The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
The problems have not been solved, only the major cracks have been papered over.
Depending on which version you believe, Kurdish crude blend sells for between $7 - $10/bbl less than what SOMO believes should be the case.
At $8.5/bbl difference, that implies that ca $64M per month, or $768M pa, more will be paid to Baghdad than what the Kurds will receive for their 250,000 barrels.
That has potential implications for the current payment agreement with the Kurdish producers, and until these are clarified there will remain a question mark against this whole thing.
As long as Brent remains around the current level such payments can be relatively easily stomached; should Brent slide back below the $55 level then it has the potential to unravel very quickly.
The apple has a worm:
"...The quantities delivered are based on the amounts realized from the sale of 250 thousand barrels of crude oil per day AT THE PRICE OF SOMO."
If this goes through, and it has the powerful backing of Erdogan, then we will almost certainly see the restart of terrorist attacks against the Kirkuk-Ceyhan pipeline running through the Diyarbakir province of S. Turkey - with all that implies for producers.
The open and transparent ownership of foreign-registered companies, coupled with the issue of Beneficial Ownership, has long been of interest to GKP shareholders (not only!), and some of us have been lobbying MPs and others to tighten the rules for such companies that also make use of London Listings for their offshoots.
Last year for example, the issue of Beneficial Ownership Registers was debated in the Parliament.
Bermuda is a Sovereign Overseas Territory, and as such, the UK Parliament has unlimited powers to have all sorts of Bermuda (financial) laws altered – should it see fit. It also already has a Central Register (not a public register) which contains the relevant shareholder information but, until recently, there has been no great pressure to have things changed.
(A lot of that pressure came from the EU!).
The debates on the Sanctions and Money Laundering Bill 2017-19 included an Amendment 69G, which would have forced Bermuda to make their listings public. Needless to say, the amendment faced great opposition and appeared doomed. Facing defeat on other points, however, the government agreed to include the new clause (Clause #6) compelling the OTs to establish public registers (they did not agree to do this for the Crown Dependencies, see Clause #14).
To the best of my knowledge, the Sanctions and Money Laundering Act 2018 bill was passed with a deadline (for the OTs to comply) of “End-2020”.
Minister of State Alan Duncan stated in the House that, in the event of an OT not complying, a Draft Order in Council would then be raised, requiring the government of the day to prepare Draft Legislation (by 31st Dec-2020) requiring the government of the OT to introduce such public register by Dec-2023.
This implied delay went down badly, and the act was again debated in the HoL last Summer, but the Draft Order In Council was published 14th Dec-2020.
As far as I know, the new deadline of Dec-2023 still stands.
The Bermudians are no at all happy…
...and no sooner said than done, DNO popped up on my ticker!
Oslo, 9 March 2021 – DNO ASA, the Norwegian oil and gas operator, today reported receipt of USD 42.4 million net to the Company from the Kurdistan Regional Government (KRG), of which USD 31.9 million represents DNO’s entitlement share of January 2021 crude oil deliveries to the export market from the Tawke license in Kurdistan.
Of the balance, USD 4.3 million is an override payment equivalent to three percent of gross January 2021 Tawke license revenues under the August 2017 receivables settlement agreement and USD 6.2 million is a payment towards the Company’s arrears of USD 259.0 million relating to withheld payment of Tawke license 2019 and 2020 entitlement and override invoices.
ShaMaran announced yesterday, DNO yet to do so:
VANCOUVER, BC, March 9, 2021 /CNW/ - ShaMaran Petroleum Corp. (“ShaMaran” or the “Company”) (TSXV: SNM) (Nasdaq First North Growth Market Sweden: SNM) is pleased to confirm payment of $21.7 million ($7.3 million net to the Company) has been received from the Kurdistan Regional Government (“KRG”) for Atrush oil sales invoice entitlements for the month of January 2021. In addition, the Company has also been paid $1.04 million as the first monthly implementation of the KRG’s proposed repayment mechanism for receivables.
There is a fine, old Dutch proverb that ends:
Wye him neder werpt inden slijck,
Hi wart vul slikich bij ghelijck.
Wye mit zwinen wil omme gaen,
Daer leert hi wael gnorren aen.
Whoever throws themselves down in the dirt,
they will equally become dirty.
Whoever wants to live with swine,
will learn how to grunt.
You question why...
Perhaps if you, the plaintiff, have more or just as much to be ashamed of than does the defending party, then you might very carefully consider the implications before initiating any such action.
Don't wash your dirty linen in public...?
I should of course have qualified that by adding "...and assuming the request was granted".
GKP made a Declaration of Commercial Discovery on 1st August 2012 to the Shaikan Block Management Committee under Clause 12.6(a) of the PSC. The declaration was made in respect of a Crude Oil Discovery (with associated natural gas).
The Development Period is defined in Clause 6.10 of the PSC as 20 years, with an automatic right to a 5-year extension.
If commercial production from the production area is still possible at the end of its development period then, upon request, the contractor shall be entitled to a 5-year extension under the same terms as the those provided in the contract. Such a request must be made in writing at least 6 months before the end of the development period.
So, PSC expiry either 1st August 2032 plus 5 years, meaning 1st August 2037.
OR
Expiry 1st August 2037 plus 5 years, meaning 1st August 2042.
Take your pick…
11 years and 5 months,
16 years and 5 months,
or 21 years and 5 months?
Assuming you do actually request the extension(s), and depending of course on how capital-hungry the beast has become, you might wish at that point to consider your options.
Someone said: "...So in summary just doing nothing will generate easy 3 billion.
One problem with this simplistic view (there are more ) is that the decision to "do nothing" is not in your hands alone, is not one that you can make without consequences; this is just of the one of the problems you face when dancing with the devil.
At some point your intransigence will be seen as an issue that has to be dealt with - perhaps dealt with severely.
The company is not alone in facing similar issues, but others are showing that these can be confronted and mastered.
johnscott100,
First, in Google Earth, make sure that the settings are correct:
Tools / Options / 3D View
2nd set down: “Show Lat/Long”
If you want to search for Degrees/Minutes/Seconds, activate that dot.
Back to Main Map:
For the coordinates Shaikan #1 in everhopeful’s listing, enter 36°46’32”, 43°20’46” in the Search Window, top LHS.
You will not see very much at all as the Google maps for this region are very out of date. Also I believe everhopeful’s coordinates are incorrect.
If you do not want to subscribe to a satellite feed with bang up-to-date imagery (can be expensive), try another free system with more up-to-date imagery such as satellites.pro.
For example, this will give you a good image of the Shaikan #2 production facility (the coordinates are entered in decimal form): https://satellites.pro/Iraq_map#36.748501,43.499001,19
Sat Pro can be a little tetchy – if the coordinates don’t seem to take you where you want to go, just zoom the map and drag the screen image – the coordinates in your main search window will adjust as you drag, and you will get there eventually!
Have fun…
tm,
of course, there is the possibility that the +ve will outweigh the -ve.
Put the following into Google: Glencore Restructures $500 Million Oil Loan With Iraqi Kurdistan
Bloomberg article 9th July 2020
And, as ever, the devil is in the detail:
"...under which the region hands over the federal government the value of exporting 250,000 barrels per day (bpd) AT IRAQ'S SOMO OIL PRICES IT SETS TO SELL IRAQ'S CRUDE OIL SHIPMENTS".
This is a hard one for the KRG to swallow as the Kurdish blend sells at a much lower price than does the S. Iraq crude. If it does get agreed, then those Kurdish producers supplying lower-value crudes may well not see much benefit at all from this.
Good morning Cookie,
yes, the outlook is really perking up, isn't it?
Given the rapid strengthening of crude, however, the forthcoming OPEC talks (4th March) may be quite challenging as some countries might interpret this as the chance to open all the taps again.
Your "wait and see" attitude is wise - we need to hear some strategic thoughts from the new man; DNO making all the running at the moment.
Cheers!
Not true...
The main reason why I post very little on the other board has nothing to do with any self-proclaimed "experts" there and more to do with the unashamed lying that is posted there, every day, unrelenting.
My Blackrock posting is not at all negative - it is quite factual.
The Slurryman posts elsewhere using other avatars - I post only under Broadford Bay.
I'll go post now on ADVFN just to say Good Morning.
Caveat emptor applies here as well...
To think that Blackrock have a strong commitment to the "investment case" beggars belief.
Just looking at the RNS announcements listed here on LSE over the last couple of years, Blackrock appear to have kept their exposure within very tight limits.
Since 1st Jan 2019, they have announced 11 changes around the 5% trigger point – of these, 6 triggered the 5% reporting limit going Upwards, and 5 going Downwards.
11.02.21 UP to 5.03% from less than 5%. SP approx. 155p
02.04.20 DOWN from 5.12% to less than 5%. SP approx. 69p
12.03.20 UP to 5.12% from less than 5%. SP approx. 92p
11.10.19 DOWN from 5.01% to 4.99%. SP approx. 211p
12.08.19 UP from 4.99% to more than 5%. SP approx. 220p
07.08.19 DOWN from more than 5% to less than 5%. SP approx. 220p
05.08.19 UP from less than 5% to more than 5%. SP approx. 227p
03.07.19 DOWN from more than 5% to less than 5%. SP approx. 222p
24.04.19 UP from less than 5% to more than 5%. SP approx. 251p
17.04.19 DOWN from more than 5% to less than 5%. SP approx. 250p
12.04.19 UP from less than 5% to more than 5%. SP approx. 249p
As the holdings below the 5% trigger limit are essentially invisible, I see no commitment here – only opportunistic trading of retail exuberance.
In the CEO's own words:
"...breakeven can be achieved to cover all operating, general and administrative costs and interest payments with a Brent price just below $35 per barrel."
Good morning theoryman,
I used the word "clarity" rather loosely, and the company's apparent unwillingness to be more open about such things just invites destructive speculation.
For example, taken from the 2018 Full Year Results, Sales Revenue:
"...Under the Shaikan PSC and the bilateral agreement between GKPI and the MNR signed on 16 March 2016 ("Bilateral Agreement"), the Group is entitled to offset certain costs (including capacity building payments and production bonuses) against amounts owed by the KRG to GKPI. In these instances, the Group recognises revenue and a reduction in the liability to the KRG."
I'm sure the (potential) implications of such words will not escape your scrutiny.
The original Capacity Building Payments were written into the contract at 40%., this was later reduced, however, to 30% and is covered by the Bilateral MNR Agreement.
This agreement was (and remains so) very heavily qualified and the qualifications can be found in the New Notes $100M Prospectus (late-2016), for example in the Risks section:
(RISKS, 1, e, f, 2)
"1. (e) the reduction in the capacity building value charge to be paid per month by GKPI under the Shaikan PSC from 40% to 30% of sales of GKPI’s Profit Petroleum (as defined in the Shaikan PSC); and
(f) the commitment of each of MNR and GKPI to enter into the Second Shaikan Amendment for the purposes of giving effect to each of the objectives listed at sub-paragraph 2(a) through to 2(e) above; and
2. finalise the terms of relinquishment and termination by the Group of its rights and obligations under the Sheikh Adi PSC, which has now been completed in accordance with the executed Relinquishment and Termination Agreement attached to the Bilateral MNR Agreement.
Whilst the Bilateral MNR Agreement provides an interim contractual framework that reflects GKPI and the MNR’s commitment to implement these terms; it is not intended to be a medium or long term position, nor is it complete in so far as it does not address certain contractor terms which are expected to be clarified in the Second Shaikan Amendment.
As at the date of these Listing Particulars, the Company continues to work with the Group’s partners (MOL and the MNR) to finalise the Second Shaikan Amendment however significant uncertainty remains in relation to the terms, timing and signing of the Second Shaikan Amendment."
The 2nd Amendment is of course what has been such a sticking point for so many years. The New Notes Prospectus is a mine of information and should be read by all serious investors.