Shaikan Valuation: Best DCF , RF & Reserves Analysis

The uplift in the mean oil in place numbers to 13.7 billion is extremely positive. However today’s announcement is only one key variable and without the other four we are left guessing when it comes to a valuation of Shaikan and the company as a whole. The missing variables are: The recovery factor The yearly discount rate to use in a discounted cash flow calculation The long term oil price assumption to use The Chance of Success to apply Nothing in today’s announcement hints at the missing four values So we are still left with a range of possible outcomes. Lets start by using the parameters used by Miraboud our house broker. http://db.tt/EhoBqB85 The screen shot of my reserves analysis workbook has a range of long term oil assumptions starting at Mirabouds $85 and increasing in $5 intervals right up to $105 You will see that I’m using their 25% recovery factor And their 12% discount rate in my DCF calculations ,which take place off screen on a separate workbook which then returns a value to the Reserves Analysis sheet. Plugging in these 4 key variables returns a target valuation for the company of £6.07 and a valuation for Shaikan alone of £4.46. The spreadsheet calculates a $3.56 price for a recoverable barrel at Shaikan (Column L) which is less than half that calculated by The Perpetual Optimist in his seminal work on the KRG PSC contracts. ($7.80/recoverable barrel) So using Mirabouds figures we are leaving over 50% upside for the next man Miraboud then applies a 50% political risk to their figures so I expect them to announce a rise in their target price to around £3.03 Sticking with this screenshot you can see that changing one variable, the long term oil price assumption to $100 would increase the valuation to £7.09 before they apply a 50% political risking – which would reduce the figure considerably. to give a target of £3.55 see the next screenshot that has this 50% political risk applied. The value for Shaikan alone would be £2,23. The workbook with this applied can be viewed here http://db.tt/YFrv7J3B The recovery factor ,of which we have heard nothing in todays RNS, is another key variable. Lets leave the figures based on the Miraboud note and change the RF from 25% to 30% The OIP remains constant at 13.7billion The discount rate applied remains 12% The long -term price assumption chosen remains at $85 over the contract term No political risk is applied Now the company valuation climbs to £7.17 This change can be viewed here http://db.tt/GXmbLGjr The Shaikan block contributes £5.29 to this total – coincidentally this figure now coincides with that reportedly remarked upon by John Gerstenlaur in New York as the value of Shaikan alone. If a 50% political risk is applied then £3.58 becomes the target. Moving on and returning the RF to 25% but decreasing the discount rate to 8% a value mentioned in the note a price target of £6.87 is achieved That is the RF remains at 25% The long term oil price assumption remains at $85 Now the price paid for a Shaikan barrel has risen to $4.06 and Shaikan as a whole contributes to £5.08 to the overall valuation. Perhaps it is time to leave the figures from broker notes behind Here are my own parameters I am looking at a range of long term price assumptions between $85 – $105 I favour $100 I am using a 30 % recovery factor A 6% yearly discount No political risk – you can add your own to taste! This assumes we achieve £4.04/ entitlement barrel at Shaikan. The results of my own variable assumptions can be seen in the next screenshot. http://db.tt/lwftUgbH At a $100 long term oil assumption the workbook then pumps out £10.30 per share At $85 long term oil assumption the workbook pumps out £8.79 with Shaikan now contributing £6.54 No political risk has been applied. Because we have only been given one key variable – a new OIP figure of 13.7 billion barrels, we are left to pluck other key variables from the air. I have done my best to illustrate a range of possible outcomes. As always the reader should do their own research and apply their own figures accordingly. No advice is given. I just wish that a GKP RNS would one day state the recovery factor, the discount rate, the chance of success being applied and the long term price assumption they think would be appropriate. There remain so many gaps to fill in. I have done my best to work with figures supplied by the company and its house broker to come to some sort of conclusion. I hope it helps. Kind regards Dalesmann == Re: so what about the new shares...? == nlper 38 Hi All, Just got home. Sorry I didn't take notes so won't give a full report but will add as and when I can. On the 100m shares, res 2.6, passed with approx 27m against, really approx 300m for. When asked why they were needed, Euan replied, "They'll give us options" I was tempted to ask if he meant LTIP options....but thought better of it. nlper ((Definition of 'Long-Term Incentive Plan - LTIP' A reward system designed to improve employees' long-term performance by providing rewards that may not be tied to the company's share price. In a typical LTIP, the employee (usually an executive) must fulfill various conditions and/or requirements that prove that he or she has contributed to increasing shareholder value. The incentives for doing this are usually conditional company shares, which are distributed in two parts. The first part represents an immediate distribution of half of the shares, while the remaining half of the shares will only be presented to the executive if he or she stays with the company for a predefined number of years. Investopedia explains 'Long-Term Incentive Plan - LTIP' Some businesses have replaced pure options-based incentives in favor of LTIPs. One criticism about how some firms have been using LTIPs is that executives still receive the second half of the reward even if their performance has not been exceptional in the subsequent years. This is because in order to receive the second portion of the shares, the executive must only succeed in not being terminated in the designated time span. In some forms of LTIP, recipients receive special capped options in addition to stock. Read more: http://www.investopedia.com/terms/l/long_term_incentive-plan.asp#ixzz216bk7H1w)) = mazdaq 25 Ewan stated that the 100m shares have not been assigned to anything in particular at the moment but they will provide options regarding financing the development of Shaikan, and not just a straight equity placement. For example, if we went down the convertible bond route then enough shares would need to be available in case the bond holder wanted to convert the bond into shares, and they need to be in place before the bond is issued. What some people need to get their head round is how big Shaikan actually is and how much money it will take to produce 100k bopd after which it will become self-funding to 400k bopd. They are not going to be able to fund it to 100k bopd through oil sales alone and the sale of AB. Of course, we could go down the reserves based lending route which would possibly be a better option as it would avoid further dilution. However, we need a recovery factor first, which I asked JG about at the AGM today, and they have a team of 20 people working on it as we speak. But it is another hugely technical aspect of Shaikan and another indication of what a massive asset GKP have under their belts. Maybe you should have attended osiros. === ((Definition of 'Convertible Bond' A bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder. Convertibles are sometimes called "CVs." Investopedia explains 'Convertible Bond' Issuing convertible bonds is one way for a company to minimize negative investor interpretation of its corporate actions. For example, if an already public company chooses to issue stock, the market usually interprets this as a sign that the company's share price is somewhat overvalued. To avoid this negative impression, the company may choose to issue convertible bonds, which bondholders will likely convert to equity anyway should the company continue to do well. From the investor's perspective, a convertible bond has a value-added component built into it; it is essentially a bond with a stock option hidden inside. Thus, it tends to offer a lower rate of return in exchange for the value of the option to trade the bond into stock. Read more: http://www.investopedia.com/terms/c/convertiblebond.asp#ixzz216dS77Ej)) ------------------------------------------ Have been informed recently that the following BIR have now been assigned and signatures paid and will be announced very soon. Pulkhana, Taza,Garmian,Duhok central, Bijeel,shaikan ,bada rash, ain sifni, Qush tapa,Sarsang. Some of the companies named are , Total,,,exxon, reliance, conoco, Tpao,Eni,Roseneft , statoil. was gonna do a cryptic post but thought i'd just say it how it is === Re: 2.6..............100,000,000 shares agrigento 10 They should have listened it was always going to be "all resolutions passed" could have saved themselves the plane fare The reason you haven't heard anything from the attendees is because they are thinking up stories to add a little meat to their visit & posts so it doesn't make them look too limp risted & more like hero's on arrival home but then again there are plenty here you could spoon feed any old rubbish and they would swallow it with a smile and ask for more The plain truth is they probably sat there petrified of making a fool of themselves, more worrier than warrior once they leave their PC ------------------------------------------------------------------------------------------------------------------ YOU are in NO position to critisize those that found the time to go to the AGM,they are still probably on their way home whilst you spout from the comfort of your PC,clearly 11 inches short of a foot. now LOL off == Blast hits Iraq-Turkey oil pipeline Sat, 21 Jul 2012 12:21:11 GMT Turkish security sources say an explosion in the southeastern part of the country has targeted a section of an oil pipeline coming from neighboring Iraq. The incident took place at about 11 p.m. local time (2000 GMT) on Friday near the Turkish town of Midyat in the southeastern province of Mardin, close to the Syrian border, the sources said. The blast brought a halt to the oil flow to the Turkish region and it was not clear when the oil transport operation would restart. Turkish officials said the explosion was an attack carried out by the terrorist Kurdistan Workers Party (PKK) on the 960-km (600-mile) pipeline that transports oil from the northeastern Iraqi city of Kirkuk to the southeastern city of Ceyhan in Turkey. The Friday explosion comes a few days after Iraqi government spokesman Ali al-Dabbagh said in a statement issued on July 15 that Turkey “must stop the unauthorized export of oil through its land.” “Exporting oil from the Kurdistan region (in Iraq) to Turkey is illegal,” Dabbagh said. “This matter will affect relations between the two countries, especially economic relations, which will be damaged,” he added. On July 8, Seerwan Abubaqr, an adviser to the Kurdistan’s natural resources ministry, said the autonomous region “started exporting limited quantities of crude oil to Turkey a few days ago.” “We will continue exports of crude oil until the central government provides the region with oil products,” Abubaqr said. The Iraqi government and the Kurdish region have been engaged in a dispute over oil exports in the past few months. ============== With video http://www.aljazeera.com/programmes/talktojazeera/2012/07/2012726121141649305.html The Kurdish president warns that Iraq's Kurds could seek independence if they do not get what they need from Baghdad Talk to Al Jazeera Last Modified: 28 Jul 2012 08:27

There are more than thirty million Kurds - most of them living in an overlapping area of Iraq, Iran, Syria and Turkey. It is said to be the biggest ethnic community in the world without a homeland. In some of the countries in which they live, they are prevented from speaking their language or obtaining citizenship. "I am very proud of being one individual among the Kurdish people because our people have had their suffering and pain and they don't think about retaliation or revenge after the tragedies that have happened to them." - Massoud Barzani, the Kurdish president

Saddam Hussein, the former Iraqi leader, used chemical weapons against the Kurds, destroyed their villages and killed tens of thousands of them during his rule. The bodies are still being unearthed. The US encouraged them to rise up against Saddam when his forces were driven out of Kuwait in 1991 but then left them hanging. And thousands died fleeing to Turkey as refugees. But the no-fly zone that the US, British and French established to protect them from Saddam's attacks, allowed them to break away from Iraqi government authority, while remaining part of Iraq. Since 2003, the Kurdish region has become the most stable and prosperous part of Iraq, fuelled by oil and Turkish investment. And while relations with Turkey have improved, they have worsened with Baghdad - with disagreements over oil, land and politics that some fear could turn violent. Massoud Barzani, the Kurdish president, has emerged as a crucial player in Iraqi politics and as the leader of Kurdish aspirations in the region.

"... Some of the people in Baghdad do not intend any goodwill for the people of Kurdistan and they are simply hostile to the Kurdistan region .... They just want to stop the progress that the Kurdistan region is making." He has warned that Iraq's Kurds could seek independence if they do not get what they need from Baghdad. And that his region will not be dragged down by the rest of Iraq. "We have seen tanks, artillery and other weaponry being used against our people. We have seen large numbers of troops being used against our people," explains Barzani. "Our fear is not of that. Our fear is the mentality that still believes in using planes, artillery and tanks to solve problems. We do not believe that that will solve the problem. This is the wrong approach and the misery and the troubles that Iraq faces today is a result of that kind of mentality. Therefore we do not want that to be repeated again. "Otherwise if Baghdad or the federal government thinks about the usage of such things then we will be obliged to go back to the times when we had to think about how to target the F-16s in order not to allow them to reach here. We hope this will not be the case but we have to get ready." - Massoud Barzani, the Kurdish president

On this episode of Talk to Al Jazeera, we sit down with Barzani to find out how far he is willing to go to protect and promote the interests of the Kurdish people. == Thu 16:07 Re: Brokers targets 2 GKP.L 65 that's my point, even the most bearish of brokers on GKP have targets above where we are today. That has to be first. Come on TK... it's been yonks since we have had a proper operational update Can you your shareholders a full run down on the following please... 1. Detail on SH-5 and 6 2. Detail on pipeline status eg contracts and when we expect to have it completed. 3. Production - how's it all going? Are we on track for that 40kbopd by year end? EWT mods - are they sorted yet - are we over 10kbopd? 4. How's SA-2 going? 2 months into a potential 3 month drill. Must be some news? 5. Who are Excalibur's backers? As shareholders don't we deserve a right to know. After all - we are paying the legal fees for the case are we not? 6. AB sale - Guess we'll have to accept your AGM comment of playing naughty at present. 7. When's SH-8 (gas target) kicking off? 8. Any news from your mate Hayward on BB-1 tests? He's been at it for weeks now. Must be costly or worth it? Anything else I have left out? Or should we just keep guessing? DOW was 12900 range when we were testing the 240's and the market sell off and fear contributed to the slide back to test the early 190's. DOW is now just shy of the 12900 on the futures by 55pts and GKP is shy of the 240's by around 42p or a whopping 20%. It's easy to see the manipulation in action these days. Low volume these days means it's in the hands of those that want it lower. High volume normally means there's a concerted effort to see it higher. Interesting times. Incidentally - has any one seen Hitchen's HSBC broker note? Am I right in understanding that he has upped the broker target from 266p to 268p based on the 4.4bln extra barrels of oil on the p90? 2p? There's no way that his previous broker note was factoring in 12.4bln on a p90. So what's he playing at. need to have the facts correct before taking action against that particular broker. But I do think that shareholders should keep an eye on the before and after broker notes and relay the disparities to the fsa as it doesn't seem right to bash the stock on weakness yet not extol the virtues when the good news arrives. These brokers need to be held to account and they are regulated by the fsa which make it the fsa's job to see them perform in a balanced and fair manner. PetroCeltic announced late last year that they expected the Declaration of Commerciality to be agreed with the Algerian government by April 2012. When April 2012 arrived the algerian gov were still dragging their feet. All parties concerned agreed a 3 month extension to 24th July 2012. PCI announced yesterday that after a much discussion they are very close to agreement and have as such set a 15 day deadline to conclude matters. Their licence involves ENEL and state owned Sonatrach. Once the DoC has been agreed it then has to go to the Competent Authorities for approval. This can take up to 60 days. I'm not suggesting that Algeria is identical to Iraq at all - but in my experience before you can finally agree the DoC you have to have all partners in agreement. At present Shaikan involves, MOL, GKP and the KRG. The latter I believe have to allocate the BIR's and I'm not sure whether they can do this after the DoC. I think they have to do it before. I also think that before the DoC can go in - the Field Development plan has to be submitted. I think shareholders should look more closely into the process involved with DoC and FDP and if in doubt - enquire with GKP's IR department. As per usual GKP's management comments were 'loose' and without the normal satisfactory detail. As shareholders, I believe we need more detail on comments such as (not exact words) 'DoC' is just a letter and can be done in days. Iraq has proven to be slow on just about every red tape issue going. Kurdistan is no different. BIR's should have been allocated last year. 12 months later and we are still in the dark. Any thoughts from other shareholders on the DoC and FDP relationship would no doubt be useful to all on this board. In short - I wouldn't set xmas as your departure date. You may as well depart today with that deadline. HUB ============== Re: Shaikan PSC–Profit Oil-Arundallio Dragon_Ventures Hi Arundallio, I think you are not understanding the Discount Rate Reduction Factor BBBS is applying in the NAV Calculator. To keep it simple, In the NAV Calculator set: Oil Price: $100 PSC Profit %: 13.35 Discount Rate Reduction Factor: 1 $PB = 13.35 http://www.navcalculator.com/GKP_NAV.php Contrast that with the 15% Contractor take in the Final Phase of the PSC @ $13.35: http://i46.tinypic.com/dnmv12.jpg At the AGM the question was asked again what the average net profit % was to GKP (Excluding cost recovery) in the Shaikan PSC. Todd’s reply was along the lines of ‘We have published the PSC revenue terms in a recent presentation, it is there for all to see.’ I believe the presentation Todd was referring to is the 21st March 2012 Investor Presentation – Page 13: http://www.gulfkeystone.com/uploads/investor_presentation_march_2012.pdf I have taken the flow chart provided by GKP and put in a Sale Price for a barrel of oil and followed it through. Below is a $70 barrel of oil during the initial field development phase (Current Status GKP 80% of costs, MOL 20%): http://i46.tinypic.com/33aez9y.jpg I have then looked at the PSC and the later stages when the field development costs will have been substantially recovered and, ongoing, recoverable/lifting costs estimated at $1 a barrel: http://i48.tinypic.com/1zeuj8.jpg Tweaking the model assuming that the Shaikan Back in Rights are sold by the KRG, and also that the KRG 20% interest is sold to a third party gives the following: http://i45.tinypic.com/293azh3.jpg In summary for different barrel of oil prices & Back in Rights + KRG 20% interest exercised: $70 Barrel of oil: http://i45.tinypic.com/155ql8x.jpg $85 Barrel of oil: http://i48.tinypic.com/2dv4xmw.jpg $100 Barrel of oil: http://i46.tinypic.com/dnmv12.jpg ** Caution: Use of a $/bbl margin x reserves simply calculates the PV0 i.e. Present Value with no discounting to ensure a commercial rate of return is achieved. Discount rates of between 8% and 15% are commonly used by oil companies to calculate the value achieved over and above a minimum acceptable rate of return. ** Mirabaud recently stated they had used US$85/bbl and a 12 % discount rate in their calculations. However, they did go on to say there are reasons to believe that an industry buyer of GKP may be willing to pay a premium since they are likely to have a lower cost of capital and a more bullish view of long term oil prices. They then quoted as an example, a 8% discount rate and a flat nominal Brent oil price of US$100/bbl as a more bullish valuation metric. Of interest, when looking at the Profit Oil payment under a $100 barrel of oil I get: GKP $4.36 v BIR Holder + Ex KRG interest = $4.27 [Final Phase] GKP $5.29 v BIR holder + Ex KRG interest = $5.18 [Field Development Phase] Profit Oil payment under a $70 barrel of oil I calculate: GKP $3.04 v BIR Holder + Ex KRG interest = $2.98 [Final Phase] GKP $3.70 v BIR holder + Ex KRG interest = $3.63 [Field Development Phase] This analysis shows to me that a acquirer of the Back in Rights + the KRG 20% interest could, with the 32% stake derive almost as much profit per barrel as GKP’s 54.4% stake, due to the KRG Capacity Building Bonus levy GKP have to pay. Apologies for any errors. This post has been my own interpretation of what has been given to us by GKP. Dragon_Ventures Dragon_Ventures == mr11 If your version is correct then NAV for everything GKP owns now over 4 licences is £4.20 or thereby ------------------------------------------------------------------------------------------------------------------------------------ It will be more than £4.20. DV's calc : $8.86 x 0.544 x 0.6 = $2.89 GKP's 54.4% WI has been factored into the above calc. If we remove GKP's WI from above, it works out to $8.86 *0.6 = $5.31 per barrel. If we redo the calcs starting from 13.7 P50 we end up with 13.7 * 30% RF * 0.54 WI * $5.31 / 876 million shares = $13.45 / 1.5 = £8.9 per share for shaikan. Confusion seems to be in applying WI in per barrel calc unless i got something wrong in the above. =========== Marathon Oil, Total Agree to Jointly Explore Two Blocks in the Kurdistan Region of Iraq Tuesday, July 31, 2012 HOUSTON, July 31, 2012 (GLOBE NEWSWIRE) -- Marathon Oil Corporation (NYSE: MRO) announced today that its subsidiary Marathon Oil KDV B.V. has closed farmout agreements with subsidiaries of Total S.A. under which Total has acquired 35 percent working (43.75 percent paying) interests in the Harir and Safen blocks in the Kurdistan Region of Iraq. With this transaction, Marathon Oil reduces its stake to a 45 percent working (56.25 percent paying) interest in each of the two blocks while remaining operator of the Harir block and exploration operator of the Safen block. A Total subsidiary will become the operator of any development of the Safen block. The Kurdistan Regional Government continues to have a fully carried 20 percent interest in each of the blocks. The Harir block is approximately 174,000 gross acres (705 square kilometers) and the Safen block is approximately 105,000 gross acres (424 square kilometers). Both blocks are located northeast of Erbil. "We are pleased to have Total join Marathon Oil in exploring these high-impact exploration opportunities in the Kurdistan Region of Iraq's world-class hydrocarbon province," said Annell R. Bay, Marathon Oil's vice president of global exploration. "This partnership combines the extensive exploration, drilling and completion experience of Marathon Oil and Total to fully evaluate the potential of these two blocks." A 2-D seismic program on both blocks is ongoing and expected to be completed by the end of the third quarter of this year. The first exploration well on the Harir block began drilling July 30, 2012 and will be exploring Mesozoic fractured carbonates with main reservoir objectives in the Cretaceous, Jurassic and Triassic formations. The first exploration well on the Safen block is planned for the first half of 2013. Marathon Oil is an independent international energy company. Based in Houston, Texas, Marathon Oil had net proved reserves at the end of 2011 of 1.8 billion barrels of oil equivalent in North America, Europe and Africa. For more information, please visit the Company's website at http://www.marathonoil.com. This release contains forward-looking statements with respect to Marathon Oil KDV B.V.'s exploration activities in the Harir and Safen blocks in the Kurdistan Region of Iraq. Factors that could potentially affect these exploration activities include pricing, supply and demand for crude oil and natural gas, the amount of capital available for exploration and development, regulatory constraints, drilling rig availability, unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto, and other geological, operating and economic considerations. The foregoing factors (among others) could cause actual results to differ materially from those set forth in the forward-looking statements. In accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Marathon Oil Corporation has included in its Annual Report on Form 10-K for the year ended December 31, 2011, and subsequent Forms 10-Q and 8-K, cautionary language identifying important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. ### CONTACT: Media Relations Contacts Lee Warren: 713-296-4103 John Porretto: 713-296-4102 Investor Relations Contacts Howard Thill: 713-296-4140 Chris Phillips: 713-296-3213 Source: Marathon Oil Corporation ========= You are here: Home » Oil » Production & Exports » Total defies Baghdad, signs with Kurdistan Total defies Baghdad, signs with Kurdistan The drilling platform at the Akri-Bijeel field in Iraqi Kurdistan. (SEBASTIAN MEYER/Iraq Oil Report/Metrography) By Ben Lando and Ben Van Heuvelen of Iraq Oil Report Published July 31, 2012 France's Total has signed two deals with Iraq's semi-autonomous Kurdistan region, provoking condemnation and threats from leaders in Baghdad. After buying a 35 percent interest in two exploration blocks from American firm Marathon, Total has become the third super-major to sign contracts with the Kurdistan Regional Government (KRG), even though leaders in Baghdad say that any deal done without the approval of the central government is illegitimate. "We consider Total's actions to be incor... === UPDATE 3-Iraq blacklists Chevron for Kurdish oil deals Tue, Jul 24 17:43 PM EDT * Iraq bars Chevron from oil deals with central government * Chevron buys oil block shares from India's Reliance * Baghdad, Kurds locked in dispute over oil deals By Ahmed Rasheed BAGHDAD, July 24 (Reuters) - Iraq hit out at Chevron Corp over its just-signed oil contract with Kurdistan, barring it from any oil agreements with the central government in a move meant to deter other companies from dealing directly with the semi-autonomous northern region. Baghdad has long held that contracts signed by the Kurdistan Regional Government (KRG) are illegal, and last year Exxon Mobil Corp aroused its anger by striking a deal with the region while also running a project at a supergiant oilfield in the south. Baghdad retaliated by banning Exxon from an exploration tender in May. Chevron followed its larger rival into Kurdistan last week, and Baghdad's action on Tuesday will be closely watched by other oil majors, such as France's Total, which is widely expected to be the next to make a Kurdish oil play. "In line with Oil Ministry policy based on the constitution, the Oil Ministry announces the disqualification of Chevron company and bars it from signing any deals with the federal Oil Ministry and its companies," the Oil Ministry said in a statement. Last week, Chevron said it would purchase 80 percent of two blocks in Iraq's Kurdistan, an area where oil rights are a subject of fierce dispute. Responding to the ministry's rejection, Chevron highlighted its near-decade-long relationship with Iraq's government, having started a technical assistance program in 2003. "Our goal is to help Iraq achieve its objectives for the oil and gas industry by participating in opportunities that meet our investment criteria," Chevron said in a statement. Yet whatever the impact on goodwill, Chevron has no material stake in the south to lose at the moment. The second-largest U.S. oil company was qualified to take part in Iraq's four oil and gas licensing rounds, but chose not to. The company found the commercial terms of Iraq's service contract unworkable, but - like other investors - found the production-sharing contracts on offer in Kurdistan more attractive, industry sources said. Chevron has said it will continue to monitor opportunities in both the north and south of Iraq. Iraqi oil officials said the company had shown interest in developing the giant southern Nasiriyah oilfield, which was not offered in any of the tenders. "The reputation and credibility of Chevron and other companies are being tested today, and we are fully confident the result of its test is a total failure and it should feel ashamed of its action," the Oil Ministry statement said. THINK TWICE? Kurdistan said in June that it expected more oil majors to follow Exxon in the next few months. Total, which also has a stake in a project in the south, is widely believed to be close to doing a deal. "Total is waiting for the best time to proceed," said an Iraqi oil executive. "After today's announcement, they may think twice." Just last month, Iraq asked U.S. President Barack Obama to stop Exxon from exploring in Kurdistan, saying it could have dire consequences for the country's stability. Iraqi Prime Minister Nuri al-Maliki said Obama sent a "positive" written response. Seemingly undeterred, Exxon is close to awarding a contract for drilling rigs at its six exploration blocks in Kurdistan, said Iraqi oil sources. As part of its deal announced last week, Chevron is buying the Sarta and Rovi blocks from India's Reliance Industries Ltd , making it the new partner of Austria's OMV AG , holder of the other 20 percent interest. Baghdad has a long-running dispute with the KRG over oil, land and sharing revenues and insists that it has the sole authority to manage oil fields and sign deals in the north. As well as Total, Norway's Statoil is looking at KRG exploration blocks, industry sources have said. A move into the north by a third big oil name could be a tipping point. "Chevron has no contracts in the south, so that's likely to minimise the fallout," an oil industry executive said. "If Total joins the procession, that will signal the transition from a trickle to a flood." == Author bonobo77 View Profile Add to favourites Ignore Date posted today 08:04 Subject Hold 'til Sold Votes for this Posting Voted 47 times. Message This is a share that can turn on a sixpence. It can go from 190-322p (+70%) in 4 sessions. It can go from 320-415p (+30%) and 140-220p (+57%) in 3 sessions. Or 169-200p (18%) in minutes, as it did yesterday. It has also experienced some pretty rapid drops. No wonder it is loved by traders. But I wonder how many – honestly - have been able to predict the drops and not get caught out by the bounces. How many have traded the full swing. Very few, I’d imagine. But good luck to those who do. As an investor, the above swings can make us feel giddy. However, even the chartists will concede that we remain in a long term uptrend since we struck oil at Shaikan. And we now have Hayward, Exxon, Chevron, Total, Repsol and Turkey on our side. Shaikan is being surrounded by the ‘Galacticos’ of Big Oil. Am I going to bet against them and sell a few? For an uncertain 10-50p a share? When the ‘possibility’ of 10-50p can so quickly be turned into the hard reality of a 100p+ rise or news of an acquisition? I’ve thought about it. And I’ve decided that the odds would not be stacked in my favour. I’ll hold my two bells and wait for third wheel to click into place. No point spinning them all. 87p in August 2011 became 450p in relatively short shrift. The SP is transient. The oil remains firmly in place. And the same can now be said of our new neighbours. == Wed 22:16 Spin - Kurd Style Fruit n Veg 36 This exchange of letters is pure spin. Even P Mandelson would blush... Resources Minister Ashti Hawrami has apparently approached three key Kurd contractors to seek their co-operation in exploring the possibility of restarting oil exports, even though payments for previous exports remain outstanding. I say 'apparently' because: All three initial replies share the same date. Mmmm... Two of the three follow-up replies also share the same date, with the third (from DNO) dated the following day. The whole correspondence took six days to conclude – an amazingly short time for such a sensitive matter. It beggars belief... which is why I don’t believe it. Now look at the wording of two replies: the second one from Genel and the second from KAR. Both have similar wording. Genel states: “Genel agrees to restart exports under the one month framework outlined in your letter and will endeavour to export 40,000 bbls/day from Taq Taq with effect from 1st August. “I stand with you in hoping this gesture brings progress.” KAR states: “KAR agrees to restart exports under the one-month framework that you advise in your letter. I stand with you in hope that this gesture brings progress. These guys really needed an editor. This is amateur. I conclude - reasonably, I think - that this material was entirely crafted by the KRG, which has in effect ordered exports to be resumed. There is no way that this exchange of correspondence was done at arm’s length. It is an act of policy co-ordination between the KRG and its political allies, chiefly Washington – what Ashti describes as ‘our friends within the political/diplomatic circles'. Why is this important? Because it demonstrates conclusively the pro-Kurdish thrust of US foreign policy, whatever Washington might say for public consumption in its ostensibly even-handed dealings with Maliki over the Kurd question. We know Uncle Sam would like to get Maliki on side over the oil and gas law and this is a none too subtle overture in that direction. That’s good. What I like most is that it shows that the Kurds, the West, the Russians and the Chinese are speaking with one voice over the O&G law and Baghdad is in a minority of one. With Chevron, Total and now Gazprom all out of the closet in quick succession, the ICG must now be sweating profusely and this apparent gesture - exquisitely well-timed, it has to be said - to resume Kurd exports might be their exit route from political humiliation. If they can take off their ideological blinkers just for one moment, they will see an olive branch and they should waste no time in grasping it. Exciting times ahead... or in Mandelson-speak, Things Can Only Get Better. === Crude prices hit $106 on Iran sanctions Fri, 27 Jul 2012 11:20:52 GMT Brent crude prices have climbed to $106 per barrel as consequences of US and European embargoes against Iranian oil sector continue to reverberate. The latest oil price hike transpired during Friday trading in European markets as Brent crude futures for September rose by 70 cents to $105.92 per barrel after surging to a high of $106.41, up by $1.15. Meanwhile, US light crude futures were reported up 30 cents to $89.69 per barrel. The higher oil prices on Friday came despite generally stronger financial markets, with hikes in stock markets reported in Europe and Asia. On January 23, under pressure from the United States, EU foreign ministers approved sanctions against Iran's oil and financial sectors, banning the imports of Iranian oil and crude products by the bloc’s member states and halting transactions with the Iranian central bank. The EU measure followed a US decision on New Year’s Eve to impose new sanctions on Iran. The US sanctions called on other countries to either refrain from importing Iranian oil, or brace for Washington’s punishments. =============== =======