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.

i read it that the oil majors have deeper pockets

was temped to sell some but sp seems to be holding in the 350's plus the well news to come, then might be a time to shed a few....when it hits £5.,.

Prosel all part of the game,are suah statements meant to put doubt in PI's minds?
Billions of oil fields(not many nowadys)will always be attractive to super majors,as it's what makes them so,of course the cheaoer, the moreso(but that can be said of anything).
Shaikan is the largest onshore oil field found in decades,so don't be fooled by such statements.

Holding up nicely at 360-370p Well news soon then whooshhh.,.

http://www.iii.co.uk/tv/episode/what%E2%80%99s-so-exciting-about-gulf-keystone-petroleum

This is up and down like a weston s mare donkey today, still wouldn't want to be out of these over the w/end.,.

364.64p fimish,pinks flying in the USA.

Exxon annual 10-K filing now online


Quick scan reveals nothing specifically regarding GKP or Shaikan, however this is the first official comment from Exxon regarding their Kurdistan contracts: -

"During 2011, production sharing contracts were negotiated with the regional government
of Kurdistan."

"Exploration and production activities in the Kurdistan region of Iraq are governed by production sharing contracts negotiated with the regional government
of Kurdistan in 2011. The exploration term is for five years with the possibility of two-year extensions. The production period is 20 years with the right to
extend for five years."

It's now official!

HOUSTON (Dow Jones)--Exxon Mobil Corp. (XOM) said Friday it plans spend a record $37 billion annually in capital projects for the foreseeable future, becoming the latest oil giant to unveil an eye-popping capital budget aimed at boosting production and reserves.
"The corporation anticipates an investment profile of about $37 billion per year for the next several years," Exxon Mobil said in an annual report filed with the Securities and Exchange Commission. "The corporation's financial strength enables it to make large, long-term capital expenditures." The figure is slightly higher than the record $36.8 billion the Texas-based oil major invested in 2011 and a jump from the $32.2 billion it spent in 201


he announcement marks the rebirth of a trend towards bigger spending by the oil majors that was interrupted by the financial crisis, which caused oil prices to tumble in 2008.


A recovery in crude prices has led the majors to shrug off the uncertainty and keep boosting spending as they seek to fund the projects that will drive production growth and replenish reserves for decades.
But part of the increased spending comes from higher costs for equipment, materials and labor. These projects are getting increasingly expensive as companies push technological boundaries to tap reserves in hard-to-reach places such as the deep-water and the Arctic.
Rival Chevron Corp. (CVX) said in December it plans to spend $32.7 billion in capital projects this year, 12% more than in 2011, while ConocoPhillips (COP) said its 2012 budget of $14.8 billion will be 11% higher than in 2011.
Texas-based Exxon Mobil is the world's largest publicly-traded oil company

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; isabel.ordonez@dowjones.com

(END) Dow Jones Newswires

nice one cyril!!!:))

dalesman - 26 Feb'12 -

Just to underline the enormity of the under valuation by Cannacord this week I have posted a screenshot on my website dalesmann.com of one of the lesser used but nevertheless useful workbooks contained in ‘Targeting Oil Shares’. Click to enlarge.

This workbook is a simple one and takes all its references from other integrated spreadsheets.
In its most simple form it asks how many recoverable barrels would it take to support the current share price.

At a share price of £3.64 the spreadsheet returns a figure of 667m barrels
This is valuing a barrel of oil at $7. 64 a figure slightly below TPOs $7.80 . His spreadsheet can still be accessed at:
http://dalesmann.com/tpo-revised-gkp-valuation/

I understand it is currently undergoing a slight upwards revision but it will do for now.
This represents a PSC profit of 13% before tax (corresponding to TPO’s 7.8% profit after the 40% AISP tax, in the above calculation a $100 long term oil assumption has been assumed.)

The Cannacord so called valuation ignores their own previous calculations. In BBBS recent valuation

http://dalesmann.com/bbbs-gkp-nav-updated-cheap-at-half-price/

he sites Cannacord using a similar figure to TPO – based on

“- a Discount Rate Reduction Factor (DRRF) of 0.6185 (corresponding to the reduction observed within the Cannacord Adams evaluation of several generic Kurdistan PSC’s when applying a Discount Rate of 10%),”

I strongly suggest you read the whole of BBBS post to gain the full context of this statement.

Suffice to say if BBBS is correct (I’m sure he is) then Cannacord have up till now been using a very similar figure to TPOs £7.80 for a recovered barrel. :0)

They qualify their statement by saying that their calculations are based on 3b bls recoverable. I’m happy to use this figure, which they state was derived after a 28% recovery factor was applied,

GKP has effectively 54% of this figure. After a 10% top-slice has been applied we come to 1.439bbls as the GKP entitlement.

Their current valuation of GKP they say comes out at £1.70. Does it really – then your previous guidance was worthless !

So we are led to believe that 1.439bbls = £1.70/ share – lets assume 893m(fully diluted) shares in issue

And an exchange rate of $1.57 = £1

We then have 1.57 x 1.70 x 893 = market cap of $2.383b according to Cannacord

If we now divide this number by the number of barrels they have assigned to GKP we get 2.383 / 1.439 = $1.65/ recoverable barrel.

Are they actually trying to make us believe this figure – about what Afren paid for contingent resources, not recoverable barrels! Genel paid $5.8/ bl and stated that the Chinese were prepared to pay 33% more ($8.7 / barrel)

Compare that figure with Cannacord’s own declared announcement for a barrel of recovered oil derived from a KRG PSC contract and all of a sudden there is a $6 / barrel disparity.
If we use figures stated by Cannacord Adams in their previous analysis (see BBBS post) a figure close to TPOs $7.80 ,

we get

$7.80 x 1.439 = $11.22billion

Divide that by 893 shares in issue 11.22/0.893 = $12.56/share

Divide this figure by the exchange rate 12.56/$1.57 = £8.00

So using previously stated metrics put out by Cannacord Adams themselves their valuation should be £8.00

They then have applied upside due to a TO situation which amounts to £2.10 – £1.70 = 40p/share or a percentage premium of 23% (strange I’ve heard that figure before haven’t I CJ?)
If we apply a 23% uplift to £8.00 we get £9.84

I think that these figures have now some semblance of truth to them. :0)

I have only used figures put out by Cannacord Adams themselves prior to their last note, their recovery factor , their recovered barrels. All based it seems on the 10.5billion OIP figs at Shaikan which both Todd and John G expect to update us on soon. John has mentioned 18b OIP, Todd a doubling of the resources.

Interestingly if we take Cannacords 28% recovery factor and apply it to 10.5b we get 2.940bl leaving only 60mbo to come from Sheikh Adi, Ber Bahr and Akri Bijeel. As 2.4b has already been declared at Akri Bijeel and we have a fully diluted 77.41m barrels of entitlement there, it appears that Cannacord is throwing in around 17m barrels at Akri Bijeel for FREE as well as the whole of Sheikh Adi and the whole of Ber Bahr – IMHO there is absolutely NOTHING in their figures for these blocks! Am I wrong?

Returning to my workbook and the associated screenshot:

You can see that only 637m barrels are required to support the current market price using $7.64 profit /barrel

If we return to Cannacord Adams entitlement figures assigned to GKP of 1439m, the Shaikan valuation would be $11b or equivalent to £7.00 for Shaikan alone before any TO premium.
In actual fact my own figures as can be seen from the screenshot have an unrisked target of £14.32

A little bit of study looking at the spreadsheet will see how this figure was derived.

So much for what IMHO was a most disingenuous note!

As always I urge you to DYOR . Check out the validity of my workings for yourself – as always I am not giving any advice on holding, selling or buying – that is all down to you!

What we will get in a TO situation is anyones guess - a low ball offer is still possible.

A second longish post 'A Pilot on board' is also posted on my site

Kind regards
Dalesmann

Scotland on Sunday's excellent Bill Jameison today writes this, the article as a whole is very close to the Telegraph one, but I will concentrate only on two features - QE and Energing market Growth.

Bill writes ( page 22 Business) from HSBC's research paper "oil and money"
"QE is now playing a role in pushing up oil prices higher as well as by turbo-charging emerging market growth.
- a slowdown in the big G7 , no longer works to bring down the oil price as it once did.
- Emerging Markets now account for nearly half of all world oil consumption"
Yet, more QE is likely to be the reaction to the fall in productivity that higher oil prices bring.
- returning to GKP, and our UK mid cap oil cos, no wonder there is now a rush to take them out. This sub-sector is getting re-rated, and may well be further so. As a slight aside, I'd be buying into copper for example, also boosted by the same factors. QE is boosting commodity prices and more QE will boost them more .
No advice intended of course.
H
H.

perhaps coincidence, but sp dropped back to 338 this morning, which happens to be 25 dma level, and then bounced modestly

A bit of an attack on the SP this am,probably after those stops? 340p seems to interest buyers,i would think some news is required to recerse this trend? To be in or not is an issue with GKP as a offer could appear out of the blue and as i see that figure way above todays price,then my decision is to hold on however painful short term.

Is it me or i'm the only one geting trouble ,loggong in?

No, it's been like that most of Monday.

Same problem for me sometimes, takes about 10 times before it finally logs in.

After a bad start perking up again, back to 350+.,.

Just surfaced,glad to see the log in problems sorted,along with a reasonable recovery 357p.

cyril it's 9.45am you having brunch????