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.

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

And Dalesmanns own site.

http://dalesmann.com/

pay much attention to self-serving posters and you'll deservedly lose your shirt ..... as with computers, garbage in, garbage out

http://www.independent.co.uk/news/business/sharewatch/market-report-glenstrata-deal-has-some-worried-about-missing-out-6316133.html

.

Positive noises emerging from an investors presentation in New York helped Gulf Keystone Petroleum, with the Kurdistan-focused oil explorer – and favourite of the retail punters – spurting up 14p to 293p on the AIM.

Cynic your right in saying not to believe everything one reads on a BB,but neither should one dismiss everything.The same is true regarding what you feed a computer.
Over the years one gets a feeling as to who one can and cannot trust,not that makes them right as thhe E&P business is high risk,not for widows?
Many work in(BIG AL) or are ex(usually retired)personel from the industry who enjoy the challenge of finding the next multi bagger,yake the arial pictures released by the owners of a company for free. It is possible to work out (from info)roughly the value of an asset,but when it's down to the drill(such as Ber Bahr)then you take your chance?

I suppose it's right to be a little cynical,but don't just dismiss out of hand and DYOR.

Take care everyone and GL.

Looks like the seller still dumping around the nid 90's,if it's the ex mrs TK,i wonder how many of the 17m shares she intends to dispose of?

When I think that I first bought these around 11p to 14p or lower....now close to 300p.....wish I had kept all of them now.....but you just can't tell......

Big Al was a great guy - what's happened to him?

Don't know,thought you two were close?

haven't heard from him in years, but he was certainly a very knowledgeable chap - he came from the coal-face so to speak, whereas my oilfield involvement is peripheral equipment

Hovering around the 300p mark,would be a nice if it was to finish 300p+?

Flying now 306p,lets hope it holds up?

Trying to find out why all the buzz? Seems a known pi has conntacted them(GKP i presume?)about a t/o rumour and they are not denied it,coupled with 400k buy at 300p.
Battle to hold 300p,their seems a lot have 300p orders being triggered?

Excellent to finish up above 300p,

303.5p,up3.58%

Busy weekend for the chartists?

Definetely buzzing here.

.

Ber Bahr's operator.

Genel Energy plc will be hosting a Capital Markets Day presentation in London on the afternoon of Thursday 23 February 2012.

Tony Hayward, Chief Executive Officer of Genel Energy will deliver a presentation on Group strategy and set out milestones for 2012. There will also be operational, pipeline and exploration updates following the first 90 days since the Genel Energy listing. Other members of the Group's senior management will also be present.

A live webcast will be available on our website (www.genelenergy.com) on the day, and will be available for download with the presentation from the day shortly afterwards.