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.

3 points I would like to make:-

1. Knowing who the backers are is important, as the most important man in the court has said:-


JG: Yes, if that is all. What is the nature of the deal and what share are they getting?
RW: I cannot answer that
My Lord: This is important to case.

Is my Lord thinking that this action is vexatious and that GKP may well want to counter-sue the backers if it is discovered that the purpose of the action wasn't to help the Wempens. The Wempens are just pawns in the big game to manipulate the sp to the advantage of the backers over the last 2 years or so that the case has been on-going

2. Wouldn't it be just great if TK were to bring out a mega-rns this week and you would be able to smell shorters burning all over the country.

3. I would ask FB to allow JB back on. I like reading his rubbish deramping posts! LOL!

Reuters Middle East – 10 mins ago....Email0Share0
Share0Print......LONDON, Nov 21 (Reuters) - A company suing UK-listed oil

explorer Gulf Keystone Petroleum is being funded by

hedge funds which specialise in litigation finance and two

brothers involved in shipping, a London court heard on

Wednesday.

Gulf Keystone is locked in a battle to defend its ownership

of giant oil fields in the Kurdistan region of Iraq after its

former partner, a company called Excalibur, launched legal

action claiming it is entitled to a stake of the assets.

Shares in Gulf Keystone, a stock closely watched by private

investors, closed 11 percent higher on Wednesday on speculation

that the outing of Excalibur's backers could work in the

company's favour in the lawsuit.

Private investors pack the court room on a daily basis and

post frequent messages on websites tracking the shares, hungry

for a steer on how the case will affect a stock which has soared

by 885 percent since oil was discovered in 2009.

Analysts cited private investor speculation on websites that

the disclosure of Excalibur's funders was positive for the

company as the reason for the rise in the shares.

Excalibur founder Rex Wempen said on Wednesday that his

company had received funding to help it pay for the court case

from New York hedge fund Platinum, and New York litigation

funding specialist BlackRobe, as well as Andonis and Filippos

Lemos, two brothers involved in the shipping business.

One private investor speculated that the Lemos brothers

could pull their funding for the lawsuit given that their

backing of Excalibur had now been made public.

The claimant was ordered by a London court to pay 9.5

million pounds as security for the defendants' costs before the

trial started, and questions have been asked about how

Excalibur, a small company run by Wempen and his brother which

has few financial records, accessed such sums.

Under questioning from lawyer Jonathan Gaisman, Wempen told

the court that the law firm representing him, Clifford Chance,

had introduced him to the Lemos brothers.

Gulf Keystone, which declined to comment on the rise in its

shares, has been touted as a takeover target for an oil major

looking for a foothold in the attractive Kurdistan oil province

but the legal battle is cited as an obstacle to any deal.

The company said in October that it expected the court case

to run for up to three months.

ed 21 Nov 2012 2 - 4.25pm
Michael Crane (MC) cross examining Eric Wempen (EW)
RW and 4 legals for Excal. c10-15 for GKP ( no TK) , with 30 in public seats.

[1749] re CA and possible percentage splits 80/20or 60/40 in letters to Texas.

[1751] EW says was not keeping perfect record of emails sent/received, those from Baker McKenzie days were not saved when he left.

[1753] c 25/1/06 Deed of Adherence etc. ‘Template’. Issues about direct/indirect provisions – and possibility of assignment to a Texas associate or anyone else.

[1760] Covering the requirements in the event of a licence concession being awarded. EW says he read the standard UK Offshore Operators terms (ie their pro-forma) prior to the signing of the Shaikan PSC.

C3 (P857) (P865) Long document with certain definitions included. Did percentage interest include direct or indirect ones? EW thought also included indirect ones and still thinks it now. Judge “ How can you be present holder of a licence indirectly?”. EW had convoluted exchange with Judge re ‘condition precedent’.

[1778] Email 17/1/06. RW to TK saying happy with legals but wanted to negotiate on percentage split ( subsequently agreed at 70/30).

MC ‘When did you read KRG model PSC contract?’. EW ‘I don’t know but around the time the draft Shaikan PSC appeared in cApril 2007’. EW then confirmed he was well aware of the requirements regarding signature bonus etc. MC ‘By Oct 2007 you would have known of the 30 day payment deadline?’. EW said ‘ Broadly yes’ or some similar wording.

[1782] [1784][1786][1790] [1791][1797][1810][1793][1821].All around early Feb 2006. RW accepts it quickly and unconditionally. TK says amended contract will be forwarded. RW doesn’t wait for this to arrive but signs off his copies of documents which have wording allowing TKI to assign their interest at their sole discretion.

MC to EW ‘ Did you make 1 review or 2 of the draft agreements? EW now says 2, which seems to conflict with his written evidence.

[1861] 2 Emails from RW to Margaret Berry (TKs PA) agreeing documentation signed and attached. Particular point here was that one document had a very fast turnround of c1-2 hours max between being received by RW and then returned back to TK, leaving almost no time for EW to have seen it and commented upon its contents.

H34 [9548] 24/1/08. EW Memo to self re how to describe for Excal taxation purposes a possible deal involving sale of Excal’s interest for $0.5m plus a further $0.5m on finding oil. MC points out that EW includes these words in his memo ‘Excal never owned an interest in the Shaikan PSC’. MC now says ‘A proposition with which I respectfully agree!’ MC ‘Why not pay tax on a sale?’ EW waffled unconvincingly. ( Was he hoist with his own petard, I wonder?).

Break 3.25 – 3.35

c Apr 2007 EW refused permission for TKI to assign its interest.

[ 6760][6768]c 9 Oct 2007 Steve Goda to RW. Re draft Shaikan PSC and requesting RW’s response and comments by 15/10/07. MC ‘ This contained some material adverse changes from the model draft ( eg A right for KRG to bring in a 3rd party contractor as a partner for 20-25 per cent, and a cost of $4m for each of 2 wells to be drilled). EW “ I was not really concerned as ‘ no skin off Excal’s back’ as Excal’s interest was indirect”.

[6734.4 etc] EW aware of signature bonus payment obligations but didn’t focus on whether the payment dealine was ‘hard’ or ‘soft’.

[6764]. Involving a Mr ?Jull? who files Excals tax returns. MC ‘No profit for Excal that year?’ EW ‘Correct’. MC ‘Did Excal ever make a taxable profit?’. EW ‘Yes, in 2004’. This arose principally from RW special forces projects where ‘temporary contracts’ for c100 personnel were involved and they were perhaps creatively described as Excal employees. EW confirmed there were no recent tax returns for Excal because no taxable profits had been made and that Excal had no business dealings since 2008 apart from the current litigation. EW said they were effectively ’Zero Returns’.

Judge asked re future timetable.

MC said 2 more days for EW, finishing by c Tues lunchtime 27 Nov, with JG cross examing EW on Tues afternoon. Judge suggested Wed am 28 Nov for the ( private ) disclosure discussions re Excal Funders’ percentages etc and also some issues about costs and requested a ‘skeleton’ be given to him beforehand.

QCs raised issue about starting date for Jan 2013 term and whether it would be Mon 14 or Mon 21? Judge wants expert witnesses’ availability schedules to be canvassed prior to a decision on this being made next week.

Judge then wished all those heading back to USA ‘A good celebration of deliverance from colonial power!’

Close 4.25

">

C&P'D,


An interesting post from iii which makes some good points imo. It's longish, but the main point is that any SPV set up to finance litigation will likely only be liable for the sum of its assets as far as costs or any other awards are concerned.

If I were the judge/defense barrister that would raise a huge red flag for me, and I wonder if that's the reason he has requested a skeleton costs briefing.

Using a shiny new limited liability entity financed by several wealthy parties to litigate against a PLC based on the claims of a penniless 'brass plate' has to raise serious questions imo.

Admittedly the SPV could receive more capital from the shareholders in the event that it gets short of cash, but by its nature it could also simply fold should the case go against it.

Under the circumstances (and given that the case has already caused a stir in legal circles when J.Gloster ruled against US arbitration & for judgement in England) I can't help thinking that this case might eventually go a lot further and end up as a precedent that leads to the tighter regulation of TPLF in commercial cases. After all, we're looking here at a situation where -financially speaking- the plaintiff says, 'heads I win, tails you lose'.

---------------------------------------------------------------------------
Also,
http://www.theatlantic.com/national/archive/2012/07/why-are-hedge-funds-allowed-to-invest-in-litigation/259345/ Great article on hedge fund investors in litigation and how it leads to abuses..

if i remember correctly, EXCAL were obliged to deposit a very considerable sum ($9.5m comes to mind) into court before proceedings even started ...... it MAY BE that the judge is contemplating asking for further funds to be deposited if the case is to be allowed to continue - i assume that is legally permitted

Excal complauned about the sizw of the defence,resulting in a meeting to discuss.Added a further link to previous post,ref to abuse.

From dizzylizzie2,well worth reading.


The backers are important not for the facts and evidence as they exit and subsequently presented to court but is crucial in understanding the purpose of proceeding with the CC in light of the failed attempt at US abritration, mareva injunction and the damning comments by Jus. Glouster.
If you are in pursuit of justice then reading the Justice's comment especially about chancers would make it clear to you where the truth lies. Exc, based on the evidence supplied to court, has not one single document/agreement that supports their claim. (Prime came that conclusion earlier on). They have a collboration agreement with TKI which itself did not entitle them to anything but dictated/agreed terms upon which a new venture would operate should the parties to the agreement go on to secure a PSC as part of a consortium. That venture would be a 50:50 partnership. (of course they never went on to secure a PSC together which makes the agreement worthless). It also gave TKI the right to assign the underlying asset to any third party of it's choice and RW did sign the first draft of the JOA with this clause prominent in there.(There was a 2nd draft but poor ole Rexy couldn't wait so quickly sign the 1st). Indeed, it's this point that TKI barrister is putting to Eric as he is a trained lawyer and testified to the effect that he is used to dealing with long, complex legal documents.
Eric's defense is that he knew this clause was there but he didn't think it mattered as Exc did not have a direct interest but an indirect one. When asked to explain this indirect interest Eric says it was based on a 'condition precedent'. (Maybe lawyers amongst us can explain but the legal minds in court didn't including the judge) At this point My Lord intervened for a good few minutes asking Eric 'How can you own something indirectly?' and to explain what he meant by condition precedent but, in my view, none present including the judge was any wiser so all moved on. This is very, very important but not discussed much on the BBs. When added to His Lordship request for a skeleton of costs one gets the feeling he's heard enough and need to protect GKP from incurring overrun costs being that deposited cash might soon run out and the SPV will not be liable.
That bring be back to my original point as to why the outing of the backers is important.
1. RW did everything not to name them and for a brief minute or so there was utter silence before he eventually came out with it. SP tried his best with the judge to prevent RW from answering the question. It follows then that the backers did not want to be named so this cannot be about specialist litigants as they carry on a legitimate business.
2. If the name of the backers is known then it makes investigation into share price manipulation easier. You can tract also the bashers on bulletin boards to see if they had any connection with these funds
3. They will loose credibility amongst their peers and possibily the press for making such a big cock up. Would you want to invest in their funds in future with such poor DD record and immoral if not crimal practice? (ie fund the case and short the sp so either way we win)
4. The fact that we found out in court that the backers are funding through an SPV is more important than many think. Why? The judge is now very alert as to the strategy here imv to frustrate GKP into settlement! I suspect he will have none of it and ask them to deposit more cash as it will be impossible to sue the SPV that is a shell. Will they pay up? I'm sure the GKP/TKI team is very expensive as they need a lot of time pre trial and during trial to properly defend the case.

Where does all this leaves us...shareholders. Will the FSA/LSE/SFO investigate? The broadsheets keep refering to - GKP beloved and followed by PI. Is that the reason why the establishment cannot be bothered? Don't want to jump the gun but when this is over we should put pressure on the powers that be to investigate the trading of GKP shares including those huge shorts just before the CC began. Was that down to 'delta' hedging? IMV, no and that was my opinion at the time. The bonds were oversubscriped and underpinned by the oil in the ground as they can be converted to equity so no need to short the entire portfolio 1 for 1. It just wouldn't make sense and had the potential to make more losses than profits

i am well aware what a mareva injunction is, but which party was trying to impose this and why? ...... it would not seem to have a lot of sense, and as far as i can see, never had much chance of it being granted - which of course it was not

Thanks to doc-h from iii :

====

Author doctorh

Date posted today 15:09

Subject Court visit 21/11/12

Votes for this Posting Voted 54 times.


I managed to fit in a visit to court 15 yesterday. The following is written in good faith but is subject to the limitations of my ability to listen, interpret and record the detail, errors and omissions excepted and all the usual disclaimers but I hope it helps give a feel for how the day progressed. Also any opinions expressed are my own and may be incorrect.

Firstly, my apologies for rather late feedback, but this lunchtime is the first chance I’ve had to type up my notes, as in addition to the logistics of getting to court I have to try and juggle my ‘proper’ job as well, whilst simultaneously keeping Mrs H happy – it would be rather short sighted to make a fortune on GKP and then have to spend half of it on my own court fees and a divorce settlement!

I quickly discovered that trying to take extensive notes and produce an accurate and comprehensive account along the lines we have so far enjoyed from others is an incredibly demanding task. It takes some effort to even keep pace with the dynamic and language of proceedings and I echo the many comments made praising our indefatigable reporters.
In addition to the dialogue, there is a constant flow of documentary evidence to digest, copies of which appear on the computer screens in front of us. For the most part, these consisted of email traffic involving Eric and Rex, which generally were used to demonstrate how their thoughts and actions in 2007/08 contradicts evidence they have given elsewhere.

The day began (following on, of course, from the excitement of Tuesday afternoon) with the judge saying he is now unclear as to who is backing Excalibur and is seeking the identity of names of signatories, beneficial owners, contacts etc. I was under the impression that the judge had already asked for full disclosure, so surely the emergence of parties which M’Lud was hitherto unaware of is likely to be another nail in the coffin of Excalibur.

It was agreed that some time needs to be set aside for this, although in the interests of expediency they wanted to complete RWs evidence today. This disclosure is therefore scheduled to take place next Wednesday, which will be after EW has finished giving evidence.
JG then began his final questioning of RW with the phrase – ‘Mr W, good morning. I think you owe me two names?’

These turned out to be Adonis and Filippos Lemos – the Greek shipping magnates, details of which have been well and he went on to extract the names of other litigation funders, namely Black Robe, Platinum and Hamilton. He also mentioned the name ‘Harvey’ - my impression was that this is simply the Christian name of an individual who works for Platinum. RW confirmed that ‘Harvey’ has been in court over the past month or so but could not remember his surname.

It was difficult to keep track at this stage and I have no doubt that RW was being deliberately obtuse, but my interpretation was as follows: Platinum are a hedge fund in New York that specialise in litigation finance. Hamilton, who are based in Delaware, and are providing a ‘Security for adverse costs’ facility, and act on behalf of Black Robe. RW had only met Hamilton this year but he can’t remember exact details (no surprise there!).

Final question from JG to RW was about any potentially profitable activities that Excalibur is engaged in. There was a bit of dancing round the subject but in a nutshell the answer is none – all their eggs are in this one basket and RW has clearly spent most of the past few years trying to spin this in his favour.

Simon Pickens (Exc’s barrister) then rose for a brief cross examination of RW – I presume to ensure certain points are on the record.

He went through some details of the PSCs – how Exc’s name had originally appeared but was subsequently removed in August 07. RW said this did not concern him as Exc were still part of the collaboration agreement.

He also went on to discount any question about RWs criminal record, by claiming that as he has US security clearance this cannot be an issue. Apparently to get such clearance you need to pass a full background check, such as all convictions, secure financial position, nothing that may leave one open for blackmail, no legal issues worldwide, etc. Last went through this in 2008 and authorities never came across any record.

There was also mention of an email from Iain Kinnear regarding a discussion he had with ‘Ali from GKP’ (I presumed Mr Al-Qabandi) which mentioned a possible settlement of 1m USD and 2% of final set up – sorry but I wasn’t quite sure of the context of this but presume it refers to previous settlements discussed elsewhere.

Finally there was a letter from Credit Suisse to Excalibur regarding Kurdistan financing in respect of back costs. I think the purpose of this was to document the ‘what if’ scenario, rather than an actual offer of funding. It seemed to me that this was an acknowledgement that if Exc were to be successful in their claim for 30% of the licence, then they would also be liable to cough up for the back costs. So, Credit Suisse were saying that they might be able to assist with the raising of acquisition financing (to the tune of 185 million US Dollars – subject of course to Exc winning their case and having 30% of GKP. (Good luck with that one, Mr W!)

I had to leave at morning break as I had a business appointment, but returned just in time for the afternoon session by which time Eric was on the stand, being questioned by Michael Crane, the TKI barrister.

It was immediately clear that Rex and Eric have similar traits in terms of their selective amnesia and methods of deflecting awkward questioning -a typical answer would be ‘I’m not sure I would characterise it in that way’.

MC skilfully exposed Eric’s limited understanding of the PSC, and his claim that Exc were indirect parties to the PSC. After one particularly flowery answer, when it was pretty obvious to everyone in the room that EW was riding the baloney pony, MC stated ‘Well, you’ve lost me as an English lawyer!’

At this point M’Lud interjected – ‘Mr W, how can you be the present holder of a licence indirectly?’ - not a very convincing answer from Mr W!

There was then some discussion regarding the Joint Operating Agreement (JOA) and the ability of TKI to assign it to other parties. In short, RW claimed he was not aware of some of the terms. He also claimed to have been unaware of the deadlines when Exc would need to cough up their share of the signature bonus and capacity building bonus.

MC spent some time reinforcing the point that when looking at both the PSC and the JOA, any competent lawyer would have identified these points - ‘The structure of the agreement was there for you to see had you chosen to look at it’.

My favourite point of the afternoon session was an email that EW had sent to himself as an aide memoire, which he described as a tax proforma for Excalibur. This was in anticipation of Exc receiving a pay off – i.e. a buy out of their collaboration agreement, which EW was planning to present to the IRS as being a non-taxable event.

On this subject, MC said: ‘So accordingly, Mr W, what you are saying is that Excalibur never owned an interest in the Shaikan block… a proposition with which I respectfully agree’ (cue audible sniggers from all around the gallery!)

After a short break, the final session related to Eric’s reading and understanding of the PSC, notably the specific provision that each party to it would have to have the financial capability and technical knowledge and capacity to complete petroleum operations. Rex already knew this was an issue and had been told as such by Todd.

Leaving aside the technical issues, the financial commitment that was required if Exc had been able to take part would have been us$1m for the seismic, and two lots of US$4m for the exploration wells. MC: ‘Quite hefty sums for a one man band, wasn’t it?’

Went onto the Exc tax affairs, how they had not declared a taxable profit since 2004 and filed zero returns. Also they had previously claimed to have 100 employees… the reality was that they had 100 people on a temporary contract who were carrying out a survey! Also touched on the fact that the court had requested copies of Exc’s bank statements from Citibank at the beginning of the case and these have still not materialised - one can only speculate why they haven’t yet been presented….

I’m sure I’m not alone in finding some of the glaring anomalies and gaping holes in the Wempen’s case nothing short of cringe-worthy. At one point I almost found myself feeling a bit sorry for Rex, as he was floundering desperately to come up with a plausible explanation….but only for a nanosecond, as I quickly reminded myself that his delusional views of what he is entitled to are primarily responsible for the past two years of trauma.

Final part of proceedings was to agree the way forward for next week, which sounds like a couple more days on the stand for Eric, disclosure on Wednesday and then presumably thereafter it’s Todd’s turn. For anyone contemplating an early settlement, this doesn’t seem to be on the agenda as they are already making plans for when to restart in January, given the case over-run, and it sounds as if the first day back in court after Xmas will be 21st Jan 2013.

Having said that, it seems to me that Excalibur’s case is so desperately implausible that the only reason this is being played out is that the backers have an ulterior motive – and if that is about to break cover and become public they may just decide that enough is enough and cut their losses - time will tell!

My visit to court has reinforced my view that GKP were right not to settle, that common sense will eventually prevail and that the long term investors will be rewarded for their patience. Oh, and I should declare my interest... I now own more shares than I have ever done.

IMHO, DYOR etc

Dr H

Court sitting next Monday.

A well connected poster, says TK values GKP at US$50 billion???

i do so enjoy punch and judy, and it's a real teat to be able to watch it indoors rather than on a cold and windswept swanage beach

C&P FROM ELSEWHERE.

From today's IC courtesy of Pathai on iii-

*

Gulf Keystone Petroleum

One of the most talked-about oil and gas frontiers in the world is located in the Kurdistan region of Northern Iraq. Fearful of alienating officials in Baghdad, the oil majors were initially reluctant to commit to the region, but the continued success of smaller operators such as Afren (AFR) and Gulf Keystone Petroleum (GKP) eventually prompted a change of tack. The Kurdistan Regional Government consequently expanded exploration deals with foreign oil majors and boosted a growing crude-for-products trade with Turkish interests, including the development of a gas/oil pipeline. Now the likes of ExxonMobil, Gazprom and Total are active in Kurdistan, and looking at ways in which to expand their footprint in the region. However, gaining acreage in Kurdistan has become progressively more difficult, so growth through acquisition is the way forward.

Gulf Keystone, through the scale of estimated production at its Shaikan oil field - 150,000 barrels of oil a day by 2015 - is a prime candidate for the majors, although any approach would be contingent upon the outcome of a legal dispute with Excalibur Ventures, which is claiming a 30 per cent stake in Gulf Keystone's Kurdistan assets.

Admittedly, the group has been subject to takeover speculation in the past, to no avail. But given the increased clamour for Kurdish assets, together with the fact that Gulf Keystone's share price is now 57 per cent adrift of its 12-month high, you could make a reasonable case that the group will end up in the majors' cross-hairs once the Excalibur affair is resolved. Mark Ray Robinson

From IC today re potentail M&A targets


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Bambooman

Sorry about that fella.

M

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judy's certainly is or even are!

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swanage punch and judy has been going for over 100 years .... used to go to knoll house hotel when my children were young 20 or so years ago

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it was probably mid 80s ..... Knoll House was and still is very child-friendly with an excellent adventure playground for them and plenty of other children of their age ..... beach within easy walking distance too .... sort of Butlins with BMWs!

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