Member Info for BroadfordBay

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.

theoryman,
your concluding remark caused me to have another look at the declared revenues.

I started with the 2019 Annual Results (released 23rd Apr-20) where, mid-page 20/33, the "Capacity Building Charges" for 2019 were stated as being $15.3M.
I checked my figures and the numbers do not stack up when using the 80% WI for the PO calculation and a Capacity Building Charge of 30% - with these figures the sum works out at approx. $20M.
Using a 58.2% WI figure, however, gives quite a good fit - I get $14.6M.

So, if the figures don't lie, either the Working Interest is not 80% as the company states, but nearer 58% - alternatively the capacity building charge has been reduced (from 30% down to 22.5% or so).

My assumption is that the Cost Oil is being paid at 80% WI, as GKP are (with MOL) currently carrying all of the costs.

Thank you for the prod!

theoryman,
GKP has, and continues to be, a company most unwilling to share anything that can be considered unwelcome news - this stretches back to Todd's day and remains a defining characteristic shared by company officers and those entrusted with their PR .

For example, the issue of SH-6 and the FWL: This was very well addressed by Gramacho in his post of 18th Apr-2014, following publication of the CPR, in which he highlighted the apparent contradictions found therein. Gram was hounded from these boards and obviously decided his professionally-founded views were of no interest to many of the "investors" (to be found here and on the other 2 boards) who prefer only to dream of the 100 Billion Barrels and who wish to believe everything the company says.

The lack of clarity with respect to OWC etc can be seen today with the lack of information re well output from the Eastern side of the field, depth of currently producing wells and reasons for, lack of information re SH-4 performance and the SH-9 experience. I must also mention the issue of gas treatment which seems to have been pushed to the back of the queue despite it having the potential for (financially) blowing up in our faces.

It may well be that the CEO and BOD are just paper tigers, chosen for their willingness to comply - to be well-paid putty in the hands of others, but - and this appears increasingly common in the UK financial world - the apparent lack of a moral backbone is shocking. The company may be a Public Limited Company but, leaving aside the handful of larger investors (corporate & private), scant regard seems paid to "the public".
I was part of a small but vocal group who tried to change this but we, and our NEDs, failed.

Re your final point: I no longer believe that any UK City Watchdog is interested in such goings-on. The information given out along with the accuracy / truthfulness is “just enough”, and that encapsulates a lot of what is wrong in our country and society today. GKP’s SP development displays enough peaks and troughs to keep the financially astute more than happy.

PS. You remark upon the PSC flowchart showing Revenues – I agree (the PSC actually speaks only of barrels due). My personal view is that the Profit Oil is the most relevant part of the agreement and will be the value-defining aspect – the Cost Oil part just defines how quickly you get back your own, or borrowed, cash.

42Mbopd means 1,171,800bbl after deducting the 10% MNR Royalty.
Using that output number:
At Brent $50 this implies $33,982,200 total monthly revenues.
At Brent $55 this implies $39,841,200 total monthly revenues.
Difference is $5,859,000.
A 50:50 split between the KRG and the SH licence partners implies $2,929,500 for the KRG and the same amount to be split between GKP and MOL.
If GKP’s WI share is assumed to be 80% then that equates to $2,343,600
If GKP’s share, however, is taken to be 58% then that equates to only $1,699,110

Nobull,
Sales are not revenues, and GKP does not receive 75% of the sales revenues - the contractor group receives a percentage of the oil sold and that is further broken down into Cost Oil and Profit Oil.
GKP then receives a percentage of each of these sums - they also pay a 30% tax, initially described as an Infrastructure Support Tax, on the Profit Oil.

You obviously do not quite understand the GKP Production Sharing Contract.

Go back and read it - final slide (#26) of the Jan-2020 Corporate Presentation will show you where you are misinterpreting its workings. Do your sums and then we'll debate who is wrong.

On the contrary,

field output of 55Mbopd and Brent $55/bbl generates revenues of ca $21M+ per month. Upping Brent to $60/bbl increases those revenues to ca $25M per month

The 75Mbopd level would generate ca $29M per month at $55/bbl Brent, increasing to ca $34M at $60/bbl Brent.

The costs of re-injection, while not cheap (DNO spent ca $110M for the Peshkabir gas collection, storage and re-injection project), are manageable. SH crude is even more acidic and sour than Peshkabir, so SH costs would be somewhat greater.
What is challenging, however, is finding the right formation and location for sour gas injection.
There are 2 main, gas project aims (the 3rd - selling a nice commercially clean gas, is an outside bet):
1. Get rid of the nasty, poisonous gas – that means finding a non-leaking formation into which it can be safely injected. In addition, if injected into an oil-bearing formation (as opposed to a gas cap type location), then the increased GOR comes back to bite you at surface (reduced fluid handling, proportionally more gas handling, etc.).
2. Inject the gas at location(s) that will assist your rate of oil recovery. That objective was not achieved at SH-9 and the management are now very aware of their lack of knowledge re potential gas cap locations and general sub-surface transmission pathways.

At the end of the day, resolution of the gas issue will forced upon GKP by the MNR – the only question is when. Sooner is very bad, Later is good.

Hi Cookie,
I’m not qualified to give a professional opinion on this – all I can offer is an intelligent interpretation / opinion of what I read and understand, somewhat expanded by 10 years of exposure to SH data releases.

What I can say is that the company has been vigorously trying to more fully understand the petro-geological implications of what has so far been measured; witness the recent Geo Society papers found in the Lyell Collection dated 18th Sept-20 and 28th Aug-20.
These efforts have already been mentioned in several company publications (see Discreet Fracture Network Studies in recent presentations) and have been ongoing for several years.

Have a read and you’ll gain a bit more background to the issues.

My very broad-brush interpretation of what is said in the Abstracts is that, as a result of observed pressure declines, more effort is been put into understanding why this should be so (especially as the fractures are said to be huge and well/pressure communication can be seen over great distances).
The behaviour of fractures under changing pressures (they are three-dimensional after all), the stress to which they are subject, coupled with their orientation (these vary all over the field) greatly influences permeability: the orientation relative to the axis of stress determines whether they are deemed critically oriented or not (as does their orientation relative to the wellbore!).
Critically Oriented generally translates to “to your benefit”, as in better flow.

As pressure changes / drops, some fractures close – and some open up. If stress changes enough during such movements then some previously closed but critically oriented fractures may reactivate / extend / open up (ref hydraulic fracturing enhancement).
The Shaikan field is located at the conjunction of the Taurus and Zagros orogenic trend and overlies the basement strike-slip fault (Kochuk-Duhok Fault, ref 2011 Strike-Slip Earthquake) and recent seismic activity suggests this region is critically stressed (Heidbach et al. 2016).
Any increase or decrease in localized sub-surface stresses has potential implications for the outcome of the Discreet Fracture Network Studies mentioned. From these flow output projections, depletion rates, OIP, Reserves, etc, etc.

It’s not much, but it’s my rough understanding of what is being said.

There appear to be both positive- and negative implications within the articles – it is after all an intensive and ongoing bit of work trying to understand more fully just what’s going on down there!