MIND BOGGLING

Independent oil and gas explorer Gulf Keystone Petroleum revised the reserve estimate at its Shaikan oil discovery in Iraq upward to 10.5 billion barrels. "This upgrade of the Shaikan mean oil resources from 7.5 (billion) to 10.5 billion of barrels of gross oil-in-place is a result of the increase... FULL ARTICLE AT UNITED PRESS INTERNATIONAL



============
bonobo77
31
Shaikan alone now boasts 1.5 barrels of oil (P50) for each and every human being on this planet. That’s $150 in the pocket of every one of the globe’s 7 billion inhabitants.

Our additional 3 billion barrels of ‘$100’ oil have added just 9.4p per share, or roughly £80m to our market cap. In other words, the market is valuing each one of those P50 barrels of oil at 4.3 cents.

Assuming 35% RF / 54.4% WI / Tax, etc. those additional 3 billion P50 barrels should, in theory, add 159p to our SP and increase our Market Cap by £1.36bn ($2.19bn) … not £80m!

GKP’s total mean (P50) OIP has moved to 14.41 billion barrels. This gives us a NAV of 689p, or a 381% increase on current SP.

According to the BP Statistical Review of World Energy, Iraq has the world's fifth largest oil reserves with about 143 billion barrels of oil, or about 8.5 per cent of the world's share. GKP’s total P50 OIP is now approaching a figure that equates to 1% of all the oil in the world.

China's total oil reserves amount to 18.2 billion barrels. Its total oil production stands at 4 million barrels per day. Don’t tell me Sinopec aren’t crunching the numbers on GKP. Our acquisition would be of great national significance to the Chinese.

From Exxon’s 2010 results - their reserves base sat at 24.8bn oil equivalent barrels. To put it in perspective, we now have a 90% chance of extracting ONE THIRD of Exxon’s total reserves, from just Shaikan, and that’s BEFORE we convert any of our gas into ‘oil equivalent barrels’. Exxon are capitalized at $380bn.

============

DGA, Ryder Scott, OIP and Petrophysics

View parent message
Votes for this Posting Voted 40 times.
Message
BBBS I have told you before, don’t let slip the family secrets lol! The oil industry is incestuous ((Having committed incest.
Improperly intimate or interconnected: ))and consultant petrophysicists are but one example.

You jest((A playful or amusing act; a prank)) about Rick’s use of a water saturation cut off but of course the other cut off applied in the calculation of net pay is porosity. I guess there are two key questions:

1. What truly is the low porosity value that should be used to eliminate some reservoir rock from the net pay count?
2. Has Rick eliminated any reservoir rock as being net pay on the basis of water saturation even though its porosity exceeds the porosity criteria for net pay?

My understanding is that GKP has produced on at least one occasion significant quantities of oil from a fractured interval that does not meet the current net pay criteria. I am not sure if they been able to show from the well test analysis that the production coming from the fractures was being adequately supported by the “non-pay” matrix. If so this could cause a rethink of the net pay criteria and lead to an upward revision of net pay.(Even without matrix support to the fractures there would be a small increase in net pay associated with oil in the fracture network.)

The interesting thing is that there was no specific reference to reconsideration of net pay criteria in today’s RNS despite the mean OIP increasing by a whopping 40% to 10.5 Bn bbl. Is there room for further increases in net pay by testing one or two additional intervals that don’t meet the existing pay criteria? The net pay story has yet to be completed and there could be a chapter with further good news yet to come.

Regards and GLA,

Gramacho

========================

The BIG picture....


A few observations...
GKP.L
90
No doubt BBBS will update us all with a few more of his infinite pearls of wisdom later but I just have a few comments on my more superficial view of today’s RNS:-

1) The new P10 of 8 billion barrels is HIGHER than the old P50 of 7.5 billion. So, we haven’t just seen a step up through the ‘p’ levels... but a 6% increase as well (in line with the 5%-10% increase in size of the Shaikan structure suggested by the 3D sesimics perhaps).

2) The increase in the P10 level from 4.9 billion to 8 billion is 63%, and the P50 from 7.5 billion to 10.5 billion is 40%.....

it is 8 BILLION (P90) - i.e with a 90% probability. Not P10 (only 10%).


But YET AGAIN we see the SP failing to respond by anything even remotely similar. At 145p as I write, it is still only 9.5% up and 5p above the placing price... a placing which took place nearly 2 months ago! I am sure those 'placees' will be looking for a bit more than that!

Hmmm ... I wonder if we will see an increase in the SOL figures again today, just as we did when the last massive OIP upgrade occurred in April. Because something definitely seems to be holding it back!

3) BBBS noted a few days ago that Shamaran had shown in their November presentation that GKP’s Shaikan discovery could hold 14 billion OIP, and this was the first reference to this. Today we see figures up to 13.4 billion referred to - once again, well spotted BBBS! I think they all KNOW long before us what is going to come next. Oh, and Shaikan-7 has moved officially from being ‘contingent’ to now having a definite plan, which again our wonderful 'prophet' BBBS observed was very likely.

4) SH-4 still apparently drilling near to 3400m – we must be literally centimetres away from reaching it, as this has been the case for several weeks now. Are we going deeper than originally planned I wonder - just like Bekhme-1 which changed its TD from 3000m to about 5000m in the course of just a few months?

And today’s RNS already refers to an EXTENSIVE testing programme to follow on SH-4 - so it sounds like GKP has VERY high hopes for this well, without even yet reaching TD!

Finally, John Gerstenlauer sounds pretty optimistic, doesn’t he...

"ONCE AGAIN, the Company's management and Board of Directors are DELIGHTED to validate our WORLD-CLASS DISCOVERY at Shaikan in the Kurdistan Region of Iraq. This THIRD SUCCESSIVE UPGRADE of the Shaikan gross oil-in-place range by Dynamic Global Advisors is a NEW STEP towards completing our understanding of this EXEPTIONAL asset. The process of assessing Shaikan started on 6 August 2009, when we announced our first significant discovery in Kurdistan. This assessment is FAR FROM BEING CONCLUDED as we have just spudded Shaikan-5 and prepare to drill Shaikan-6 in early 2012.These additional appraisal wells will provide us with valuable information about the flanks of the massive Shaikan structure, while the Shaikan-7 well will target the Permian, the deepest undrilled horizon of the structure. The Shaikan appraisal programme is being completed in parallel with the ongoing work on the Shaikan Field Development Plan."

One quick question though, JG – do you think that just one 440 THOUSAND bpd pipeline for Shaikan is going to be enough, or is this really just the start? Some of the probably smaller oil fields in Southern Iraq are targeting production levels of up to 2.8 MILLION bpd in a few years time! Not that I expect GKP will be around long enough to see the full fruits of this amazing discovery - but it makes you think, doesn't it!


GKP.L
77
I had to pinch myself as I thought I must be DREAMING!

This RNS is indicative of exactly why we INVEST..... for the LONG-TERM.

The P10 figures have gone from 1.9 billion to 4.9 billion and now to 8 billion in the last year. Meanwhile the P50 has moved from 4.2 billion to 7.5 billion to 10.5 billion!

Now that is what I call PROGRESS - and it is ONLY for SHAIKAN.

Whatever the SP does today is IMO therefore almost irrelevant - the eyes of every NOC and IOC are now firmly focused on GKP... with bewilderment - perhaps even complete SHOCK and AWE!

No SP predictions from me today - we simply need to see 'the BIG picture'!



-
Erbil remedies....
GKP.L
56
IMHO, theperpetualoptimist’s post this morning at 08:13 deserved rather more attention than it received, especially as it highlighted the question of 'Timing'.

We had not had any major OIP upgrades since April's massive increase. Sheikh Adi's 1.9 billion OIP (P50) is still classed only as a 'preliminary' estimate. But GKP has been testing both Shaikan and Sheikh Adi for about 3 months, so must have known for some time how much the OIP levels were expected to rise.

Yet, until today, no more major OIP announcements! Why?

My feeling for some time has been that Iraqi/Kurdish disagreements over the Oil Law etc. have been been at least inhibiting the release of important information as a sort of bargaining tool.

But today, with news on the Oil Law seemingly having taken a turn for the better recently after the much publicised conflicts, GKP (presumably with the KRG’s blessing) has chosen to announce a massive OIP upgrade. I wonder if Sheikh Adi OIP figures are coming in the next few days too!

The key point is that it looks as though the shackles are slowly being released by the KRG just as the major Oil and Gas conference in Erbil is about to start.

To me, that Conference now seems somehow pivotal - Tony Hayward and Mehmet Sepil will be speaking. So will Todd Kozel and John Gerstenlauer. And I think that every one of the oil companies operating in Kurdistan is on the list as some kind of sponsor.

The KRG is also heavily represented (as you would expect) but there are also certain members of the ICG. And with Vallares/Genel due to re-list on 21 November (no doubt to a media frenzy and fanfare), everything points towards the Erbil conference being a vital opportunity for the KRG to tell the world what they have, and for GKP to show how important its oil discoveries will be in terms of Kurdistan's (and Iraq's) future prosperity.

Erbil could therefore be the scene of a glittering array of fireworks IMO!

Incidentally, I note that our friend, Dr. Shahristani, is "appearing" in London on 22 November as Iraq's representative at the 'Iraq: Untapped Opportunities' conference.

http://www.iraq-businessnews.com/tag/shahristani/

Maybe, he too will be taking the opportunity then to sell the idea that the whole of Iraq (including Kurdistan) is now open for business, and no doubt claim some of the credit for his part in this transformational process. It will be very interesting to see if he does!

Anyway, thank you TPO for reminding us of some of the possible ‘remedies’ to GKP’s vastly under-valued SP that we may get to hear about soon... from Erbil.

AIMHO and please DYOR

GLA, scaramouche


===================

Author Dalesmann View Profile | Add to favourites | Ignore
Date posted today 13:11
Subject Reserves 2
Votes for this Posting Voted 59 times.
Message
This is an update of a recent post but this time I have included all the major producers . The ‘3’ indicates a member of OPEC .

The news from yesterday moves us up the scale. I stress that the Gulf Keystone figure is only for Shaikan.

The figures date from 2009 and are only oil and condensates. But they are no worse for that. If anything many of these figures will have declined!

GRH has pointed out that at Shaikan the tank is full! No I’m not talking about the full to spill scenario, rather it has NOT had its resources reduced by continual production. Many of the large producers have had their reserves called into question and these huge fields have been diminished by continual pumping but that’s another matter.

We were at position 34 on this list.

Yesterdays news moves Shaikan to position 32!


1 Saudi Arabian Oil Company (Saudi Arabia) 3……259,900
2 National Iranian Oil Company (Iran) 3……… 138,400
3 Iraq National Oil Company (Iraq) 3……………… 115,000
4 Kuwait Petroleum Corporation (Kuwait) 3…………101,500
5 Petroleos de Venezuela.S.A. (Venezuela) 3………99,377
6 Abu Dhabi National Oil Company (UAE) 3………92,200
7 National Oil Company (Libya) 3 ……………………41,464
8 Nigerian National Petroleum Corporation (Nigeria) 3….36,220
9 OAO Rosneft (Russia)………………………………17,513
10 OAO Lukoil (Russia) ……………………………… 15,715
11 Qatar General Petroleum Corporation (Qatar)3 …15,207
12 Sonatrach (Algeria) …3……………………………12,200
13 PetroChina Co. Ltd. (China) …………………11,706
14 Petroleos Mexicanos (Mexico)……………………11,048
15 Petroleo Brasilerio S.A. (Brazil)……………………9,613
16 Sonangol (Angola)3………………………………….9,035
17 ExxonMobil Corporation (United States) ……7,744
18 Chevron Corporation (United States)………………7,087
19 ConocoPhillips (United States)……………………6,320
21 Total (France)………………………………………5,778
22 Petroleum Development Oman LLC (Oman) 5,500
23 BP Corporation (United Kingdom)………………5,492
24 Petronas (Malaysia) ………………………………5,360
25 Petroleos de Ecuador (Ecuador)3……………….4,517
26 Dubai Petroleum Company (United Arab Emirates) 3 4,000
27 ENI (Italy)……………………………………………3,925
28 Royal Dutch/Shell (Netherlands)……………… 3,776
29 Egyptian General Petroleum Corp. (Egypt) ........3,700
30 Statoil (Norway)……………………………………2,389
31 Occidental Petroleum Corporation (United States)… 2,228

32 GKP prospective reserves at Shaikan…………1,542

33 China National Offshore Oil Corp. (China)………1,490
34 Canadian Natural Resources (Canada)…………1,358
35 Anadarko Petroleum Corporation (United States)…1,014
36 Devon Energy Corporation (United States)…………998
37 Repsol YPF (Spain)……………………………………952
38 EnCana Corp. (Canada)………………………………927
39 Pertamina (Indonesia) 3………………………………903
40 XTO Energy (United States)…………………………308

That is quite remarkable! If our total entitlement of 2711mbo of OIL became 2P reserves we would move to 30th above Statoil.

Lets look again at what that means in terms of reserves replacement and just use Shaikan as it is closest to having 2P reserves announced; starting with the Chinese.

13 PetroChina Co. Ltd. (China) …………………………………………11,706
Shaikan would replenish 13.7% of their reserves. They have billions available to spend. At $5.11/bbl this equates to $7864m for Shaikan alone or $9.21 /share (£6)

Moving on to the Americans

17 ExxonMobil Corporation (United States) ……….7,744

Shaikan would now replenish 19.9% but on a full to spill p10 basis of 13.2b/bls at Shaikan this moves up to 1938mbls and this would replenish 25% of Exxons reserves.

Just think about that for a moment Shaikan could replenish 25% of the largest listed company in the world’s total reserves.

Returning to what has already been announced.

18 Chevron Corporation (United States)………7,087
Shaikan could currently replace 21.75%

19 ConocoPhillips (United States)…………..6,320
Shaikan could currently replace 24.4%

23 BP Corporation (United Kingdom)…………5,492
Shaikan could currently replace 28%

28 Royal Dutch/Shell (Netherlands)………3,776
Shaikan could currently replace. 40.8% of all of Shell’s reserves.

Mind Blowing!

PTO costed the acquisition of Shaikan in an excellent post a little while ago. These companies MUST BE running their slide rule over GKP!

If we look at those players already in Kurdistan

33 China National Offshore Oil Corp. (China)………1,490
(close enough to Sinopec which doesn’t register on the list.)
Shaikan represents 103% of this NOC’s reserves

37 Repsol YPF (Spain……………….952
Shaikan represents 162% of this NOCs reserves

49 Hess Corp. (United States) …………………………..885
Shaikan Represents a staggering 175% of this IOC reserves

50 Marathon Oil Corp. (United States) ………………….650
Shaikan Represents an even more staggering 237% of this IOCs reserves!!!!

On a day when the SP refuses to even nod in the direction of value it is good to put our company into context and realise that our day will come.

I’ve just had a long conversation with GRH, his point and it is a really powerful one is this:

“These companies CAN’T,

they just CANNOT IGNORE GKP!

Their shareholders would never forgive them if they missed out!”

Kind regards

Dalesman

======================



Chinese still buying->GKP comparison
renardargente
4
A quote from an HK analyst;

“Nobody can buy at a discount, and everybody has to pay a premium to buy now,” Kwan said. “If you don’t want to pay a premium, you can go make your own discovery, but the process is going to take a long time.”

within the following article on CNPC's(Sinopec of course, not CNPC.
) purchase of 30% of GALP Energia's Lula / Cernambi fields at Tupi area offshore Brasil.;

http://www.bloomberg.com/news/2011-11-11/sinopec-agrees-to-pay-3-54-billion-for-30-stake-in-galp-s-brazilian-unit.html

GALP has a 10% interest in Tupi etc. and CNPC therefore bought 3% of the Tupi concession for $3.5 Bn giving a concession value pricing of around $100 Bn. Tupi complex contains around 8.3 Bn bbls of recoverable light oil equivalent and thus $12 per bbl to participants. Lifting costs are estimated as approx. $40 per bbl. I don't have the precise Tupi concession terms but a discussion is given in;

http://www.law-now.com/cmck/pdfs/nonsecured/Brazilian.pdf

For the sake of argument let's assume similar fiscal terms to the Kurdi PSCs and balance the GKP ASIP tax against a $40 / bbl lifting cost for Tupi. If we also take a punt on what Shaikan/SA eventually holds as also being 8 Bn bbls recoverable ( approx 20 Bn bbls OIP ) then an equivalent value figure for GKP ( approx 50% WI vs 3% CNPC ) without Ber Bahr is 15x the GALP deal or around $50 Bn. Leave beind 40% for a future buyer's wedge or GKP ASIP tax or whatever and this gives a range of $50 Bn - $30 Bn. This equates to an SP of 15x - 10x tomorrow's SP. Plus Ber Bahr to come.

The SP figures quoted here from 2009 may not look so stupid in the near future if a real cash deal is used as a comparison.

I understand that some gross errors in arithmetic may have been made and there are some major assumptions. But..... we are talking orders of magnitude for CNPC's deal compared to the figures currently assumed for GKP value.

Would appreciate a constructive deconstruction (!!!) of these figures . However, the Chinese ARE on the prowl and Tupi area is hugely more difficult to produce than onshore Kurdistan.

=====================

The magical phrase
Pittsburghguy
48
The news of late seems to get better by the hour and should easily propel the stock to new highs. Passage of the O & G law will be the ultimate accelerant. Move of other majors and the first offical bid will likely make us all vey happy. And we know that Gulf Keystone is in a race against the clock. Still my selfish holiday wish (excluding those matters that trump material and finacial matters) is the magical phrase, preferably around mid December and after all of the above news -" Gulf Keystone, in an effort to maximize shareholder value, has engage Goldman Sachs as advisors". Of course, the announcement to be followed by a methodical and thoroughly prepared " book", a request fo inclusion in the bid process, a 30 day window for expresssions of interest and indications of value, a week or so ananlyze the responses and an inviitation to three of so bidders to formalize and increase their offers, and so on and so on. A 5 month process during which the rules or should I say facts continue to change as the many drill bits turn. You want drama, you want to get in trouble with your boss, your family and friends, you want to develop a new addiction that has you walking around distracted at all times - then wish for that magical phrase.

===============