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@TM,
this is what I heard at 1:20 into the 1:38 video:
"Baghdad is currently STRANGLING, got its hands around the neck of Kurdistan region..."
@TM,
true, he is not (yet) a director but only a Chief Commercial Officer...but one who has been told he will soon be CFO.
He possibly has even more detailed knowledge of "what's going on" than does the CFO...
Insider Trading rules surely prevent Mr GPL from buying shortly before any news of importance to which he is privy...
Pop over to Ekurf net where you can read what's happening:
"Did the Barzanis **** a US government employee in cold blood?
The Kurdistan Victims Fund, a charity incorporated in Wyoming, filed a lawsuit Tuesday against the Kurdistan Regional Government. Co-defendants include many, but not all, members of the ruling Barzani family and their top aides. While Iraqi Kurdish Region Masrour Barzani will likely claim sovereign immunity, the fact that he is, according to the lawsuit, a permanent resident of the United States negates that claim."
$17M is a piddling impairment.
"Progressively written out" won't wash anymore, I think the market is telling you that already...
Will this be the year when the company auditors are finally forced to qualify the accounts - as the payment expectations of outstanding monies must now be almost zero?
putup, i tend to agree with you here; financial smoke & mirrors.
re fixed asset register
see the psc, article 20, title to assets.
20.2 "during the development period, subject to article 21, all assets acquired by the contractor for the petroleum operations shall become the property of the government upon the completion of the recovery of their costs of all such assets by the contractor, or the end of the contract, whichever is the earlier."
it's tempting to consider the asset as a single, ****geneous entity but is that really the case?
(art #21 concerns the use of the assets)
consider;
the hole in the ground (the well) is not an asset, but the steel casing and the esps within it are, as are the wellhead gear at surface and the flowlines leading to the processing facilities.
the processing facilities are the main assets, but even they have been installed at different times, in different phases, and have been modified / extended several times since their 1st commissioning. same goes for the crude loading / unloading facilities and the storage tanks.
the point that surely should be considered is that, in the event of a severe difference of opinion at some point, some of these “assets” could be considered as having already been paid-for. skilled advocates could have a field day with such considerations, don’t you think?
perhaps it suits the krg/mnr at the moment not to push the point, but it's pretty thin ice here i would say.
"For western ethics "a contract is a contract", and when IOC's invest billions in exploring and drilling they don't expect Iraqi officials to try and backstab them in changing contracts after they have met their side of the contracts."
Well, Nothing is sacred, nothing is written in stone.
When the facts change, change your mind / your agreement.
When your information changes, alter your conclusions.
In any contract, when one partner becomes unwilling or unable to fulfill contract terms, there are only 2 ways to go: attempt to reach as amicable an agreement as is possible, or resolve the issue in court. I'm sure Iraq can afford the best international lawyers, should it ever come to that
Iraq isn't too bothered by a threatened court case and, as can be seen by the steadily declining offtake (local sales) numbers, that low-hanging fruit may be slowly withering on the vine.
Putup,
we are now in Bid Round 5(+) and almost ready with Bid Round 6.
The buzz expression down South is now "revenue sharing" - but, again, conflating the two revenue streams.
I've run the numbers at nominal parameters for Aug-24 and they look pretty dire.
I would be more woried about too much SH heavy being barred from the pipleine for the reason I gave.
The widely reported (and almost certainly misrepresented) $20/bbl) agreed "contribution" numbers need careful study when officialy confirmed. At the moment, it appears that CO plus CO are just being lumped together to give that number.
Leaving aside the BOTAS demands for much higher pipeline tariffs (which they will get IMO), the revenue flows from anything like $20/bbl will be WELL down on previous numbers - perhaps down two thirds.
That means project implementation schemes will have to change (slow down) which will not please either KRG/MNR or SOMO. If SOMO push hard for reduction in Flaring, with associated gas capture and -processing, that will hurt some OilCos badly. The SH and Atrush FDPs will need re-writing and agreement, and the future Kurdish Blend (that SOMO would dearly like to return to near-Kirkuk grade, 32API) will mean that not all of SH Heavy will be wanted in the Ceyhan pipeline.
Still lots that could could go wrong here IMO.
$30/bbl was yesterday.
More like $25 - when you can get it...
There are other - and non-IOCs operating in the region - who were selling their crudes before the pipline was closed; they think, correctly, why should I suffer?
Dog eats dog, offered prices reflect that.
There is just not the local refinery capacity and demand to satisfy all actors.
Dog eats dog.
$30/bbl was yesterday...
As reported in Energyvoice:
"...Investors should stay away from E&P companies working in Kurdistan, Panmure Gordon research analyst Ashley Kelty has said.Commenting on Genel Energy’s results this morning, Kelty warned that progress in resuming exports would be slow.
Some production has restarted and is being sold locally, he noted, but at prices “well discounted” to Brent.
“This state of stasis is likely to carry on for some time, with no obvious resolution to the dispute over the export pipeline, despite several false dawns after talks between officials. This means that investors would be well advised to avoid the KRG centric E&Ps for the time being.”
Rider75,
you are correct in that the Capex so far has resulted in a field output of XMbopd (ca 50,000?) and a processing capability of YMbopd (ca 75,000?). Of the cumulative Capex so far, we have probably recovered ca 90% ?. via the Cost Oil recovery, so not an awfuld lot left to claw back unless additional, and substantial , Capex is on the cards.
Coasting along, as you appear to infer, (forgive me if I misunderstand your meaning) is not realy an option as such producing formations deteriorate without preventive maintenance and ongoing TLC.
As the Cash Cow effect of yet unrecovered Capex heads towards zero, your positive cash flow can only then come from the Profit Oil component (you will of course never have a Zero Capex scenario as there is always something that needs to be done, but $5 - $10M per month Care-and-Maintenance Capex is not going to do much for you).
Putup, as you say, it's not even close.
I was lambasted many years ago for daring to point out that the Cost Oil recovery "revenues" should be looked at very critically - as basically it's just your own shareholder's funds (perhaps even borrowed money) being returned to you, albeit with delays.
The Profit Oil element should be what drives the perception of your business model.
All of this $20 - $30/bbl stuff being bandied around is misrepresentation of the facts. The Iraq Revenue Sharing Contracts (the Exploration, Development and Production Service Contracts (DPSCs) currently being fine-tuned by Iraq for the Fifth(+) and 6th Round Contracts ALL recognize the difference between money to be returned to the contractor group for field development capital expenditure and $/bbl earned for your efforts. The Rate of Return of incurred Capex can & will be modified, the $/bbl "earned revenue" eelement will be a far lower number than what is being spouted here.
Apropos Capex, dare I question how quickly the company will be able to fill its coffers fast enough to be able to initiate a major Capex project ...and on the back of that question, should the company have to return to capital markets to replenish the war chest, what the cost of that capital might be?
Hi Cookie,
I am well, thank you - trust you are also in good health?
Re GRH posting elsewhere, I would be very careful about assuming this is the real GRH and try to ascertain his bona fides, as much as you are able, before puting too much trust in what he says.
The mention of "Rob" intrigues me - would this be Robert aka bobobob Waterhouse...?
I'm not following the Predator story at the moment.
Taqa has been trying to offload its Atrush stake for several years - see Gulf Times May-2016, "...According to TAQA’s 2015 annual report, the company has an agreement with a “related party” under which, at the request of TAQA, that party would buy all its oil and gas assets in North America and Atrush in Iraqi Kurdistan, plus most of its assets in Europe, at an agreed price."
The news that Taqa is not very happy with its Kurd investment has been repeated at various times since then.
Until the price is made known, it's best to assume no great added value effect here - just a tidying up excercise.
MOL, as minority partner along with Texas Keystone in the Shaikan operation, could be considering a similar stake sale.
Keep your eyes on Todd, possibly getting out of US jail early - an angry man who feels hard done by...
Annoying LSE correcting software, I'll try again:
"the apikur member companies' current commercial terms and economic model must be maintained."
Good luck with that. this is very difficult for somo to swallow - the various KRG/MNR PSCs are not identical - the "local contribution/tax" varies, the % that can be reclaimed via Cost Oil formula varies, the % and kick-in points (R-formula) for the Profit Oil varies.
And of course the quality of crudes produced by the members varies greatly.
Could HKN think they are in the driving seat?
"the apikur member companies' current commercial terms and economic model must be maintained."
good luck with that. this is very difficult for somo to swallow - the various krg/mnr pscs are not ****geneous - the "local contribution/tax" varies, the % that can be reclaimed via co formula varies, the % and kick-in points (r-formula) for the po varies.
and of course the quality of crudes produced by the members varies greatly.
could hkn think they are in the driving seat?
Shares are not an asset - they can (should?) be considered an IOU.