Feeling very very low and trapped in , now this should be so much more than this been here 2010 becoming a real strain now had plans but all on hold how long before take over or a sensible price could of sold at high but did not 8 pounds and all that whould take 4 now just tierd now but in till last but it is the bank for me after this xel the same
"sharp share price increase is inevitable". Oh boy, from 30-40-50-60p to 100-120p maybe 150p one more time for let some VIP out? Do not take me against GKP. I am holder too. The only thing is really bother me; why only now TK gone under the shade when pressure on him for years? Maybe the area never been so swelter and he know`s well something brewing there and good to blame for someone else when everything go really-really wrong?
I think the WAR has put institutional buyers off guard and once they settle down they will buy in to GKP . It's just my feeling and hope , but in the Macy Blogs he has said the GKP share price is undervalued . "Into the Valley of Death Rode the 600 GKP'ers . Cuba
However I will be using your figures. 51% fully diluted entitlement on all barrels lifted.
Now let’s use my $7.8 per barrel net profits which includes cost recovery (cost oil), the transition period and the profit oil component. It subsumes all lifting cost within it. It also accounts for the 40% ASIP tax and the 10% top splice. You seem to want to use a higher figure in your note - there are limits beyond which I just cannot go!
Continuing the Alice in Wonderland figures referred to in you note. (Deep sigh)
400,000 barrels x 365.25 = 146.1million
OK, I’ll play along!
So far so good, the batteries in your calculator are holding up well!
1.461 x 25 years = 3.652 b
Well done, correct again!
However it is at this point that you seem to have a certain amount of trouble.
GKP has a 51% entitlement –
You seem to calculate 51% of 3.653 is equal to 821 m barrels.
51% of 3652m barrels = 1.8625 billion barrels
You seem to have lost 1 billion barrels – ‘curious’ said Alice!
Of the 1.8625 there is an additional top slice of 10%
1862.5 – 186.5 = 1.676 b barrels all in which GKP has an entitlement to under the PSC.
And then at this point you seem to be content and are happy to to leave your logic hanging and not to value these barrels on a per share basis.
“Curiouser and curiouser”. said Alice
I’ll do it for you: 1.676 X $7.8 barrels = approximately $13 billion to GKP
If we divide that by approximately 1 billion fully diluted shares in issue that’s
$13 per share (USING YOU FIGURES – not mine)
£8.66 / share for Shaikan.
Seems OK, if a tad high to me! I’m certainly not saying we will receive this amount in a take over situation only that applying the logic of your own figures to the tricky problem of assigning production then this is the logical outcome of your fairytale figures that you have set out in your last note.
You are billed as, quote
“an expert commentator on resource stocks."
Why not prove it!
As always the above is all my own opinion God help me. I say this, both to you and to all who read this post:
PLEASE do your own research and act accordingly as no advice is given.
PS the contract length appears to have been amended to 30 years not 25 see Scicillian –kan previous post. But then I did say I would use your figures.
Firstly a comment on your opening remarks, strangely this is not the north sea, its not Louisiana, its not Venezuela, its Kurdistan, a small northern enclave of Iraq that appears to have signed a binding agreement with Turkey for the transmission by pipeline of its hydrocarbons to world markets via the Turkish port of Ceyhan. We only wait formal ratification and I’m sure that a formal announcement is not far away.
The contracts are all standard Production Sharing Contracts.
I have the Shaikan contract in front of me as I type.
Firstly lifting costs. With only a modicum of research you will find that Mr Kozel has stated publically that the lifting costs are indeed in the order of $3 per barrel.
If this figure is incorporated in a DCF calculation spread over the length of the contract the average profit per entitlement barrel (IMHO) equals $7.8 on a 15% Shaikan contract, using a $100 / barrel long term oil price assumption.
A net figure of around $8 is widely agreed upon after all costs, lifting or otherwise, have been taken into account. I agree with you that the net profit per barrel is lower than your N Sea example but then the North Sea does not have the volumes that are on offer in Kurdistan.
You fail to mention that Exxon are receiving $2.65 per barrel on a service contract in southern Iraq. They can make a good profit on these metrics.
It is of course nonsense to assume zero lifting costs and I don’t.
However, it appears that this is exactly what you now wish to do!
But hey ho as we appear to have adopted an Alice in Wonderland approach to valuing GKP, lets dive down the rabbit hole!
Once again, wherever possible I will play along with you and will try to use your figures. Except of course where they are wrong!
At this point we need to do a little mathematics!
GKP has a 51% entitlement, not 28% but a fully diluted 51% entitlement in all barrels lifted at Shaikan.
This figure has not been reached yet and this fully diluted figure will only be reached after the backin rights have been awarded and the 15% KRG holding is sold.
Up to that point their entitlement is 75% on every barrel sold. GKP have already sold over 1m barrels of oil into the local market.
Once the backin rights have been awarded all back cost will have to be paid on a pro rata by the company obtaining these rights in line with the entitlement they obtain. GKP will be recompensed for any associated costs. A large cash boost to the company.
The Shaikan contract allows the participating companies to get a 15% share of each barrel to which they are entitled. In the case of GKP this has been further reduced by the 40% ASIP tax to give the 9% figures that you seem to have difficulty grasping.
15 x 40 / 100 = 9%. Simples!
In addition Texas Keystone has a small entitlement that is now being held in trust for GKP taking the fully diluted effective
Sorry, just realised what a dick I am, that damn ROSE has only shown a 35% SP rise in my investment during the last 3/4 weeks. How I wish I had stuck with GKP and seen further falls in my portfolio, I really must do better. P.S. When ROSE hits 6p I recover all of my losses in GKP, yes, I really must do better. Less criticism of those prepared to see sense would be good. Lots of Love.
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