GKP Various posters ' notes from Feb presentation '

ladies and gents, TOPSCOTTY
my summary from tonight:
Algeria
some of the Algerian officials and some of the sontrach officials have been arrested therefore the Algerian asset sale will not happen anytime soon until that is cleared up

shaikan will need 6-7 development wells to firm up the structure so end of next year to fully appraise my guess on current timescales

shaikan 2 will be drilled with the same rig though design will incorporate the increased oil and gas pressures previously not anticipated

work over rig being implemented to target the zone that produced 5-8,000 barrels (note this was choked) will produce 10,000 bbls a day from one zone this will be sold into the local market at 50% discount to Brent...i.e. approx $35 dollars a barrel..(Not bad when the extraction costs $2-4 dollars!!)

sheik adi possible one structure no surface erosion and no oil seeps...as mentioned before GKP now take the view that with no seeps the oil is sealed in and the quality of the oil will be better than shaikan same as MOls structure I assume that the api will not vary as much as the shaikan structure so therefore we can produce from more than one zone and therefore greatly increase daily production

1 billion barrel potential....

ETAMIC were directed to GKP by the KRG as GKP and ETAMIC were worried about monetisation/protection issues also the fund had no operator at that stage so it was the perfect tie up...GKP were also worried that the oil from shaikan had migrated into ETAMICS blocks so they partnered for this reason i.e. if no oil in shaikan then definitely migration to their blocks

ETAMIC is listed offshore in the Caribbean by one individual....
He will be creating an oil and gas investment fund and the prospectus will be issued shortly to investors...this individual will then manage the fund proceeds of the above fund their 50% this news is imminent I think

ber bahr operator genel not confirmed on spud date yet though targeting same multiple reservoirs as shaikan pencilled in for 2010 currently

refining the oil was mentioned as the oil currently pumped goes thru the refinery in Kirkuk..a brand new refinery has opened in Erbil which has capacity for 50,0000 bopd so we would truck to their also existing refineries that have capacity

Bijeel 1 tight hole though no issues or hold ups to date GKP in daily contact with them over drilling tests etc etc the size of this block is massive with many shaikan structures situated on it..any successful drill will have significant material impact though we only have 20%

I took it that there will be a placing with institutions though there were many issues to consider around this that affect this decision...I took it that this was not an issue just deciding what was best for the company has over 40% of shares held by directors and they don’t want to give anything away...

my final take is GKP will not be bought out anytime soon as there’s too much risk still as further
appraisal work is necessary however the majors will be happy to pay the premium for a substantially de-risked acreage....I’ve set my timeline for end of next year with a share price of £5 + minimum definitely a share to hold so I for one will not be selling a single share till then and continue to add as funds become available..time for bed


MAKEMAGIC
Thank you to all who have provided a summary of tonights presentation, for what its worth this I furiously scribbled the following:-
1. Start of much bigger story.
2. Algeria - ongoing - some progress - 2 weeks ago - arrests made!
3. Leading E&P in Kurdistan.
4. Momentum to achieve 3 (above).
5. Start of life cycle.
6. Principle purpose to build resources via Sh. and other licenses.
7. Why Kurdistan? On trend with other Iraq/Iran oilfields.
8. Frontier area and high prospectivity 1:2 and 1:3 chance of success.
9. Trend down to Miran and visibility on surface.
10. Legal issues: Maliki - rights s/be observed - Shahrastani to look at. Iraq MP applied same objection to Baghdad as Shahrastani did to KRG!
11. Largest discovery in world last year - possibly last 10/20 years.
12. 5 tests - 20,000 bopd - restricted (testing) - output could be a lot higher.
13. Very large structure - difficult to measure. (yippee)
14. Seismic programme.
15. Cost - $1-$3 to develop.
16. Different types of oil and gas encountered. Showed slide with two jars of different oil - one light/one dark (both full!)
17. How big? Looked at Sh. with JK1 - water level 2230m - could be full to spill so could be very large OIP.
18. If all areas in communication - could be all oil!
19. 6-7 wells envisaged on Sh.
20 EWT - high permabilities - up to 13 Darcies i.e. better production (with analogy of bottles of water with stones in one and a sponge in the other).
21.Expect $35 for locally sold oil.
22. SA next to Sh. - poss. they join up - i.e. one structure. Oil from day one from Sh - but not SA - but could be better quality oil. Expect to drill 2010. Prospectivity Crut. to Permian.
23. Acquired SA in case Sh dry.
24. BerBahr - similar to SA/Sh. on trend. Genel to decide drilling. Prospectivity as Sh.
25. AB - MOL - Sh lookalikes on this block - may have drilled in wrong place - will move to where there is more prospectivity.
26. Work programme - to prove maximum OIP.
27. Sh 2 depends on Sh 3.
28. Lots of news this year.
29. Funding - discussing with advisors - news in near future.
30. Question time - ETAMIC - registered offshore Caribbean. Prospectus being prepared - one individual managing fund. TK has met ETAMIC - EA hasn't. ETAMIC Fund should be launched this year - "I hope so anyway" (or words to that effect)!
31. Used China for logging - Rig from US.
32. ETAMIC - no problems with ICG (!)
33. New refinery o/side Erbil - capacity up to 50,000.
34. JG introduced DGA - who have gained further work in Kurdistan as a result.
35. 13bn on DGA report - plus unreported areas.
36. Infinite pool of oil. (at least I think thats what he said!)
Apologies if I misheard anything and the points I missed - the sound system wasn't perfect and I'm no secretary.
Post presentation vibes - TK got lucky and has found one almighty oil well. What will he do with it - your guess is as good as mine. GKP is my largest holding by some distance - I'm not selling but then again I'm not buying either. One reason and one reason only - ETAMIC - it just won't go away. GL everyone.


Nice 2 c u
Ok,
This was an interesting evening and couldn't believe some of the big names from iii were at the presentation tonight :-)

Maud, the fish & chips were lovely.

THE GOOD
Good presentation
Biggest oil find in last 20 years and has the potential to be bigger
Felt GKP are holding back big time.
Big prospects for other wells.
Looking to produce and have already calculated $38 barrel to Kurd region until exports can start.
Ewan (CFO) is very bullish that funding is NOT an issue.
Looking to get new PR firm as GKP are unhappy with the share price also

THE BAD
ETAMIC - still very woolly. ETAMIC is only one person and the CFO has never met them!!!! TK has....Why?
ETAMIC introduced to GKP by the KRG...is this anything to be worried about??
Political risk - we all know this. Still relevant but getting better all the time. The Chinese are in Addax so really.......who's gonna mess with them at the moment?

The UGLY
I didn't quite catch the full explanation but, 2 guys from the sale of Algeria assets have been arrested for some reason so count this out of the equation for the next 6 months at least.

In the after speech drinks (and fish & chips) we encountered some interesting people.
Check out (Google) Robert Waterhouse - oil.
He was very upbeat about GKP however, most of his recommendations were on SEY.

He said that he thought GKP had the potential for being around £100 a share however, it would never get there because it will get sold before that.

Very interesting evening and worth the free drinks and food.

6-9 Months at least of hanging on for the biggy.
Good luck and thanks for the good company tonight...you know who you are.

Oh and COME ON YOU LEEDS for tomorrow :-)

JACK DIAMONDS

Dhatrader,

As you say....

"This is just the start of our story"..............

Tonights presentation confirmed to me :

1. No problems in funding, it's just the way it is structured

2. ETAMIC registered in Carribean. To set up fund this year. I heard Ewen say that "Directors & Management have no internal involvement with ETAMIC" & I believe him so bang go the conspiracies.

3. All 4 acerage " ON TREND" . Difficult to evaluate true potential. I would go as far as saying PI should throw away their calculations for Shaikan.

4. Confident that political issues will be sorted.

5. Production as early as May 2010

6. "2010 will be news driven" with the work programme that is in place


Overall more than happy with investment

Got the same impression Psyclops! The company is definitely on a path to drilling all blocks unless a blockbuster offer comes in! Ewen was quite clear that appraising and proving up reserves is the key! But long-term even he said they will sell-out. I asked him that direct question:

'GKP is going to get bought out right? you are here to prove reserves, you are not built to become an operator as the field is too big for you'

He agreed. So all in all:

- AB getting drilled now and mountain structures around drill-site makes their view that AB might hold a Shaiken not in this well but the block overall. Shaiken he said had 160km2 of oilin 283m2 block. AB is an 889km2 block.

- Early production facility up and running by April-end. 10000bbl/day into local market at 50% of spot price.
- As soon as AB finished SH2 will start. So hopefully May and then Shaiken 3 if needed.
- New rig in July for AB.

End of 2010:

- AB1 drilled
- SH 1 and 2 drilled. 3 maybe started
- SA1 drilled
- Early production system up and running.
- Oil contracts shld be in place

Story starting to come together right? We all should wait for the year to playout. Value of GKP will be in excess of a current offer if these blocks get proved up! If i was Todd i would do the same!

P.S We talked about CNN. He said Todd is a cheeky fellow and enjoyed the moment. Dont take that interview seriously.

I hope he doesnt take a low-ball offer seriously either! Lets prove up the block and get that 2nd rig in!

PSYCLOPS
My two cents worth from what I managed to get out of Ewan after the masses had moved on...

- Opened with the line "our goal is to be the leading E&P company in Kurdistan
- Funding should be announced sooner rather than later
- They are reviewing their PR firm given the lack of II buying on the open market, but tempered it by saying they are considered one of the best in the business for FTSE E&P Co's
- They are considering a main market listing as part of their longer term strategy
- Been covered already but: ETAMIC is one individual and will not have any negative impact on the contract ratifications, he is looking at establishing it as a private investment fund for Kurdistan, this will fund the forthcoming work from their side
- In the event that ETAMIC cannot fund their share of costs going forward, GKP have the right to take greater ownership of the GKPI vehicle.

One of the major points I took from this is that the BoD are looking more and more longer term at establishing a bona fide production capacity to take this forward without the need of a JV or partner to do this, Ewan stated, a lot can change in a few months and since Todd did the CNN interview the view is certainly changing. He also said it would be very difficult for a hostile bid to succeed as ~40% of the shares are owned by 4 /5 people who would side with the BoD reccommendation.

DHATRADER

All,

Went to the presentation this evening, and was quite informative to hear Ewen thoughts. Got to spend some quality time with him. I will address the key points. I finally met a PI in Gramcho, and i knew it was him as soon as the technical reservoir questions started coming from the man ;-)........was nice meeting you mate! Most of the reservoir points i will get Gramcho to post as he is the expert.

1) Funding:

Ewen said funding would not be a problem but they continue to assess their options. Algeria will not fund the program as politics are quite tough and few Sonatrach folk just got arrested, further delaying that process. GKP never thought that was an option. We have a payment of 15million i believe as per block extension rights etc. However, no costs will be spent on development, ie drilling etc.

What about offering shareholders to partake in fundraising. Ewen was quite clear that the process is way too long and offer for shareholders will not happen. However, funding is still a mystery and thats the way GKP like it.

2) Oil Law: Not much comments but most of the stuff is in the news. Good progress is being made. Ewen did make a parting shot at the government. How can you award contracts in the South when you havent got an overall oil-law. its the same thing as the KRG he said. Confident this will get honoured

3) ETAMIC:

Obviously this was going to get asked and it surely did by many people. Ewen did say it was 1 person and they are registered in some island. The specific firm plans to open a fund with special investors. The capital put by those investors will cover their share of the costs.

So why were they brought to the party?
According to the geology in the region, Shaiken had oil-seeps all the way to the surface. That doesnt necessarily mean thats a good thing. It can often mean that no seal exists and oil has seeped of somewhere else. So it could have been a possibility the oil had seeped to SA,the adjacent block.

In addition, there was clear indication that both reservoirs were connected and hence monetisation and fighting of reserves could get ugly. Therefore KRG put them in touch with ETAMIC who did the deal with GKP. This was supposedly done pre-spud but paperwork takes a long time.

This doesnt mean SA hasnt got oil. What they obviously didnt realise is the size of the beast and that SA is linked to Shaiken.

The oil-spill over question was asked by Gramcho and Ewen and the team are quite confident that it does exist.........so 13billion barrels here we come! Anyways, i will let the expert deal with this one.

4) Takeover

I asked him what would tempt you for takeover and what is the gameplan. The reality is that these directors all hold a couple of million shares. This share should make them millionaires. If they play it right, they should be even richer. They wont get a chance like this again in their life. Simply there is no other area this oil rich on our planet.

To realise full-value they need to drill appraisal wells for Shaiken, do SA, AB etc. It would give the buyer a clear value on the reserves. Ultimately when you prove the reserves, it removes uncertainty and you get real value for your company. So in my view GKP is up for sale but only after appraisal and firm numbers against each block. However, if a big offer came they would consider. This is Ewen's words and not mine!

Favourite quotes:

' Drilling this well was like drilling a pipe into an infinite pool of oil........we just never hit water'

While in AB we have a small share, they have been looking at physical structure and he said the following during the presentation:

'If you look at the hills behind the AB drill-site, we believe the structures there are like Shaikan and even bigger'

Finally:

'This is just the start of our story'

Dhatraders view: Buy or Hold.........dont sell unless circumstances require you too.

Regards,

AMARETTO
Amaretto - 2 Feb'10 - 21:39 - 69002 of 69005


Didn't stay for the free booze and canapes as there were just too many people present to successfully corner Ewan.

Ewan kicked off with the stated aim of GKP in the near term, that being to verify the amount of oil in place. He also said that despite the rapid rise in SP recently, it was 'only just the beginning'.

He then gave a brief synopsis on how he saw the state of play in Kurdistan and it's relationship with Baghdad. He made particular reference to Shakristani (can't remember the spelling) and his recent comments and also mentioned an MP from the Iraqi parliament taking the Iraqi government to court over their awarding of oil contracts, which given the lack of an oil law means the contracts awarded to the majors in Iraq are no more 'legal' than the contacts awarded by the KRG. Essentially he expects everything to be resolved soon and the current contracts to be honoured.

He talked a lot about Shaiken and didn't add anything new but clarified just how much oil he expects to eventually be in place (a la Todd's CNN interview). He expects there to eventually be 6-7 wells for Shaiken alone but Shaiken-2 will be amongst the most important as this will give a much clearer idea as to the actual size.

He also mentioned the extended well test. He expects to produce about 10,000 bpd and this will be trucked out. Given it'll only be sold locally they only expect to receive approx 50% of global oil price. Refining facilities in country will be able to handle everything sent their way.

Finally, onto funding. He was a bit elusive on this subject but cutting a long story short I got the impression there was plenty of cash available but they wanted to decide in 'the near future what kind of company GKP was going to be' (direct quote).

That's about all I can remember and i'm sure others will post more detail. Overall though, nothing significantly new but the overall vibe was of extreme confidence. They're just doing things in their own time and it's all about sinking as many holes as possible and proving reserves. It's just how to maximise this task so as to give best shareholder return. All in all great stuff but it'll take a while (12 months min according to the charts on his presentation) assuming we don't get gobbled up by then.
________________________________________