GKP Dalesman 4 Feb ' Following Presentation '

Ok folk’s time for a stock market cliché.Para phrasing Warren Buffet – the stock market is a device to transfer wealth from the impatient to the patient.

Isn’t it just!To any punter out there that sold today I say to you many thanks, for I topped up again at 83.44pTo those who got stopped out – my commiserations – but again thanks – its time for you to learn what playing in the E&P sector is all about. I promise that I will look after and nurture your shares for you :0)And I know that I am not the only one doing so!

Unfortunately the day job rather got in the way of me being present at the presentation the other night but I have had excellent first hand reports both off the boards and on. To all eloquent posters here and on other boards again I say many thanks.Lets just mull over what we know and what we have learnt.Recently the shorters have had little material to work on. The elusive e ETAMIC angle has been a rich seem for them to work with. However the presentation did by all accounts, clarify some of the mysteries surrounding ETAMIC.

Gone are most conspiracy theories.1) We learn that ETAMIC is actually one man.2) That the KRG introduced ETAMIC to GKP (hugely important!)3) That if ETAMIC cannot raise their contribution to the Sheikh Adi and BB drills, GKP will obtain a greater percentage of the pie. And what a pie it is!4) We learn that there is no problem whatsoever with the validity / credibility / legality of the ETAMIC involvement.Given the above, the risk of ETAMIC being a ‘wrong un’ is much reduced. The KRG wants to be seen as squeaky-clean. Just look at the way they reacted to the DNO affair. The fact that ETAMIC was brought to GKP by the KRG is immensely important in my book not to say comforting and strengthens the case that all is well.The fact revealed in the presentation that any funding shortfall would result in a bigger slice of the pie for GKP also de-risks the situation. It is clear to me that GKP have reviewed the risks relating to going into partnership with ETAMIC – all the bases seem to have been covered and I am now much more comfortable with the idea of ETAMIC than I have been in the past.

The jigsaw pieces are being revealed and they seem to fit very nicely into the picture.The reasoning above – that insurance has been taken out in case of a default by ETAMIC, also fits nicely with the impression made by Ewan Ainsworth as a competent person.As the FD he will have had a hand in drawing up the contract between GKP and ETAMIC. Everything I have learnt about the man from a myriad of posters points to a conclusion that he is an astute operator. My spies tell me that he was completely at home with the partnership between ETAMIC and GKP. That tells me that he believes that most of the bases have indeed been covered.A new bit of information – at least to me – was that GKP thought that Shaikan might be dry and that the oil may have migrated into Sheikh Adi. Now, we know that this was not the case, but it does explain why SA was so attractive to GKP.

Gramalcho’s recent excellent post pointing out that the deal made with ETAMIC may not have been ‘as it turned out’ as good thing as we first thought, knowing what we now know out OIP, misses this point.We now know that the oil water contact is very low and that there is a possibility that Shaikan is filled to spill and that in all probability the Shaikan reservoir continues into SA. IMHO the benefits of acquiring SA still seem to me to be very much intact. Particularly when we learn that GKP feared the worst on the Shaikan drill.Indeed it seems to me to be excellent strategic thinking on the part of GKP to go for SA and I expect that this level of strategic thinking also applies to the contracts governing the partnership between GKP and ETAMIC – all over seen by the KRG, who I repeat, introduced ETAMIC and therefore in effect vouched for the veracity of ETAMIC as an entity.

So we turn to the second shorters favourite cry– funding issues. Here I am relying on a few individuals who cornered EA after the presentation. I have to say that what I am going put forward comes down to gut feeling – but the guts in question are hugely experienced and are shrewd operators in the market.

It is their impression that Ewan:
1. Was not in the least worried about funding
2. That funding could come sooner rather than later if indeed it is needed
3. And this is the biggy – funding may not even be needed and events will develop which negate the need for funding at all!

Now here there is a great deal of reading between the lines going on – but the readers are all people that I trust and respect.No 1 above is therefore, a personal viewpoint made by a player at the conference. It is however a viewpoint shared by almost every poster who has reported on these boards from the conference. Indeed the impression that I have gained, albeit at a considerable distance, is that number 1 in the funding argument above is a given. EW is not worried about finance – and he is the FD of the company!No 2 is, as I understand it a reported fact – a morsel dropped in by EA to the audience.No 3 is the wildcard and is absolute speculation. Is TO really that close? I have one report that GKP may well indeed not be around in 6 months time. If so no wonder the FD is not worried about funding.Now I’m happy to have this speculation trodden all over by posters – and yet to me there may well be some mileage in it and I for one am not ruling this out.

The people who have reported to me from the conference are smart cookies with substantial funds invested. I know that in one case his investment went up again today!The rest of the info is a re-hash of what we already know. However from all reportsIt gives more credence to the high-end valuations and for me the story just got better.

But then, ‘I’m just a singer in a rock and roll band!’ what do I know!That’s Moody Blues Bob! :0)

From one poster to you all my friends – I for one have put my money firmly where my mouth is.

Just don’t tell Mrs D!

Please DYOR