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.

Good post from iii

Only Watch Shahristani
Barney71255
8

I have posted before disconnects within the ICG. Luiabi the oil minister was positive about Kurdish contracts at the Maliki government formation and was corrected by Shah on his statements and Shah also corrected statements made by Maliki. So strong disconnects are always there and Shahristani is changing.

When Exxon exploration block awards became public (not when they were known) Shah spit the dummy out and the Kurd contracts were illegal, there were the threats to save face, and the puppets below him continue with the same position.

Since then Maliki met with Exxon in Washington so their (Exxon) off the record position is known by Shahristani, and in a totally separate event the south of Iraq around Basra the provincial government (endorsed by Shahristani) has been involved in regional government oil & gas activities previously only done centrally. It indicates Shahristani maybe accepting more regional empowerment.

Exxon from their side would never indicate if lawyers are involved, their leanings. So the puppet statement that Exxon are re-considering was not from them but I recall Maliki asking them to re-consider. Exxon's lawyers would have only requested a delay in providing a response.

Now yesterday I posted that publically Shahristani told Dinar on Monday he wanted to see more transparency in the Kurdish contracts. First time he's accepted them and NOT said these were illegal and choose north or south. The message is clear, Exxon be transparent in the 6 exploration block contracts you now have and respond to us. Watch the organ grinder and not the puppets. He is not saying drop these. So from a publicly available info on the political scene, Shahristani is signally Exxon about transparency and in so saying he's endorsing Kurdish oil and gas contracts and that these exist. All KRG oilies should rise in price as political risk is dropping and not what we are seeing.

Also the National Conference between all parties lead by Talabani happens towards the end of March to try and finally resolve the issues between Allawi & Maliki. The kingmakers are again the Kurds and top of their agenda is sort out the Oil & Gas Law - and now Shahristani is wanting to see and understand these terms in a tranparent way - he sees the writing on the wall if Iraq is to continue

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At least these have recovered 10p at the mo where as AFR............
edit 20p+

Trading above 280p now,HSBC's value.Lokks like a real pro job on how to get cheap stock?

Wonder if he's/she's back in???

The way the market is behaving,it looks to me as though all those accumilated in yesterdays fiasco are not of circulation?

He's a post from anhardened experienced no nonsence investor,the last line is why i post.

I didn't have a problem with HSBC's approach and valuation based on the public facts available to them

£5+ or whatever discounted by 50% for political risk
The discount factor is whatever you believe it should be

In Exxon's case (or any other prospective buyer)the fact that you are intent on making an offer means you put the risk factor down pretty low


As I posted before the AB data room is full to spill with interested parties!

Just came across this,

Lucian Miers has written a negative article on today's Share Crazy Blog. It is well argued and not exteme in tone but very critical. Including:-

1."In June 2011 the company set an 8 month target of 10,000 barrels of oil production per day. If I am not mistaken more than 8 months on, this target has not been reached and the company has given no reason as to why not".

2."In September 2011 GKP stated its intention to sell its 20% interest in the Akri Bejeel block, estimated to contain 2.4 billion barrels. Executive Chairman and CEO Tod Kozel said at the time that he expected a quick sale owing to huge demand, yet in February the company is appointing grand sounding names to help sell the stake".

3." The company’s website homepage contains an extremely bombastic interview on CNBC with Tod Kozel who claims oil “definitely” in place of 12 billion barrels (more than the published reserves of Shell), which furthermore costs only $2.90 to extract. If it sounds too good to be true…..you get my drift. (To give such an interview is one thing, to post it on your corporate website another)".

4.Perhaps I am being over cynical. I have just been rereading Brian Hutchinson’s seminal tome on Bre X “Fools Gold: the making of a global market fraud “ It is great reading but perhaps makes one feel a little over cautious when attempting to evaluate massive resource discoveries.

I'm sure these points have been made here sometime ago but they will be difficult to find among the thousands of posts. What are the answers please?

I hold a substantial no of shares which I regard as an investment for re-rating of the discoveries, possibly £8 area.

Have just sold out at 280.5, nice to make 40p a share in under 24 hrs.

FT oil sector watcher:
"Even by yesterday's volatile equity market standards, GKP's share price collapse stood out as remarkable. At one stage the shares were off 36% to 218p, before closing down 24%. Bear in mind that this is the second largest E&P in the sector behind Tullow, which in itself I find astonishing. The reason for the dramatic underperformance (the AIM Oil & Gas Index was down a mere 10% on the day) was a press report that Iraq is pressuring Exxon Mobil not to press ahead with its recently announced plans to acquire acreage in Kurdistan. If it does, Baghdad is saying that this could lead to it being unable to invest further in any Iraqi projects. Its proposed entrance into the disputed Kurdish region had led to highly speculative claims that XOM would bid an extremely high price for GKP, rumours propagated largely by the bulletin board retail nutters, sorry punters, who largely drive the share price. At least the shares are back at a more reasonable level. Whatever XOM decides to do in the region, I simply cannot see the justification for an enormous premium for GKP and hence I'd still be a seller of the stock."

I like this bit

rumours propagated largely by the bulletin board retail nutters

indeed

I'm posting this article along with the previous one so one can get a feel on how others seeit. It should be remembered he got it wrong ,as the SP climbed to 450p?


Gulf Keystone Petroleum Is it time to Buy? Gulf Keystone Petroleum Is it time to Buy?
by Lucian Miers, East London’s most feared short seller



I was urged today to buy Gulf Keystone on the back of big falls so I decided to have a very quick look at it. GKP needs no introduction (In case you hadn’t heard it’s sitting on around 20 billion barrels of oil in Kurdistan). It seems to the most talked about oil play out there and I find it difficult to move freely around without being tipped it by a succession of friends, taxi drivers, brokers, waiters etc . For this reason alone I have stubbornly refused to buy it and felt extremely foolish as it soared inexorably to 450p the other day.



So today with the shares at 250p and with cries to jump on the GKP bandwagon growing deafening I spent a short amount of time skimming through the last year’s worth of company announcements and looking at the company’s website. For what it worth, I will not be jumping on the bandwagon for the following reasons:



In June 2011 the company set an 8 month target of 10,000 barrels of oil production per day. If I am not mistaken more than 8 months on, this target has not been reached and the company has given no reason as to why not.



Also in June GKP issued a Directors Shareholdings RNS which looks odd and seems to make some pretty implausible claims.



During a period in which GKP’s shares quadrupled the only time it commented on its price was to say it knew no reason for a fairly modest fall back in August.



In September 2011 GKP stated its intention to sell its 20% interest in the Akri Bejeel block, estimated to contain 2.4 billion barrels. Executive Chairman and CEO Tod Kozel said at the time that he expected a quick sale owing to huge demand, yet in February the company is appointing grand sounding names to help sell the stake.



The company’s website homepage contains an extremely bombastic interview on CNBC with Tod Kozel who claims oil “definitely” in place of 12 billion barrels (more than the published reserves of Shell), which furthermore costs only $2.90 to extract. If it sounds too good to be true…..you get my drift. (To give such an interview is one thing, to post it on your corporate website another)



None of the above points in themselves seem that important and no doubt the cheerleaders have good explanations for each of them but there is something about GKP and by extension, Mr Kozel which makes me a bit queasy and I will not be bargain hunting at these prices.



Perhaps I am being over cynical. I have just been rereading Brian Hutchinson’s seminal tome on Bre X “Fools Gold: the making of a global market fraud “ It is great reading but perhaps makes one feel a little over cautious when attempting to evaluate massive resource discoveries

you have been warned!

Lenthy but worth while and clearly a well read investor.

I do not post on this BB because it is habitated ( some people are spending more time here than at home )mostly either by crazy or crazed posters who happily gave incredible credence to Spencer Freeman , despite his admission that he did not own a share in GKP and ipso facto was beyond prosecution for spreading rumuors , because he was not gaining from his statements.Moreover
I do not know how GKP nav could be at 18 pounds to 63 pounds sterling.

When one is valuing an oil company one should always bear in mind the proven reserves and the recovery factor over the lifetime of the PSC, always allowing for the depletion rate, and then deduct further 30% in capex/rex which will also come out of recovered oil,then apportion the PSC share, deduct income tax,if any,to work out NAV based on current market wholesale price of about $75 a barrel,exclusive of transport,refining and retail profit/cost. However,in case of GKP there is a fixed band of return profit.

I must confess I do not own a single GKP share because it is not Isable,but I am involved through my sister and grand niece, who bought thousands of shares in early days on my recommendation and have kept them.

Few days ago my sister asked whether GKP sp hike was due to Exxon takeover rumuor.I told her no, because Todd Kozel had denied it and he would not mislead and invite prosecution and civil suits for damages under strict U.S.A law,as the shares are traded there albeit on pink sheets.

Furthermore, I also told her that until Excalibur case is decided for which 10 days trial in October has been set ( the case must be complicated )no sane company will takeover GKP or its share in Akri Bijel. The matter is sub judice and only fools will go in where angels fear to tread.

So the press and people who have been harping on about takeover are not talking through their heads( unless their knowledge is very limited )but something else.

I informed my sister that the sp rise was due to increased estimate of oil reserves from 8 billion to 13 billion barrels mean figure given out by Todd Kozel, and based on that the NAV is 569p per share, without FTSE 100 listing,or takeover,or market discounting for geopolitical risk,which should be plus or minus 20 to 25% except in the takeover.

I now notice that HSBC analyst has given NAV of 560p per share,but discounted
it by 50% to 280p for geopolitical risk.Is he right? I do not think so. The reasons are simple.

Constitutionally, the control of natural resources in Iraq lies with the provinces ( regions) and the revenue from these resources,including oil and gas,is pooled into national fund, which underpins the national budget, and there is already a mechanism for that.

As there is no oil and gas law empowering the Central Government to award oil and gas contracts , Kurds are justified in invoking their constitutional right
and awarding PSC contracts. Kurdi contracts are legal, until national law negating these contracts is passed by Iraqi parliament. I am supported in this by the pronouncements of Iraqi and International constitution lawyers.

Can a law be passed cancelling these contracts retrospectively? First of all for any such law to be passed the Kurdish support is vital and it will not be forthcoming.Secondly,international community does not allow retrospective law except in emergencies like war or warlike situations. As such Baghdad will have to pay heavy compensation for cancelling existing Kurdi PSCs.

On the question of legality of oil and gas contracts ,Harwami is alleging that if Kurdi PSCs are illegal, then Central Govt.'s service contracts are more so, because it has no contitutional power to give out these contracts, only the provinces have that power. Baghdad's answer that oil service contracts are for
exploiting existing fields and no new law is necessary is not going down well with Kurds, because old laws are dead and the country is now governed by new constitution.

This is of course making oil companies on service contracts very nervous in Southern Iraq because Baghdad is on a sticky wicket and if the matter were to to International Court, Kurds will win the argument hands down.

As such it is almost incumbent that Iraqi govt. must pass new oil and gas law for awarding exploration contracts and Maliki knows this, otherwise oil companies would not touch them with a barge pole Hence the delay in new round of contracts in Southhern Iraq.

Kurds can just sit back and carry on and progress , and let the Shia Iraq continue to suffer and eventually throw out Maliki. Status quo favours Kurdistan and not Baghdad.

In the absence of new oil and gas law , will Shia govt. march into Kurdistan and force its will? The answer is no.There are lot of Kurds in the border areas
of Iran ( hence oil smuggling),Turkey and Syria - where even Assad has not dared -who will gladly take to arms and furthermore Sunni Jordan,Saudi Arabia,Turkey, and Kuwait will come to Kurds rescue in addition to Iraqi Sunnis.

Can Maliki count on Iran ? Not on your nelly or his nelly, because that will give U.S.A and perhaps Israel a pretext to knock out Iranian nuclear reactors and annihilate its army.It is therefore obvious that Maliki is cornered politically and legally from denying the Kurds the right over their natural resources. I therefore do not see any geopolitical risk to PSCs and this was made abundantly clear by the oil companies including GKP at their interm and AGMs.

HSBC analyst is therefore wrong in his conclusion and should not have discounted GKP by 50% to 280p.However that is his problem for which he will be answerable to his clients.

The next scare has been the recent press report, which has been regurgitated over the world and spat out, that Sharastani has asked Exxon to decide on Kurdi
PSCs and it has requested few more days for the decision. The devil is in the detail and there is nothing to indicate that Exxon is being forced to decide soon for Baghdad or Erbil.The words are clear:

" The Central Government is waiting for Exxon to respond to our letters and in the light of Exxon's response, Baghdad will take a decision."

Baghdad has not asked Exxon to decide but to reply, and I think Exxon will tell Baghdad to take a running jump, because it has not broken any national oil and gas law by going into Kurdistan - none exists. The legality of PSCs is a matter between Baghdad and Erbil.

Concerning the condition in service contracts/tenders that companies should not
practice their trade in Kurdistan,it is an unreasonable restriction and will be thrown out by WTO and International Court for Arbitration ( footballer Bosman rule springs to my mind ). In fact some companies which have due to this restriction not gone into Kurdistan may demand compensation from Baghdad.

Will Exxon decide to leave Kurdistan ? I do not think so. It can just sit back and let Baghdad cancel its existing service contract and then go to the International Court of Arbitration and get damages of billions of dollars and use the monedy on PSCs etc. Exxon is in a win win situation and that is why other oil companies are thinking about going into Kurdistan.

I do not see any risk on that front either.

I hope I have allayed some of your fears and misgivings. The recent massive fall was not due to panick selling by private investors but by HSBC and other funds with hedgies on their backs selling out, but equally there were others who were happy to take the shares. It is a battle between big boys and you should just watch the action unless you are trading as a small fry.Come December 2012 almost all of you will be laughing all the way to your bank.

I will not indulge in any argument or banter because I do not have the time.You should either take the post as it is or leave it,or just forget about it.

Finally you must do your own research . IMHO,DYOR

niceonecyril

Who did you say wrote this last articular ?

Must say I like that last post cyril.,.

still a big risk hence i am out.....trade in betweeeeeeeeeen.

Interesting article, but there are a great many 'I do not see' & 'I do not think' statements which are not facts, but opinions. Well put together, but does not change my opinion, in particular given that the sp has sunk back to the sub 280p level.

Posts under the user name of 5professor.