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Think we have to digest the article carefully and include the normal pinch of salt, because it talks about the way forward but also as Putup kindly points out some history as well.
However for me looking at the way forward there are most certainly positives. We have the prime minister saying the current law could be tweaked to enable full payment under contractual terms, which would make everything legal and above board.
No mention about payments being excessive now they have finally understood the differences in the risk/reward game of contracts in virgin ground and known oilfields.
Yes some older material on how they would like the Kurdish IOC's to fall in line with current Iraqi policy and terms, but only a fool would do that ad extract crude for peanuts , and they know the IOC's act and operate as per existing contractual terms and will not budge.
It also points out that Iraq has to move as they are loosing millions every single day already by my own slide rule approaching 10B$ and counting. While the IOCs are easily keeping their heads above water by supplying local market and export trucking operations. Let aloe the extra 1M a day fee for unused pipeline penalties.
Iraq has only itself to blame for this mess as it started court proceedings and is now paying in lost revenue several times the amount of the award, and they didn't have the foresight to tweak existing laws in advance so as the Kurdish oilers could be legally rewarded under contractual terms.
Indeed if we believe some articles they didn't really even know what the Kurdish contracts paid the IOC's, despite supposed to be in charge of all Iraqi crude. So spouted "illegal contracts" for years, but when they eventually found out what the IOC's actually get it is pretty decent, and Kurdistan/Iraq does get a fair share.
"They reap what they sow", and Baghdad sowed poisonous weeds.
Nice to see that the Baghdad oil ministers after drawing an extortionate salary for many years have finally learnt how much the IOC's operating in Kurdish territories which is part of Iraq are actually being paid for every barrel of crude they produce..
Are they really for real......... You could not make up this level of incompetence, it just cannot be true.... can it??
It states that the agreement comes out at $21 dollars a barrel, for doing everything from roads, infrastructure, all exploring in a virgin plot, where as in Iraq, you had known quantities , easy to extract oil, with a lot a basic infrastructure like pads and roads already constructed.. there they get rewarded $8 per barrel.
Well actually considering all the risk/reward factors I believe those figures are pretty fair, if not even a bit one sided towards the Baghdad fields, where some local export pipelines exist.
Only a fool would disagree.
Certainly quite a few chunky trades going through, not normal PI ones. New positions being taken for sure.
Someone has some privy info.
Those shorters will be feeling the pressure this morning. Squeaky bum time.. Lot of shorts still open, with plenty to lose.
While the genuine investors here have plenty to gain.
Clearly Mr. market likes it. Are the Iraqis buying stock knowing a pipeline deal is in the offing.???? Would never discount that kind of dealing from those with the ability to give the green light.
Good point Bugsy, having these face to face meetings items like export rates (for local consumption of course), and most importantly the rates for those exports can be discussed. They have all worked together for years and no one is fooled by the antics of Baghdad. I'm actually also thinking of topping up as well because the current antics have come at no surprise to the toughened investors on this forum. Indeed its why we are here and not £5.50 a pop. How much we can make in the interim is very important right now.
Good to see meetings actually taking place, however its clearly not a case of contractual rights but moves against the finances of Kurdistan and deliberate moves to stop their income by Baghdad hardliners that are clearly holding sway here.
It does appear that Kurdistan and Turkey have agreement and its Iraq that's doing the holding out even though it makes no financial sense for them to do so, they don't seem to care.
Offering the IOC's terrible terms that they know cannot be acceptable in any way or form is just part of the games they are playing.
Think we have to see who's loosing the most here for the most likely outcome. The IOC's, have beaten attempts at financial blackmail, probably with the help of the Kurdistan government.
Iraq has lost 8$Billion in lost crude revenue and counting and is also paying 1$M a day in unused pipeline fees to Turkey. It 's also desperate for regular water flows from Turkey for its farmers which is being restrained in Turkish dams currently.
Not surprised to see them try the tactic of ignoring the IOC's, or even making up that they have agreement of a kurdish operating company we don't know of. Just a last gasp attempt to put pressure on and perhaps worry the IOC's or their shareholders. Now we see the Iraqi puppet masters who have been pulling the strings for years, living in embezzled riches while the population goes hungry and unpaid. All the time being two faced spouting that they are working with Kurdistan while deliberately hiding behind the "illegal contracts" in order to cause delay and smokescreen.
They are loosing here and they know it as the losses rise daily.
"Removing legal obstacles to the Oil Ministry's transactions with companies investing in the Kurdistan region".
Seems like a another Iraqi trouble making politician had his complaints rejected.
Its clear where the obstacles lie, little wonder XOM have pulled out completely from Iraq.
They say they are working towards a solution, they are lying. Not long ago they were trying to blame Turkey for the delays when all along it has been Iraq.
https://www.kurdistan24.net/en/story/32535-%E2%80%98The-ball-is-in-Turkey%E2%80%99s-court%E2%80%99,-says-Iraqi-oil-official-on-resumption-of-Kurdish-oil-export
However now the unused pipeline is costing 1M a day plus a Billion $ a month. Already 8 Billion dollars lost, plus costs and they have held many meetings and achieved nothing concrete bar "working together and God willing".
Well the waters not flowing from Turkey either now the "sign of good faith that they asked for has clearly been false hope for Turkey.
Now they offer the IOC's much less per barrel than they are paying for easy crude extraction in known oilfields in Iraq south. Then talk rubbish about illegal contracts in Kurdistan.. Clearly target is aimed to destroy the kurdish economy, and they are supposed to represent all Iraqis, and are trying to build world trust...
Believe they are now the worlds laughing stock and no country really trusts them despite what they say when sat together at the almost daily biscuit munching meetings.
They will yield because the costs are becoming intolerable for Iraq, just we really see that they don't want to, so certainly cannot be trusted at all.
I think in a nutshell current sales do not warrant anything near the amounts that our board are paying themselves.
In effect the rights issues with further stock dilution is being pocketed by the board while sales languish.
When I hear of part timers on six figures, then hear of extra costs also into 6 figs via their own consultancy services alarm bells are ringing loudly.
Be very much on guard guys.....I really mean this for the holders with serious skin in the game because there are many very nice genuine investors on here..
Because I've see this kind of behaviour before, when the company has decent assets but for whatever reasons its unable to really take off, those in charge recognise it but then milk it for as much as they can get away with, until the music stops then shareholders are penniless.
Clearly not the case here, ?????
However my employed matchbox seller has gone a couple of friends that live in Spain and France and if I also pay them £30 a year they will market our matches there, trouble is they are also only selling a few a year and I've had to send lots of stock, which has a shelf life as the matches go damp, so might end up "striking off" unsold matches. At current doubling of annual sales on this singular product it will take 6 years to break even.
Hi Mikodx,
Your attempt to critic my post is wrong , my comments was as follows......" I can share TW's frustration that solid sales are not increasing at anywhere like most investors would like to see".
I stand by my post because although sales doubled last year sale numbers are terrible in my eyes as an investor.
Like saying my employed matchbox seller who I pay £30 a year sold 2 matchboxes a year last year now managed to sell 4 for 50p profit on his sales this year.
Then you as shareholder in the matchbox business say you are happy , with that steady growth and better than no growth at all.?????? the percentages quoted are similar?
One million a day lost, just because they are trying the cheat the oil companies out of their legal and rightful share of the crude extracted.
Money the Iraqi people cannot afford to lose just due to the stupidity of those in charge.
Pressure building on them all the time.
There is a balancing act to be achieved where cutting edge products are being introduced and marketed which ideally should be completed by a top notch team which isn't available for peanuts.
However while I'm sure shareholders will be happy with this expenditure for a while as long as they see solid material results coming in, which warrant these costs.
Believe the Croda deal most certainly only requires minimal input as its almost "in house".
I can share TW's frustration that solid sales are not increasing at anywhere like most investors would like to see. I believe if sales numbers were increasing at an exponential rate this subject would most certainly not have been raised.
However reality must be faced that for some reason sales are not really catching on, its been the same since launch , what 2-3 years ago now. Unless something changes just selling in more avenues is unlikely to dramatically increase sales.
Almost needs to be prescribed to sufferers from GP's. It would take off then, however getting to that position means jumping high hurdles and deep pockets.
I agree that anyone who got scaled back in the recent rights issue that this is a good time to make up that shortfall because nothing has materially changed with our company. Also a good position from a traders perspective as this dip is probably transitional.
I also believed that the 20t scale up was done ages ago, indeed it was discussed probably three years ago now, might be incorrect on this but that was my perspective.
Hi Swell,
They are most certainly feeling the pain, with a $8B loss of earnings and counting coupled with unused export pipeline penalties.
Throw in local crop failure due to Turkey holding the water in its dams because they wont export Crude oil, and locals hungry and unpaid salaries and a totally different picture emerges.
Our management team have actually done a very good job, keeping a bit below the radar and having a collective spokesman to prevent being singled out and penalised. Its taking a long time but the rewards are most certainly worth holding out for. The IOCs are in a relatively good position and attempts to force them into poor terms with new contracts by financial blackmail are not working. As a serious shareholder our board has my full support.
Https://www.reuters.com/business/energy/us-crude-production-september-rose-monthly-record-eia-2023-11-30/#:~:text=NEW%20YORK%2C%20Nov%2030%20(Reuters,Administration%20data%20showed%20on%20Thursday.
In my book top marks for the Yanks managing to increase shale oil yet again, wasn't that long ago that they surpassed 10M BOPD.
Clearly we see that without them OPEC would have crude oil at $150 plus dollars a barrel right now and we would all be paying handsomely to line the purses of the OPEC members.
Saw shale oil estimates of 200B plus barrels in USA alone so wont like the UK deplete the fields.
Renewables are also ramping up quickly as we move to EV's. Seen the latest plans for 900Mtr offshore wind turbines and they are very impressive indeed, coupled with these not so mini Rolls Royce neuc reactors, self sufficiency for UK is becoming strong probability. Yes we will still require oil and chemical products but in vastly reduced quantities.
By OPEC keeping crude in the ground foolishly thinking they might utilise it in the future its allowing and causing even more USA production. Without crude sales Iraq which hasn't currently even got electricity for half a day will not develop much at all. Its reported there especially in Kurdistan that companies like ours are producing crude while flaring massive quantities of gas, flashing off diesel in the local teapots, then selling that diesel to the locals so they can power highly polluting and inefficient generators to generate home electricity to keep freezers etc working.
They are also collectively pretty thirsty, so local crude rates are increasing.
SOMO in Iraq is now in charge of "OIL and GAS", so that actually puts them in control of electricity production, so again the blame for poor supply falls at their feet.
History of honouring contracts is essential for any company be it Chinese or Brazilian building gas fired boilers to produce electricity for them.
Now 8B dollars lost on crude flow.. will we see 9B$ ???
If you graph out the current increases in sales and profit even allowing the decent annual percentage increase to continue, its pointing at several years just to achieve profitability on current sales.
Clearly would require a few more rights issues in the interim as well.
Does appear that everything depends on Croda currently.
Slightly O/T, but demonstrates the levels of corruption in Iraq.
https://www.rudaw.net/english/middleeast/iraq/291120231
Also reports that Kurdistan only getting 7 hrs of electricity a day. While the IOC's flare off loads of gas which could easily be used to generate essential power...
Only snag...
Needs western investment to make it happen, because it wont happen without it. Just need to build contract confidence, because no one will invest millions in generation for them just to see them alter contract terms when the generating station is finished....
Another clear point how full adherence to contractual obligations is essential....
Everyone invested right now knows the risks and the rewards, its becoming a bit to tight to call because its quite feasible that coupled with the strong pressure that Turkey, Erbil and the IOC's are jointly bringing to bear on Baghdad, (although acting independently for self interest ).
Then throw in on top of that the 8$Billion product loss, and counting and unused pipeline fees it looks really bad for the holdouts in Badghad.
Next throw on top loss of reputation and face as appearing to clearly be the cause of all the problems, and the echoed loss of international reputation as trying to alter fully legal London contracts after oil has been struck to further line their own pockets.
This will have long lasting repercussions on other oil and gas deals as well as other services, while Iraqi employees go unpaid and resentfulness towards them is recognised increasingly by the general population.
Attempts to blame others like Turkey for delay have failed.
Attempts to financially subjugate the operating OIC's by refusing and delaying exported crude have also failed as alternate trucking operations into local markets and most certainly beyond have backfired as every one of them are reporting increasing crude sales and income ad can hold out at current increasing rates indefinitely.
They meet early next month, highly possible that a long term deal might be struck then which will set up the IOC companies for the long term and keep everyone bar the Baghdad politicians happy.