(GKP) Gulf Keystone Petroleum

^ pounds on the low side, 8 at the middle and 10 on the high side.

Your view only. T/O not happening IMHO for a long time, if ever. If it does in a year or so,
£15 on the low side 25 in the middle and £42 on the high side.
That's the trouble with this board all individual opinions. Let's just see who is right, if any of you are still here. !!!

I'd suggest that all of them are valid questions at this time and that the answers to some of them may have a material effect upon our investment.

Not surprising that PI's can't get things right when the co. has consistently missed every expected event [by a country mile].
Supposedly BB sold last year.
Mgmt. options [always priced to be an easy goal] missed by 1/2.
CC has been a huge pain in the tukos and seems to drag on for ever.
Still we have 100 bill. brls of OIP and 30% RR.
Most of the discontent is due to novice investors believing the cod swallop about 50-70 pounds on TO.
Preassure from II's has to be imense and after CC is finished; my guess is TK will move with a much more realistic goal in mind.
^ pounds on the low side, 8 at the middle and 10 on the high side.

Basically what's happened is this (as far as I can see).

People (well-meaning and knowledgeable though they may be) spend oodles of time fiddling with facts/figures. It looks and sounds great, but when it doesn't happen they fiddle again and tweak it to come up with the next best theory, which then doesn't happen either. Tweak, repeat, tweak, repeat, ad infinitum until any original straight path to the goal has long since been erased/buried by the mists of time and Ties. Or lack of.

But not to worry because another sage-sounding theory will be round the corner.

Not singling anyone in particular out, but it's just the overal impression of being here and other boards for several years. This clearly will be a waiting game, so you're best just checking in now and then and not setting too much stock but all these lofty-sounding debates. Invariably, 99% of them have proven to be false dawns or concerning issues too far into the future to even debate fruitfully in the present.

It really comes down to solid production and booked numbers to see any clear path imho. We haven't even done that yet so its hard for me to take uber-serious sounding people, too seriously.

Lets try and understand the disconnect between the opinions of the various Brokers / Analysts and our own personal valuation expectations on a 12 month basis.

The highest currently following Canter Fitzgerald slashing their TP is 350p from Fox Davies and 315p from WH Ireland. HSBC, who blow hot and cold and sometimes warm, now reckon 259p ish up from 185p.

These Brokers / Analysts have access to more information than many of us, many are maintaining their buy ratings and none are calling the stock a sell.

Without reserves, production, exports and uncertainty over funding, are these 12 month targets justified for GKP based on what we know today and how much upside is likely in each case if we get the result we are all hoping for on or before the 23rd August.

Lets try and be grown up about this rather than ridiculing the mere notion that I am deramping - god knows, I want any of the targets currently covered to be achieved and some with an average of 244p.

Can i suggest you select a Read reciept or delivery confirmation on your email.

At least you will get some kind of response from the company.

Oil flows from Iraq to Turkey stopped
http://www.shafaaq.com/en/business/6439--oil-flows-from-iraq-to-turkey-stopped-.html

Wednesday, 19 June 2013 13:46
altShafaq News / Iraqi official said on Wednesday, that the oil flows through a Kirkuk - Ceyhan pipeline stopped on Tuesday evening due to leakage from an eroded part of the line.



It is expected to complete the reform process within 24 hours to replace the damaged section followed by a pumping test, as the pipeline transfers Kirkuk crude of high sulfur density to the Turkish port of Ceyhan on the Mediterranean Sea.

An official of Iraq's North Oil government Company told “Reuters” briefed by “Shafaq News” that “the eroded part cracked the pipeline,” noting that “our staff is working to replace this part and resume pumping within 24 hours”.

Iraq's exports fell to 2.484 million barrels per day (bpd) in May from 2.62 million bpd in April due to a slowdown in shipments of Kirkuk after repeated attacks on the pipeline and maintenance work in the south.

Flow of crude oil from Iraq to Turkey through Kirkuk - Ceyhan pipeline had stopped in May because of repeated attacks.

Over recent months I have e mailed 'Anaesthetic' at Investor Relations 5 times. To date I haven't had the courtesy of even an automated response let alone a reply. Perhaps Anaesthetic is living up to her name and is asleep. Anyone any ideas as to how to get her to respond? Polite responses only please.....
Monyash

Rather my point .....

gotreal - why don't we wait and find out tomorrow. The last thing we need is amateur speculation.

Maybe you would like to provide the figures upon which you base this assumption Rambo ... ??

mandels - if you email me at rambo_62athotmaildotcodotuk I will share a story with you.

Agreed, but this doesn't just go one way. IMO the uncertainty is fed by both sides.

GKP duly raised the cash for this year on the premise of completing the first facility in Jan and at the very least they implied to both investors and analysts that the production had an outlet, it would be exported and paid for. In reality they were never in a position to deliver these supporting goals and have been over optimistic, at best. They have since spent or remain committed to spending all of this cash. Will they get more money at the same price this year or a debt facility without evidence of revenue? Unlikely. Of course the structure of the CB may well have helped mitigate any concerns on delivery which the II / HNWI may have had at the time.

For their part the KRG are in a tight spot and haven't been unable to deliver on their end as yet either, there is still no confirmation of export routes, the converted Dohuk pipeline is now a Sep target not 'middle of the year' and they haven't notified anyone that the Management Committee have approved the FDP . Given the problems hitting this year's targets, without a signed up FDP I don't think GKP are yet in a position to provide the detail required for another fund raising.

http://www.bloomberg.com/news/2013-04-10/turkey-kurdistan-pipeline-set-for-completion-this-summer.html

The real question is not what is the name of the cy, but which are the fiscal terms?

Will they also have to pay the infrastructure tax, and at which rate? We have already seen that Genel has a lower Isap tax rate that GKP.

And in fact Turkey is making KRG a favour by allowing exports. How much are they asking in return? Wait and see...

BD

"Seems like bored investors turned gamblers. "

----------------------------------------------------------------------------------------------------------------------------------

Hmm, I wouldn't say it's "bored investors turned gamblers" - more like disillusioned investors turned traders.

Todd and GKP had a lot of goodwill in the bank from PIs. They were prepared to trust his every word. Problem is, when promises are not delivered that kind of trust tends to dissipate.

I've seen a similar thing in the hospitals where I've been visiting my mother while she reovers from hip replacement op.; nurses make promises to patients - "I'll be back in 5 minutes" - and never return, leaving the poor patient high and dry - actually, more often, depressed and wet as it's usually a request for help to get to the loo. It doesn't take too many broken promises of this nature for trust between nursing staff and patients to break down entirely. I saw a couple of examples where disillusionment turned to cantankerousness and then downright fear and insecurity (not my mother, I might add! I make sure to keep all staff fully informed of my mother's needs all the time whether in person or by telephone, and backed up in writing.) But that's an aside.............

GKP has promised a lot and, recently, has failed to deliver much. Worse still, TK has given every appearance of lining his own pocket before jumping ship with that share "transfer". Not exactly the best way to instil trust and confidence in a loyal following of PIs.

From the March presentation and you can clearly see the possible upside at Triassic and Permian depths that remains....

http://postimg.org/image/tyu92l001/full/

Post SH7/SH10 it's looking likely that Shaikan will be sitting at 20-25bbls with 40k production.

Hopefully some decent updates tomorrow, one can assume their must be a sweetener coming before the AGM, what and when it will be who knows...?

Reserves will probably come next year as I think it's been mentioned before that they need more reservoir data from PF1/PF2 first, i favour a catalyst being an imminent sale of AB / BIR's being sold or production and revenue from PF1 started.

Price action wise, an assault and break above 164 is needed as it's boringasfuck atm.

You are here: Home / Business News / Energy Resources / Oil drilling under way in Iraqi Kurdistan
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Oil drilling under way in Iraqi Kurdistan
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Published: June 19, 2013 at 6:48 AM


LONDON, June 19 (UPI) -- An oil company working in northern Iraq said Wednesday it was looking to confirm the region may be one of the best in the world in terms of resource potential.

British energy company Gulf Keystone Petroleum said it started operations for the Shaikan-7 exploration well in the semiautonomous Kurdish region of Iraq. The company said Shaikan-7 is its first deep exploration well, targeting natural reserves more than 2.5 miles underground.

Drilling is expected to take nine months.

"With Shaikan-7, we hope to confirm our expectations of major reservoirs beneath the deepest horizon drilled to date and add to what is already recognized as one of the world's largest onshore conventional oil and gas developments," Chief Executive Officer John Gerstenlauer said in a statement.

The company said the Shaikan oil discovery could hold as much as 10.5 billion barrels of oil. It expects to reach a full-scale production level of 150,000 barrels per day by 2015.

The central and Kurdish governments in Iraq are at odds over legal issues related to oil. As a whole, the International Energy Agency said Iraq could be producing 6.1 million bpd by 2020.



Read more: http://www.upi.com/Business_News/Energy-Resources/2013/06/19/Oil-drilling-under-way-in-Iraqi-Kurdistan/UPI-73221371638886/#ixzz2WesOHSc2

Just a reminder that there will be another RNS tomorrow as GKP's finals are released.

It's not unusual for BoD's to do the city rounds after results are issued as they seek to reassure investors that all is ok etc.

If GKP are doing presentations then a new presentation pdf should be on the site tomorrow for all to read.

I suspect it might contain a few insights into the future work program as the one issued last year is beginning to look dated already after project over-runs.

Funding is clearly an issue and with SH-7 now under way and BB now also unexpectedly added to the work program - analysts will be keen to see how the cash pot is looking and how future ops are going to fall into place when production is still at zero and cash flow NIL.

Interesting day ahead tomorrow and volume on the sp looking pretty pony of late.

If a placing is done at circa 140's then I imagine TK's 168p sale will look that much more insightful.

Just think - he could partake in a new share placing via the usual director participation rules or like some these days via an unrelated offshore business. The latter has been suggested in the past by media / press.

Eitherway - any placing under 168p is a discount for him (if he partakes).

Also watch out for the AGM proxy/agenda. It's due to be issued to shareholders next week.

So if it shows the share capital being increased again - then you know the writings on the wall regarding a placing IMHO.

The interesting thing is that the 100mln shares granted last year have not been touched although some may have been pledged or placed aside as collateral to buy out the bond holders should they take up their options at 270p range.

One thought - would it be easier to gain shareholder approval on an additional grant of shares to the capital 'after' a placing has been done or before?

Finally - if the CB is anything to go by regarding risk issues. Then it would appear that any capital / equity placings seem to be on hold until the CC has been closed.

Thus - one has to imagine that any placing would have to be done post July and after the CC ruling. If that's the case, then it should be at a higher price than 150p and higher than 168p.

That said - it wouldn't be the first time that TK and co have done a placing before some good news is released. Rather than wait for a higher sp - the past shows that it's normally done at a cheap sp.

Tut tut.

HUB

Shaikan – a giant field
The key asset, for us, is the giant Shaikan field
where the company has an effective 54.4%
working interest after the assignment of a 15%
working interest to a third-party and the KRG
taking up a 20% interest. This is the largest field
made in the region to date with potential resources
in place of 13.7bn bbl. At present, the company
has not detailed the recovery rate. With the crude
being relatively heavy (with much of the crude
being 18 API), we believe this might prove to be
relatively low given the size of the field (at 20%)
but will still equate to approximately 2.7bn bbl
recoverable reserves. The company has now
appraised this field and is moving ahead with the
initial development of this discovery. It is putting
in two processing trains with a capacity of
20,000bbl/day each to allow the field to have
productive potential of 40,000bbl/day by the
middle of the current year. In the government’s
ambitious plan, this field is slated to reach
150,000bbl/day of export potential by 2015.

Valuation
We refer investors to the valuation section earlier
in this note for our valuation methodology for
E&P shares. We derive a core asset valuation for
Gulf Keystone of 346p/share from the group’s
discovered oil and gas resources. We then adjust
for the net debt of the business, which equates to a
further zero p/share. On top of this, we add the
risked exploration upside over the next 12 months,
which adds a further 24 p/share to the metrics.
Discounting the oil and gas in our prescribed
manner leads to a target price of 185p/share.
In the scenario of successful exports from the
KRI, we would reduce our 50% discount for
assets in the KRI to our traditional 30%, which
would raise our target price up to 259p/share.
This however, could be some way off as we
would require evidence of export sustainability.

seakelp

Why some people on here refuse to believe this beats me.

http://www.investorschronicle.co.uk/2013/06/19/shares/news-and-analysis/news-tips-gulf-keystone-petroleum-jd-sports-itv-micro-focus-imagination-technologies-more-qmAubusWsRUK2TM3wiYyUI/article.html

News & Tips: Gulf Keystone Petroleum, JD Sports, ITV, Micro Focus, Imagination Technologies & more

Shares in London hit the skids in early trading despite a strong showing in New York overnight as nerves set in regarding the statement by Fed Reserve chairman Ben Bernanke later today on the quantitative easing policy in the US. And the Trader Dominic Picarda is looking forward to some more concrete direction for the markets.

IC TIP UPDATES:

Gulf Keystone Petroleum (GKP) has commenced drilling on the deepest test well yet at its successful Shaikan discovery in Kurdistan. Shaikan-7 is the first deep well drilled there, with a target depth of 4,500m. Meanwhile, work is about to commence on the field development plan for the existing shallower discoveries. We keep our buy.

KRG needs to see credible finance for FDP going forward, not the current 'chump change' in the kitty.

From Gramacho in Feb, this explains it reasonably well:

Interesting to note MOLs capex projections for 2013 from the drilling update presentation.

For Shaikan
Exploration: $7.9MM for Shaikan-7
Development: $50.8MM for SPF1 and SPF2 and Shaikan-10
Total $58.7MM net at 20% WI which equates to $235MM net Capex for GKP/TKI


For Akri Bijeel
Exploration: $140.9MM net for 3D completion, drilling Bijell -2, 5 and 7 appraisal wells, commence drilling Bijell 4 and 6 appraisal wells
Development: $15.1MM net for Bijell-1 EWT and surface facility upgrade
Total $156MM net at 80% WI which equates to $39MM net Capex for GKP/TKI


Hence total 2013 capex for GKP/TKI = $274MM which is approximately equivalent to the money raised by issuing the convertible bonds.

MOL also kindly detail the full year 2012 spend for AB and Shaikan. Adding the components yields a total 2012 Capex spend of $149MM for MOL and $190MM for GKP.

These figures are the bulk of GKPs spend in Kurdistan (not forgetting Ops G&A and SA and BB Capex) and should enable a reasonable estimate of GKPs year end 2013 cash position without production and with the benefit of production once the rates can be estimated more accurately.


MOL are starting to yield some useful snippets at last!

Regards,

Gramacho

http://www.iii.co.uk/investment/detail/?display=discussion&code=cotn%3AGKP.L&thread=10430582&threshold=0&it=le&action=detail&id=10430582

And from Edison Research in Oct 2012:

The convertible raise gives the company the financial horsepower to invest heavily to get production
capacity up to its stated aim of 100mbbls/d by the end of 2013. As indicted in the full-year results, the
company estimates that getting to the 100mbbls/d target will require around 5% of the gross, full cycle
capital expenditures estimated at $7-10bn (ie $350-500m). As a result, the company will likely spend
the money raised by the convertible in 2013.
To get to the 100mbbls/d level, the company will have to install extra facilities to take production from
the 40mbbls/d capacity allowed by the PF-1/PF-2 units. We expect this extra 60mbbls/d+ of capacity
would be significantly more expensive than the $30m or so for each PF facility (to survive the rigours of
the 25-30 year development), while new wells will be drilled in 2013 and we would expect GKP to
contribute to the costs of the pipeline if/when it is constructed.

http://www.edisoninvestmentresearch.com/?ACT=18&ID=8634

Toby, you would think it should be a great bit of news SH-7... I'm only left wondering why the SP didn't dive by at least another 4%... Makes one wonder, doesn't it ??? Perhaps it is just waiting for the next spud, before we tank in the true and proper fashion that we're used to

good to see the news spreading

http://online.wsj.com/article/BT-CO-20130619-703172.html?mod=googlenews_wsj

June 19, 2013, 6:14 a.m. ET
Turkey-Kurdistan Pipeline to be Completed September


LONDON--A pipeline that would carry oil from Iraqi Kurdistan to the Turkish border is scheduled for completion by October, Kurdistan's minister of natural resources said Wednesday.

Speaking at a conference in London, the minister, Ashti Hawrami, said the pipeline will have an initial capacity of 300,000 barrels a day, rising to more than 1 million barrels a day.

The pipline could be a game-changer for Iraq's oil industry and could also have profound political implications.

Baghdad and the Kurds are at odds over who should control the oil wealth of the semi-autonomous region of northern Iraq, and the Kurdistan regional government has been shipping oil by trucks to Turkey in defiance of Baghdad.

Those shipments currently amount to about 30,000 barrels a day, well below Kurdistan's capacity, which Mr. Hawrami said was about 300,000 barrels per day and expected to rise to 400,000 barrels a day by the end of the year.

"I am confident that Kurdistan's exports via pipeline will become a reality very soon," Mr. Hawrami said.

Write to Sarah Kent at sarah.kent@dowjones.com

"Why would GKP need another placing"..... FDP

Unfortunately Bobobo and a few others have staked their reputations on this paying off big time and it appears to have gone way beyond an investment / trading opportunity for them - on the surface at least. He may well know all about drilling and geology but for all that knowledge, I am certain that he doesn't know what's going to happen any more than you or I.

'it's an interesting coincidence that the well has been delayed for perhaps a year, and that it now fits the production facility timetable'

OMG! It's also interesting that we have a finite amount of cash and in Oct last year we told our retained analysts that we planned to spend it all this year and realize revenues from production by Jan! Maybe that also offers an alternative and cogent explanation of why they delayed the drill?

So now the narrative is that it's all about patience and that's a fair point. However, had you suggested in 2010 / 2011 that we should be patient; because we'd still be around in mid 2013, with no production a court case still pending and no confirmed funding for next year then you would likely have been shouted out of town.

Why would GKP need another placing when they had US$139.9m this time last year in the bag and then a further US$300m from Bank Paribas for the bonds in November 2012?
Er Indoors

http://www.davy.ie/davy/article.htm?id=Davy_Morning_Equity_Briefing_19062013_moneBLinkS0016C0001Cmp.htm


DAVY VIEW

Trading at a near-73% discount to our group valuation, we think Petroceltic is significantly undervalued by the market. However, drilling in Kurdistan is imminent and is a near-term catalyst to begin the process of closing the valuation gap. All going to plan, the group should have commenced the Shakrok well by the end of July.
Kurdistan has proven to be fertile ground for other explorers

Kurdistan, located in northern Iraq, has delivered major oil and gas discoveries for a number of exploration groups over recent years. Petroceltic has been involved in the region since July 2011 when it acquired a 20% interest (16% after a state back in) in the Shakrok and Dinarte licences with Hess Petroleum as its partner. A well is planned on each block within the next six months, commencing with the Shakrok permit in July.
Very large structures

Work by DeGolyer and Mac Naughton identified a number of structures with capacity to hold greater than 500m barrels, the level nominally defined as a giant target. The Shakrok structure itself is believed to contain 650m barrels with a defined drilling chance of success put at 24.5%. However, in reality, post recent seismic and detailed work undertaken in 2012, the risking is now believed to be more like 30-40%.

The thermal maturity profile is one of the bigger risk factors related to Kurdistan operations in that it is clearly preferable to encounter oil rather than gas at this stage of the infrastructure development profile. Significantly, detailed oil sampling work by Petroceltic has shown that both the Shakrok and Dinarte blocks are thermally mature for oil in the Jurassic. The Shakrok block is believed to be mature for wet gas/condensate in the deeper Triassic, although the Dinarte block is still mature for oil at this level.
Major value gap

Our group valuation is 530p per share. Of this, Kurdistan now contributes 20p per share based on the $53m investment required to get its initial position on the licences. It is worth looking at what the blocks could be worth on a more pro-active valuation basis using a number of corporate actions that have valued discovered barrels at between just under $1/boe to just over $3/boe. Petroceltic has 421m barrels net to its account from the various targets on its Kurdistan blocks. Applying a mid-range value of $2/boe to this suite of targets generates a risked value of 59p per share. This is based on the 'pre-drill' case using the more conservative DeGolyer and Mac Naughton risk assessment.

The start-up of drilling creates the opportunity to unwind pre-drill risk. For instance, the largest target on the Shakrok block (104m bls net) could justify the whole of Kurdistan pre-drill valuation alone. Hence our belief that the start-up of drilling in Kurdistan should act as catalyst to closing the value gap.

http://www.bbc.co.uk/programmes/p019p6bf

This is the first time I've EVER seen Shahristani admit to consultations or negotiations with the KRG. He usually states the KRG contracts are illegal, smuggling, etc, everything controlled by the centre and you will do as I say. This seems IMHO to be a huge change in his tone, direction and outlook................................

LONDON, June 19 (Reuters) - A resumption of Kurdish oil exports through Iraq's federal pipeline system will depend on a "permanent" resolution between the Kurdish regional government and Baghdad, KRG energy minister Ashti Hawrami told a conference in London.
Thanks for those posts Barney71255.


I wonder why? I think we (& Hawrami) have all heard the rhetoric before Messrs M&S... although the tone is now slightly changed. We won't hold our breath! At some point the valves are going to open..  Put the biscuits away and smell the coffee!


...............................................................................
Ahmed Rasheed ‏@Ahmed_Rasheed_R 29s
BREAKING: #Kuridsh energy minister Hawrami says new #oil pipeline to #Turkey complete by end September, initial capacity 300,000 bpd

---------------------
Shwan Zulal ‏@ShwanZulal 14m
Hawrami: highlight law passed buy #KRG to recoup oil/cost owed by Baghdad and says unless payment made krg has right to monetise. #Iraq
-----------------------
Thanks  also to Pathai.

GLA.

I'm with you on this MktChaser.

What the heck, we know where this is going, GKP will be pushing it to the wire and maybe even start pumping oil through the new pipeline.

You know what, I am here until I reach my opt out price.

Been here for 4 years, whats another 2+ eh.

ATB

MARKETCHASER, i understand your frustration but you must of brought @ 7p which must mean you are very much in profit, so in reality your dream is already achieved in some respects, unless you have brought further amounts at a higher price than today's price, keep the faith. CCC

I am one of the p l o n k e r s (self confessed) who bought and sold and bought and sold as I caught the bug early - now holding twice as many as I originally bought at a grand average of 244p - aren't I the genius. Starting to think I will be lucky to see an exit above that average in the next 12 months.

Another 12 months - what the hell, since 11th March 2009 and still here. Who would have thought it would take this long to realise the dream.
============================================================

MARKETCHASER, i understand your frustration but you must of brought @ 7p which must mean you are very much in profit, so in reality your dream is already achieved in some respects, unless you have brought further amounts at a higher price than today's price, keep the faith. CCC

you don't get it do ya.
Why do you think TA targets of 166 are being bandied around?
The traders will be gone by 164, there will be no momentum and the II's are far too savvy to be tricked into buying on spikes.

Spikes are for PI's.

Here's a great spike for yas:

1. Begin tweeting in late May that a court case judgement is nigh. The share price begins to climb from its low of 129.

2. Keep the tweets going - after all, you've got respect, you were tweeting from court everyday right?

3. Your mates - the ones who keep telling you the court case verdict is imminent - have been buying feverishly with volume since the 120's. We know this, various posters tell us about every trade.....

4. The tweets keep coming "Blackrobe already know Judge Clarke's judgement", "Judgement only days away".

5. Volumes are strong, the SP is going up into the 150's. PI's on the bulletin boards shout Yeehar......

6. And the piece-de-resistance (with 50+ ticks to boot) from a certain PTHC:
"Judgement has been with CC and MC since last Friday". And the source is apparently 110% reliable. (Of course, number 6 is now utterly refuted).

7. Then when the price is in the 160's (intra-day 164) the coffee-drinkers and associates begin unloading all the shares they bought in the 120's, again with volume, for a nice 10-15%.

Job done. And as if to rub it in..........several posters THEN receive e-mails from the Judge's clerk to say the judgement will not be handed down until at least July or the very latest August 23rd. Is it just me or is this beginning to stink even more than it did before?

200 from here is a pipedream unless a substantial offer is made for the whole company.

Judging by the latest round of block-awards to Chevron and Total, it does not look likely in the short-to medium term that any kind of offer will be forthcoming. And let's not even begin talking about the interminable delays around production, not to mention a court case which stank to begin with and now reeks more than a dead dog in a sewage farm.

AIM: The A - Z guidebook of how to fleece shareholders.

No its not pretty but as far as I'm concerned that's how it happened, and many on this board had ringside seats and didn't even notice!

If anyone has a cogent explanation of 125 - 164 - 147 during ramping season... I'm all ears.
---------------------------------------------------------------------------------------------------------------------------------------


LOL... ain't that the truth...

Useful, or just more bobbins?

Yup, thought so...can speculate until the Kurdish cows come home.

bobobob5 19 Jun'13 - 09:59 - 287710 of 287740 11 0

The S-7 well is going deep; the total depth is unstated. In order to handle very high-pressure deep zones, and to go deep, the well will require sufficient free hole diameter to allow the sequences of casings to be slid down inside each other. They will only get one shot at this well, and it must avoid a technical failure or "running out of hole".

The well design will have been very carefully worked out, taking into account inter alia the data from the other Shaikan wells and Ber Bahr-1. The top hole diameter required, to leave plenty of free hole diameter when the drill bit is entering the Lower Triassic and then an unknown distance into the Permian, will be considerable. A 36-inch diameter drillbit, at the early stage, has been used by another Kurdistan operator. It may take quite some time to go even a couple of hundred metres with such a monster, because of the loose nature of sone of the rock close to surface. It might be fine, or they might spend maybe three months going only a short way.

Drilling S-7 heavily overbalanced (very high mud weight to keep the oil in the non-deep formations from entering the hole in volume) would be risky, because large mud losses into a formation which will be a producing reservoir at other Shaikan wells could cause damage. The well isn't all that far from two existing wells. So very careful drill mud control, and casing as they go rather than long runs of open-hole drilling, will be needed.

This isn't a particularly deep hole, as holes go these days, but it's probably one of the most important wells drilled anywhere in the world in the last 50 years. There is a great deal of importance, not just for Gulf but also for Iraq and more broadly, on what this well discovers at depth, because of the enormous thickness of the Paleozoic in the Greater Shaikan area. It is possible IMO that the world's biggest oilfield is there, in the Lower Triassic and the Permian...we simply do not know.

If the Permian is a monster (and of course it might not be) it would be no good entering it with a drillbit the same diameter as my tea mug, and saying "oh dear, we've run out of hole, and the pressure is so high that we cannot test it". All that would do is duplicate the Shaikan-1 result. And the Permian needs to be entered a fair way IMO, but I don't know how one quantifies that...perhaps 300m to 500m as a broad-brush minimum?

Another important point IMO is that Shaikan-7 is designed to test certain so-far-untested reservoirs *above* the Triassic-Permian boundary. It is not a "Permian or bust" well.

This dimension is significant in terms of timescale. Often, a well is drilled to TD and is then flowtested on a bottom-up basis, i.e. deepest reservoir first. In this case, I suspect that they will perform open-hole Drill Stem Tests when going through those non-Permian reservoirs. That will take time; I have no idea how many such zones there will be, or how many tests per zone would be done. Perhaps some 3-5 DSTs? On that basis, the nine months includes such testing, which might itself represent something of the order of a couple of months. If one assumes something similar for potential Permian testing, the nine months might perhaps be about five months with Dr Drill, and about four months with Flo Test.

The significance of the non-Permian testing should not be underestimated. If I am right in thinking that this may be done via DSTs, there will be results from those before the nine months is up. For example, if one assumed two months Permian testing, and two months to very carefully reach TD in the Permisn, then take that away from the nine months, and we get five months. On that basis, which may be incorrect because we lack the well design details etc, we might get some results by about the end of 2013 for the non-Permian formations.

Another interesting point is that the Shaikan production facilities might potentially be used as part

I wouldn't bet a penny on anything on here.

Seems like bored investors turned gamblers.

I am certainly very very interested to see how the next 12 months are to be funded. PF1 and 2 won't provide enough income?

Any placing MUST come after the CC judgement at 200+ range?

Unless there is an asset sale?

plenty are fed up, disappointed with broken promises and repeated failures by the company to achieve anything other than exploration success so far which is to be commended but I consider that success to be largely attributable to the former Country Manager now departed, He was pivotal to what has been achieved so far, without him it is unlikely that there would ever have been a GKP in the guise we now see it today.

Funding concerns are legitimate and worthy of debate and discussion however divided the board is on these. Todays announcement which is on the face of it good news on the further exploration of Shaikan has does nothing to improve sentiment or opinion here as evidenced by the decline in share price which was largely expected by anyone who has been here long enough.

I doubt that the 9 month estimate will be achieved based on previous estimates given and the associated overruns on every one of them and the cost of this deeper appraisal will have to be funded by something. Asset disposal, we have heard that numerous expressions of interest have been expressing an interest - I am still not convinced and similarly believe that the figures quoted are too high for AB - let's see.

We have Results tomorrow, more questions than answers and unlikely that we will see 200p again before 23 August - assuming we win and they lose.

Isn't this fun. Patience required they say. We are the most attractive risked asset in Kurdistan and yet no evidence exists that anyone is prepared to make a cheeky approach, subject to clean title and exclusivity. Doesn't add up.

Another 12 months - what the hell, since 11th March 2009 and still here. Who would have thought it would take this long to realise the dream.

Lets hope Hawrami keeps to this end of September date then this time for the pipeline as the January claim about the 2 or 3 new oil majors announcement "in about a month" mentioned below didnt happen as reported ! Time will tell again.

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Ahmed Rasheed ‏@Ahmed_Rasheed_R 29s
BREAKING: #Kuridsh energy minister Hawrami says new #oil pipeline to #Turkey complete by end September, initial capacity 300,000 bpd

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from Tue Jan 29, 2013 10:01am EST

www.reuters.com/article/2013/01/29/kurdistan-oil-idUSL5N0AYFRY20130129

Jan 29 (Reuters) - Natural Resources Minister Ashti Hawrami said today:- Iraqi Kurdistan is negotiating with two or three major international companies to operate oil blocks and expects to announce the results in about a month.
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apologies, I think the Nina article is a bad translation of Oyrx as the 225 million matches with the below....

Oryx Petroleum spuds Kurdistan probe

Fresh target: Oryx Petroleum spuds probe on Hawler licence, above Oryx Petroleum
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Bill Lehane 18 June 2013 13:18 GMT
Canada’s Oryx Petroleum has spudded a third exploration probe on its Hawler licence in Iraqi Kurdistan, targeting the Ain Al Safra oil prospect.
The Calgary-based explorer said that the AAS-1 probe qould be drilled by the Sakson Hilong 10 rig to a total depth of around 4220 metres between now and the fourth quarter.

It is aiming to tap deeper light oil potential in the lower Jurassic and Triassic and heavy oil potential in the Cretaceous.

The Ain Al Safra prospect is estimated to contain risked prospective potential of 44 million barrels of oil, or unrisked potential of 225 million barrels, based on evaluations by Netherland, Sewell & Associates.

Formed in 2010 by former bosses of Addax Petroleum, west Africa and Middle East-focused Oryx Petroleum operates the Hawler licence on a 65% interest.

The Kurdistan Regional Government holds a 20% interest in Hawler and Korea National Oil Corporation the remaining 15%.