GKP Zengas Nov 2009 ' Events and comparisons '

I know there's many GKP investors/followers on this board, a few who are probably anxious with the sharp drop in the SP since the news was released. I think we all expected a slight retrace with profit taking, but not something this significant. So I thought I'd share this comforting post from the legendary Zengas(on ADVFN) of which I've taken from the Kurdistan Oil E & P board (thanks to mrjugz). In the post he refers to EVO's negative broker note, let me know if you haven't read it and I'll try dig it up.

ZENGAS - 25 Nov'09 - 20:08 - 50288 of 50292

Re EVO

All i can say is Evos coverage is lacking, but reasons for that are obvious. They cover SEY and are SEYs house broker and unlikely to want to see potential investors running elsewhere. Their job is to win investors for their primary customers. They are also market makers and just as likely to want to be long or short a stock and know that their comments travel on the newwires and press. For starters they have issued a price target of 6p on Sterling which now sits at 4p.

SEY reserves now 1.2 million barrels (much less than what GKP have for sale in Algeria - possibly 50 X that figure).

After the USA asset Sey gained just $6m more after all debt cleared.

Current shares in issue 7.13 billion @ 4p = m/cap of 285m pounds.
Cash $67m + $6m surplus from sale of USA = $73m/44m pounds.

So SEY valuation, minus cash = 241m pounds - EVO are giving SEY a price target PRE DRILL of Sangaw at 6p - ie 427m pounds. 44m pounds of that is cash so they are attributing a value of 383m pounds. On top of that is the upcoming 2 for 9 rights at 1.3p to raise 20m pounds which might give a total of around 8 billion shares which at 6p = 480m pounds including a possible 64m pounds cash element = net value of 420m (taking out the cash element) for Sangaw pre drill and before ANY oil is discovered.

Yet EVO are trying to tell us that GKP are worth around 90p/share or 439m pounds despite drilling one of the most promising discoveries todate - multiple reservoirs and an upgrade beyond the original DGA report and tests on only 30% of our net pay giving a potential 30,000 boepd.

At the same time for GKP - they are some 8 months ahead of SEYs operations.

Again look at it - Evo attribute 6p pre drill to Sangaw and when you strip out their cash would equal 420m pounds.

GKP with such a mammoth discovery - EVO are trying to tell us GKP is worth just 439m pounds - some 19m pounds more than SEY yet SEY haven't even spudded and have it all to do. Presumably then tell us that SEY will be worth 10-12p+ (their implying it in their coverage) on any discovery.


Likewise, SEY will only have one well drilled at Sangaw and will be in no greater position than GKP to give any greater info than GKP have done, other than to follow up with further drilling. I don't doubt SEYs enormous potential but they have it do and likewise will also have to go beyond the 1 well stage.

EVO say there will be no action at GKP until mid next year. WRONG !

GKPs Akri-Bijeel will be possibly spudding at the same time as Sangaw - (Akri due to spud next month). On top of that, despite the lower stake, the recent reports on the MOL analyst coverage, suggest that potentially there could be far greater oil in Akri-Bijeel than Shaikan (multiple prospects/oil seeps and roughly 3 times the area of Shaikan).

The Shaikan well test will commence in about mid January (where might the test oil go ?). Only 30% of the net pay so far is tested with estimates of 30,000 boepd so far - are EVO so naive to suggest we're worth only 19m pounds more than SEYs pre spud target price for Sangaw.

I've left out GKPs sale of Algeria - but this is expected some time after January/in the new year. Rumoured that there are 3 interested parties/dd.
What figure is anyones guess, - $50m?, $100m?, $125m+ ?

The production facilities are to be in place at Shaikan 1 for April and still at least likely to see production sold locally including from testing ops.

Also likely that some results from Akri-bijeel could emerge in late February/March.

The political situation is no different now than it was 6 months ago and will be worked on. It's something that all 30+ international companies face including SEY so not unique to GKP. GKPs former bidder 2 years ago has been upping its stake in the Kurdish explorer DNO last week.

If the shorters and others that shout repetive posts think this is worth a lot less, then i think their targetting the wrong company. Those that sold on EVO reccs and the constant barrage of scare mongering posts at least provided me (and i'm sure others) with a fantastic opportunity to acquire more and as such i added 100k more today after such astounding news delivered two days ago. Others should read Dalesmans posts.

What we have here is potentially a 250k+ boepd field in the making when you consider flow rates and the implied size of the discovery. It's not unreasonable to think that over the 4 blocks, potentially GKP may be a partner in 500k+ bopd production. What GKP have already announced makes them predatory bid material. Presentations and TKs TV appearance in the coming days will send that message out.