GKP Post 2012

I just attended the NY investor summit, so here’s a brief summary of what JG said. Presentation seemed to be same as for LSE last week but some very interesting snippets. Apologies in advance as a lot of scribbles (feel free to post on iii if of interest as trying to sort my login out there), and usual disclosures about information and how it should be treated apply (this is a brief summary only)

- JG opened by saying this would be the ‘best story of the day’. He explained how the company had grown from almost $40m in value to nearly $4bn in a few years.

- He gave the current figures for oil in all blocks and said there is PLENTY of upside left. He said that he believes current figures (for Shaikan in particular) are conservative. He later mentioned on 2 separate occasions they are confident Shaikan is full to spill and a figure of 18bn barrels is likely.

- As heard before, they have tested all the good stuff and are now testing all the ‘bad stuff’ to see what is really there. He mentioned one part that was a pokey little area and which produced 5,000bpd

- SH-1 and SH-3 are hooked up for production, have expanded well test facilities. SH-4 is the best so far, they are still testing.

- Sheikh Adi they believe there is a lot more oil on the other side of the fault. SH-7 will be the last of the Shaikan appraisal wells. ALL reservoirs and intervals (in SH) have been full of oil and gas. No dry holes, not even in the intervals. They are looking at 300m (1,000ft of net pay which is huge amount).

- 122km pipeline to start this summer. $170mn costs, will finish mid 2013.

- After SH-6 TD, GKP has 30 days to submit development plan to KRG in July / August this year. The clock starts then (on the 30 year production front).

- He believes they have a 10 year plateau of producing between 400k and 600k bpd. Shaikan could be producing for 80 to 100 years so they will leave a lot of oil in the ground.

- **He says according to KRG website BIRs are to be sold to KNOC, the Koreans (note I believe he was referring specifically to Shaikan here, which is why I was surprised).

- Every piece of news on Shaikan good so far, not limited by water point to date. Testing on wells limited to 10,000bpd but more potential.

- cash flow to finance everything. Project insensitive to Capex / Opex issues.

- No security concerns. 5 years in Kurd, no incident. Erbil like a mini Dubai, boom town.

- Shaikan lots of directional drilling. 1mbpd AVAILABLE in Kirkuk to Ceyhan pipeline. They will have capacity for 400,000bpd but could ‘twin’ the pipeline to expand this.

- More on figures. BB – 5bn to 10bn expected, SA – 3bn to 6bn, SH 18bn, AB – MID 20s. (yes, big number). Said if they don’t get good price for AB share (process to start this week) then they would hang on as could be v profitable.

- DGA report would not be until SH-5 complete so few months away. Next report likely to be from ERC Equapoise(?).

- Still on course for FTSE main listing (would currently be number 95).

- Asked whether they plan to fully develop Shaikan or sell off: they are continuing with their full plan “BUT WHEN THEY WANT TO BUY US ( I understood meaning Shaikan), they’re going to buy us. Many majors.. [will be interested]“.

Please don’t take everything word for word as this is a broad summary. My impression is they are conituning to do all possible to prove up the oil, increase production and create more attractive assets. However, at some stage, a big player will in all probability take a piece(s) off their hands.

He said what they do know of Shaikan so far is worth about double the current share price….

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