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William Sirett
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I am a private investor based in Hong Kong investing my own money in the oil and gas industry. I have a background in cryptography/security but work in the financial markets in Asia. I write notes on oil and gas companies as a result of my own research in prospective investments and current... More
  • MOL News To Impact GKP 2P Reserves 2 comments
    Apr 20, 2014 6:44 AM | about stocks: GUKYF

    On the 13th March 2014 Gulf Keystone Petroleum Ltd (GKP, OTCPK:GUKYF) published its first Competent Persons Report (CPR) detailing the audited reserves across its four blocks (ir1.euroinvestor.com/asp/ir/GulfKeystone...). The overall 2P number disappointed the market and the stock has since sold off.

    On the same day the CPR was released the operator of one of GKP's blocks - MOL - released this news release: ir.mol.hu/en/early-production-has-starte.../

    They stated the following:

    Reserve potential estimates relate to Akri-Bijeel block in the 'Third-Party Audit' material published today by Gulf Keystone Petroleum Ltd., with a cut-off date of 31 December 2013, is very conservative, does not calculate with the latest positive results and is significantly lower than the current best estimate of the Operator.

    The conservative numbers in question were GKP's gross oil in place (STOIIP) estimate in its recent CPR of the Akri-Bijeel and Bakrman discoveries, both on the Akri-Bijeel bock, at 43mmboe and 3 mmboe respectively. MOL clearly felt these numbers significantly underestimated the asset and will release its reserve update at the end of April.

    MOL is undertaking a considerable development at both discoveries, both of which are declared commercial. I believe the upgrade of these reserves at the end of this month will be an important catalyst for GKP. Upward revision will demonstrate that GKP's 2P numbers are a work in progress and investor can look forward to significant upgrades in the near-term and medium future.

    Current 2P reserves for GKP stand at 163mmboe. There is a lot yet to be known about GKP's assets in the Kurdish region of Iraq. These massive oil bearing structures will take years to fully exploit. Management assert that the recent 2P number was released soley to enable the company's recent movement from the AIM listing to the main market and recently enable Gulf to tap the bond market for $250mln. Gulf maintain that the number is an ultra-conservative baseline and that's its their focus to work with the 3rd party auditor to prove up the assets and improve 2P reserves along with production.

    Disclosure: I am long GUKYF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I am long Gulf Keystone Petroleum (GKP)

    Themes: long-ideas Stocks: GUKYF
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  • William Sirett
    , contributor
    Comments (47) | Send Message
     
    Author’s reply » From my estimates the reserve addition to GKP could be between 12-25mmboe 2P and 25-50mmboe 2C. Lets see what MOL release this afternoon...
    23 Apr, 11:28 PM Reply Like
  • William Sirett
    , contributor
    Comments (47) | Send Message
     
    Author’s reply » The MOL AGM is the 24th but there is no statement promising details of the FDP today. MOL have stated by the End of April so perhaps a few more days to wait.
    24 Apr, 05:56 AM Reply Like
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