Illegitimitate nil carborundum : 3 years of misery and torment; tossing and turning;

A trademark used for an abrasive of silicon carbide crystals. trademark - a formally registered symbol identifying the manufacturer or distributor of a product abradant, abrasive, abrasive material - a substance that abrades or wears down Hi folks My posts on this board are few and far between - in common with many of the long termers, I have long since given up contributing regularly and in truth it doesn't really have any bearing on my own investment decisions. But I have to admit that was quite a week, even by GKP standards, so I thought I’d just spend a few minutes to share my thoughts about where I believe we are now. When I invested, my objective was to buy and sit tight through the inevitable roller coaster ride and see it out for the end game. With the glorious benefit of hindsight it would have been great to have been a smart trader and ducked in and out - but as highlighted by others, that is a lot easier said than done, and is a notoriously difficult thing to get right. Despite all the blame that many here have heaped upon the shoulders of TK and his hapless board, few could have seriously anticipated being where we are now – it is difficult to imagine that just over a year ago, in the euphoria of winning the court case, that the share would lose four fifths of it’s value…. yet here we are, languishing at 47p and looking decidedly vulnerable for Monday’s opening. The share price of a company can often be in stark contrast to what is actually happening at grass roots. Looking back historically, what actually changed with GKP to move the share price from 87p in August 2011 to 450p six months later? Nothing but a swing in sentiment caused by a few plausible rumours, that’s all. Conversely, would someone care to tell me what has actually changed since last Tuesday when the price was quickly pumped up to 72p, and yesterdays close at 47p? That's 30% of the company’s perceived value (arguably from an already depressed point) wiped out in a few days trading? The market for all shares - not just GKP – is driven by greed and fear. Make no mistake, there are some very clever people who understand the emotions of private investors with a lot of skin in the game and a lot of effort goes into managing and manipulating sentiment – hence this bulletin board and several others. Just as the investing community was whipped up into a total frenzy in early 2012 in the ‘pump and dump’, so many now seem to be falling victim to what I believe is the inverse equivalent - a ‘poop and scoop’. The combination of recent events - some of which seem to have been own goals by the GKP board, but many of which are of a macro nature, culminating in the terror threat from ISIS - has given those with an agenda plenty of ammunition to scaremonger in the hope of driving prices down. However, IMHO the fear of total meltdown is being dramatically over-played. I am appalled by the actions of ISIS but by all accounts they are not actually impacting directly on Erbil or our operations. I’m not trying to defend every move that the GKP board have made – these have filled me with frustration at times, especially decisions taken with funding. In their defence it is quite difficult to achieve what we have when your key partner - the KRG – has so far been unable to stump up what they owe us. It is my belief that GKP is still as an exciting proposition now as it ever has been in the past four years - especially at current prices. There are many hurdles that have been negotiated - we have clean title, proven reserves (which I believe will benefit from substantial upward revision) and we are producing and exporting oil, and we are getting paid, albeit gradually – the company knows this and is working on improving the payment mechanisms significantly as matters progress. Speaking of cash flow, the issue of debt covenants and debt/equity ratios was mentioned yesterday. That might become an issue if we were seriously short of cash, and looking to raise further funds…. but that’s a long way off IMO and the recent fall in the share price is NOT about to cause an imminent early foreclosure as some people were hinting at. This would only happen if we fail to meet an interest payment; we’re a long way from being in that predicament. The KRG is in debt to GKP for significantly more cash than the total capital we owe the bond market – in fact, by my calculations they incredibly owe us more than our GKP market cap! So effectively the bond holders have that as their back stop. If the KRG had no intention of paying the oil companies then it’s game over, but I’m not sure anyone in their right mind thinks that’s about to happen. They KRG are totally focussed upon building a nation on a successful oil economy and if they gained a reputation for default the consequences for their future would be dire indeed. In effect, GKP has become an investment in the future prosperity of Kurdistan. I think they will make it, in many ways the ISIS situation has brought matters to a head and despite the current turmoil we can still end up with a very positive outcome, possibly sooner than some would anticipate. In conclusion, I didn’t put money into an oil exploration company in Kurdistan expecting an easy passage. There have been more trials and tribulations that most expected, and of course an opportunity to have taken an early exit which after due consideration I declined. But I didn’t sell at 450p, so do you think I’m going to sell at 45p? Never in a million years. I’m seeing this one through, it’s a risk I personally am willing to take and whilst it’s a miserable place to be at the moment, I truly believe that brighter times are just around the corner. So, I’m ignoring the harbingers of doom and intend to ride this out. If I’m wrong, so be it – I have made an honest call based on how I think things will pan out. I’m certainly not about to be wavered by agenda driven posts on here. So, good luck with whatever you decide to do.... hope to see the braver ones amongst you at the much heralded takeover party... if it doesn't work out, a good mate who I met through this board has suggested hooking up for a few cans of cheap brand lager in the park. Sounds like a plan - all long termers welcome! All the best to the genuine and let's hope our forbearance is worth it. Dr H =========================================== Thanks for reminding us about the outstanding CAPEX - £1billion, more than the market cap. Now, if ISIS topples the current Kurd government and takes control of the territory, then all bets are off and a default is on the cards, so zero for us all. If the current Iraqi Kurd nation continues, then they have a valid contract ( signed under UK law ) with GKP. Although UK law is not the cast-iron guarantee it once was, it is still the best in the world - hence the palava and ultimate victory with Wempen and co. This contract will still be held in high-enough regard to pressure the KRG to pay, one way or another. ( Look at Argentina govt versus the vulture funds re past debt - http://www.forbes.com/sites/afontevecchia/2014/07/30/final-round-for-argentina-vs-billionaire-paul-singers-elliott-as-default-is-hours-away/ to see what trouble a govt default can bring ). Suffice to say, the trouble it would bring the KRG who could not sell the rights to Shaikan with another court case looming, for years and years and years.......... they would likely settle to pay costs + just to move on. Hence the current SP, to those who have a long-term view, is a no-lose situation, Imo. Will it go lower on Monday ..... possibly yes, as those who have not thought this through jump off the cliff with the rest of the lemmings; this is how fortunes are made and lost. But, for those with some foresight and grit, there is no real reason to give up now and sell, if you believe that Kurdistan, the KRG and GKP will survive into the future. ============================== Hub, have you had a liquid lunch? Your list of bad news items are not what you'd call sudden events. They've been unfolding for weeks. 1. Oil prices have been in decline for well over a month. 2. Air strikes were *never* going to defeat IS and the Kobani situation, tragic as it is, isn't going to affect either oil prices or the markets in general. Kobani is in Syria, which has been in meltdown for four years. 3. There's no breakdown in relations between the KRG (who own the oilfields) and Turkey, but between Turkey and its Kurdish population. Subtle, but great, difference. 4. Maliki and Shari have gone. The next ten days will, I believe, see the bones of an agreed solution to outstanding issues. 5. Ebola? Ukraine? Not worth even responding here . . . Are you hoping to get back in at 42p? ================== Concerning Hub's point 1). As far as I remember, lifting costs for kurdish oil are 2-3 USD per barrel. So the cheaper oil gets, the more interesting kurdish oil will get: http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=6 ==================== How much does it cost to produce crude oil and natural gas? A measure of the total cost to produce crude oil and natural gas is the upstream costs. The upstream cost includes lifting and finding costs. Lifting costs are the costs to operate and maintain oil and gas wells and related equipment and facilities to bring oil and gas to the surface. Finding costs are the costs of exploring for and developing reserves of oil and gas and the costs to purchase properties or acquire leases that might contain oil and gas reserves. EIA collects data related to these costs from the largest (major), U.S. oil and gas producers in its Financial Reporting System (FRS). The data are generally representative of the average cost for the FRS companies to find and produce their own particular mix of crude oil and natural gas in their production locations in the U.S. and in other countries and regions of the world. The table below is adapted from the most recent report of the Performance Profiles of Major Energy Producers, 2009. Costs for Producing Crude Oil and Natural Gas, 2007–2009 2009 Dollars per Barrel of Oil Equivalent1 Lifting Costs Finding Costs Total Upstream Costs United States – Average $12.18 $21.58 $33.76 On-shore $12.73 $18.65 $31.38 Off-shore $10.09 $41.51 $51.60 All Other Countries – Average $9.95 $15.13 $25.08 Canada $12.69 $12.07 $24.76 Africa $10.31 $35.01 $45.32 Middle East $9.89 $6.99 $16.88 Central & South America $6.21 $20.43 $26.64 15,618 cubic feet of natural gas equivalent to one barrel. Source: Tables 10, 11 and 12, Performance Profiles of Major Energy Producers, 2009. Last reviewed: January 15, 2014 ======================================== Popped in because of the recent news and share price. Made me reflect on my investment here and the following sprang to mind. Valuations here were historically crazy. Remember the days of: 35% recovery in a 30 year PSC! Using P10 OIP figures of 18bn barrels at the same time as 35% recovery! Discount rates of 0%! Heavy oil sale assumptions of $100/bbl! 500k bopd in 7 years! No decline rates! No risk factors applied! Not only was GKP valued upon these totally unproven assumptions, there were people who said that the next man in would pay in full for all of the above, with nothing for them other than the unknowns even beyond those as yet unproven, and with hindsight, wild, assumptions. There were many reasons for this overvalued sp. Naivity, unsubstantiated rumours, ramping by the CEO, and last but not least, the blind following of unrealistic valuations put on the BB combined with the refusal of many to accept counter views - indeed such views were attacked by the many. The views of those who valued GKP as it was - namely an inadequately funded explorer with poor corporate governance, which had partially explored an underdeveloped field (with three other fields with indifferent results that were until proven a drain on funds) in a politically unstable country from where there was no means of selling the oil in volume or receiving payments - have been proven to be correct. It took me longer than some to get to the stage of viewing GKP this way, which I regret. Fortunately I did before it mattered too much. That said, on reflection my holding up to 400p+ (and back down quite some way) was crazy given the economics and risks. Indeed, I should never have invested in the first place. This does not mean to say that there is no future here, but what the future is, is clearly uncertain. There is political risk. There is a devastating war nearby that may also have an impact upon regional relationships even if fought outside the area that directly impacts upon Shaikan. There is uncertainty as to valuation assumptions and how much GKP can produce and by when. There have been years of missed targets re PF1 and AB sale. There are funding concerns leading to whether or not GKP have the financial muscle to develop Shaikan, plus exploration and development at AB, SA and BB. All the above is why the sp is where it currently is, whether or not one thinks those risks or the sp to be fairly assessed. I add, that I have no idea whether the sp will go higher or lower. What I do know is that I like to invest in shares that have limited possible downside and significant possible upside and GKP clearly does not fall into this category. I suspect that I am not the only one with such views on GKP, though others clearly have reached different conclusions on the facts. Anyhow, I wish people well here, whatever their future here may be. s_k ============== 10th Sep 2013 Well, it has been a long time coming since that ‘Rejection of legal claims’ RNS first spoiled the festive season on 29 December 2010, knocking a swift 30% off the share price, as it fell from Christmas Eve’s close of 184.5p to 131p in a matter of minutes… and costing many ill-prepared or perhaps over-leveraged investors considerable sums of money. It is easy to forget quite how damaging or even crippling this court case has been for some of our former colleagues. Furthermore, in the 986 days that have followed that bombshell of an announcement, many of our fellow investors have ceased to hold GKP shares for all manner of reasons - whether financial pressures, persistent uncertainty, fear of an adverse CC result, disappointment with the failure of the share price to ever adequately reflect the fantastic assets discovered by TK and his team, or simply the passage of time with all the sad events that can happen in what amounts to nearly three years. So, the fact that this millstone has finally been removed is undoubtedly a huge relief to everyone, no matter how confident they may have felt throughout that the lawsuit was spurious and how much they believed (like I did), that Excalibur deserved to receive absolutely NOTHING for their efforts. My position has ALWAYS been that, if they had felt that they warranted a finder’s fee they should have accepted the original generous offer made to them or sued purely on the basis of that finder’s fee. The fact that they did neither, but subjected all long-term holders to nearly 3 years of misery and torment through a combination of selfishness and greed says everything to me. And the fact that Blackrobe, Platinum Partners, Lemos and indeed even Clifford Chance readily jumped on board, clearly eager to profit from what was in effect a form of blackmail targeted at our CEO, our company and its shareholders, tells me very clearly that unfettered Third Party Litigation Funding simply has no place in our system of Justice. I will therefore very much look forward to reading Justice Clarke’s full judgement when it becomes available to see whether he has any further comments on such matters. No, I do NOT share the views of those who see Rex Wempen and his brother as somehow warranting a “grudging form of respect”, or simply being guilty of “having thrown away a golden opportunity” and seeking to take their subsequent battle a little too far. Everyone faces disappointments or times in their lives when they may perceive themselves to have been victims of personal injustices. But few choose to follow up those disappointments by seeking extortionate amounts of redress which they know will seriously impact the lives of thousands of people they have never met. To put it in context, we should therefore remember that the Wempens and their 'accomplices' were making demands on our company amounting to up to £1 billion pounds or 30% of the assets which could have led to its total destruction. And this after having already turned their noses up at £1 million when GKP had been nothing more than a very small oil explorer operating on a shoestring budget! Because of them, many of us have been extremely seriously damaged by their actions, and I am pleased to see that, at long last, the boot is very firmly on the other foot. I make no apologies for saying this. Today, Justice Christopher Clarke delivered the verdict we were all hoping for and for that I am absolutely delighted.... but please don’t let us forget the pain and the trauma which all parties to the Excalibur cause have brought upon innocent bystanders like ourselves. Good to see then that Memery Crystal commented today “The Defendants will now seek to recoup their costs, firstly against the £18.5m currently deposited in Court by the Claimants and secondly, the balance, if any, from the Claimant’s third party litigation funders”. No let-up for Platinum and Lemos then since BlackRobe it appears have already fallen on the Excalibur sword. We will undoubtedly all be sleeping a little sounder tonight, but hopefully Rex and Eric, the TPL funders, and certain lawyers will still be tossing and turning, as they wonder what else might lie ahead. And hopefully, when the full force of LJC’s detailed judgement has been applied, Justice will not only have been done… but it will also be SEEN to have been done. AIMHO and please DYOR. GLA, scaramouche ==============