Gulf Keystone - Investor Day comment

Thursday, Jul 04 2013 by
8

A "strategy for value creation"

An interesting day was had, up at Park plaza Victoria hotel where Todd Kozel and board faced the baying barbarian hordes. Didn't quite turn out that way - much to the annoyance, no doubt, of M&G, Asher and the numerous derampers and whisperers that have slithered out of the woodwork over the last year.

Have to say it was a slick presentation - JG was exceptional in my opinion.

We started off with some introductory speel from Todd emphasising how we were moving from the explorer phase to being a producer, the aim being to monetise the OIP in addition to continuing further explo.

TK highlighted GKP's operational success - 18 wells drilled, not a single duster. Quite incredible for an Oil explorer.

Regarding Adnan Sammarai's move - apparently he's moved to the MNR to be a special adviser to Hawrami..

PF1 is due to go "live Oil" in next day or two.The delay has been down to technical delays. PF2 due to go live October.

The CC has been an annoying diversion, and they expect a result on 23rd August at the latest.

The aim for Full list is September/October, with the appointment of a non exec chairman the first step along that road. This means the CPR will be due September ish as well, and a final declaration of "Reserves"

Vis M&G - apparently M&G have not approached GKP, nor discussed their move according to TK. Regarding their 4 proposed NED's TK described them " small company men", not suitable for a Ftse company. The fruits of independent background searches into these four will be revealed in a soon to be released RNS.

JG then took the stand for an Operational review. And what a presentation. It's clear he is very passionate about GKP and a worthy member of the board.

OIP 19bn barrels with significant upside potential in the permian
19th well will be spudding soon, Shaikan 10.Development &Production well.

PF1 complete and ready for commissioning. 40,000bopd by end 2013. All in a short space of time. Compared to Kashagan this was remarkable - 15 years, $45bn and still no production.

As an idea of how big Shaikan was we had…

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Gulf Keystone Petroleum Limited (Gulf Keystone) is a holding company, which is engaged in the oil and gas exploration and production. The Company operates in the Kurdistan Region of Iraq. It operates through segments, including Kurdistan Region of Iraq and United Kingdom. The Kurdistan Region of Iraq segment consists of the Shaikan, Ber Bahr blocks and the Erbil office, which provides support to the operations in Kurdistan. The United Kingdom segment provides geological, geophysical, engineering and corporate services to the Company. It operates in the Shaikan oil field. The Shaikan block is situated over 85 kilometers northwest of Erbil, covering an area of over 280 square kilometers. more »

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4.4



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16 Posts on this Thread show/hide all

peterg 5th Jul '13 1 of 16

Hi Fangorn,

Thanks for the report - good reading.

Was there discussion of how soon the pipeline and promised spur were going to be operational, and of how the current production is got to market (- trucks presumably, and how far that can scale prior to the pipeline)? Also what are they currently being paid for the oil?

Peter

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Fangorn 5th Jul '13 2 of 16

Hi PeterG,
Vis the spur I believe they're looking at 8 months - The main pipeline into Turkey will be ready by then. In fact I think the pipeline into Turkey will be constructed by Sept/October. Then subsequent testing etc.

I suspect 8 months is probably the worst case scenario regarding the spur as well.

Current production is trucked yes as indeed I believe the 17000bopd average production for the rest of 2013 will be.

It wasn't clear whether ALL of the scaled production, as PF1 hits 20,000bopd & PF2 starts to feed in October time at 5000bopd per month - the trucks will certainly get alot busier that's for sure. Presumably they will switch over to the pipeline asap (next march/April)

Payment - memory a bit hazy here. I presume KRG will be paying them. There was chat viz profit /bbl ($20/bbl less operational costs of $5-10/bbl - GKP paying 50%) But TK mentioned the need to discuss next Wednesday regarding take off agreements and exports - presumably there are plenty of considerations to iron out regarding payment for Oil GKP exports..

A few too many G&T's post presentation :)

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peterg 5th Jul '13 3 of 16
1

Hi Fangorn

Thanks for the reply, I'm sure the G&Ts were well deserved!

presumably there are plenty of considerations to iron out regarding payment for Oil GKP exports.. 

Indeed, and it's the uncertainty about this that stops me increasing my decent sized holding by a lot more! (And I suspect that applies to the market in general too). 

Peter

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Fangorn 10th Jul '13 4 of 16

Investor's Day event now accessable as live webcast for anyone interested.

http://www.investor-day-gulfkeystone.com/

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rhomboid1 10th Jul '13 5 of 16
2

Wow..I watched Todd Kozel present and instinctively checked that I hadn't bought a single GKP share , he really is a one off.

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Fangorn 11th Jul '13 6 of 16
1

Did you feel the same way after watching John Gerstenlauer present the operational review?

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rhomboid1 11th Jul '13 7 of 16
1

I've responded twice on this topic but both posts vanished, is there a Bermuda Triangle mode I've not been made aware of?

Frustrating...

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Fangorn 11th Jul '13 8 of 16

In reply to post #75127

I've not seen either of those two posts Rhom - has Stockop had IT issues?

Did I misinterpret what you initially said?

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shipoffrogs 11th Jul '13 9 of 16

"The aim apparently is to move more to debt issuance so as to reduce equity dilution."

Maybe, but a good way of judging their intentions on this is to visit their summary page on the iii website and see if they have placed a banner advert. That'll tell you the expected direction of cash flow between company and investor.

They have.

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peterg 12th Jul '13 10 of 16

In reply to post #75130

You'll need to be a bit clearer! I can't see any banner advert

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Fangorn 12th Jul '13 11 of 16
1

In reply to post #75130

Why go to the "iii.co.uk" site and not the company website?

Why would the company advertise to iii their cash flow expectations anyway?
What banner are you talking about btw?

http://www.iii.co.uk/investment/detail?code=cotn:GKP.L&it=le

Thanks

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shipoffrogs 12th Jul '13 12 of 16

I presume that the space below the word "summary" is a paid for advertising.

Advertisements are meant to sell things, I assume therefore that companies who do this are likely to have rights issues or placings. Why else would a company spend the money?

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Fangorn 12th Jul '13 13 of 16
1

I presume that the space below the word "summary" is a paid for advertising.

Is it? Looks more like iii's own summary on the company to me to encourage punters to sign up to its boards/premium services.

"Buy UK shares for £1.50 with our regular investing service. Real time trading at £10."

Included in summary is the above. Would seem to indicate that it's iii promoting,and nothing to do with Gulf Keystone. Nought to do with GKP especially as they'd not use this as a method to raise fiance or advertise their cash flow requirements.

 

Oh look Hertiage Oil have a similar page layout

http://www.iii.co.uk/investment/detail?code=cotn:HOIL.L&display=summary&it=le

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Fangorn 13th Jul '13 14 of 16

Comments pertaining to the M&G friday meet...

GKP's response to the nominee NED's

http://www.gulfkeystone.com/uploads/theboardsrecommendationtoshareholders13july2013.pdf

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rhomboid1 13th Jul '13 15 of 16
1

Fascinating stuff..especially as an ex shareholder in Tower , I'd not rush back to any pure blue sky explo story without spending a lot more time on due diligence.

Does anyone know what "disruptive" behaviour Mr Asher is being accused of whilst serving as a GKP director?

What is M&G looking to achieve here and couldn't they find more blue chip candidates?

Cheers

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Fangorn 19th Jul '13 16 of 16

Does anyone know what "disruptive" behaviour Mr Asher is being accused of whilst serving as a GKP director?

According to some it's that he stood up to TK and openly questioned his remuneration. Not proved. Others say he was too involved in day to day operations - he does strike me as being the back seat driver type.

What is M&G looking to achieve here and couldn't they find more blue chip candidates?

Good question - if only one was the fly on the wall at the meetings.
The fact their 4 nominees are so ordinary says it all. That GKP can't get someone like Simon Murray but that M&G didn't bother and went for the likes of Asher convinces me that there is more than meets the eye going on. If it was all about improving CG the last thing you do as a minority shareholder is parachute in 4 nominees all of whom know at least two other the other candidates, and one of whom has 17 million shares. There's nothing independent about them whatsoever.So what's the real reason. Wish I knew.I have ym suspicions though.

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