Just a quick one here.
News doing the rounds here at the moment is to expect a great leap forward within this sector., as the Global crisis fades away for most of the Western world the oil price is expected to climb over the coming months. Tower,gkp,mta,char,circle,des are all (for their own individual reasons)expected to increase as the recession becomes a distant memory.
The arrival of Shell via the signing of the 20 year service contract is yet another indicator that Iraq/Kurdistan are beginning to settle down check out the link below.
http://www.zawya.com/Story.cfm/sidZAWYA20100117134910/Iraq%20and%20Shell%20Consortium%20Sign%20Majnoon%20Oilfield%20Contract
The more the market sees of the above kind of news/link the more GKP will increase in value.It is whispered here that GKPs’ value will eventually have to catch up with the DGA report significantly undervalued here at the moment but i expect that there’s a big correction coming on this stock. It is as we speak being re-rated in house here and i can tell you that there are many Houses/Brokerages carrying out further analysis factoring in the recent good news from the DGA expect to hear re-ratings over the next few weeks with new price targets upped.
Daniel
Dan,
I tend to agree with your appraisal of how the MM will work this one (although I also think that their role is often exaggerated to cover up poor investment decisions by PI’s)
It does tend to lead back to a question as to how on earth you can value this company. the discovery in Shaikan is just too big. If you take other transactions in the area, the Sinopec purchase of Addax is one example, where the purchase price was reportedly around $5/barrel.
If you do the maths on that one and assume 20bn barrels (overly optimistic, but completely ignoring all other blocks) you get a stupendous £128/share…which btw is a completely unrealistic value IMO, suggesting that Sinopec paid significantly over the odds for Addax if the purchase price were solely based upon oil reserves.
The whole GKP valuation will be difficult because GKP have no real assets outside of Algeria and the rights of the blocks. Substantial investment will be needed to actually get the oil to market as well as the political impasse being broken with regards to contracts and exports.
Dan has reckoned that a good opening bid would be around the £3-£5 level, although I would hope that it is in the tens of pounds myself 🙂
GKP do not have a permission from the Iraq goverment to undertake any exploration work in this area, this liecence as been issued by the KRG, this may be ratified by Iraq goverment during the forthcoming elections, it also may not.
At the end of the day it really doesn’t matter how much oil is in the ground or how many independant companies survey it, if you don’t own the rights to it then it isn’t coming out.
Good luck all. DB
Spot on Diamondbob. Latest news does suggest that central government recognise the legal entitlement to the oil but I think they are a little sensitive over payment terms as they beleive these to be generous. If they can sort this out, then we have a real winner.
Cheers
In either case the tone has changed from ‘These contracts are illegal’ to ‘Lets sit down and discuss’
Certainly a softening of position IMO.
I agree there as been a more open approach to the contract problem and said payments for the oil recovered, if this can be ratified and agreed upon this this share will move faster than you can buy it at a fair price. If you have ever tried to SELL this share on a spike then you’ll know what I mean. If you try BUYING it on release of contact news then the markets will have you locked out until the big boys have had their fill. You may end up paying £1.50 quicker than Mr Brown can tax my forthcoming massive Barclays bonus!!!
As ever, good luck all. BD
Good read as always,many thanks.
Dan,
Going of topic i am a long term holder of GCM,any rumours circulating the floors re recent price movement ,any views much appreciated.
many thanks.
I’ll ask around for you over the next few days.
Daniel
Many thanks,top man.
Dan,
Another Oil stock gaining more interest from PI investors is RRL Range Resources… Have you heard any comments ont he floor regarding this..
Cheers
S
Yes it has your quite right.
I shall make some enquires for you.
Daniel
Hi Dan,
thanks for all the GKP updates!
Have you heard anything interesting on the Algeria assetts for sale?
When do you believe funding details will be released?