RIL in talks to sell Iraq assets to Chevron

Author pathai View Profile Add to favourites Ignore Date posted today 08:15 Subject Votes for this Posting Voted 7 times. Message http://epou.net/?p=31144 Posted by Eta Phi Sports on Jul 18, 2012 in Military | 0 comments Reliance Industries (RIL) is in talks with Chevron Corp, the US oil behemoth, to sell its assets in war-ravaged Iraq at a valuation of close to $200 million. The deal is likely to give RIL a 15 times return to what it paid in 2007. An RIL spokesman declined to comment. Analysts, however, are doubtful whether a sale will be easy considering the political environment in that country. Reliance Exploration and Production DMCC, the overseas conventional oil and gas subsidiary of RIL, had bought a 100% stake in the Rovi and Sarta blocks in Kurdistan (north of Iraq) in 2007 for a signing amount of $15.5-17.5 million. This was bought from the autonomous Kurdish Regional Government and the contract had an option for a 15% interest to be exercised by the local Kurdish oil company. Unless exercised, RIL was allowed to hold complete interest in the two blocks. Later in May 2010, RIL’s stake in the block reduced to 80% when the self-ruled Kurdish government arbitrarily assigned a 20% stake to Austrian oil firm OMV Petroleum Exploration GmbH. While it was not immediately known whether RIL was compensated later for the 20% stake given to OMV, at $200 million deal for the two blocks, RIL would see an appreciation of 11-13% to the original signing amount it paid five years ago. This could turn out to be even higher at more than 15 times if only 80% of the originally paid value of the block is considered, if RIL was compensated for the 20% stake assigned to OMV. A senior analyst with a reputed international brokerage said it is good if a RIL walk out of Iraq but the question is whether it will be able to do so or not. “Iraq is a politically disturbed region and there is no clarity on the accuracy of the reserve projections for the two blocks. therefore, the Kurd asset acts more like a distraction than value addition for RIL,” he said. He said the company’s current focus should be to restore D6 gas field in India and US shale gas venture. The Rovi and Sarta blocks in Kurdistan are spread over an area of 517 and 607 sq km, respectively, and estimated to hold around one billion barrels of oil reserves. they are said to have almost 80% oil bearing structure and RIL had planned to drill four wells to a target depth of 4,500 metres, say reports from international media. DNA could not independently verify these details as RIL declined to comment on the nitty-gritties of the blocks. According to the company’s 2011-12 annual report, the company’s overseas subsidiary had undertaken well testing in the Sarta block during the last financial year, but it did not mention anything about the Rovi block. Currently, RIL has interests in 10 blocks under the conventional oil and gas portfolio overseas, including three in Yemen (one producing and two exploratory), two each in Kurdistan, Peru and Colombia and one in Australia. this cumulatively stands at total hydrocarbon acreage of 51,000 sq km. In the last fiscal, the company relinquished its interest in Oman -Block 18, Oman – Block 41 and East Timor Block-K where REP DMCC had 70%, 75% and 75% participation interest respectively, said its annual === Chevron Secures Major Deal in Kurdistan, But More is to Come 19/07/2012 18:17:00By HAWAR ABDULRZAQ ALI Font size: RUDAW EXCLUSIVE: ERBIL, Kurdistan Region -- Chevron’s acquisition of Reliance is part of a new wave of major oil and gas deals with Erbil and with these developments Baghdad policy of deterring Oil and gas investments in Kurdistan has ended for good. Reliable sources (from diplomatic, political and industry circles), who prefer to remain anonymous, have confirmed to Rudaw that several top league international oil companies are following ExxonMobil and have signed or are about to sign big new contracts with Kurdistan. In addition to the Chevron deal, which was announced by the US company today, new deals are in the pipeline with the French company Total; a Russian state controlled company; and possibly the Norwegian company Statoil. Both Total and the Russian company are believed to have some other investments in the south of Iraq under contracts signed with Baghdad, but Statoil has already pulled out of a big oil field in Basra due to poor contracting conditions and have said they prefer to work in Kurdistan instead. The Chevron deal involves the acquisition of the Kurdistan operated assets of the Indian Reliance Company, plus possibly the acquisition of many other unnamed interests from the KRG, as Chevron, just like ExxonMobil, sees itself becoming a large player in the Region. The details of the Total deal are still secretly guarded, but Rudaw’s well-informed industry sources are pointing to an agreement between Total and Marathon of the US, which has four contracts in the Region. The Russian state controlled company comes as a big surprise, and its deal involves a direct contract with the KRG for KRG’s remaining share of interest in the blocks operated by Western Zagros. These developments come soon after the recent decision of the Turkish authorities to grant permits for an oil and products trade with KRG, and the import of natural gas by the Siyahkalem company for power generation in Turkey. The gas import will be at 700 million cubic meters initially starting in the year 2014, which will gradually increased up to 3.2 billion cubic meters. According to the Rudaw sources close to Ankara decision makers, the scale of Turkish involvement in the KRG energy sector is gradually becoming clearer. These sources point to the existence of a major exploration deal between a Turkish state owned company and the KRG. It is understood that KRG has already agreed to award several contracts and approved other contractual partnerships in favour of an unnamed Turkish state company. Rudaw believes that TPIC is the main players in the deal. Potentially, this Turkish - KRG deal could be far larger than the deal forged late last year with ExxonMobil. These TPIC contracts point to a well-planned Turkish strategic policy shift towards the KRG to underpin its own energy security by accessing the large resources so close to its own borders, and to cement Ankara’s rapidly developing and growing economical and political ties with Erbil. For sure, KRG has now become potentially a big energy player in the region. Critics and doubters may be silenced by these latest KRG achievements, as these appear to vindicate KRG’s consistent and determined contracting and investment policies.

These new waves of major contracts, are likely to embarrass the anti-KRG oil policy makers in Baghdad who will struggle to explain the IOC’s vote of confidence in Kurdistan. A senior oil executive told Rudaw: “They will now realize that their tactics to deter investments from Kurdistan have totally failed, the KRG oil policy is here to stay, and to put it simply Erbil has won, and Baghdad oil policy makers have lost the argument.”

================= You are here: Home » Business » Companies » Chevron announces KRG block buy Chevron announces KRG block buy American firm Chevron on July 19, 2012, announced it purchased two blocks in Iraq's Kurdistan region held by India's Reliance. (JUSTIN SULLIVAN/Getty Images) By Ben Lando of Iraq Oil Report Published July 19, 2012 Chevron ended days of heated speculation Thursday, confirming it will take over Indian firm Reliance's two exploration blocks in Iraq's semi-autonomous Kurdistan region. In a statement, the second-largest American oil company said it "completed a transaction to acquire ... Reliance Exploration & Production DMCC's 80 percent interest and operatorship of the production sharing contracts (PSCs) covering the Rovi and Sarta blocks." Neither the companies nor the Kurdistan Regional Government (K... == Tensions Rise as Kurdistan Trucks Oil to Turkey Posted on 13 July 2012. Tags: Exxon, Exxon Mobil, ExxonMobil, KRG, Kurdistan, oil contracts, oil exports, Turkey By John Lee. Turkey has started importing the crude oil from the Kurdistan Region of Iraq, and will hold negotiations over direct sales to the natural gas. The Turkish Energy Minister said in a press conference on Friday that “Turkey has started importing five to ten trucks of crude oil per day from Kurdistan, and the quantity will increase to between one hundred and two hundred per day“, according to AIN. The spokesperson of the government, Ali al-Dabbagh stated in a press statement on Wednesday that “The Council of Ministers regards the export of oil by the KRG to Turkey as illegal, and Turkey must not allow it because it is responsible for this issue.” AKnews quotes, Samira al-Moussawi, an MP from Hussein al-Shahristani’s parliamentary group as saying, “the Kurdistan region, in cooperation with Exxon Mobil, is smuggling oil to foreign countries including Turkey and Iran without agreement with the government, and this is an encroachment on the constitution and the laws.” U.S.-based private intelligence consultancy Stratfor observed: “Ankara’s approach of offering concessions and projects to both Baghdad and Erbil seems to be gaining ground … Wednesday’s announcement represents an important leap forward for Turkey’s ambitions in Iraq and, if successful, will make Turkey the premier enabler of foreign investment and development plans for both northern and southern Iraq.” (Sources: AIN, AKnews, UPI, Reuters) (Picture: Trucks queueing at the Iraq-Turkey border) =============== Hello all, Overall, all of the recent big swings stink of market manipulation to me. Quite by whom is an interesting point for debate. Some think that certain hedge funds are preying on the volatility of GKP and using the perceived 'news drought' as an opportunity to short the hell out of it. A couple of very good sources of mine both believe that the recent drop to 140p was facilitated by a couple of English hedge funds and masterminded by one (odious IMO) individual. They both (independently) called the 'target' of 140p when we were sat around 170p. When I saw it all happen and witnessed the following recovery (over the next 4 market days, and on the back of NOTHING significant), it confirmed to me more than ever that larger forces are at work in one way or another… A massive unexplained drop and then a miraculous 50% (!) rise in four days of trading. I would say that such a play, even by the likes of the opportunists that seek to exploit GKP, the 'punter's favourite' (a phrase which I vehemently dislike), was actually quite audacious. I would almost admire such audacity if weren't backed by such bentness and greed. Another theory seems to be that a handful of HNWIs have privileged access to a 'second tier' of information and knowledge via the IIs, are using this to day trade and essentially (from my understanding of this theory) act as a multiplier to the movements of the SP, whilst gaining from 'second tier' information. Or perhaps there are much larger forces at work? Perhaps a potential bidder (or bidders) are exerting their own power to suppress the SP as they accumulate shares in order to essentially provide a discount to their bid when it is (finally) made? Whichever way you perceive it - it's ridiculous and it's very hard to decipher and make real sense of. We announce a further significant upgrade to the OIP at Shaikan - and we get (another) brief rise up to a high of 243.5p and then a drop back to the 200p bracket and slightly lower. What was the drop based on? Literally pick an excuse - there are many that could be levelled by many thinkers but all of them stack up to jack shiet for me. I'm confident that those 'in the know' will have made plenty of money on both the way up and the way back down. We could have announced 25BBO+ at P50 and I think we would have seen a similar sequence of SP events. I believe that this SP behaviour will continue and we will remain a cash cow for the market (at least to a large extent) until the 'big oil' starts to really talk. I'm talking about renewed rumour regarding one or many of the majors that now, remember, completely surround our blocks. Or even better, a confirmed bid. The former could still allow 'the players' some leeway to play with the SP to a certain extent. The latter would allow very little room for such manipulation, if any at all. Having said that though - quite a few here have stated that they are now of the belief that GKP genuinely have the desire and appetite to 'go it alone and become a major'. At the AGM Todd apparently said to expect less news via RNS as we are entering a 'development phase'. Perhaps Todd et al are batting away bids and making plans to carry on with the 'E' but further embrace the 'P'? After all, we've done a great job of the exploration phase up to now (in purely operational terms) , and we're apparently (Todd at the AGM) fully funded until the end of 2013… *ahem*… middle to end of 2013. Thanks for the correction, Ewen. So… here's a reminder of GKP's ambition to 'go it alone and become a major' from a historical standpoint - as well as a reminder of the 'two plans going forward', with regard to development strategy from our company. Both of the following are interviews with John Gerstenlauner. In my view, the man cannot lie. 1) The first was published by ProActive Investors on 16th November 2010. It was a generic interview but gives a great perspective on where GKP were back in 2010, to where we are now. Please listen to it all - as even if you're a long term holder and you've seen it before, I think that it will help give you perspective as to where we are right now. Watch from around 8 minutes and 40 seconds in to see John's thoughts on the company's overall aspirations at the time. http://www.youtube.com/watch?v=vtQ3dQVt_Gs&feature=related Also note that the SP was 193.5p at the time of that interview in November 2010. Shaikan's reserves at that time stood at 4.2BBO on a P50 basis. There were no majors in Kurdistan, and the political risk was as such relatively massive. The OIP at Shaikan is now more than 3 times that, and we find ourselves encircled by supermajors in Kurdistan. We have witnessed some serious progress there, and what 'value' has it added to our company? According to the close on Friday - 0.5p. 2) The second was published by Oilmatters in mid November 2011. Again - if you've heard it before, please take the opportunity to re-listen to it. If you haven't heard it before then pay particular attention to John's explanation of the two development plans that GKP had submitted at that time. http://www.platts.com/IM.Platts.Content/insightanalysis/podcasts/oilmatters/archive/2011/nov/oilmatters111711.mp3 I transcribed the most relevant quote from this interview as I see it, to give some context as to how the land currently lies: '(JG) Even though we're running the business like we're gonna have it forever, we have to be prepared for the probability, or at least the very strong possibility that we're gonna get bought. So, not knowing what the timing of any that would be, and we're not being pro-active about selling ourselves or anything like that, but it just seems prudent that if you have a development plan that you're working on now that will not be submitted for about a year - you better have two of them. So what we have, we have a limited capex development plan for Gulf Keystone, and we have an un-restricted resource type development plan that we can submit at the last minute, or will be able to submit at the last minute, for a company with unlimited capex.' In short, unless Todd, John et al have had a major change of heart, I still think that they are doing exactly as JG stated in the interview and 'running the business like we're gonna have it forever'. When the time comes to implement 'Plan B', it's there and ready. I don't believe that it will be implemented by GKP. After all - it wasn't designed to be! I just cannot see that GKP have the appetite to go it alone (they've always been clear on stating up until now that they don't), and I cannot see the KRG being content with having an outfit like GKP being the operators for 'The Crown Jewel' in Kurdistan. The block that they see providing half of the country's oil. Oil that they want to get out of the ground as quickly and efficiently as is humanly possible and with the highest level of expertise imaginable. Who would be better positioned to facilitate the KRG's ambitious fast-track plans for production? Exxon/Chevron/Sinopec etc - or GKP? I know my answer… Your Exxons/Chevrons and Sinopecs won't be wringing their hands with glee at the current SP with the belief that they will be able to pick up the bargain of the century and stick in a bid for £6. Not in my opinion. They make their valuations in a far more realistic fashion and will be viewing an asset like Shaikan as it should be viewed - as something so enormous that it will give th em a significant edge against their competitors. This is also (IMO) why we have Perella Weinberg and Strand on board. I do go on about them I know, so I'll just link back to an old post from me and say that my views remain the same. http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&action=detail&id=9413755 The only caveat that I will apply to supermajors' valuations re: a confirmed offer, concerns how any of these HUGE companies would justify an initial bid (to their shareholders) of say, £10 if our current 'market value' was still sat sub £2. If the 'end game' is to be an auction (and Todd has stated that it will be on more than one occasion), then the first bid could be low in theory. Say Exxon made a public bid for the company for £6. They may feel that they could justify that to shareholders with our ridiculous OIP figures and more importantly it would get the ball rolling. Cue Chevron - They don't need to worry so much about their shareholder's thoughts as one of their direct rivals has just put a market value on it. It's then much easier for Chevron to stick in an £8 bid and justify it to their shareholders. Then it's much easier for all parties to 'get involved'. At least those can afford to… (Chinese, anyone?) The above is, of course, an ideal scenario and an open bidding process (a la Cove Energy) would suit us well I feel. In all truth who knows - I just really cannot see our company being around even by the end of the year. But then many people have thought similar in the past and whilst doing some research yesterday I stumbled across an old post from Aimvpr. It's from 16th November 2010, and entitled 'I'll eat my hat…' : http://www.iii.co.uk/investment/detail/?display=discussion&code=cotn%3AGKP.L&threshold=0&it=le&action=detail&id=7272129 I sincerely hope that Aimvpr managed to digest his hat OK. He must have had terrible indigestion on New Years day. The landscape has changed considerably since that poster's excited prediction was made, and it seems to me like many blocks have slid into the correct places since. But when you sense imminence, time passes more slowly. We shall see. Just my thoughts, GLA, DYOR and all that. Regards, Axo ================