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.

Message




This morning the meeting took place with our key team players present… the man TK himself, operating chief JG, finance director Ewen Ainsworth and legal director Tony Peart.

I was tempted to reach for a bacon bap but resisted the urge to focus on the real tasters coming out. I am sure you have all seen the presentation and results posted online, TK led us through the slides. For GKP this was quite a year, 2011 has seen us discover a vast unmatched volume of oil in North Iraq, only one of the sweetest onshore spots in the world remaining. GKP are a running joke even in Kurdistan, we just drill and we find oil.

However down to business, please refer to the presentation as I write, I will flip forward/back intermittently depending on subject. Firstly with respect to Kurdistan as a whole… the "exploration" phase is pretty much done. The smaller E&P companies that entered have had
70% success and we were amongst the luckiest. The risk-it-for-the-biscuit has been done and was achieved by the likes of GKP Genel MOL etc. It is only to be expected therefore that the region looks to enter the "infrastructure" phase, and that means pipelines.

STEAM last Sunday should not be lost on anyone with a business mind or an investment prospect. For years we have all wondered what exactly the KRG had in store given the on-going disputes with Baghdad. Page 6 gives the map from the Kurdish Ministry for Natural Resources themselves on the planned pipelines, this is their map not GKP's. It
is no coincidence that GKP's own planned pipes fall in line with the route. What is not written is that the KRG's plans for 2 million bopd to Turkey will expect to see development of the first pipeline (of 1 million bopd) completed and exports commencing by August 2013 next
year. The second pipeline, we can expect completed by January 2014. What has happened though, is given so many operators/blocks around, the KRG must coordinate with everyone how the infrastructure will be developed, but such details are currently being reviewed. There is also a 3rd planned pipeline for heavy crude of 500m bopd, which would mean eventually 2.5 billion bopd for Kurdistan total.

Of the KRG's 2m bopd target, our intention remains to produce 400k bopd of that and therefore be a huge chunk. The BoD believe that by the time the 1st pipe is completed mid next year we should be able to deliver an aggregate total of 100k bopd. It will take some 4 years to reach capacity of 400k bopd. With confidence it can be said that GKP are crucial to the Kurdish monetization plans, and in turn they have explained the framework on how we will realise our finds into a business via Turkey. The evaluation of pipeline options as mentioned on p.8 ties in with what I explained above in that the KRG and not solely GKP needs to coordinate for the bigger picture.

Our current plan is to reach 40k bopd by year-end using the two EWTs at SH1 & SH3. No problems on trucking, Tawke is trucking 70-80k bopd towards Turkey currently… And there are plenty of trucks in Kurdistan.

To highlight, the two EWTs are important for giving us proper indication on recovery rates. So far we have merely seen small volumes all from fracturing, but the two EWTs when completed will be 30km apart & will allow us to test properly for dual porosity reactions.
This will give us much better indications on recovery factor. These numbers will then be available for CPR.

The CPR will be included on our eventual prospectus for FTSE listing. The listing itself however will not be until after the lawsuit, October later this year set. We will clear Excalibur first to ensure the FTSE route is clear.

Tony Peart sounds very confident Excalibur are just digging themselves a hole. Excalibur are not an E&P company, and in Kurdistan you cannot have any working interest if you're not an E&P. Given our preliminary actions thus far, it's going our way. But to be prepared for worst-case scenario, Excalibur in the most unlikely event they win, would only be allowed damages.. since as stated above they cannot have any operating interest. In terms of "damages", Excalibur have not spent a single penny in Kurdistan. Even if they win the case and are awarded something, it won't be much. Their lawyers will be pleased nonetheless however.

One of the original requirements for FTSE was 3yr's production/income, however the listing rules have changed and this is no longer a requirement. As such, once we put Excalibur to bed the door will truly be open once we appoint the 3rd non-exec.

In terms of monies and a stronger cash flow than we worried about, our local sales currently give us $40-50 per barrel in the domestic market, corroborating the $2.25m per month on existing EWT. We insofar have historically produced a total aggregate 400k barrels to end 2011. In 2012 YTD to May we have already done 200k barrels, and with the joint KRG/Turkish announcements you can expect our domestic/regional sales to pick up further given the clarification towards monetization. TK Ewen & JG all see us reaching 20k bopd by September, and 40k bopd by January 2013, as we upgrade the EWT facilities.

SH8 is not oil appraisal, but gas-handling. The KRG are very stringent about flaring and want to ensure the Kurdish operators are more disciplined than those in South Iraq.

With respect to the BIRs, Shaikan and AB will give us $40m back-pay, yet to be added to our current books of $183m cash/equivalents.

So in terms of finances, we're not stretched. There is additional financial support if we need in loans, even convertibles (p10) with 10-12 banks now. More numerous financiers than we has, so that's an option if we get to that point. Again the KRG/Turkish agreement is paying off for us in many ways. Regardless we are currently financed through to mid/end 2013 with local sales picking up in the coming months.

AB does have current bidders, no names. However don't fret that we want to boost oip numbers, the BoD aren't in a hurry given we have cash and so want to maximise our return on the sale. JG said himself, p11, he believes on AB the Bekhme1 and Bijeel3 are all part of one large structure despite the map, along the area's anticline. What is certainly likely at least is the Bijeel field is bigger than the current green area. We expect upgrades from the 3.6bn current OIP P50. Anyhow on AB sale, the Bod reassures we can expect an announcement in the coming months.

This brings us to our prize among prizes, the jewel of Kurdistan, Shaikan, which has had a great run on appraisal this year. The BoD reinforced that recently they didn't need to test to the good parts that were there, but went for the marginal sections to better understand what we have. We did reach OWC on SH6, 150m below target levels below spill point in the Jurassic and will add significant increments to both the aerial extent and depth of the Shaikan structure. If I take us to the outline of the Jurassic on p13, the current green area on the east of the Shaikan block pretty much extends green all the wall to the remaining blue section of the block and likely into the South too of the neighbouring block. The water contact on SH6 is in the low Kure Chine C or D section, and there it is like what we found in SH4. There is possibly another OWC in the Butmah level but that requires further testing. What we have encountered is extremely high pressure of 19.2 pds/ga in the Triassic, and we need to think how to deal with this. To give some context, the Triassic usually in SH1-3 is more 12 pds/ga, so this has surprised. During SH5 in the Kure Chine D levels there was a significant oil kick with sample gravities in the mid 30s-40s and appears to be sweet. This bodes well the prospectus below. In terms of the Jurassic matrix, the overall fracture or amount of oil retained is higher than expected, where originally it was thought 0.8%, but is now proven to be some 3%. The main takeaway on the back of SH5 SH6 is we can expect an increase again in OIP on Shaikan.

Just briefly on Sheikh Adi, SA-2 is roughly 125m into the hanging wall, the more flexible part of the structure it sits upon. This means we can expect a much better fracture than SA-1. With regards to BB, JG stands by his comment that the structure of Ber Behr is x1.5 times Shaikan, the only thing is we await Genel as they move to understand exactly what it contains. The geology on BB is very different from Shaikan, and the time it's taken is because everything is coming in much deeper. Eg we hit geo-pressures on Kure Chine C level, whereas it's still just normal pressure on BB.

The Shaikan development plan will be submitted to the KRG before the end of the year for approval. On a final note, ERC Equipoise will be the ones leading us on the FTSE prospectus/listing after Excalibur are finally kicked up the backside and booted out of our lives forever.

Overall, as Kurdistan moves into the "infrastructure phase", our Shaikan starts thinking more about EWT and monetized production, and FTSE beckons under a more realistic timeframe post-Excalibur, I almost fancied thinking that we are beginning to see the 'P' and not just 'E' as an exploration and production company.

Is there a new thought forming in my head? Hell yes, we might eventually be able to go it alone with running Shaikan ourselves. Our finances appear to be in order, the KRG/Turkish agreement has our development and production central to their plans. In fact, we are about to become the model E&P company. Baghdad will either agree to what the KRG have done, and if not then Basra and Mosul will look at the Kurdish model and follow suite. This is perhaps the end of the federal Iraq sovereign nation depending on what Maliki does. Todd thinks his days are numbered btw. But yes, not that anyone mentioned it in the room, but some were left hanging at the thought we will turn into a producer. Don’t worry if we’re not sold yet in 2-3 months or by year-end, we might be, the BoD didn’t let on. However, we have done the hard part already. It is simply now just following the plan, and therefore I think we are now in a very comfortable position going forward. Not just oip, but the overall business model.

http://www.proactiveinvestors.co.uk/columns/fox-davies-capital/9496/xcite-energy-gulf-keystone-petroleum-arian-silver-ithaca-energy-and-others-feature-in-fox-davies-newsflash-9496.html

Gulf keystone sees big oil moving into Kurdistan

Says oil majors now "visible" in Kurdistan; Gets interest in Akri-Bijeel licence stake; Fully funded to end 2013 on current production level
May 29, 2012 12:23 by Reuters
Kurdistan’s plan to start oil exports to Turkey could make it attractive for more big oil players to try to move into the region, the head of Britain’s Gulf Keystone Petroleum told Reuters on Monday.
Iraq’s autonomous Kurdistan region has been locked in a long-running dispute with Baghdad over oil exports, inconveniencing oil firms that operate there and putting off others due to the complication of monetising huge oil finds made in the area.
Gulf Keystone’s Chief Executive Todd Kozel believes the stage is set for change, however, after Kurdistan earlier this month detailed plans to start exporting crude to Turkey by August 2013.
“This is the first I’ve seen of this kind of aggressiveness,” Kozel said in an interview.
“It’s finally showing an opening into the commercialisation phase. They laid out dates for the beginning and ending of those projects. They laid out quantities. It’s significant.”
Kurdistan, previously a no-go area for oil majors with contracts to develop Iraq’s southern oil fields, has increasingly been on the radar of the biggest oil companies after U.S. group ExxonMobil inked a deal to explore there in 2011.
Gulf Keystone, which estimates it has found around 10.5 billion barrels of oil at its giant Shaikan oil field, has been the subject of frequent rumours that Exxon is looking to acquire it.
“Is that possible in the future? Yes, anything’s possible, we’re a public company,” said Kozel when asked whether the company would still be independent in a year’s time.
“It’s life. I don’t know what’s going to happen tomorrow. Our plans are to keep our nose down and keep working.”
The dispute between Baghdad and the Kurdish capital Arbil is part of a broader political crisis in Iraq, where a fragile government of Shi’ite, Sunni and Kurdish blocs is struggling to overcome deep splits over power-sharing.
Baghdad says only the central government’s oil authorities have the right to control oil exports, and dismisses contracts signed with the Kurdistan Regional Government (KRG) as illegal, while the KRG says it has the right to develop its own oil fields.
Kozel added that oil majors were now “visible” in Kurdistan, and said “mostly large companies” were behind several indicative offers Gulf Keystone has received for a stake in the Akri-Bijeel licence in Kurdistan which it has put up for sale.
Finalisation of the sale, which the company said in January could raise up to $500 million, could come in the next couple of months, said Kozel, one of the UK’s highest paid executives whose earnings doubled to $20 million in 2011.
Gulf Keystone is targeting production of up to 40,000 barrels of oil per day (bopd) from its Shaikan field by the end of 2012.
Kozel said that Gulf Keystone, which has been the subject of internet gossips speculating on whether it will need to raise money, was fully funded to the end of 2013 at its current production level of 7,000 bopd and without any proceeds from the Akri-Bijeel stake.
Meanwhile, the firm continues to work to achieve its aim of moving to the main market of the London Stock Exchange from its current position on London’s junior AIM market, something which in February it said would happen in 2012.
“It’s a big process and a big procedure. It’s a much bigger job than we had thought but we’re working very hard towards it,” Kozel said, when asked when the move would take place.
Shares in Gulf Keystone, which have tumbled 57 percent since hitting an all time high in February, were trading down 1.1 percent to 197.75 pence at 1335 GMT on Monday, valuing the company at about 1.8 billion pounds ($2.8 billion).

http://pukmedia.co/english/77/kurdistan-region/1155-kirkuk-governor-authorized-to-sign-oil-agreements

http://www.rudaw.net/english/kurds/4835.html

http://www.iraqoilreport.com/politics/national-politics/kurdistan-exxon-gain-key-ally-mosul-8187/

http://www.moneyam.com/action/news/showArticle?id=4389047

http://www.nasdaq.com/article/iraq-pm-warns-of-wars-over-exxon-deal-with-kurds-20120619-00231

Iraq PM Warns of 'Wars' over Exxon Deal with Kurds


BAGHDAD -- Prime Minister Nuri al-Maliki believes a contract between U.S. oil giant ExxonMobil and Iraq's autonomous Kurdistan region is dangerous and could lead to "wars," his spokesman told AFP Tuesday.

ExxonMobil signed an oil exploration deal with the Kurdistan region in northern Iraq covering six areas, including two that are said to be outside the region and claimed by both Baghdad and Kurdistan.

The central government says all oil contracts must go through Baghdad and regards any that do not as illegal.

"Maliki views these de.......................

http://www.dianomioffers.co.uk/uploads/product_2987_pdf_link.pdf

sp continues to sink?

http://uk.advfn.com/news/UKREG/2012/article/52859199

100p I imagine before a bounce.

http://www.investegate.co.uk/Article.aspx?id=201206260700211161G

Nice bounce today.

Try a sport's bra

lol.

sod bothering about a bra! ..... heavy volume today, and though there are clearly still massive political problems in the region, at least GKP look to have found an awful lot of the black stuff

Still, a pretty grim chart and I see no reason to buy at the moment.

chart-wise you're absolutely right, but i hold already, though at a rather higher price

I remember reading about a month ago that the ICG only disputed 3 contract areass,just came across this.


Refers to contracts long winded, don't know if this has been mentioned here.

Barney71255 View Profile Add to favourites Ignore
Date posted today 07:19
Subject Shahristani Accepts KRG PSC's
Votes for this Posting Voted 41 times.
Message


Last night at 23:16 I posted: The below is an interesting article from Nineveh's governor. It's the first time I've seen a non Kurd government official stating the Central government accepts the existing Kurdish contracts except Exxon's in the disputed region. The reference is Hunt's block just to the south of Shaikan's. While the KRG may argue on payment mechanism's with the ICG at least the central government accepts that that there are contracts with the oil companies. Shouldn't this be a major de risking aspect?

Now the below from Shahristani's speech in Indonesia seems to say the same thing. He is no longer saying all KRG PSC's are illegal only 3 Exxon Blocks in the disputed region. It appears an endorsement that the Kurds have establashed the 43 oil company contracts but they need to endorse final development plans. This seems very positive provided agreement is sorted on oil export payments

From the Times

Take Gulf Keystone Petroleum. This was one of my bid prospects, and the shares duly soared. I advised readers of the column to take profits in mid-February, which would have given an 80 per cent gain on the investment. Had the portfolio been able to take this advice and lock in that profit, the average rise would have been 9.4 per cent Stiil, we play by the rules of the game. In fact, no bid emerged and the shares plunged. Bid activity is hotting up again among oil and gas explorers; Gulf Keystone could again be a prospect.