GKP Group Structure (Listing Particulars): TK is surplus to requirements, a drain on the company financially

5. Group Structure The Issuer acts as the holding company of the Group. The Issuer has the following significant subsidiary undertakings: Place of Issued share Incorporation capital and and registered proportion of Name of Subsidiary office Ownership Interest Principal Activity Active Subsidiaries Gulf Keystone Petroleum Great Britain 100% Geological, geophysical and engineering (UK) Limited 16 Berkeley Street £2 (2 £1 Shares) services and administration Mayfair London W1J 8DZ, UK Gulf Keystone Petroleum Bermuda 100% Exploration and evaluation activities International Limited Cumberland House $10,000 9th Floor (10,000 1 Victoria Street $1 Shares) Hamilton HM11 Bermuda A9.6.1 26 Place of Issued share Incorporation capital and and registered proportion of Name of Subsidiary office Ownership Interest Principal Activity Inactive Subsidiaries Gulf Keystone Petroleum Bermuda 100% Exploration and evaluation activities HBH Limited Cumberland House $10,000 9th Floor (10,000 1 Victoria Street $1 Shares) Hamilton HM11 Bermuda Gulf Keystone Petroleum Bermuda 100% Exploration and evaluation activities Numidia Limited Cumberland House $10,000 9th Floor (10,000 1 Victoria Street $1 Shares) Hamilton HM11 Bermuda Shaikan Petroleum Limited Bermuda 100% Exploration and evaluation activities Cumberland House $10,000 9th Floor (10,000 1 Victoria Street $1 Shares) Hamilton HM11 Bermuda In the last financial year (i) Gulf Keystone Petroleum (UK) Limited made a loss of £2,421,750 on ordinary activities before taxation with reserves of £3,862,649; and (ii) Gulf Keystone Petroleum International Limited made a loss of US$2,172,000 on ordinary activities before taxation with accumulated losses of US$6,936,000. None of the Issuer’s other subsidiaries published their own annual accounts in the last financial year. All shares in the Issuer’s subsidiary undertakings are fully paid up. None of the Issuer’s subsidiary undertakings has paid a dividend to the Issuer in the course of the last financial year. All business operations of the Issuer are carried out by the Issuer’s subsidiaries. Therefore, the profit of the Issuer makes it dependent on the results of operations of the Issuer’s subsidiaries. The Issuer shows the value of Shares held in its subsidiaries on a historical costs basis in its accounts. 6. Litigation Save as disclosed in this paragraph 6, there are no governmental, legal or arbitration proceedings (including any such proceedings which are pending threatened of which the Issuer is aware) which may have, or have had during the 12 months prior to the date of this document, a significant effect on the Issuer and/or the Group’s financial position or profitability. The Group is currently subject to outstanding litigation brought by Excalibur which is asserting certain contractual and non-contractual claims arising from the Collaboration Agreement and claiming entitlement to an interest of up to 30 per cent. in the Kurdistan Blocks. The allegations and claims made by Excalibur are being vigorously disputed by the Group and are being contested through the due process of law; Excalibur’s Claims will be determined by the English Commercial Court at the end of a trial that commenced in London on 8 October 2012. It is anticipated that the Excalibur Litigation will end in early 2013, and judgement will be given in July or October 2013. A9.11.5 A9.6.2 27 Factual Summary In December 2005 an intermediary on behalf of Excalibur contacted representatives of the Group to introduce Excalibur’s idea to apply for exploration and development licences in Kurdistan during the period of reconstruction following the fall of the Saddam Hussein regime. As a result, in February 2006 Excalibur entered into the Collaboration Agreement with Texas, a company whose operations and business has at all material times been oil and gas operations in the United States of America established and owned, in part, by Mr Todd Kozel, Chairman and Chief Executive Officer of the Issuer. Texas is a related party of the Issuer by virtue of Mr Todd Kozel’s shareholding in and directorship of Texas. The Collaboration Agreement was for a term of two years expiring in February 2008 and set out the terms upon which Excalibur and Texas would seek petroleum exploration Concessions in Kurdistan. The Collaboration Agreement was not entered into with any member of the Group but provided that the Issuer may take an assignment of part (or with the consent of Excalibur all) of Texas’ interest in the Collaboration Agreement, upon executing a Deed of Adherence with Excalibur and Texas. Initially, the Issuer did not wish to take on the commitments of exploration and development in Kurdistan but contemplated that it might wish to do so at a later stage. Mr Todd Kozel disclosed his interest in Texas in relation to the subject matter of the Collaboration Agreement and the Issuer and authorised Mr Kozel to pursue the opportunity on behalf of Texas. When the Issuer asked Excalibur to consent to an assignment of the Collaboration Agreement from Texas in April 2007, Excalibur refused to do so as the Issuer had announced that it was in takeover talks with RAK Petroleum (“RAK”) at the time. After the RAK discussions ended, the Issuer did not request and Excalibur did not consent to the Issuer becoming a party to the Collaboration Agreement. In August 2007 the KRG introduced the Kurdistan Oil and Gas Law which provided that all concessions for petroleum exploration in Kurdistan shall be governed by a PSC approved by the Minister. Excalibur agreed and the Minister made it clear that Excalibur would not be approved as a party to the PSC. The Minister also required that a PSC would only be granted to the Issuer if it and Texas agreed to enter into a PSC together with MOL Hungarian Oil and Gas Plc (“MOL”). GKPI, Texas and Kalegran Limited, a wholly owned subsidiary of MOL, entered into the Shaikan PSC with the KRG on 6 November 2007, with Excalibur’s knowledge and consent. GKPI’s interest in the Shaikan PSC was 75 per cent, Kalegran’s interest was 20 per cent. and Texas agreed to take, as required by the Minister, 5 per cent. on the basis that GKPI would meet all of Texas’ obligations arising in respect of the 5 per cent. interest and take an assignment of it if Texas did not within two years exercise an option and take on and discharge in full liability for all sums incurred and payable thereafter in respect of the Shaikan PSC. The sum of US$25 million became payable to the KRG within 30 days of signature of the Shaikan PSC. In return for agreeing that Kalegran should have a 20 per cent. share in the Shaikan PSC, MOL agreed that GKPI should have a 20 per cent. share in the Akri-Bijeel PSC, granted by the KRG to Kalegran on 6 November 2007. US$25 million also became payable to the KRG under the Akri-Bijeel PSC. After the Shaikan PSC had been signed, Excalibur was offered an opportunity to farm-in on the same terms, and to take an assignment of a proportionate share of the Shaikan PSC upon obtaining approval from the other parties to the Shaikan PSC, and Excalibur obtaining by way of funding the means to satisfy the financial obligations arising under the Shaikan PSC. Confirmation from the Minister that Excalibur was eligible to enter into a PSC was not sought or obtained by Excalibur. Excalibur made it clear that it was unable to raise funds and had no other means to discharge the financial obligations arising under the Shaikan PSC. Discussions with Excalibur were terminated in December 2007. The sums due to the KRG upon signature of the Shaikan PSC and the Akri-Bijeel PSC were duly paid by the Issuer and MOL. In July 2009, GKPI entered into the Sheikh Adi PSC with the KRG. In July 2009 GKPI also took an assignment of an interest in a PSC made between Genel and the KRG in respect of the Ber Bahr Block. 28 Procedural History In December 2010, Excalibur commenced an arbitration in New York City and also issued the proceedings in the Commercial Court in London, and without prior notice to the Group or to Texas applied for a worldwide freezing injunction in respect of all of the Group’s assets, initially without limit, but subsequently limited to US$500 million. The Commercial Court declined Excalibur’s application without hearing Texas or the Group. In April 2011, the Commercial Court granted the Group an injunction restraining Excalibur from proceeding with the arbitration in New York pending a trial in London of the issue whether the Issuer was a party to the Collaboration Agreement. In July 2011, Excalibur abandoned the New York arbitration and agreed that all issues against all parties should be determined by the Commercial Court in London. On 14 March 2012, the court ordered Excalibur provide security for the Group’s costs in the sum of £6 million and for Texas in the sum of £3.5 million, which sums have been paid into court. Excalibur’s Claims Excalibur asserts it has contractual claims under the Collaboration Agreement against Texas and the Group. In addition, or in the alternative to the contractual claims, Excalibur pursue against Texas and the Group various non contractual or tortious claims advanced under English law and New York law based on allegations of breach of the Collaboration Agreement; breach of fiduciary duty, breach of other duties said to be owed at common law under New York and/or English law, fraudulent misrepresentation, fraud by concealment, deceit and conspiracy. Excalibur primarily seeks specific performance of a 30 per cent. participating interest in the Kurdistan Blocks which comprise 99 per cent. of the Group’s overall petroleum operations upon payment of 30 per cent. of the costs incurred by the Group to date and to be incurred in future development of the Kurdistan Blocks. Excalibur claim damages for loss arising from failure to obtain participating interests in the Kurdistan Blocks as an alternative to specific performance. The quantum of Excalibur’s loss (if any) depends on the issues of liability and expert evidence on a variety of topics including valuation and on the Court’s findings on a number of issues during the course of the trial and in the light of any judgment. Excalibur’s valuer has assessed its loss in a maximum sum of US$1.653 billion. The Defendants’ Defences The Group denies that it was a party to the Collaboration Agreement or that it caused Texas to enter into the Shaikan PSC without Excalibur. The Group’s and Texas’ defence against the claim for specific performance and/or damages for breach of the Collaboration Agreement include that Excalibur did not and could not satisfy the statutory requirements relating to eligibility to enter into a PSC under Kurdistan Oil and Gas Law, Excalibur did not seek to be a party to the Shaikan PSC, Excalibur knew and agreed that Texas and GKPI would enter into the Shaikan PSC with Kalegran and had no means of performing the financial obligations that arose under the Shaikan PSC or any joint operating agreement made thereunder. Furthermore, the Group offered Excalibur an opportunity to farm-in to the Shaikan PSC which, if accepted, would have put it in the same position as if it had wished and been offered an opportunity to become a party to the Shaikan PSC. Texas performed the Collaboration Agreement until it became clear and Excalibur agreed that it would not seek to be a party to the grant of the Shaikan PSC to Texas, GKPI and Kalegran. The Group and Texas deny unlawful conduct in respect of the claims for tortious liability and/or in respect of non-contractual claims. Excalibur’s claim against the Group under the Collaboration Agreement faces a further difficulty as no member of the Group is a party to it. The principles of New York law on which Excalibur seek to enforce the Collaboration Agreement against non-signatories are denied by the Group. Both Texas and the Group allege that the Collaboration Agreement was discharged by force majeure, alternatively as a matter of law, as it was impossible to perform after the Kurdistan Oil and Gas Law came into force because Excalibur was not eligible to enter into a PSC and/or as Excalibur abandoned pursuit of the Shaikan PSC under the Collaboration Agreement. Excalibur admits that it knew of and consented to Texas, GKPI and Kalegran entering into the Shaikan PSC without it being a party to it. 29 Excalibur admits that it was incapable of performing the financial obligations arising under the Shaikan PSC or in respect of any PSC. Similarly, Excalibur was ineligible and financially incapable of entering into a Joint Operating Agreement (“JOA”) as provided by the Collaboration Agreement, and as required by the Kurdistan Oil and Gas Law. The Group and Texas rely on expert evidence to show that Excalibur could not have qualified or performed the financial obligations arising under a PSC. Excalibur was offered an opportunity to farm-into the Shaikan PSC on the same terms upon becoming eligible to do so and having the financial capacity to perform the obligations arising thereunder but it did not and could not do so. Had Excalibur been able to do so, and been approved by the other parties, KRG and Kalegran, it would have enjoyed the same benefits as a participating interest in the Shaikan PSC. Excalibur could not do so and thus has suffered no loss from failure to obtain a participating interest under the Collaboration Agreement. No member of the Group is party to and thus not subject to the exclusivity provisions contained in the Collaboration Agreement. Excalibur’s consent to Texas, GKPI and Kalegran entering into the Shaikan PSC is a defence to the claims for damages under the exclusivity provisions of the Collaboration Agreement which, in any event, was discharged by force majeure, operation of law, alternatively abandoned by Excalibur, as stated above. The Sheikh Adi and Ber Bahr PSCs were entered into by GKPI after expiry of the contractual term of the Collaboration Agreement, and Texas and the Group allege were not subject to the exclusivity provisions that apply to transactions introduced by Excalibur and which compete with the transactions contemplated by the Collaboration Agreement. Excalibur alleges that the Sheikh Adi and Ber Bahr Blocks were introduced by its agent Dabin. Texas did not enter into and was not a party to the Akri-Bijeel PSC, the Sheikh Adi PSC or the Ber Bahr PSC. Texas’ and the Group’s defences set out above answer Excalibur’s claims of breach of exclusivity under the Collaboration Agreement. Excalibur’s non-contractual claims are based on duties alleged which Texas and the Group deny are owed to Excalibur or were breached, or in respect of representations claimed to have been made which were not in fact made or were not false or not relied upon by Excalibur, or founded upon alleged agreements or unlawful conduct which Texas and the Group deny. Excalibur ============== Interesting document I came across tucked away on the new Gkp website, It may,have been posted before but if someone wants a quick CC refresher this is a recommended read...! Page 28 - 30 http://www.gulfkeystone.com/media/49871/Gulf-Keystone-Listing-Particulars-8-January.pdf == aktier a great summary But still the CB's flew out of the door. Least a few peeps think he company worth lending $ 300m. Unsecured. As long as they can swap them for shares later @ 273p And our FD showing our defence legal costs as a income cash receipt..........in a shareholder presentation. Another day onwards. - aktier a great summary But still the CB's flew out of the door. Least a few peeps think he company worth lending $ 300m. Unsecured. As long as they can swap them for shares later @ 273p And our FD showing our defence legal costs as a income cash receipt..........in a shareholder presentation. Another day onwards. #1,558 for me #599 for PW = Please take note of what is in the Bond Prospective, which clearly demonstrates why GKP had to go to Court over the matter ~~~~~~~~~~~~~~~~~~~~~~~~~~~ If Excalibur’s Claims are successful in their entirety, the Group may have to transfer up to 30 per cent. of its interest in the Kurdistan Blocks which comprises 99 per cent. of the Group’s overall petroleum operations or pay damages up to US$1.653 bn and costs to Excalibur. The Group would not be able to fund an award of damages of this size from its existing capital resources and, in the absence of the Group being able to negotiate a method of longterm settlement of such award (which would likely be funded by future cash flow and/or financing), is likely to have an immediate and significant impact on the Group’s ability to fulfil its current and long term capital expenditure plans and could result in a liquidator being appointed by Excalibur which is likely to result in the Group’s interest in the Kurdistan Blocks being revoked by the KRG. In this event the Issuer would not be able to continue to operate as a trading company. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The simple facts are that despite what is worded on Page 30, the Bonds where over subscribed and successfully launched, which is taken as fact by those subscribing to the Bond Issue, as their showing of confidence of the CC outcome. In laymans terms, one doesn't dish out over $200,000,000 to lose every last darn cent. Mikey O/T Published at 12:01AM, August 23 2013 A $400,000 debt to a Colorado dentist and part-time company secretary has prompted the resignation of the chairman of an AIM-quoted oil explorer. Sefton Resources said yesterday that Jim Ellerton, its founding executive chairman, had stepped down temporarily, pending an investigation into allegations made on two internet sites that he used company shares to pay personal debts. The resignation came in light of “certain documentation received - Vertigo, How about a chat, no names, no accusations, just points of view. My personal rationale is that I firmly and deeply believe that GKP's *share price* is now discounted due to TK being at the helm. We needed him in the past, however in my view, you cannot continue to reward someone for past glories and again, in my view, we do not need TK going into the future now that we have a signed off FDP, bonds, SM and the soon to be 6 new NEDs, particularly when we still have JG and the country team. In my view, TK is surplus to requirements, a drain on the company financially, clearly from past behaviours he is a risk to the business and therefore a drain on the share price. As a result, I would like to have him removed in due course. Not bloodily and messily and not in a coup, just within the next 12 months. I've written to II's to express my concerns about TK and naïve that I am, even wrote to one of our past NEDs. Now because in my estimation, the share price is supressed by TK's continued presence and GKP continues to spend more money than is necessary due to his presence, we can get rid of him. What's more as we now have a signed off FDP, we no longer need, in my view, obviously highly risky wheeler dealers in what will soon be a FTSE company. Because I hold these views (and I realise that they are simply my views) I find it annoying, "deramping" even, when people praise or defend TK. This is someone who in my view is *discounting* the share price and it is up there with defending Sharistani from where I sit. Why on earth would *anyone* defend something that is *discounting* the share price? It makes absolutely no sense from my point of view. Why would you want to keep something in the company that is keeping the share price down and adds risk? So while people may accuse me of being negative or deramping because I feel that we are on course for a £5 share price in 2015 *in the absence of a takeover*, it is my view that ANYONE defending TK staying at the company *today* is deramping the share price *today*. Not in 2015. Today. Now I realise that this may sound odd to you, as you clearly hold a different point of view from me on both TK's discount on the share price and the probable share price value by 2015. But surely, even if you do not agree with me, you can see from my point of view that if I feel that TK is discounting the present day share price, that I would find those defending TK and therefore defending a low share price, abhorrent ((utterly opposed or in conflict; contrary ))? Please note that this is not about the merits or otherwise of TK's discount or value on the present share price (as you noted, this has been done to death) , simply a discussion of perspectives and understanding where the other person is coming from. I hope this engenders a response in a similar fashion as genuinely it would be good to bury this hatchet and not in one another's' skulls! ILS - Buriram. 'Wonder what TK $2.8 million personal expenses were for, that's over $7,500 per day on top of his salary and various bonuses..........hope he provided receipts............' -------------- Never stops, does it? A relentless stream of whinging, negativity, moaning and misery. And yesterday you actually began a reply to me with 'I'm positive on GKP . . .' Constructive criticism is always good but I don't think it's in you to offer any. If you're positive, as you say you are, try giving just one day to looking at the upside of the stock you allege you hold. How about today? ------------------------ Feel free to show me how to criticise constructively TK taking $2.8 million in personal expenses, over $7,500 per day over a year so I can try and learn from you.......Oh that's right you would prefer things like this weren't mentioned and were brushed under the carpet as there was no cg issue at GKP and the M&G4 were only voted in to facilitate a quick low ball TO....... Everybody knows the upside of this stock, but it's not going to happen till the BoD start delivering, go back and watch the ID presentation again, now 6-7 weeks later or however long it was and see what a farce it was, but yet again best we don't mention this. ========== Hello all, Apologies in advance for an opinion-based post/semi-rant. I urge you to stop reading as soon as you're bored. Some people have been posting on III recently pronouncing that order has been restored to the board. I disagree - it's just not quite as bad as it recently was. The cumulative frustration involved within the investment in GKP is immense. It's like a gas that turns people mad, and sets people against each other. Any poster of any notoriety seems to be questioned as to their agenda now, regardless of what they have posted and why they might have posted it. I think that the 'GKP gas' has bred a culture of paranoia, which has also been helped along by the genuine 'exposure' of some posters along our journey. I really do think that many people would do well to take a few steps back and take a deep breath, and then remember that we're all invested in a company that holds the biggest onshore oil discovery in at least half a century - and that this find could/should be the main catalyst in catapulting ( to move quickly, suddenly, or forcibly.) a historically oppressed people to huge affluence. The company is what it is. I don't like Todd much, I don't like the delays on almost every element of news flow either - who does? But I don't think that we can really say with any conviction that Todd or GKP are to blame for the tardy news flow, or even the court case and the associated perpetual dragging. The fortunes of a potential new country are at stake here - and this could be their 'pocket aces' moment. Do we not think that the KRG might be running the show/calling the shots? When I speak to other GKP investors (which I do quite a lot) the conversations mostly revolve around what we don't know about, rather than what we do. When we don't know what's really going on, we look for answers. When the answers don't emerge, we get frustrated. When frustration occurs, people start to turn on each other. When people turn on each other, it gets nasty in places, and meaningful and helpful opinion becomes lost within a nebulous mess of infighting over differences of opinion that are just that - but they suddenly become everyone's immediate focus all the same. And was the appointment of Perella Weinberg a clever publicity stunt to gain momentum to a calculated 'pump and dump', or have Yergin & Co actually been working on our behalf behind the scenes with a much bigger picture in mind? One thing is pretty much for sure - nothing that any of the BB contributors have to offer up these days holds even the slightest iota of weight when it comes to the final outcome of our investment, whatever that might end up looking like. When big oil and big politics mix, it forms a variant of liquid that is ironically more viscous than oil. We're all trying to wade through it whilst trying to manage our own hopes and expectations, and in many cases those of our families. It's a huge shame that many investors have gotten caught up in using their limited energies in bickering with folk that are essentially on their team. I still suspect that events will unravel in a very pleasing fashion, just probably not within the timescales that we hope. Yes - Todd and Co have been giving it the spiel with regard to becoming a full producer... but would the KRG want that? And more importantly, where would the money come from? It's 'sit and wait' time now. The pipelines are still being built, the mutual benefit with Turkey has been established (don't forget the gas!), the oil is still in the ground (most of it, for now), CC judgement is pretty much imminent, the Super Majors still geographically surround us and I personally think that the overall silence is becoming louder and louder. Keep well, and stay sane, All the best, Axo ==============