GUKYF Gulf Keystone Gathered Feedback ,Thanks You
What happened: Less than 24 hours after postponing today's trading update by a fortnight, Gulf Keystone Petroleum (GKP) is rejoicing after the Minister for Natural Resources (MNR) officially approved the Field Development Plan (FDP) for the Akri-Bijeel Block in Kurdistan. And an investor stampede that began Wednesday with a 30% surge continued Thursday, taking the two-day gain to 40%.
Gulf Keystone, which said yesterday that constructive discussions in Erbil with the MNR were ongoing, today confirmed the approval following a statement from MOL Plc, operator of the Akri-Bijeel Block in which Gulf holds 20% working interest.
It's also talking with the Ministry of Natural Resources about key terms of the related Lifting Agreement and Pipeline Construction Agreement, a pre-requisite for the development phase and ultimately production from the field. Hopefully, we'll get more on this at the next update rescheduled for 13 November. We're also likely to hear more about progress toward average production of 40,000 barrels of oil per day (bopd). First quarter of 2015 was Gulf's last best guess.
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Take over in the cards.
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"300p would still be a very good deal for the NEWCo,
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. "GKP not at 40,000 bopd yet, but starter set nearly complete. Would you like to buy it?
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"GKP is a weak company (hence share price), but asset wise; very strong. Now would be the time for someone to show some interest... It's the smallest fish."
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"Look at the history of such companies and then think why would a sane company pay five times the share price for assets when GKP is in such a weak position? Asset rich but cashflow
poor = fire sale or bankruptcy. GKP needs to get cashflow strengthened quickly and re-securitise at a better rate, that horrendous debt done in April."
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'"Don’t forgot Friday is always a blue for GKP, and with all this news and the amount of write ups in papers over the weekend will be all in favour for GKP, I can see 85's but end of tomorrow."
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The markets are littered with insiders when it comes to Kurdistan. One of the most corrupt regions in the world and whilst oil is the money, they are also savvy enough to know they can make millions via the stock markets without even having to pump the stuff or get their hands oily.
In short, be assured if any payment mech or deal was imminent (as you posit) on or before Nov 13th, then Genel would be 800p or 900p+.
Genel are the ones who will benefit the most from payments on exports based on their higher oil output.
Don't get me wrong, GKP will also benefit and some would say it is more important to them due to lack of funding options ahead of them.
But the reality is... if this bottle neck on payments was to be broken in the next 2 weeks, Genel, MOL and DNO etc would be edging up big time. But they are not.
Personally - I think Malcy's closer to the truth when he says GKP 'hiding' behind Genel's IMS.
The reality is, the region is not going to see any major progress on the political front until the Iranian talks are concluded imho. This has a deadline of Nov 24th.
Nov 13th is thus too early for any 'political' break throughs.
I suspect the KRG are simply keen to go into 'secret' mode while in discussions with Baghdad. I don't think they want Baghdad to know what GKP's oil output is until as late as possible. The fact that Genel are announcing on the 13th could be the 'as late as possible' date. Hence - they may as well buy KRG/MNR a further 2 weeks of horse trading before delivering the numbers.
There has been some hints of KRG PR as per newswires saying oil output can double etc etc. I wonder whether this PR bluster gets a bit of a kick in the ...... when aligned with the real numbers.
Also - budget payments are being sought at present. I don't think the KRG wants baghdad to know that GKP have produced XX barrels just now. In 2 weeks time, Genel are going to announce their output and it's clear that they are not going to change their RNS date.
I still think Nov is the month for the Iranians to do a deal with US and believe any breakthrough in iraq is going to be directly down to the outcome of those talks.
As for Mol, GKP and sharaman etc - these are the minnows that are stuck with FDP's that are hard to fund without incoming cash. Hence - they are really struggling to make progress and may well be seeking a combined infrastructure deal to help with a second pipeline.
My view would be ... don't get your hopes up for the 13th and watch out for the period around the 24th of Nov.
Genel will be your barometer imho. When they start surging (as they did when last at 650p to test 1100) you know good news is coming.
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The only two things that matter in the long term is that GKP have a lot of oil and it is commercial.
The last 3 years Gkp have chosen to keep the KRG happy over the city, Right choice imo.
KRG have done a fantastic job in showing Barack Obama and John Kerry that they never held ICG to any ransom, but were given false promise's by Maliki.
I believe that usa have u-turned on side with kurds and will reluctantly agree independence if Baghdad blow it this time hence all the pressure being on Baghdad to keep the 3 side United.
New month again today, time is going so fast and this time it is not a problem for KRG or GKP.
Baghdad being rushed into implementing all the process's under force is new to them. About time to.
Gla holders.
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I am quite sure the news being held back is receipt of first payments for oil.
The Kurds now have a massive position of strength, they have :
Control over Kirkuk that is not going to be given back.
Told the US they are liars, no more promises will be listened to, only action.
Told the Iraqi Government (IG) no more promises, only action.
Become the only viable force to fight ISIL on the ground.
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What will happen this month is :
First payments to oil companies operating in KRG will be announced. Kurdish pressure on the US has borne fruit, US has now pressured IG to pay money to the Kurds.
Court will rule that KRG can sell their oil into US markets in a landmark ruling, there will be vocal grunts and groans and complaints from Baghdad but behind the scenes its agreed they will allow it to happen without further real challenge.
This will be 2 big pieces of news in November.
Now that a payment mechanism has been put into place we will see consolidation in the region and its my view GKP will farm down/sell something in return for cash/free carries on drilling/free carries on putting in production.
Is it a strong buy ? Yes in my view.
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......The KRG wants GKP to report that they just received their first payment with more to follow and that was a major impetus for the delay ( just my speculation mind you).....
I think this is the first time that this hypothesis is mentioned and it is in fact a very interesting idea.
As you say, if true, it would have a very strong impact, specially for GKP, which is, I thnik, the one oil company in Kurdistan that is the most fragile financially while having at the same time the highest potential in terms of reserves and one day in production terms if they can resolve their financial fragility.
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Like it but the “scratching” business in China has become invisible now in China- even MOONcakes sales have collapsed every since Xi Ping came to power and nearly every loophole plugged. (reckon it has artificially lifted the official figures growth by 2.5% pa as the grey economy was estimated to be at least 25% three years ago)
For what it is worth i met up with a Chinese Leader here in Sh'zen in May who is an advance scout for setting up Chinese investment projects in different parts of the world. As i was replying to him on another subject - at the time of the massive announcement of the Investment Programme by China in the Uk last JUne sent him the following as as a Postscript on June 18th
“PS: I note the largest Investment Projects announced (By China last June in London with Cameron and XI Ping) were in Energy with BP and Shell.
A most interesting “jewel” right now is Kurdistan and it is all coming very right for that country with Kirkuk now giving it the means for full Independence.
The prospects have never looked brighter as the real problem all along has been Maliki which is now only being aired on airwaves.. The British are heavily involved here with Barzani the Kurdistan President a visionary front runner.
Your Sinopec has already an Investment there through its acquisition of Addax so you are probably aware of the wider situation but just to mention with events freeing things up will reactivate its energy importance on companies radar.
The two companies with substantial proven oil reserves of note there are GENEL ( run by ex BP boss) and Gulf Keystone Petroleum. I do have an interest in GKP since 2009.”
The move by MOL is achieving strong traction IMO as it also presents a much better vehicle within international diplomatic and arabic circles as it removes any confirmationary criticism of the US/UK invading Iraq in 2003 for ulterior motives. ( it would be interesting to see a graph on comparison of the two share prices (GKP and MOL over 3 years)
The Chinese (CNOC) are clean here and no doubt the Chinese are investing, and agree as heavily as they can in the area with GKP it seems being a key target but in the set up may well be barrelled aside (but for TK sitting there)
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November 13th, a bit of line in the sand, a cliff to possibly fall off or a mountain to conquer. Let's face it, neither the company nor the KRG have a lot of credibility with the capital markets.
So what is in store for us. Not likely a firm agreement with Baghdad on recurring payments to the KRG. Too soon as the cabinet and committee meetings have just begun in earnest.
Even for a overly fatigued investor like me, the next several months look interesting to say the least. Interesting in that the Kurds, while on the verge of bankruptcy, have been very coy and patient in their negotiations, in fact Barazani has not even made it to Baghdad for the inaugural negotiations. Interesting in that the US is now pressuring Baghdad to make payments to the KRG, interesting in that the KRG was in London last week on a roadshow to fixed income investors laying the groundwork for a Bond offering (Wow). Three straight months of lobbying the EU members for support for Independence and 3 months of being the force that has fought evil on behalf of the rest of the world. Interesting in that the Kurds are negotiating from a position of strength, whether they truly have it or not.
Interesting in that MOL has just raised some capital and just had their field development plan approved. Interesting that Shamaran has begun construction of the pipeline spur that could run adjacent to Shaikan, and RAK is up to something.
Politically, my guess is that the pressure is very high for a cash payment to the Kurds and that is the big bet. The KRG wants GKP to report that they just received their first payment with more to follow and that was a major impetus for the delay ( just my speculation mind you). But I do believe that there is more to the November 13th date than just that. A milestone I believe, a cliff, I hope not. High stakes, very high stakes. But then again, if it is a cliff, and there is no immediate payment mechanism, the long term answer and permanent solution via a legal mechanism to export may be in the near future. Good luck, long and wishing I was strong.
The pressure to pass some form of a budget is very high, so, I believe, it is reasonable to expect a return to liquidity in Kurdistan which will be good for all of us. Never a straight line up, some day maybe.
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end current feedback, Thanks All the air waves are filled.
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