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.

No denial.

From the Exxon conference call:

Question: "Can you comment on the status of West Quorna and how that project is going and then the related part of that is can you make any comments on adding acreage in Kurdistan... there's been a lot of press about that and I don't think you've put out anything officially. That's the first question. Thank you"

Answer: "Let me actually answer those in reverse. I don't have any comments to make today on Kurdistan. I will though tell you that in the West Quorna field things are proceeding on plan. We continue to meet our production commitments..." bla bla bla

Ladies ?...where did you get those one liners from?.....sounds like the Marx brothers are back in town !.

me? ..... oi makes 'em up as oi goes along ... it's the way i tells them!

Cynic...on a more serious note : check out FPM....for 2012 at least....looks like a superb little medium oilie....worth a punt....even if latest wells come up dry...no need to worry....sp will come back.....

looked at FPM before and concluded that good though its record is, it is horribly illiquid

I've had no problem in trading them......

From my Iraq report today:
Exxon declined to report its KRG deals in a quarterly filing, but disclosure rules could require the company to break its silence in February.

News from the Hew York presentation.


Apologies, new to this Board so re-posting some details that I placed in different thread earlier. Hope of interest:

I just attended the NY investor summit, so here's a brief summary of what JG said. Presentation seemed to be same as for LSE last week but some very interesting snippets. Apologies in advance as a lot of scribbles (feel free to post on iii if of interest as trying to sort my login out there), and usual disclosures about information and how it should be treated apply (this is a brief summary only)

- JG opened by saying this would be the 'best story of the day'. He explained how the company had grown from almost $40m in value to nearly $4bn in a few years.

- He gave the current figures for oil in all blocks and said there is PLENTY of upside left. He said that he believes current figures (for Shaikan in particular) are conservative. He later mentioned on 2 separate occasions they are confident Shaikan is full to spill and a figure of 18bn barrels is likely.

- As heard before, they have tested all the good stuff and are now testing all the 'bad stuff' to see what is really there. He mentioned one part that was a pokey little area and which produced 5,000bpd

- SH-1 and SH-3 are hooked up for production, have expanded well test facilities. SH-4 is the best so far, they are still testing.

- Sheikh Adi they believe there is a lot more oil on the other side of the fault. SH-7 will be the last of the Shaikan appraisal wells. ALL reservoirs and intervals (in SH) have been full of oil and gas. No dry holes, not even in the intervals. They are looking at 300m (1,000ft of net pay which is huge amount).

- 122km pipeline to start this summer. $170mn costs, will finish mid 2013.

- After SH-6 TD, GKP has 30 days to submit development plan to KRG in July / August this year. The clock starts then (on the 30 year production front).

- He believes they have a 10 year plateau of producing between 400k and 600k bpd. Shaikan could be producing for 80 to 100 years so they will leave a lot of oil in the ground.

- **He says according to KRG website BIRs are to be sold to KNOC, the Koreans (note I believe he was referring specifically to Shaikan here, which is why I was surprised).

- Every piece of news on Shaikan good so far, not limited by water point to date. Testing on wells limited to 10,000bpd but more potential.

- cash flow to finance everything. Project insensitive to Capex / Opex issues.

- No security concerns. 5 years in Kurd, no incident. Erbil like a mini Dubai, boom town.

- Shaikan lots of directional drilling. 1mbpd AVAILABLE in Kirkuk to Ceyhan pipeline. They will have capacity for 400,000bpd but could 'twin' the pipeline to expand this.

- More on figures. BB - 5bn to 10bn expected, SA - 3bn to 6bn, SH 18bn, AB - MID 20s. (yes, big number). Said if they don't get good price for AB share (process to start this week) then they would hang on as could be v profitable.

- DGA report would not be until SH-5 complete so few months away. Next report likely to be from ERC Equapoise(?).

- Still on course for FTSE main listing (would currently be number 95).

- Asked whether they plan to fully develop Shaikan or sell off: they are continuing with their full plan "BUT WHEN THEY WANT TO BUY US ( I understood meaning Shaikan), they're going to buy us. Many majors.. [will be interested]".

Please don't take everything word for word as this is a broad summary. My impression is they are conituning to do all possible to prove up the oil, increase production and create more attractive assets. However, at some stage, a big player will in all probability take a piece(s) off their hands.

He said what they do know of Shaikan so far is worth about double the current share price....

Seems to be building well this a.m. but not huge volume......something on the way???

Nice surge....boy ! oh boy !....

has the cork popped (cherry been taken/eaten?) at long last? .... it'll be interesting to see if sp can now hold above 280/285, even as a precursor for more exciting things that just may be afoot

Lets hope so(cork popped),290p at present, nopeing we finish above that 285p today?

I just wonder if the seller at 275p is starting to dump at 295p? Possibly ex Mrs TK.

fact is, there is yet again relatively very little stock on offer ..... yet again bid/offer is approx 3:1 on good volume

Thanks,good to hear.

better day

Corker.,.

nice plump and juicy cherries!

This is TPO`s post from over on iii:

I thought it might be helpful to revise my Shaiakan and GKP valuation in the light of the news overnight from New York. Obviously this has to come with a big cautionary note that I cannot vouch for the info that HamishNY posted but assuming that he has accurately reported John G’s comments then these are the consequences.

As before, these figures come from my spreadsheet that converts the oil figures, capex and PSC terms into actual profit figures.

1) Shaikan (a 54.4% interest)

I have increased the OIP to 18bbls and reduced the plateau of peak production from 12 to 10 years. As a result of a conversation with Gramacho, I have also increased the rate of decline in production when coming off the plateau. I have kept most of my other main assumptions as before with 30% recovery and $100 oil price. However I have assumed 900m shares in issue.

The result is:

Profit oil is constant at 7.8%.
The undiscounted value per share becomes £15.49
The value per share if a 6% discount is applied becomes £6.60.

The £6.60 valuation ties in quite well with John G’s reported comment that Shaikan is currently worth about twice the share price for the whole company.

BBBS commented in an extremely useful post on the 27th December that my discount seemed very severe as normally a 6% discount would not reduce the undiscounted figure so much. I think the answer is that the ramp up in production means that the period of positive cash flow is heavily weighted to the later two thirds of the PSC period and so there is an unusually high discount. However, I have included the undiscounted figures so that readers can apply their own discounts.

I can confirm that my spreadsheet shows that even with the massive capital investment that was outlined by John G in September, cash flows are positive from 2015 and that the income from the sale of AB together with the recovery of costs when the BiRs are sold would together be adequate to fund capex until 2015 providing that Shaikan was prioritised over SA and BB in the next 2 years.

I have not included the value of the gas in Shaikan so you can add this to my figures.

2) Akri Bijeel (a 12.8% interest)

Taking the mid 20s comment to mean a massive 25bbls oip then:

Profit oil is 8.3% and is higher than Shaikan’s because profit oil is between 32% and 16%.
The undiscounted value per share is £5.36.
With a 6% discount the value per share is £2.28.

The discounted cash flow to GKP is around £2bn. Sadly we will not see that realised as a price for GKP’s share of AB as the full appraisal has not been completed but it gives an indication of the upper end of the valuation bracket, or indeed the value of holding onto AB and using debt to finance any pre T/O capex on Shaikan (no more dilution please Todd).

Clearly there is an issue here (as in Shaikan) as to how much oil can actually be extracted during the PSC period. My spreadsheet shows 6.9bbls extracted during the PSC. If you consider this too optimistic, you can reduce my figures pro rata.

3) Sheikh Adi (an 80% interest)

Taking the mid point of the figures we were given in NY, 4.5bbls, then the valuation is:

The undiscounted value per share is £5.74.
With a 6% discount the value per share is £2.47.

4)Ber Bahr (a 40% interest)

Again taking the mid point of the NY figures, 7.5bbls (the only slightly disappointing part of the presentation), the valuation would be:

Profit oil is 8.3% which is in line with Tony Hayward’s comments and reflects the fact that BB has 32% to 16% profit oil but that GKP pays 40% final tax while Genel pays 30%.

The undiscounted value per share is £5.18.
With a 6% discount the value per share is £2.21.

5) Summary

The undiscounted value per share of all four interests is £31.77. Discounted at 6%, the value falls to £13.56. Many distinguished commentators have suggested that some NOCs will not apply such a high discount but that is to be seen.

As a sensitivity exercise I did the same set of calculations assuming an oil price of $120 rather than $100 and the equivalent figures are then £38.07 and £16.23. The cash flow pattern means that it is not exactly pro rata but it is close.

Dalesmann has kindly put my Shaikan spreadsheet up on his web site so you can carry out your own sensitivity exercise. The “HamishNY” version will be there mid afternoon.

TPO

Anothe rattempt to put a value on GKP's assets,they're all arriving at similar figures.


good post from scara over at iii
================================================================================
Author scaramouche View Profile Add to favourites Ignore
Date posted today 18:27
Subject NOT Going for a song....
Votes for this Posting Voted 28 times.
Message
I always like to hear what JG has to say, because he comes across as cautiously optimistic... and not a man who is likely to let the story get ahead of itself.

He has told us many times that he thinks a recovery rate of 30-35% is reasonable, and he continues to report upgraded OIP figures much in line with those forecast. In essence, he never seems to say anything other than what he can subsequently prove.

So, it is worth reminding ourselves that he recently mentioned that Akri-Bijeel should command a price tag of between $350 and $500 million, despite the disappointment of Bekhme.

GKP’s 12.8% Net WI in AB currently amounts to 2.4 billion x 0.33 x 12.8% = 100 MILLION barrels of estimated reserves.

So, that suggested that JG was expecting between $3.50 and $5 per barrel based on the results to date.

According to HamishNY’s notes from the presentation yesterday, JG also said “what they do know of Shaikan so far is worth about double the current share price....”

So, what do they KNOW so far?

Latest OIP figures 10.5 billion (P50), JG assumes one-third recoverable, and there is a Net WI 54.4% (after Texas Keystone’s current interest is applied).

10.5 billion x 33%RF x 0.544 = 1900 MILLION barrels of estimated reserves.

Furthermore, GKP’s share price yesterday when he gave his presentation was 279p and gave us a market cap of about £2.4 billion. So, if we were then about half of what JG thinks Shaikan is currently worth, he must see Shaikan as presently worth around £4.8 billion (or $7.6 billion).

And $7.6 billion for 1900 million barrels = $4 PER BARREL, very much in the same ball park as his mid-point estimate for a barrel of AB reserves.

It seems to me then that this is the second indication of how JG appears CAUTIOUSLY to consider what a buyer would pay for GKP’s oil.

But what else does JG say about Shaikan?
He estimates that it will hold 18 BILLION barrels OIP (Note: that is still quite CAUTIOUS compared to TK’s forecast the other day of a 100% upside from where we are now).

*** On the same basis as the figures above, JG's estimate would mean about 3.2 BILLION barrels of reserves attributable to GKP from Shaikan alone ***.

Think about this...

3.2 billion x JG’s very cautious $3.5 per barrel = $11.2 billion = £7 BILLION
And 3.2 billion x JG’s more optimistic $5 per barrel = $16 billion or £10 BILLION.

Now where have I heard those figures before? Oh yes...

http://www.independent.co.uk/news/business/news/exxon-woos-gkp-to-gain-kurdish-base-6278531.html

Extract: < US oil supermajor Exxon Mobil is understood to have sounded out London-listed Gulf Keystone Petroleum (GKP) over a possible deal that could value the Kurdistan-focused group at around £7bn.
GKP has a market capitalisation of around £1.5bn and is listed on the junior Aim market, but its chief executive, Todd Kozel, believes the group could eventually go for double-figure billions.>

But, of course GKP then famously denied that there were any talks regarding the sale of the COMPANY.... leaving the door wide open for the fact that there might still have been talks about the sale of SHAIKAN.

Hmmm... hasn't GKP’s very own Chief Operating Officer (JG) just told us that he believes that SHAIKAN alone should soon command a price tag of about £10 BILLION under a competitive bidding process?


Let us also remind ourselves of what HamishNY stated this morning in his notes on JG’s presentation about the rest of the company.

“More on figures. BB - 5bn to 10bn expected, SA - 3bn to 6bn, SH 18bn, AB - MID 20s. (yes, big number). Said if they don't get good price for AB share (process to start this week) then they would hang on as could be v profitable.”

On the same basis as above, this would mean...

1. AKRI-BIJEEL (mean figure of 25 billion barrels OIP)
25 billion x 33% RF x 12.8% Net WI = 1 BILLION barrels of estimated reserves



2. SHEIKH ADI (mean figure of 4.5 billion barrels OIP)
4.5 billion x 33% RF x 80% Net WI = 1.2 BILLION barrels of estimated reserves.

3. BER BAHR (mean figure of 7.5 billion barrels OIP)
7.5 billion x 33% RF x 40% Net WI = 1 BILLION barrels of estimated reserves.

And when you add all that lot up, intriguingly you get.... 3.2 BILLION reserves... exactly the same figure as 18bn OIP would give for GKP’s attributable reserves at Shaikan.

In conclusion, I think that JG has just told us in his own cautious manner that he believes Shaikan commands a realistic price tag of £10 BILLION for a super-major.... AND that much the same value can be attributed to the rest of the company.

Hmmmm.... £20 BILLION for GKP anyone (based on just $5 per barrel).... or maybe our friends from China might like to offer us a little bit more!!!

For any of those of a certain vintage, JG has IMO just told us all that GKP will certainly NOT be ‘Going for a Song’.

AIMHO and please DYOR.
GLA, scaramouche