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#1 OzzMosiz

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Posted 09 November 2011 - 06:37 PM

Does anyone think an oil company with over $200million cash (no debt) and 8-10 BILLION barrels of oil in place (on land) (and counting) in one drill section 2 others with proven billion barrel discoveries and potentially one (started drilling recently) with even more, should be valued at a smidgen over 1 billion?

If not get researching. (I'll give you a clue.....Shaikan!)

Edited by OzzMosiz, 09 November 2011 - 06:39 PM.

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#2 Voice of Reason

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Posted 09 November 2011 - 07:26 PM

Interesting...

Playing devil's advocate:

Political instability
Route to export
Company making a loss and running out of money

Thoughts?
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#3 Alm0stCerta1n

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Posted 10 November 2011 - 03:54 AM

Acquisitions & mergers haven't really started, so the cash may be there as defense against takeover, or for them to go shopping. Not sure which company you were referring to.

Also important will be the cost of recovery from this large field; is it profitable at today's price? Best guess at tomorrow's price? You said land, but does it rely on frakking to recover? If so, that comes with significant political risks at the moment.

The other thing that seems to weigh heavily on oilco profitability and valuation is the cost of discovering replacement reserves. This cost is high and for smaller companies in particular it is difficult to keep stable: bit like a lottery win as you have lots of losers then one massive success. How many partnerships are this company in to spread risk a bit?

These are some things I'd think about anyway.

#4 rw42

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Posted 10 November 2011 - 03:51 PM

Company is GKP - i've put some money in there. Owner seems a bit of a dodgy char, whole thing seems a bit of a bet on law being ratified.

#5 Alm0stCerta1n

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Posted 11 November 2011 - 12:23 AM

That is brave, but not necessarily wrong ;)

After a little reading it seems like they are considered to be undervalued for their known reserves (and have been considered this for a while), but the share price is depressed for what reasons?
Security got to be a big one.
Ongong "legal issues". I know nothing about these, but saw them mentioned in a couple of places including the half-year report. Possibly not a big deal?
The law ratification that you refer to: is it possible that it won't be ratified?

It looked like people bought into them about a year ago on hopes that they would be taken over... That may be a long term plan for the management. They certainly seem to be paying the staff a lot of shares.

They haven't run an operating profit since 2006 (and I don't understand why they did in that year). They rely in cash reserves to fund operations and don't have that much of it. Corporate and UK office expenses are massive. They are trying to sell up their Algerian blocks to BG (not currently producing by the looks of things).

Kurdistan income seems to be be greatest @ ~1.8M in H12011, but even there they made an operating loss. They talk about increasing production but a short term aim is to stabilise at 5000 bopd before increasing. It looks like they can't bring production online fast enough to get income up. Need to build a dedicated pipeline to allow increased production: what is the cost/timescale of this? I also noticed that operating costs increased from ~$9 per barrel in 2010 to ~$24 per barrel in H12011. Seems high, but may be a good reason for this.

They make a nice point about spending $64M in H12011 on exploration and weigh that against the value of their assets increasing by considerable more than this... good business, but it looks like they need to find some buyers for their licences to realise this value before they run out of cash. Can they? Ultimately it looks like takeover by a company who can afford a longer time frame is the inevitable end, but I have no idea how far away that is, or if they can survive that long. Good money to be made if you get it right!

#6 rw42

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Posted 11 November 2011 - 11:30 AM

Above water on my holding today - Exxon buying into the region gave some people confidence about the law being ratified.

Legal issues:
Big boss getting divorced, some interesting allegations in the case there. Wife saying he divulged assets to father/brother/dog or something and they're also suing him for something.
Excalibur was an ex-partner, they're suing for a share of one of the oilfields as they 'introduced' or something. GKP line is that they were due to be in on the agreement but were dropped because they couldn't meet commitments.
Oil law - the biggie. Kurdistan is in iraw but autonomous - at the moment iraq considers agreements signed with kurdistan government to be illegal.

#7 OzzMosiz

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Posted 16 November 2011 - 11:53 AM

Excalibur have never been an ex-partner to GKP. They were to TKI that is a completely different company.

GKP have 4 wells. One is up for sale which they have interested parties, 1 has between 8- 13 BILLION barrels of oil. The BB well is currently drilling and is expecting to be even bigger!

Also they have over $300 million cash and no debt!
With Exxon making a move to the north the Iraqis will either have to dissolve Exxons contract in the south (and that would seriously hurt Iraq) or recognize the oil law, in which case GKP goes north and are a BIG candidate for a takeover.
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#8 OzzMosiz

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Posted 19 December 2011 - 11:39 AM

surpassed it's all time high today on rumours of Exxon Mobile buying them up for 8/ps

One of the largest oil finds in recent times and most people don't even know about it.

Edited by OzzMosiz, 19 December 2011 - 11:40 AM.

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#9 OzzMosiz

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Posted 20 December 2011 - 09:01 AM

Disagree.

We all know about it, but look where it's based! Some balance is always needed when dealing with the ME, however, you did well today, no hint in the charts that a rumour would appear.

Hope you sold and bought back in.


Nope, not sold one share. They may not be in discussions now, but they may have been in the past. I still believe they will sell blocks and not the company (something they failed to mention in that RNS).
Kurdistan is actually quite a settled area for the east. Sure there are risks, but you don't expect multibaggers with no risk.

The US did not just spend trillions of pounds not to get oil, and why the hell would Exxon Mobile risk their $50BILLION investment in the south by securing blocks in Kurdistan????
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There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.

~ Richard Feynman (1918 to 1988)

#10 OzzMosiz

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Posted 05 January 2012 - 03:29 PM

Hit 2 again today, c'mon Exxon Mobile buyout.
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#11 OzzMosiz

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Posted 06 February 2012 - 01:47 PM

GKP is now 3.23

Edited by OzzMosiz, 06 February 2012 - 01:48 PM.

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#12 OzzMosiz

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Posted 10 February 2012 - 08:56 AM

Now 3.44
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#13 rw42

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Posted 10 February 2012 - 11:28 AM

3.66 :)

#14 OzzMosiz

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Posted 10 February 2012 - 12:40 PM

rw42, it is certainly looking good and no Behr bar (or however you sell it) news priced in yet!
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There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.

~ Richard Feynman (1918 to 1988)

#15 Lagarde's Drift

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Posted 10 February 2012 - 04:10 PM

It is priced in, just not enough. Hold on tight :)




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