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We shall see...

Either it's challenging or it's rubbish.

Company A invoices $35M for drilling a well, Company B invoices $25M, Company C invoices $15M.

A says: "... we hit unexpectedly hard rock and broke 5 bits, had to fish for the broken string", B says: "...the bit dropped 10m and the string disintegrated; had to start again", C says: "...went just fine, sweet as could be".

Can all of this be fairly compensated by a standard factor of $N/bbl?

Considering the wide range of geological / sub-surface conditions the various KRI operators have to contend with, it's very hard to believe that WoodMack can come with a cost formula that suits all, that makes everyone, incl. SOMO, happy.

Take Tawke: DNO have been able, very successfully, to exploit horizontal drilling, and their costs/well have been remarkably low. Allied to that, the topography of their development areas (both Tawke and Peshkabir) has been kinder to their Capex budget than, say Shaikan or Atrush. DNO-Tawke has also built a small refining unit that allows truck fuel (diesel?) for their own use and for some local users, and have installed their own pipeline from the field to the Faysh-Khabur export station. These are all costs that will have to be recognized and allowed for in the $/bbl compensation. The planned reduction in Gas Flaring will affect all operators, some more than others, with GKP hard hit due to the H2S- and S% content of the SH crude. GKP also seems to be relying more and more on ESPs as the heavier crude, especially on the Eastern side of the field, appears to lack the energy to drive it to the surface.

It's likely therefore that individual $/bbl cost factors will need to be developed for each operator and field.

The omnibus $16/bbl, or whatever it turns out to be, will almost certainly have to be revised rather quickly.

****eye - you are a bare-faced stranger to the truth; a li*r.

ref your untruths:

1. i have never ever said that sh crude is worthless - but i have said, many times, that it is worth less and i am happy to stand by that. you really must try to understand the grammatical difference between the two (worthless & worth less).

2. i have never associated sh crude with "gloop".

3. the us buyer has not purchased sh crude - he has purchased a blend that includes sh crude. just how much (proportion of the blend) is as yet still unclear, as is the price achieved.

4. i have never said that sh crude would not be allowed into the pipeline mix. i have said, repeatedly, that the export of a kirkuk blend would require limiting the amount (proportion) of heavy crude such as sh (14api-17api, s=5%-6%) due its grade degradation effects (api). kirkuk blend is not yet being exported - somo have just attached the name to the present kurd blend for temporary marketing reasons. i understand that this will be altered in the near future.

With a low export price continuing well into 2026, and without significant payment of outstanding CAPEX and other costs, I do not expect the company to be able to fund their expansion / development plans - even ignoring pressure from the central authorities to greatly reduce gas flaring.

In my opinion, the Oslo possibility was always on the cards due to the chance of obtaining a better refinancing deal there (new bonds).

I am always professional when dealing with other business professionals.

As I said, when it gets too penetrating they clam up.

Putup,

over the years (16 now) I have never had an answer from IR to any question that was too penetrating.

Anastasia, (long, long time ago in Mexico) actually tried quite hard to get someone to answer such Qs (not always successfully, but she tried) but since she left I find it just a waste of time - far too many PR guys trying to control the narrative.

Water, especially on the E side of the field, has been an issue for quite some time and I believe at least 1 well has recently been taken off line (at least temporarily) because of this, but the general reduction in downhole pressure in these E wells is another. Probably more ESPs will be needed to bring the low-energy oil to surface here.

I'm disappointed at the management's lack of shareholder awareness (disinterest?) - it's almost as though they are shying away from opening up on any "technical" issue whatsoever. For all their faults, Todd and JG were switched on to the need to stiffen stockholder's backbone (sometimes overdoing it!) and kept that side of the business model very much alive.

Value S

I've posted many times about this issue - the probable restrictions on export volumes / proportions of SH heavy crude.

My logic being that a large proportion of the SH crude, at ca 14-17API, in the export blend will reduce the blend grade and achievable blend price.

Opponents of this view point out that the US Gulf refineries like relatively heavy crudes, as they enhance their slate offerings - that's quite true of course...but what of the Sarsang / Swara Tika boys with their excellent API38/39 crude? They will want top dollar for their oil and at the moment it cannot be sold separately.

Human nature being as it is, you should be concerned about such unclear statements - especially when made by the CEO of an oil production company.

Not shown on any of the recent well maps incorporated in Company presentation.

Last mention I can find is a MEED report dated June-22 which stated: " The company also said that its SH-15 well was brought online in April after being drilled in record time and is producing towards the lower end of the anticipated range." Has it run out of puff?

I see 2 other wells are currently not contributing and will only make a small incremental contribution when brought back on stream Q1-26.

Are we starting to see significant pressure reduction issues in some wells - and if so, which areas of the field, which wells are declining faster than expected?

Market analysts are not stupid and they can also see/read what's being said, and what's not being said.

You should be asking, why did the CEO write:

"...Average realised prices for cash received to date equate to c.$30/bbl..."

Did the company receive $30/bbl for their exported barrels, and if so, how many barrels of SH crude were exported and what was the total $M received.

Plain, simple language not convoluted.

What's wrong with a simple statement of fact?

Fishy...

Trafigura, FT, Bloomberg all reporting this - same headline.

I wonder what the net, $/bbl price achieved was?

Kurd medium heavy discount, Ceyhan-Texas transport costs, Vitol outstanding payment?

$63-$7-$4/$5-$2/$4

Should be interesting...

@putup, keep telling them and one day it might get home.

The ONLY thing attractive about the KRG contracts is (was?) the very fast return of invested capital - the quick return of your (already spent or invested) money.

Current true $/bbl being "earned" (excl. return of Capex element) is about $4/bbl.

Pray it doesn't drop back to the Fifties...

The challenges of further field development, when added to the rectification of current field decay, will not be overcome by a gross Capex input of ca $110M - $120M (my estimate). The public record numbers for the next stage are there for all to see and no amount of feelgood stroking can change that. Net shrinks that nice number quite a bit.

SOMO will decide what Kirkuk grade and -volumes will be exported and to what OSP (less correction factors).

"A good deal of investment" may be your opinion, but I'll stay with my "very limited" opinion.

Putup,

I don't disagree with the general thrust of your argument, but (there's always a but) I think you should have formulated your response more as follows:

"...But even that lower amount per barrel provides headroom for continued, BUT VERY LIMITED, investment in the field from within the current cost recovery mechanism. "

Without continued and substantial investment (new agreed FDP?), GKP will remain a tiddler in the pond - a profitable tiddler of course - even paying limited dividends, but one whose basic substance is not growing but diminishing.

Always good to exchange views.

@putup,

as you say, it's not.

The (crude supply) market is extremely nervous at the moment as production is being increased all over the shop. Goldman's projecting low-40s and prices staying low into 2027.

GKP's future is predicated on being self-funding, and with extremely low crude prices on the horizon, any "agreement" to pay producers anything like $16/bbl will completely collapse - no matter what cast-iron legal agreements say; self-funding then flies out the window.

The fall so far has actually been quite gentle, as we get closer to end-of.-year that could change.

Putup,

ref yr 23/09/25 at 20:41, are you modelling the $16-2/bbl against all contracting parties (i.e. using yr 61.5/18.5/20 parameters)?

Putup,

for the avoidance of doubt: when I wrote "...will SOMO give the individual companies the amounts due.." I meant give details of the amounts due / to be paid - not the actual handover of this money.

I appreciate that Dec is the date mentioned for cash handover, as does the market, but my penultimate remarks re. the "fine words" stands.

It is unclear when GKP (and the others) will be able to announce the revenue currently being generated by their exports - will SOMO give the individual companies the amounts due (for exports AND local sales) in the next few days, or will all of that detail be put off until Dec-25?

Until the true Gross- and Net $/bbl being received are confirmed to the market then all the fine words surrounding "the agreement" is just that - fine words.

Hence the nervous price tendency, IMO.

What we could be looking at in the next couple of months:

Step 1: Determine market price for Kurdish Blend excluding Kirkuk fields (Baba, Avanah, Khabbaz, Bai Hassan, Jambur). This will be the first official Iraq cargo of Kurdish crudes with no “distressed seller” discount. Several cargoes, to different refineries, will be necessary to give a good overview of obtainable prices.

Step 2: Determine market price for Kirkuk Fields Blend incl. Baba, Avanah, Khabbaz, Bai Hassan, Jambur and possibly other, smaller fields in the Kirkuk area but excluding the above Kurdish Blend. This will be the first official Iraq cargo of Kirkuk crudes for some years - and will differ somewhat from historical Kirkuk offerings as API and Sulphur etc. vary. Several cargoes, to different refineries, will be necessary to give a good overview of pricing.

Step 3: Determine market price for the 2025 Kirkuk Blend now to be specified and offered by SOMO. This blend will become the new 2025 Kirkuk benchmark and will include some elements / volumes of #1 above and most elements / volumes of #2 above. Several cargoes, to different refineries, will be necessary to give a good overview of pricing.

Step 4: Considering the range of prices obtained for all exports, enter into discussions with the crude suppliers to try to agree $/bbl pricing differentials and associated export volumes.

#4 then has the potential to become "quite an issue"....