Gulf Keystone Petroleum

[Petrovale]

Heavy volume!

http://www.bloomberg.com/news/2012-01-29...-says.html

[efi426hemi]

My 1000 foot quick response (I need to get back to the beach):

Whether you are interested in GKP or not, there is a fascinating shift of power going on in Iraq right now. For those of you that don't know, when things stabilized in Iraq and the new government was elected the Iraq Central Government (ICG) was at odds with Kurdistan (one of the provinces in Iraq) over the terms of oil sharing contracts with oil companies.

The ICG adopted an approach of federally controlled agreements and agreements that pay very small margins to the majors. Additionally, since the Kurdistan contracts were fundamentally different from this approach, the ICG also said that if you do business with Kurdistan we will black list you from all of our oil fields in the south.

So the super majors jumped on board with the ICG probably due to some political reasons (US was still supporting the ICG very strongly) and hope that a new oil and gas law would be resolved which would give better terms. The small and unknown oil companies moved into Kurdistan. This all happened 3-4 years ago.

Now, if we fast forward to today, the ICG still doesn't have a new oil and gas law, haven't been providing their portion or the agreements (roads/infrastructure), haven't been making payments for the oil and the sectarian violence has returned. Meanwhile in the north (Kurdistan) huge fields were being found (enter GKP here), there was no violence, and the Kurd government was building a strong relationship with Turkey (key for a pipeline to export their oil).

So the super majors are sitting in the south, looking at high risk/low margin almost depleted fields with no progress by the ICG in the past 3 years. The straw that broke the back was dropped and Exxon signed a deal with the Kurdistan government last summer at the risk of losing their deals in the south. Now it appears as though Total is jumping on board, with strong rumours about Chevron and Conoco Phillips soon to follow.

Essentially, the super majors, with very strong political backings are walking away from the ICG. Why? Because in the last 3 years Kurdistan has turned into the last great onshore reservoir of hydrocarbons. So large in fact that if they start moving their oil the united nations could stop the flow of oil from Iran with no disruption to the world demand for oil. Given the recent nuclear statement by Iran, does anyone think that this isn't being discussed behind closed doors?

My guess, Kurdistan will declare independence from Iraq with the blessing of the UN, a large number of super majors will move into Kurdistan consolidating the diverse number of tiny oil companies, and this new nation will receive the massive economic, political and military support from the world. It just so happens that the company I am invested in, GKP, is right in the middle of this shift in power.

Health and Happiness and PDYOR,
hemi

[Petrovale]

Hemi, thanks for your historical perspective on GKP. According to my barber, who is a Kurd, Bagdad and Teheran will have to surrender quite soon. I hope the presence of major O&G cos. will contribute to a better future for those people. They have been beaten up by too many regimes for too many years.

[Petrovale]

A tense situation building...

http://www.bloomberg.com/news/2012-02-02...-says.html

[Petrovale]

Sale of Akri-B or entire Shaikan block?

Gulf Keystone is pleased to announce that it has appointed Strand Hanson Limited and Perella Weinberg Partners UK LLP as Joint Corporate Advisers with immediate effect.

Working alongside Strand Hanson, Perella Weinberg Partners will be jointly responsible for coordination of and advice on the sale of the Company's 20 per cent working interest in the Akri-Bijeel block in the Kurdistan Region of Iraq, which is part of the Company's Forward Strategy announced on 14 September 2011.

[admin]

Thanks for this, Petro. Interesting development

[Petrovale]

GKP -23 %, a solid correction...

Stocks linked to Iraqi oil stuck in the political mire:

http://www.independent.co.uk/news/busine...37895.html

[admin]

Gulf Keystone board strikes gold
Posted by Paul Murphy on Mar 22 08:04.

Funny company, GKP.

The latest executive remuneration scheme seems to have been fashioned so as to encourage takeover speculation amongst the hoards of retail investors who follow this Kurdistan oil play.

Exit Event Awards

The Remuneration Committee has recommended that the Company makes cash settled awards to certain Executive Directors and employees conditional on the occurrence of an Exit Event (as defined below) (“Exit Event Awards”), up to a maximum amount equivalent to the value of 10,000,000 common shares of USD0.01 each (“common shares”) at the time of an Exit Event, and that a trustee (the “Exit Event Trustee”) be appointed to hold and, subject to the occurrence of an Exit Event, to sell sufficient common shares to satisfy the Exit Event Awards.

The wheeze now involves creating an exit pot worth up to £25m (at today’s share price) in the event of a sale of the company or a majority of its assets. There’s a plan to appoint someone to keep an eye on this pot — an “Exit Event Trustee.”

This is on top of the regular executive bonus scheme, which pays out up to another £25m of stock (at today’s prices) to top executives, led by Todd Kozel, over the next three years.

These awards are treated as related party transactions under London’s AIM rules. For details on the conflicts here, see the full statement from GKP.

Related links:
Widows and orphans, meet GKP – FT Alphaville
Christmas cancelled for GKP investors – FT Alphaville

[efi426hemi]

My 2cents on this,

I am a little skeptical about the GKP management. They are definitely in this with personal gain as their first objective as opposed to shareholder value. I don't think I would trust them with my car keys. Bottom line though, is they have literally found a super giant oil field, which I think time will show to be the second biggest world find ever. And gargantuan resource trumps management every time in my book.

In this specific situation though, this is a very good sign. There have been a number of rumours of buyout, indeed how is a company that is worth a few billion going to be able to harvest a field of this size during the 25 year lifetime of their contract. They have neither the funding nor the expertise to do this. The Kurdistan government wants the oil out of the ground as fast as possible and the only way that can happen is a super major running the show.

The management know this and this move says to me that the rumours of buyout are true and that our greedy executive are making sure they set themselves up to make the most money when it happens.

This greed just so happens to coincide with my desires, a company buyout, so in a situation that I would otherwise be upset about, this is just another sign that the company is going to be sold and before end of year imho.

Health and Happiness,
hemi

[Petrovale]

The Independent: Gulf Keystone bosses' trip to China hints at takeover deal

MARK LEFTLY SATURDAY 24 MARCH 2012
The bosses of takeover target Gulf Keystone Petroleum have visited China with an army of advisers, leading to speculation that a Far Eastern oil giant could be interested in the company.

In a court transcript from a case over the origin of Gulf Keystone's oil discoveries in northern Iraq, the company's lawyer revealed: "The business trip to China is one which, as your Lordship sees, is market sensitive ... it involves finance advisers, it involves external legal advisers, and it involves a number of counterparties in the Far East who this team is going to see."

The news emerges a day after chief executive Todd Kozel announced an "exit event" scheme, which would see the board granted significant bonuses if they sell the company or a majority of its assets.

(This info leaked via a study of the transcripts of a court hearing related to Excalibur.)