Adi is also along trend from the Atrush discovery.

Very major potential at Sheik Adi with an 80% working interest for GKP.

Photobucket

The SH-4 rig was due at SA-2 once it had finished there. Testing could take a fair time yet at SH-4. Might the rig for SH-7 be diverted there ?

Still much to do on both Ber Bahr and Sheik Adi, but there looks to be very major value potential which could be far greater than even Shaikan.

Can't find it myself but it seems a 2m buy at GENL(£17m),perhaps why GKP recovered ?

Peak oil back as an issue.

http://www.madhedgefundtrader.com/the-resurrection-of-peak-oil/

http://uk.reuters.com/article/2012/01/25/iraq-kurds-oil-idUKL5E8CP1W320120125

.

y Ben Lando and Staff of Iraq Oil Report
Published January 26, 2012


BAGHDAD - The Parliament Oil and Energy Committee is exploring a way to guarantee the sanctity of contracts already signed by both the central government and the semi-autonomous Kurdistan region, in an effort to secure political progress on the long-delayed oil law.

Contrary to local media reports, a crucial law to govern Iraq's highly disputed but massive oil sector is not on the Parliament's formal agenda, as the country weathers a political crisis. Yet the Parliament committee responsible for the legislation is planning to push it forward, and key players consider the recognition of all existing contracts to be the single greatest prerequisite for political progress.

An official close to the legislative process, speaking on condition of anonymity because of the tenuous political situation, said negating any of the contracts would require a legal battle and cause harm to the business environment in Iraq.

"For existing contracts, (the Parliament) should not vote on whether they are null and void," the official said. Instead, the official added, there is growing support among some key MPs to formally validate the deals through either a provision in the oil law or a political agreement that would ensure a retroactive grandfathering process – though there is not yet a specific proposal on the table.

Baghdad has signed 12 oil and four gas contracts, and the Kurdistan region has signed 48 oil and gas deals. Each side questions the other's legal standing.

A conservative reading of Iraq's existing laws and the vague provisions in the 2005 Constitution would suggest that the contracts require ratification by the Parliament – a view that some MPs have advocated but both the central and Kurdish government have resisted. New oil legislation could potentially resolve the ambiguities.

The disputes over the oil law are technical in nature, but they carry important political implications.

Sources within the committee say the central government and the Kurdistan Regional Government (KRG) disagree on five key issues: the oil authority given to local governments; the makeup of a federal council that would set policy; the procedure for making contracts; the review of future contracting; and how to rule on the contracts signed prior to the law.

According to people involved in political negotiations, the question of existing contracts is the biggest obstacle to progress.

The Parliament committee has three different draft laws before it: a version initially agreed to nearly four years ago, to which the Kurds have suggested specific alterations; an amended law pushed by the central government's deputy prime minister for energy affairs, Hussain al-Shahristani; and a draft crafted under the oversight of Parliament oil committee members with the backing of the Kurds.

In a country where 95 percent of government revenue comes from oil, the technical structure of the oil sector also shapes the powers of the state. Parliament committee members have said that legislative progress will only continue through a political agreement.

Last fall, Iraqi Prime Minister Nouri al-Maliki and KRG Prime Minister Barham Saleh agreed that their respective oil ministers should meet to clarify their agreements and disagreements, hold one-on-one negotiations based on a February 2007 draft of the law, and send their proposed amendments to Parliament as a basis for new legislation.

That meeting, which was supposed to take place by the end of the year, never happened.

The KRG has sent numerous communiqués to Baghdad, a committee official said, including Minister of Natural Resources Ashti Hawrami's preferred amendments. The official said the committee will consider Shahristani's recent draft to be the preference of the government, unless the Cabinet submits its own analysis of the 2007 version.

The Parliament committee version of the law was given half of a first reading last year, interrupted by a walkout by members of Prime Minister Nouri al-Maliki's State of Law bloc, who refused to return until the law was shelved. In a December interview with Iraq Oil Report, Shahristani said the Cabinet version was the only legitimate draft.

The Parliament committee is now considering taking an internal vote on the three different draft laws. If one gets a majority vote, the committee will send it to the full Parliament. If not, all three will be sent to Parliament, sources within the committee said.

First introduced in a draft by three Iraqi oil experts in late 2006, the oil law was amended during political negotiations between representatives from Baghdad and the Iraqi Kurdistan Region. It morphed so much that two of the three authors withdrew support in early 2007, around the same time that the Baghdad-Kurdistan agreement fell apart.

Since then, Baghdad has signed 16 new oil and gas deals, and is readying for another contract licensing round, this one for exploration blocks.

The KRG has signed 48 production sharing contracts. At first, smaller companies struck deals for mostly unexplored land; over the past year, Kurdistan has landed bigger names, including most recently ExxonMobil, which took six of the few remaining open acreages.

The Exxon signing brought a sense of urgency to the oil law process.

The company had already signed a massive development deal with Baghdad two years earlier for the West Qurna 1 project in Basra, and Baghdad has warned Exxon to back away from the KRG deals. Exxon has not shown any sign of retreat, and Baghdad's lack of recourse has underscored the liabilities associated with pursuing oil development without a clear legal regime.

"The law must be legislated and endorsed by the Council of Representatives as soon as possible," said Susan al-Saad, a member of the committee and part of the Fadhila Party. "Otherwise there will be many future problems for the oil ministry to experience, as well as for the local governments in all provinces."

In Iraq, however, political conflict often takes precedence over national priorities. And right now the coalition government is rife with open hostility, as the Iraqiya political bloc officially continues a boycott and contemplates leaving the government for an opposition role. Meanwhile, several Iraqiya bloc members have been arrested and charged with terrorism.

Leaders have called for a national political conference, ostensibly aimed at ending the political crisis, but they have disagreed even over where to hold it.

Kurdish leaders, too, are upset with Maliki, as he consolidates power and refuses to budge on demands to decentralize the oil sector and move forward with other oil-related legal, financial and land disputes.

"The Parliamentary Oil and Energy Committee will not be able to look to any draft of the oil and gas law unless there is a political deal among all the political blocs," said Bayazid Hasan, an MP from the Kurdish Goran Party. "The center wants things for this law and the KRG wants things different."

Just came across this,

that is interesting


Exxon results 31st January- after the bell? Gkp present 1st Feb before mkt opens. Mmm.

http://www.gulfkeystone.com/events.aspx

A posters update of todays presentaion.

My broker has returned from the presentation.
3 things quickly.
1. They can supply 80000 bpd now.
2. Todd gave the air of a man who was not going cheaply. My previously very conservative broker came back with telephone numbers in 4-5 years time. His opinion is no near term takeover but perhaps a XOM joint venture. He is now very bullish.
3. Shaikan keeps getting bigger and bigger nod nod wink wink.

Just my brokers personal views and report. dyor!

in the meantime, a friday afternoon sell-off, so if you're bullish then perhaps buy near the close

LSE Presentation

m0lineux







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I went to the forum this morning and saw six oil and gas companies present one of which was our beloved gkp, represented by Todd Kozel.

The following are my notes and in no way are guaranteed or to be interpreted as a recommendation of any sort. ALL the usual caveats apply.


Currently looking for 3rd non executive director. Stressed that they are striving for quality in NED's from a corporate governance viewpoint. GKP are the most active company in Kurdistan with five drills currently turning.

The upside potential on Shaikan is 100% based upon 8-13 bn barrels of oip.

The strike rates in Kurdistan are likely to move towards worldwide averages and not be like shooting fish in a barrel in terms of discoveries.

They are NOT calling AB a discovery yet. Estimated to contain 2.5 bn barrels and then went on to say that BB is the same as Shaikan if successful in terms of the drill site I think (later referred to BB as 1.5 times Shaikan).

The preliminary development plan has been finished and submitted and includes 122 km pipeline, cost $150m plus or minus, bidding on the pipeline in the next couple of months, operational by end 2013, Shaikan capable of 500-550k bpd then plateauing at around 450k, multi wells off single pads, between 50 - 60 wells.

Intend to maintain drilling pace for foreseeable future: May/June sh 1, 3 & 4 40k bopd would mean self funding program's going forwards, then sh 2, 5 & 6 November 2012 to 60k bopd.

Currently funded thru 2013 including pipeline, development and appraisal.

Big play of involvement in Kurdistan including sponsoring seats at university and employing locals first wherever possible. Gone from 17 to 800 Kurds on the books.

KRG target of 1m bopd gkp will be a significant part of that. Considerable amount of respect between KRG and gkp. Proven premier operating company in sector.

Short and sweet presentation said TK.

Turning into appraisal and production company. Can produce 80k bopd now. Experienced no delays at all on anything with respect to politics and made great play of avoiding whole political issue. Stays well out of it. KRG very responsive and gkp not only have permission for pipeline but have encouragement for it.

Working for April admission to main listing.

When question cam up about refining in southern Iraq, said "I would'nt want to build a refinery in southern Iraq I don't about you".

FWIW, this is what I noted. The overriding impression I got is one of a man who wants to take his company up the ladder a few rungs and who has the discoveries to do it. Time will tell whether or not he gets the chance. One thing I do feel is that I'm not at all sure I would want to be negotiating with him. I get the impression that if he doesn't like what is said, the next thing you would see would be his back leaving the room!

GL All

Posted on 26 January 2012.
http://bit.ly/x7mAmA

Despite objections from Baghdad, ExxonMobil already has personnel on the ground in Iraqi Kurdistan, according to Reuters.
“They [Exxon] are definitely here and they are definitely assessing living and working accommodation … There are around 10 individuals here at any one time looking at what it takes to fully mobilise here – office space, housing space, these types of things. No oil company comes in in a day.“

Kurdish-Media

"They (Exxon) are definitely here and they are definitely assessing living and working accommodation," said a Western industry source in Arbil, at the heart of Iraq's northern Kurdish region.

"There are around 10 individuals here at any one time looking at what it takes to fully mobilise here - office space, housing space, these types of things. No oil company comes in in a day."

http://bit.ly/zQiWDr

A down to earth post.

Need to keep real.
Currently Iraq gets $106.18/b (published Dec 2011 figure).
For KRG contracts deduct 10% royalty per barrel.
Deduct a guess of lifting costs once the project is running at TK's 450,000bopd, say $5/b cost.
For GKP PSC take 15% of the profit - the maximum allowed at that stage (see GKP's PSC terms on the KRG website)- and then take 54% of that as GKP's working interest.
Then take off the 40% of profit oil the KRG also get.

The number I get from this is....
$4.40 profit per barrel to GKP.
Over 25 and 30 years thats $16.835b profit or $20.202b at current prices i.e. ignoring potential rises/falls in the price of crude.
An £8 a share offer for say 930m shares, if you include options and the 5% ownership not in GKP's name, equates to an offer of about $11.755b.

orvis - 27 Jan'12 - 16:43 - 155905 of 155914

Further to my post 155898...

25 years and 30 years at 450,000bopd, if you say 340 days a year to allow for maintenance, equates to total production of 3.825bb and 4.59bb.
If you use a recovery factor of 30% the figures for total oil reserves would be 12.75b and 15.3b - 25/30 yrs respectively

From The Sunday Times tommorrow (posted on LSE) -


"Total, the French oil giant, is close to securing exploration rights over several oil and gas blocks in Kurdistan, northern Iraq.

The deal, which could be announced within weeks, will intensify the land grab in the semi-autonomous region after several big finds. It will also heighten tensions with the federal government in Baghdad, which considers such deals illegal.

Oil majors have stayed out of Kurdistan for years because Baghdad threatened to freeze them out of deals on the country’s giant fields in the south. That left the region open to dozens of smaller players.

Genel Energy, a London-listed firm set up last year by former BP chief executive Tony Hayward and Nat Rothschild, is the largest producer. Gulf Keystone, also listed in London, has seen its shares soar amid takeover speculation after a big oil find.

Heritage Oil, founded by Tony Buckingham, a former mercenary, has made a large gas discovery.

Industry insiders said the move by Total is the clearest sign yet of belief in the industry that Kurdistan — which produced virtually no oil five years ago — could become a big new producer. Sources close to the situation, though, said the deal could still fall apart. Chevron and Conoco Phillips, the American giants, are also understood to be angling for the final pieces of land held by the Kurdish government.

The scramble comes despite a long-running impasse in Baghdad over oil royalties that has left some companies unpaid. A federal oil law was first tabled in 2007, but it has yet to be ratified.

The interest in Kurdistan is also an indication of growing frustration with the rest of Iraq’s industry, which is constrained by bureaucracy and the worsening violence.

In November, Exxon Mobil became the first big oil company to challenge Baghdad by doing a deal with the Kurds, signing licences for half-a-dozen exploration zones.

Having attracted smaller firms to the region, the Kurdish government is keen for the industry’s biggest players to develop the reservoirs they have found. Ashti Hawrami, the Kurdish oil minister, has set a target of 1m barrels of oil a day in production within four years. In 2007, Kurdistan produced 2,000 barrels a day from a single well.

Both Total and the Kurdish government declined to comment."

From Dalesman - 29 Jan'12 -

I've been saying for months now that February was key..

Why Feb - well as I've said many times before:

1. The subcontracted fracture report that will define the recovery factor is due in February
2. The DGA report that accompanies the fracture report is due in February
3. The fracture report should allow 2P reserves to be booked as we have a verifiable RF
4. Ber Bahr - the last undrilled component of our four blocks is due to report in February
5, Exxon annual report is due in February
6. Sh4 test results are due out in February and
7. With it an uplift in OIP already signalled by Todd

I don't need Spencer to tell me February is important!

It doesn't take a genius to see that February is key - I've been saying it for months!

More on the Total news,i wonder if it will create as much excitement as when the news EXXON became public?Doubtful more of a ripple at best?

http://www.bloomberg.com/news/2012-01-29/total-nears-exploration-rights-deal-in-kurdistan-times-says.html

Latest rumour from the poster who called SH4 correct,is that BB is tight?

Tight hole.


A section of a wellbore, usually openhole, where larger diameter components of the drillstring, such as drillpipe tool joints, drill collars, stabilizers, and the bit, may experience resistance when the driller attempts to pull them through these sections.