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.

But two sources told the Telegraph that trucks had begun transporting crude oil from Kurdistan over the border to Turkey on Thursday.

Malcolm Graham-Wood, oil analyst at VSA Capital, said the move would be significant as it would show "serious commitment" between Kurdistan and Turkey.

"We didn't expect this to happen so soon," he said. "The opening of the border massively increases the scope for Kurdistan to sell crude.”

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9380009/Kurdistan-begins-oil-exports-to-Turkey.html

Some reading for the weekend?

http://www.iraqoilreport.com/business/companies/gulf-keystone-doubles-down-on-kurdistan-8292/



Gulf Keystone doubles down on Kurdistan
Gulf Keystone Operations in Iraqi Kurdistan
A worker descends the Gulf Keystone drilling platform at Shaikan 5. (SEBASTIAN MEYER/Iraq Oil Report/Metrography)
By Ben Lando of Iraq Oil Report
Published July 6, 2012

SHAIKAN - On a hilltop at Shaikan, one of Iraqi Kurdistan's biggest oil fields, the drillmaster on a Gulf Keystone rig faced a dilemma at Well No. 5.

As the drill tore deeper through the earth, drilling fluid that was supposed to return to the surface was instead being lost into the myriad fractures in the rock. The company was forced to alter its composition of water and chemicals - and to slow the drilling down.

Yet this setback also portended a hidden reward.

"Those cracks make it difficult to drill. But the fact that it is difficult to drill with the fractures means the wells are more productive," said Richard Lowe, the Gulf Keystone drilling manager. "It's almost sort of an inverse relationship – it's challenging because of the fractures and drilling conditions, but the upside is the actual scale of the field."

Gulf Keystone Petroleum is at the forefront of the oil boom in Iraqi Kurdistan, and the drilling of this well has been just one of the many aspects of the company's operations that have presented both considerable challenges and enormous opportunity.

Like the geology of its exploration block, the political situation in Kurdistan has presented Gulf Keystone – along with dozens of other foreign oil companies – with a slew of risks. The semi-autonomous Kurdistan Regional Government (KRG) is locked in a nearly decade-long political dispute with Baghdad that, at its core, calls into question the legitimacy of the KRG's contracts.

That political risk has helped the companies negotiate lucrative production sharing contracts that promise significant profits – especially compared to Baghdad's more conservative technical service contracts.

In its 2011 annual report, released last month, Gulf Keystone estimated that "full field development is estimated to cost in the order of $7 billion to $10 billion gross, with the first 100,000 (barrels per day) of production estimated to cost less than 5% of that amount."

Geological irregularities may have raised the front-end costs of the project – operating a single rig can cost more than $100,000 per day – but at the other end lies an oil field that could hold 10.5 billion barrels of oil in place, according to Gulf Keystone estimates.

And that's just one field.

Gulf Keystone is operator or junior partner in four projects in Kurdistan, which has signed 46 contracts with oil and gas companies to explore for and produce oil. According to a Gulf Keystone investor publication released in late May, the company's two most prospective blocks to date – Shaikan, which the company began exploring in 2008, and Akri-Bijeel, awarded in 2007 – will in 2015 have a combined 200,000 bpd of exports.

Final reserves evaluation of Shaikan – and Kurdistan's other newly discovered fields – will only take place after full exploration and assessment, which takes considerable time and money. Until then, nobody is certain how much oil really lies beneath the land, and how much of it might be economically viable to extract.

The Kurdistan Regional Government (KRG) and outside analysts have estimated that Iraq's semi-autonomous northern region could hold between 30 billion and 50 billion barrels of reserves. Iraq as a whole – not including the fields discovered or developed by the KRG since 2003 – boasts 143.1 billion barrels.

The country as a whole is under-explored, and presents a massive opportunity for Iraq, foreign oil companies, and global crude consumers.

Political risk

Companies working in Kurdistan have encountered challenges far more vexing than the difficulties of drilling through kilometers of irregular rocks.

The KRG has been locked in a nearly decade-long dispute with the central government in Baghdad over how to structure the Iraqi federal state. One of the most consequential state powers – and a flashpoint for political conflict – is the right to sign oil contracts.

Baghdad, which claims exclusive contracting rights, calls the KRG's deals illegal and refuses to endorse the terms that the Kurds negotiated. The Oil Ministry has also banned companies with oil contracts in the north from signing new deals in the south.

The dispute has stymied oil development, especially in Kurdistan. With the notable exception of ExxonMobil, which signed six contracts with the KRG in October 2011, many of the world's largest and most capable companies have been reluctant to invest, both for fear of angering Baghdad and because the central government controls exports.

KRG Minister of Natural Resources Ashti Hawrami has said that Kurdistan could easily boost production to 300,000 bpd, but most of that potential has been shut in. Kurdistan once exported crude through Baghdad-controlled pipelines, under the terms of a stop-gap agreement signed in January 2011, but the KRG cut off exports on April 1 amidst a dispute over payments.

In theory, every new discovery should add pressure for politicians on all sides to find an agreement, which would increase the pace of investment in the oil sector and raise crude output that is already regularly generating between $6 billion and $8 billion per month for Iraq.

In reality, however, Iraq's oil development – in both the north and south – has complicated the political equation. As companies pour money into the expensive early stages of their projects, they create facts on the ground that raise the stakes of any political negotiations.

Since 2007 Parliament has intermittently tried to pass comprehensive oil legislation, which could help resolve some of the major disputes. Members of the Parliament Oil and Gas Committee have reported that a central sticking point in their failed negotiations has been the question of how to bring existing oil projects into harmony with a new, prospective legal framework.

Doubling down

Meanwhile, companies have responded to the new oil discoveries with a sense of urgency. Despite the lack of a foreseeable resolution to the conflict with Baghdad, investors are honoring their contracts and building up their portfolios.

At the annual CWC Iraq Petroleum conference in London last month, Hawrami said he's expecting more top international oil companies – a caliber he's now able to command after ExxonMobil's entry last year – to sign for the remaining empty blocks and to begin buying out the smaller companies that gambled on Kurdish crude years ago.

Gulf Keystone is among the oil firms doubling down on their KRG gamble. The company, which is listed on the London Stock Exchange's Alternative Investment Market, also operates the Shaikh Adi block and is junior partner in the Ber Bahr and Akri-Bijeel blocks.

The company has hired outside consultants to oversee the sale of its 20 percent stake in Akri-Bijeel, in an effort to raise cash.

Ber Bahr, operated by Genel Energy, the Anglo-Turkish firm now led by ex-BP chief Tony Hayward, just saw the completion of its first exploration well.

At Shaikh Adi, Gulf Keystone spudded its second exploration well in May. And a third exploration well was spudded in May by the operator Kalegran, which is a subsidiary of Hungary's MOL.

Adapting to challenges

The more Gulf Keystone drills in the KRG, the more the company learns about the area's geology, and they apply lessons learned to speed up the drilling of future wells, according to Lowe.

So too must Gulf Keystone adapt to some unfriendly conditions above the surface. A gas injection well for Shaikan will be drilled in an area now called Snake Valley, nicknamed for its population of dangerous wildlife.

The Akri-Bijeel well No. 1, located 1,400 meters above sea level on a flat-topped mountain, was out of service for more than 20 days recently because a lightning strike burned out the motors powering the drill.

The overall progress of the company's operations has also created challenges.

As the wells are expected to kick up even more crude, Gulf Keystone is expanding a temporary extended well test facility (EWT), which currently has about 7,000 bpd of flow-through capacity, into a permanent production facility that will have 40,000 bpd capacity by early 2013. Shaikan wells 1 and 3 will be joined by Shaikan 4 to this facility, which is referred to as EWT 1.

Shaikan wells 5 and 6 will be tied to another new facility, EWT 2.

Storage capacity, currently at 40,000 barrels, will be more than doubled.

And tanker trucks, averaging 200 barrels each, will double their loading rate. They currently load two at a time, which allows for about 30 trucks per day. The Ministry of Natural Resources (MNR) has staff on site to document the trucks.

The maximum the facility has every loaded in a day was 7,500 barrels. The orders for filling up tankers comes from the MNR.

"So when they say they want 5,000 per day, we supply 5. If they say 4, we supply 4," said one official at the facility.

The eventual output from the production facility depends on the KRG's future plans for its crude – how much oil will be sent to domestic refineries, the Iraq-Turkey Pipeline (ITP), or future pipelines.

Initial design and route survey has been completed for a 122 kilometer pipeline to connect Shaikan with the ITP at Feyshkabour. Permission to implement the plan will depend on broader policy decisions that are playing out within the Erbil-Baghdad feud, which could alter the route.

Another complicating factor is the composition of the crude from Shaikan, which is heavier than the oil currently flowing through the ITP. Another pipeline, with between 400,000 bpd and 600,000 bpd of capacity, is set to be built for the crude that cannot be injected into the current pipeline blend.

The company is also looking at supplying excess gas to a local power plant because they expect they will have more than can be used to generate power at the production facility.

"We need to have infrastructure in place – you have to have export pipelines, you have to have gas pipelines," said Ron Kuntz, the production facilities manager. "We'll just do it in nice, safe steps."

In the spotlight

After Norwegian firm DNO (operator of the Tawke field, among others) and Genel Energy (operator of Taq Taq, among others), Gulf Keystone is the biggest player in the KRG when you combine acreage and production activities.

It has had its unwanted moments in the spotlight.

CEO Todd Kozel's divorce was public knowledge – and splashed in the tabloids – as a settlement focused on his Gulf Keystone earnings and ownership. That saga appears to be over.

The company has also come under intense media speculation that it will be bought out. Sources within the company have said there are no active talks with any buyers.

This fall, a London court is to hear a lawsuit filed by a little known U.S. firm Excalibur Ventures, which claims Kozel included them in the original bid for Shaikan, but excluded them when the final deal was signed. The lawsuit is seeking $558 million.

Gulf Keystone has also sued a blogger for using the media to manipulate stock prices, even as the value of its own stock has been – like others in Kurdistan – accused of being overvalued.

"We will not tolerate malicious attempts to damage the company's reputation and share price," Kozel said in a May 10 statement following heavily circulated rumors the company would raise money by selling shares. "We have instructed the company's lawyers to use all means necessary to protect our shareholders from this malicious and unfounded attack."

Cautious optimism

Shaikan by itself would be a massive asset by any stock exchange's reckoning -- but only if the oil can be sent to market. Like other firms who have banked on Kurdish oil wealth, Gulf Keystone awaits a breakthrough in the ongoing dispute between the KRG and Baghdad.

Its share price often jumps when the news from Iraq suggests a political victory for Kurdistan, as when the semi-autonomous region landed ExxonMobil. And the stock also tends to subside after bad news, such as the export cutoff this spring.

The company has sold more than 600,000 barrels to the domestic market in Iraqi Kurdistan, according to an official with access to the sales data. KRG officials and others familiar with the domestic market estimate the price between $40 and $65 per barrel, with $25 per barrel being returned to Gulf Keystone.

The company has spent nearly $400 million in Iraq and is carrying out plans to invest more than $200 million, as it enhances its current production facilities, builds new infrastructure, and awaits direction for a new pipeline that will send heavy crude to the Turkish border.

That pipeline is pegged at $170 million and, according to recent announcements by Hawrami, would have a 500,000 bpd capacity and potentially transit directly from Kurdish-controlled Iraq into Turkey.

What happens to that crude, and how its value is translated into revenues for Gulf Keystone, depends ultimately on how Baghdad and Erbil find an agreement on it and the 47other production sharing contracts.

Without an agreement, Shaikan crude will be shut in, sent to a less-profitable domestic refining market, or exported unilaterally by the KRG without Baghdad approval – likely a combination of the three. Any of those scenarios present significant risk and uncertainty.

Yet as the KRG presses ahead with development of its oil sector at large, both the Kurds and its company partners are betting that the opportunity to make money will sway Baghdad, as well as other big investors.

The presence of ExxonMobil – and the size of Gulf Keystone's discoveries to date – suggests the company will have little trouble convincing investors and prospective buyers that Kurdish crude will find its way to market, one way or another.

Big potential

Richard Lowe, the drilling manager, said Kurdistan wells have a 70 percent discovery rate – compared to 10-15 percent worldwide.

"Each well in Kurdistan is unique because it is so heavily folded and fractured," he said about the geology, whose complexity has offered unexpected rewards.

Shaikan's well no. 6, for example, was initially drilled at the far end of the field to test the "spill point of the structure" -- where the hydrocarbons reserve ends and water was expected – but when the drill got more than 3 kilometers deep, it actually found more oil.

"It was a very, very good well for us," said country manager Adnan Samarrai, "it is very promising."

The work in the mountains of Kurdistan can be more laborious and time-consuming than in other parts of the world. It takes a month – 150 truckloads — to take down, transport, and put up a rig.

"It is extremely challenging," said Lowe, "but the rewards are quite good -- we find one billion barrels here, one billion barrels there."

http://www.iraqoilreport.com/business/companies/gulf-keystone-doubles-down-on-kurdistan-8292/

From FT. Investor roadshow?

Iraq-focused oil explorer Gulf Keystone Petroleum bounced 29.1 per cent after an investor roadshow and following reports that ExxonMobil boss Rex Tillerson was meeting officials in Kurdistan. Reports in February that Exxon might bid for Gulf Keystone had lifted the stock around 50 per cent above Friday’s closing level.

http://www.mees.com/en/sections/71/articles/5337-gulf-keystone-expects-oil-in-place-bost-at-iraq-s-shaikan-field


With the AGM on the 19th,an OIP update is to be expected,along with other operational
updates. Just 7 trading days left and par for the course RUMOURS,the latest being BP?
3 BP for 1 GKP(not to be taken seriously),so the coming days will be interesting,thats for sure?

Seems the above Analysist are well respected,so anyone thinking of joining?

$2725


PREFERRED PACKAGE
MEES Newsletter - Electronic Edition
Electronic version delivered via email directly to your inbox
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http://www.iraqoilreport.com/oil/refineries-fuel/kurdistan-begins-independent-crude-exports-8323/

http://www.iraqoilreport.com/oil/refineries-fuel/kurdistan-begins-independent-crude-exports-8323/

Something not right here?


33,354
11/07/12 09:02 211.0 293 AT 211.0 212.25 Sell 495,817 749,684 33,354
11/07/12 09:02 211.05 3,468 O 211.0 212.25 Sell 495,817 749,391 33,354
11/07/12 09:01 211.725 10,000 O 211.0 212.25 Buy 395,817 745,923 33,354
11/07/12 09:01 212.0 1,065 AT 211.0 212.0 Buy 385,817 745,923 33,354
11/07/12 09:01 212.0 5,998 AT 211.0 212.0 Buy 380,238 745,923 33,3

Chevron apparently confirmed (almost - next week?) in Kurdistan - with Total apparently to follow with Western Zagros (as per Noble Trader?)

Sunday times article - on subscription - copy below - interesting times ahead???

81339.ece

http://www.thesundaytimes.co.uk/sto/business/Industry/article1081339.ece

Oil giant’s Kurdish deal defies Iraq

Danny Fortson Published: 15 July 2012
Recommend (0) Comment (0) Print
CHEVRON is to become the latest oil giant to thumb its nose at Baghdad and buy into Kurdistan, the semi-autonomous region of Iraq locked in a protracted battle with the central government over oil rights.

The American company is in advanced talks to buy the rights to two exploration zones from Reliance Industries, the Indian conglomerate controlled by billionaire Mukesh Ambani.

The deal, thought to be worth at least $200m, could be announced this week.

It will be a boost for Tony Hayward, the former BP boss whose London-listed group, Genel Energy, is already the largest producer in the region.

Kurdistan has been at loggerheads with Baghdad since 2004, when it began inviting western groups in to look for oil. Baghdad said the exploration deals were illegal and threatened to blacklist any firm that dealt with the Kurds.

Companies found vast fields, however, drawing the attention of the world’s biggest producers. Exxon Mobil shocked Baghdad last year when it signed an agreement for half a dozen Kurdistan exploration blocks.

It is understood that Total, the French giant, is also in talks to buy a stake in fields owned by Western Zagros, a small independent listed in Canada. It is understood that at least part of the share would come from the Kurdish government, which has a large equity holding.

The rush of industry giants into the sector comes amid growing frustration with the bureaucracy and political in-fighting that has hampered development of Iraq’s giant fields in the south.

Genel does not plan to tie its future entirely to the region. The company is scouring Africa for exploration opportunities and plans to unveil a portfolio of new assets within the next couple of months.

http://www.bloomberg.com/news/2012-07-15/chevron-to-bid-200-million-for-kurdish-oil-blocks-sunday-times.html

http://uk.advfn.com/news/DJN/2012/article/53466699


Could the fun and games be about to begin?

From Iraq report: 18.7.12
Baghdad leaders are accusing Turkey of abetting an illegal fuel trade with Kurdistan, with potentially dire implications for future relations and investment.

well they would wouldn't they ...... yet more sabre-rattling, more of which is bound to occur in the coming months or even years; if nothing else, it's good for local public consumption

That's what Mandy Rice Davis said

except on that occasion it was in the singular, aimed at Lord Astor

Didn't he die when the Titanic hit an iceberg ? the man's an imposter.

rather less so than andrew davis, ceo of the failed von essen hotel group ..... he had misplaced ideas of grandeur, fondly imagining that he was as astute as richard caring and his wallet as deep ..... he wrecked all sorts of good hotels while swanning around in his private helicopted

http://www.moneyam.com/action/news/showArticle?id=4410739

http://investor.chevron.com/phoenix.zhtml?c=130102&p=irol-newsArticle&ID=1716310&highlight=

23:01
My first AGM
AFC-AL
53
As somebody that has been around for several years who has only rarely posted, I thought I would share my thoughts on today's trip to Paris for my first AGM.

Well, to start with our journey to Paris meant a very early start, arriving in Southampton airport at 06:15. Whilst waiting for our flight I chatted to Harry Rednapp and Kevin Bond who were off to Lytham to watch the golf. Harry was very engaging and even asked us where we were going. So if he didn't know about GKP before, he does now.

Anyway, we arrived at the hotel at about 11 am and quickly realised there were a lot of GkP investors in little groups around the reception area and started a group of our own. The three of us were joined by several other investors, so lots of introductions to some well and some less well known individuals.

At 12:00 the queue started to build to enter the AGM and at 12:20 I joined the queue to register. Whist waiting to sign in the BOD arrived, led by Todd. They all appeared very comfortable and relaxed as they exchanged greetings with the people in the queue.

So it kicked off just after 12:30 and I won't pretend the next few minutes were not slightly uncomfortable. Todd was clearly vexed and articulated some frustrations with recent investor actions. This included comments about investors abusing the staff in the investor relations team as well as how today's meeting would be managed.

After this rather tense introduction Todd went through the individual resolutions and how the proxy voting had panned out, except the resolution to reappoint LordTruscott. Todd explained that Lord Truscott had decided to not re-stand. This seemed to be greeted with a degree of surprise.

The attending investors then voted and had the forms collected and would be counted with results given later.

Todd then went into his presentation and questions and whilst I will leave it to others to capture the detail I found myself engrossed by the demeanour of Todd during what was still an uncomfortable pitch.

I did make some notes though and these were primarily positive and included statements like.....

This is the largest discovery in over 40 years

A remarkable discovery

One of the largest projects In the world

Humungous ( used by JG to describe Shaiken)

The KRG expects GKP to provide 50% of the total KRG exports

GKP have generated more growth than any other company in the history of the AIM market.

When asked whether Exxon could afford to take out GKP Todd responded with " they could take us out without even asking for a discount". He went on to explain that Exxon is the equivalent to the 8th largest economy in the world.

Apart from the issues at the end which I think should only be raised by the individual concerned I thought that Todd worked hard to keep the meeting focused and whilst his answers may not have been as complete as some would have liked, he did stick to his guns and on occasions skilfully introduced some humour.

The final positive for me was the fact that Todd gave plenty of time for questions, and the board all stuck around after if you wanted to talk to them. I took advantage of this and got all the BOD to sign my copy of The Prize. When Todd was asked, he duly obliged and said that at some point in the future Kurdistan and GKP will have its own section. This left me feeling that the day was very worthwhile and even more confident about my investment.

The next couple of hours was spent in the bar discussing and sharing our thoughts on the day. Thank you to the guys that travelled out with me and to everybody who took the time to share their thoughts in this and other investments.

Whilst this post will not aid you in your own investment decisions with regards GKP it might encourage investors to attend this meeting in the future ( if there is another one!)

Alan.

From iraq oil report:
The prime minister said he will take "all necessary measures" to prevent Exxon's work in Kurdistan, after the White House affirmed its opposition to the deal.