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.

http://www.thesundaytimes.co.uk/sto/business/Industry/article1147073.ece


Green Beret goes to war over oil

A soldier is taking his fight for a share of Kurdistan’s resources to court
Danny Fortson Published: 14 October 2012 Sunday Times

Accused: Todd Kozel
WHEN the email pinged into his inbox, Rex Wempen’s heart sank. The former Green Beret had spent 18 months putting together a huge oil deal in Kurdistan, northern Iraq. It had finally been agreed, but as he read the message, the terrible truth struck him: his partner had cut him out.

On that November morning five years ago, of course, the billions the deal would generate were just a dream. Nobody knew how much — if any — oil lay beneath the craggy hills of Iraq’s forgotten north.

Today, the answer is clear: a lot. More, in fact, than anyone could have imagined. And arguably nobody has done better out of the Kurdish oil boom than Todd Kozel, Wempen’s former partner.

Kozel, a bluff Texan, runs Gulf Keystone Petroleum, which with a market value of £1.8 billion is one of the largest companies on AIM — thanks entirely to the enormous finds in Kurdistan.

Wempen claims that Kozel would not have struck it rich if he had not brought him the opportunity. Tomorrow, the opening arguments in Wempen v Kozel, one of Britain’s biggest corporate legal battles, will be heard in the High Court in London.

At stake is what Wempen claims he is contractually owed — a 30% stake of Gulf Keystone’s Kurdish assets, worth at least £950m.

But the 12-week trial will not only determine who owns how much of Gulf Keystone. It will also provide a glimpse into the chaos Kurdistan unleashed when it flung open its doors to western firms, who fought tooth and nail for a piece of an old-fashioned oil boom.

According to court documents, Wempen and Kozel met in December 2005, two-and-a-half years after America invaded Iraq. By then, Wempen was an old hand in Iraq. He had retired from the military in the 1990s but re-enlisted after the September 11 attacks, serving in Iraq and Afghanistan. After he left the services for a second time, he stayed on in Baghdad as a consultant.

As the city descended into violence, he moved to Erbil, the capital of Kurdistan which, by comparison, was peaceful. The semi-autonomous region had agreed to stay in a larger federal Iraq, but wanted greater control over its destiny. That meant its oil.

Generous terms were offered to entice explorers but none of the industry’s heavyweights took the bait. The government in Baghdad disagreed with the Kurds’ interpretation of their powers and threatened to blacklist any company that dealt with them.

For those brave, or foolish enough to try, Kurdistan was a golden opportunity, but Wempen was no oil man. A contact put him in touch with Ali Al-Qabandi, a director at Gulf Keystone and Kozel’s right-hand man. In court papers, Kozel admits that until he met Wempen, he had no inkling that Kurdistan was about to open up. Just two months later, in February 2006, the two men signed the “collaboration agreement” that is at the heart of their dispute.

Kozel had started in the oil business with his brothers, running Texas Keystone. He listed Gulf Keystone in London, but in the oil world, it was a tiddler.

Kurdistan was a ticket to the big time. The partners agreed to seek oil concessions there. Wempen’s firm, Excalibur Ventures, would be entitled to 30%, while Texas Keystone had rights to 70%. Crucially, Kozel had the right to transfer some of Texas Keystone’s stake to Gulf Keystone.

In June that year, they flew to Kurdistan to meet Ashti Hawrami, the oil minister.

According to Gulf Keystone’s defence, the meeting did not go well. Hawrami told Wempen he had “created an unfavourable impression among a number of individuals within the [Kurdistan government] as a result of his failure to deliver promises previously made”.

Kozel did not cut Wempen loose, though. On the contrary, they continued to work together over the next year.

The partners zeroed in on the Shaikan field, and by July 2007 a deal was close. According to court documents, Gulf Keystone sent Wempen an email containing a draft production contract for Shaikan. It named Texas Keystone, Gulf Keystone and Excalibur as parties to the deal. On October 9, with negotiations reaching the final stages, Texas Keystone sent Wempen an updated version.

Less than four weeks later, on November 6, Kozel announced the deal to the world. Gulf Keystone was named lead partner in the consortium that had won exclusive rights to Shaikan. Excalibur was not mentioned.

Gulf Keystone argues that Wempen should not have been surprised by Excalibur’s exclusion. This is because on August 6, 2007, Kurdistan passed its first oil law. It required developers to prove they were foreign, had the financial capability to proceed and a track record of “good corporate citizenship”.

Gulf Keystone alleges that Excalibur — that is, Wempen and his younger brother Eric, a tax attorney who worked at UBS, the investment bank — fulfilled none of the above.

Kurdistan’s new rules, in effect, disqualified Excalibur. What’s more, Kozel claims he was told to get rid of Wempen.

Kozel says that he met Hawrami, “in or around late July or early August [2007]” at a London hotel, and the minister told him that, “he would need to submit a [contract] without Excalibur’s name on it ... for the concession to be granted”.

Kozel has another line of defence. The original “collaboration agreement” was between Texas Keystone, where Kozel owned a one-third stake, and Excalibur.

When Kozel unveiled the Shaikan deal, it was Gulf Keystone — not Texas Keystone — that took the biggest share, with 75%. Mol, the Hungarian oil group, had 20%, while Texas Keystone took a 5% interest. Though its share of the costs would be covered by Gulf Keystone.

Why did Texas Keystone — the prime signatory to the venture with Excalibur — end up with a small, passive stake? Apparently, it decided that the “risk of participating ... outweighed the rewards”, according to documents filed with the court.

Kozel, who is executive chairman and a shareholder of Gulf Keystone, acknowledges that staff from both companies worked on the negotiations that led to the Shaikan deal. He insists, though, that Texas Keystone was “entirely separate from and independent of Gulf Keystone”.

Texas Keystone simply had a change of heart, he has argued. The deal was too risky. It was not, however, for Gulf Keystone and as a separate entity it had no obligations to Excalibur. So goes the argument.

It will be up to the judge to decide whether that reasoning holds water. The case has hung like a cloud over Gulf Keystone for years. This week Wempen, who has stayed in the shadows, will finally have his day in court this.

END.

http://www.investegate.co.uk/Article.aspx?id=201210150700116525O

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Make of this what you like?


From Mansooreo on iii

Bean a while since I shared an update from my end( contact in.ebril). Met with my friend in ny a few nights ago as he was busy visitng family.

Talked about keystone and he mentioned that they are cutting back on their operations and support staff before at year end. He said they are scaling back, that they will be finishing their drilling program and are in new rush to do so. He is still adament that a deal is alrewady on the table but they are waiting for things to die down in the courts.

He mentioned that excalibars backers are big guys and that they are going to push this through as they believe that they have a solid case. He also thinks that they have a very string case as this OS kurdistan and people don't exactly play by the rules in this town and a lot of those factors and points will come out in the next few weeks.

He also mentioned that excalubar is not there to settle. They beleuve they are entitled to thirty share of shaikan and are going to open up the doors to tks dirty past and underhand dealings.

Saying this, he believes that keystone have already tied up a deal with a big American oilly, bot the Chinese as first thought.

He also says that everyone in ebril wants what GKP has in shaikan, especially excalibar.

Just an update!

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Back at 200p again and breaking down.

Wonder if cynic has sold and forget to tell everyone ?

I'm sure he says he sold last week at 210p... all the talking he does.

No, cynic brought MORE at 201.75p and no further posts of sales since then.

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exactly so, and position remains the same

Should have sold at 210p or 215p cynic.

Take the profit.

You have lost the profit now and at a loss. Why did you not sell when you had a paper profit ? Like you tell everyone else to do ?

because i didn't have a paper profit at 215 on my whole holding!
further, unlike the stocks you keep raving about, GKP actually has oil and assuming this court case with excalibur is just a nuisance opportunist endeavour, as it would appear, the upside in the short term is looking healthier by the week

mnamreh Thanks for earlier,must admit focused on the threshold through bleary eyes.
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Cynic ,....you can never say with the courts.....cases that seem done and dusted can be overturned on appeal....and it happens many a time in dramatic way !..

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rf - absolutely so, but a reasonable guess nevertheless

12:37


Taken from GKPFB


pathai


Just left court after opening hour and am no more/less confident of a win! The Excalibur lawyer had the floor for whole time I was there and I'm sure he is an astute legal mind but did not hold the floor with great authority and seemed to waffle on quite a bit. The main crux of his opening was that Ex have been left with nothing despite being the sole reason for GKP being in Kurdistan in first place. No real meat there and just rambled on about Rex finding his way in to K'stan with Turkish smugglers in 03 then via Baghdad going back to start looking for deals and business opps. Supposedly he met the Kurdish PM who encouraged him to look for an independent E&P company to work with to exploit his first mover advantage in 05.

I was sitting directly behind Rex and Eric with the defence team in front of them and Todd to right of the room. First time in a commercial court but still surprised by the amount of lawyers there. I can definitely see where the £10m court costs will go!

Numbers wise there was a reference to the valuation of Shaikan being $5.2bn and AB being $395m and the 30% claim but not much else other than the judge pointing out the obvious about if they wanted 30% of the profit were they prepared to stump the equivalent in costs? To
Me that's the crux of the whole thing.

I found it quite boring after the initial excitement and tension but hopefully the other PIs in attendance will provide more juicy details as the case progresses. I was sitting next to a nice gent Ed who was with B1... from iii so looking forward to reading their account later.

From another board.


'In addition, the Company has granted to BNP Paribas an overallotment option of up to USD$ 25 million exercisable up to the close of business on 16 October 2012 (the "Overallotment Option"). The Offering is being made by way of a Reg. S. Institutional Private Placement.'

Deadline today.