GKP Daeyeon 7 Feb ' Valuation '

We don't know how many recoverable barrels there are. Could be 15%, could be 20%, could be 25%, could be 30%, could be 35%, could be 40%.
Extended testing will give us a better idea.

At the moment, just over 1B barrels are attributed to GKP, based on the P50 of 4.2B.

So, if the recovery rates are as follows, we can see my guess as to how much goes to GKP. For arguments sake, I'll use 25.5% as GKP'S share of the drill.

1.071 Billion x 15% recovery rate = 160.650.000 barrels to GKP.
1.071 x 20% = 214.2M
1.071 x 25% = 267.75M
1.071 x 30% = 321.3M
1.071 x 35% = 374.85M
1.071 x 40% = 428.4M

Now, if S1 is filled to spill......

Being a long term investor, I'm looking forward to the program ahead, testing results at Shaikan, AB, S2, S3, SA, BB, commencement of production, and hopefully satisfactory contract resolutions.

These are just my views of course. I'd advise people to look at Gramacho's excellent post from the other day.

I still feel these are early days for GKP. If in a year or 18 months, billions more barrels are proved up, via Shaikan 1,2,3 and the other licences (two at 40% excites me).

Just to dream, imagine P1 at S1 is 13B (where's the water?), 3.315B to GKP?

Let's say a very pessimistic value of $2 per barrel. One must be convervative in estimates whilst investing, margin of safety and all that.

3.315B X $2 = $6.63B.

$6.63B X .6 (apprx. exchange rate) = 3.978B quid.

Divide that by (pessimistically diluted to 570M shares for funding)

we have 6.97 pounds per share, but valuing the oil is difficult as it'll only be worth what someone is prepared to pay for it. National oil companies I'd imagine would be most likely to pay more, due to the less important placed on profit and more emphasis placed on supply. This week I really need to look into historical cases of oil company take overs. Addax is my starting point, thanks to millymog for the info the other day. Sinopec were prepared to buy Addax, the Chinese has written off a lot of Iraqi debt. Will Iraq upset the Chinese? I imagine plenty is going on behind the scenes.

Furthermore, although not directly related to oil in the region, I know quite a lot about Korean investment in the area, with the likes of SK Energy, UI Energy Corp, Samchully, Daesung Industrial, KNOC, Ssangyong Engineering, Doosan Construction, Kukdong Construction, and UIENC Anheung Development among others happy to invest in Kurdistan specifically. The korean work colleagues consider Kurdistan to be safer than further south in Iraq.

Although there are many political problems to overcome, I feel secure knowing that GKP has the oil, whereas SEY and DES for example doesn't, which makes those plays decidedly more risky. Furthermore SEY is expensive at the mo imo, and the extraction costs down by the Falklands would worry me, even if oil is found.

The potential upside, as alluded to by many on the board, DGA and the GKP management excites me. Lots of news to come.

A target price of 2 pounds 17 buys the apartment I'm currently renting. Hopefully I'll make the wife happy.

Actually, buying at 11.94p felt like a bigger risk to me, as they had no oil. Buying at 80p doesn't worry me in the long term.

Good luck all.