Member Info for BroadfordBay

You are certainly not GRH1 - so why exactly did you seek to associate his moniker and excellent good name with your contributions?

Could it be because yours are so worthless?

@tm,

quick first reaction - i'l try to come back on the main points later:

somo is in charge of the sales & marketing. noco is in charge of the field exploitation and development - in close consultation of course with the sp****ly populated mnr.

The Force Majeure components are fully covered by Article 40 of the PSC; the Fiscal Stability aspects are well defined by Article 43.

You have to ask why the company has not (yet) registered a Contract Non-Compliance Dispute, as covered by Article 42 of the PSC.

An activist investor / fund could have a lot of fun with the consequences of a poor information flow.

@TM,

as always from you, stimulating questions.

It's also not yet clear what proportion of the southwards-diverted crude will remain that way - i.e. will in future no longer be exported via the ITP; indeed, what proportion of that southwards-diverted crude was previously exported via the ITP.

Should the volumes available for export via ITP be greatly reduced (whether for SOMO- or for other technical reasons), it looks like Ceyhan volumes may take a big hit - and that would make the existing BOTAS Pipeline Tariff Rates very uninteresting for TR. Example: 200,000bod x $2/bll tariff is not an attractive business proposition - either Volume and/or Tariff has to increase substantially.

The expected PSC Contract Revisions will have major impact on the company bottom line - perhaps also on its willingness to undertake further field development?

You touch on the issue of certain crudes having differing values (SH vs ST for example) and the effect that "peeling off" these volumes might have.

Have you considered whether a completely new Heavy Sour Kurdish Grade might be on the cards...

There are no answers, only more questions.

In the event that SH production were to re-start soon for local sales, and in the event that local sales were at a Special Offer price of $40/bbl as has been suggested, and if the existing PSC terms re Profit Oil were still applicable, what do you think the monthly revenues would be like?

The Cost Oil numbers of course would lift that PO quite significantly but you need to bank something for rainy days and Capex.

Output will not hit 55Mbopd for quite a while after re-start. Using 33% of that output figure (18,333bopd) you would only be generating about $1.8M per month PO, and it doesn't get a lot better at 50% either.

What are GKP's monthly operating costs again - true Field Ops plus management / office overheads?

Who would pay the trucking costs to the Special Offer Refinery? What's that going to be, another $3/bbl?

I believe the new PSC Terms will shock investors in the Kurdish region of Iraq.

SOMO / Baghdad would like N00,000 stb of crude to be sent to them for refining, for blending down at Basrah or for sale, whatever.

The oil companies continued (some) production even after the pipeline was shut, so presumably their storage tanks are almost full. In addition, the storage tanks at the Faysh Khabur export terminal must be at least partially full. It's not known if any crude remains in the Ceyhan storage tanks, but there might well be some there too.

All in all there might be a few days production, maybe as much as 0.5 - 1 Million barrels, ready to "give" to SOMO?

Why not just do it -- give SOMO the crude and show the world who is stepping up to the plate?

Surely the directors and major shareholders (those at least who endeavour to influence the company) must now be considering urgently adding a 2nd string to GKP's bow? The events of the last few months have shown that the KRG business model is unreliable and pretty well broken.

Whenever production- and exporting restarts, and bearing in mind full-throttle output will not be possible from Day #1 but may take MANY weeks to again reach pre-shutdown levels, re-instating dividends at anything more than a purely token level may well be the last thing on the CEO's mind. The well cleanup costs after such an extended shutdow will be considerable and taking advantage of any diversification opportunity will require cash. Bear in mind also that the competition for well service contractors in the KRI will be fierce in that startup period.

A major re-think about the company's future is noiw well overdue...

Hi Cookie,

present and past BODs have never been open about the extent of Kurdish shareholding. I have asked the Q at AGMs and via the so-called investor relations links, Nada, nichts, SFA.

If the local controlling families do own a large slice of the company then that can be understood as a veto right, a threat of "if you do this we'll do that."

It doesn't have to be publicly said and will never be put in writing.

Over the proverbial barrel...

Putup,

thank you for correcting my numbers, mea culpa.

Taking everything into account - the reduction in senior costs and Capex at $4M pm, I calc the reduced monthly wages bill as roughly $1.67M; that's quite a drop from FY22 when it was $4.466M pm. The company must hope they will all want to return to work after a few months without any income.

My understanding of the Ops update was as follows:

Cash as per 15th June was $93M

From July onwards, operating costs plus G&A to be around $6M per month.

Residual Capex obligations for June/Dec are $20M - $25M, call that $4M per month

So...

Were the shutdown to last another 3 months - thats 3 x $10M, so total of at least $30M going out the door.

Possibly by end-Sept cash then down to about $60M, perhaps even a bit less?

That's not even the worst-case scenario.

I thought the update was absoluetly pathetic.

For Discussion you may also substitute Clarification or Explanation.

Imagine…

No discussion as to how much the Local Buyers might be prepared to pay - $30/$40/$50/bbl?

No discussion as to where such buyers might be – KAR?

No discussion as to how much could actually be trucked per day - and how much that trucking would cost? $5/$10/bbl?

No discussion as to whether the agreed Profit- and Cost Oil revenues calculations would even apply in such a scenario - how much revenue could even be achieved?

$6M per month cost of Operations and Q&A for 3 months, call it $20M?

Add the residual Capex spend of $4M per month for 3 months, call that another $12M?

IF (big if maybe, but it has to be considered) the pipeline remains unavailable for another 3 months, that's $32M gone from that Cash pile, brings it down to about $60M or less.

Pathetic Update.

I found the Corp Update pathetically weak and lacking in substance. I have no confidence that today's AGM Presentation and subsequent Q&A will offer any real clarification of issues facing the company.

Tom,

Following the DAESH troubles, it's unclear how much of the original pipeline(s) connecting all 3 domes remains intact or has been repaired. The Avana-Khurmala link must surely still be operational as the KRG were "misappropriating" Avana and Bai Hassan crude until end-2017, when tensions again flared between KRG Peshmerga and Baghdad militias? The financial loss of output from these 2 particular fields (was said to have been approaching 300,000bopd) hurt the KRG very badly.

I reckon the distance from the Khurmala facility to the main link South at Avana Dome could be as little as 50km BUT, again, it is unclear whether the Avana-Khurmala link has been destroyed in the meantime or not - same goes for the Avana-Baba link. Arranging for flow reversal (N to S) is a pretty straightforward task and, assuming all flow control devices and pumps are suitable it's a days to weeks sort of timescale. The fact that the main Baiji Refinery (main local offtake for Kirkuk output) was smashed and robbed should also be taken into account.

If the pipeline link is still operational then it's down to political fun and games, proving a point. IMO

There is one significant downside (there are several actually) to working with SOMO - they are not used to working with smaller, financially stretched companies.

At the table, when push comes to shove, they need technically competent, strong and confident partners with financial muscle.

IMO the recent Genel activity / director share purchases is nothing but a punt on the final outcome of the gas fields issue, and has almost nothing whatsoever to do with crude oil - so, no carryover to GKP situation.

When everything went to pieces back in 2003 or so, the issue of Disputed Territories was aired by many qualified people inside US Gov organizations and in the military. There are open source maps available which show quite clearly the line of demarcation and the various towns, villages and oil blocks straddling that line. In the ones that I have examined, Shaikan field is just outside the Green Line and tehrefore within the Disputed Territories. That green line also slices through the Atrush block.

At the time, Hawrami made some statements about the Green line, incl:

"There is no hard line drawn somewhere that says this is KRG controlled territory and these are disputed territories, it is all grey areas...you show me the green line in the constitution. You show me a green line that officially anybody signed on. There are many green lines. But what counts is what is currently under the KRG authority."

The Iraqis down in Baghdad have never forgotten the issue of the disputed territories, for them it remains a thorn in their side.

Khurmala

The inclusion of Khurmala, the 3rd Kirkuk Dome, has always been like a red rag to a bull as far as Baghdad is concerned.

The problem, however, goes much deeper: Khurmala is a big feeder of the KAR Refinery - owned and run by Barzi's best pal and cutting them out completely would be almost impossible. KAR are also "willing buyers" of all sorts of non-authenticated supplies (mostly heavier crudes) from smaller producers in the region - think Akri Bijeel. Baghdad knows all of this and how it goes, and it gets up their noses.

GKP is a one-trick pony, that's why.

...and a pony with form.

P120 of AR, middle column, halway down:

The Directors believe an agreement will ultimately be reached on the terms of a revised lifting agreement, and we reasonably expect that overdue balances will be paid and payments will return to a more regular basis.

However, a deferral of revenue receipts from the KRG for an extended period of time could result in liquidity pressures within the 12 month going concern period.

...for the trees.

Some other issues of concern that don't appear to be of any concern to many retail investors:

The imminent conclusion of the Shaikan 55Mbopd Milestone – with future plans and amended FDP now to be approved by NOCo. The detail in this new FDP, especially its financial / Capex implications, will all affect the revenue streams. Any changes to the PSC terms as previously mentioned, will likewise amplify the revenue-reducing effects.

The field output at re-start will look sick - so many non-producing wells for such a long time has consequences: it may even be that some wells will no longer be able to produce. Output guidance will be paired back / re-stated downwards by a factor significantly exceeding the pipeline shutdown period.

The dividend will almost certainly be cancelled.