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Gulf Keystone Petroleum Ltd LSE:GKP London Ordinary Share BMG4209G2077 COM SHS USD1.00 (DI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 189.00 187.20 188.80 - 0.00 00:00:00
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Oil & Gas Producers 155.9 32.6 14.5 13.6 398

Gulf Keystone Petroleum Share Discussion Threads

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DateSubjectAuthorDiscuss
14/9/2018
10:06
THE CENTRAL GOVERNMENT COLLECTS REVENUES AND TAXES AND DISTRIBUTES THE RECEIPTS AS THE BUDGET IN RATIO TO POPULATION IRAQ 83% KURDISTAN 17%
tess_tickle
14/9/2018
09:57
you are totally discredited and exposed
stansmith3
14/9/2018
09:56
YEAR OLD POLITICAL NEWS IN IRAQ STAYS FRESH FOR A LONG TIME
tess_tickle
14/9/2018
09:55
tessthat article is one year old
stansmith3
14/9/2018
09:47
Wilmaaaaaaaaaaaaaaaaaaaa!Attention seeking nobody. OInvestor--Thanks for that post.
fairenough11
14/9/2018
09:35
Tell me Oil Investor have you or any of your clan found out who I refer to when I mention Mr Flintstone ???I will give you the answer later todayOMG. Have u actually 'met the Flinstones'!? YAHBOUDABBERDOUU!
officerdigby
14/9/2018
09:07
BAGHDAD: Baghdad on Tuesday began rehabilitating the oil pipeline to Turkey’s Ceyhan port that bypasses Iraqi Kurdistan, after a suspension of nearly three years, the Iraqi oil minister and lawmakers said. The 970-km-long pipeline, which extends from the northern city of Kirkuk to Ceyhan, is Iraq’s second-largest, crossing Salahuddin and Mosul provinces. Exports through the pipeline were suspended in June 2014 when Daesh overran the two provinces. Resuming oil exports while bypassing Iraqi Kurdistan is the latest in a series of economic sanctions by Baghdad against the Kurdistan Regional Government (KRG), which held a referendum on independence last month. “After the liberation of Nineveh, Salahuddin and Hawija” from Daesh, “a major campaign to repair the pipeline has been launched by the Oil Ministry to resume exports,” ministry spokesman Assam Jihad told Arab News. Iraq used to export between 250,000 and 400,000 barrels per day through the pipeline, mainly from Kirkuk’s oilfields. Following Daesh’s advances, a replacement pipeline was built to link Kirkuk’s oilfields to Ceyhan via Iraqi Kurdistan. “The rehabilitation of the (original) pipeline is a priority for the Oil Ministry to resume exports and boost income for the federal Iraqi budget,” Jihad said. A deal between Baghdad and the KRG to export 550,000 barrels per day via the replacement pipeline was approved by the federal Parliament in December 2014 — 400,000 barrels from Kirkuk and the rest from oilfields in Kurdistan. In return, the KRG was supposed to hand the revenues to the state oil company for the federal budget. But Baghdad has not received any revenues. “The Kurds totally took control over both the export process and getting back the revenues,” a senior federal oil official told Arab News on condition of anonymity. “We have no idea how much they’re exporting. For the last three years, they kept refusing to give us any information about exports, and to hand over the revenues.” The federal parliamentary oil and gas committee is backing Baghdad. “Controlling oil and gas resources are exclusive responsibilities of the federal government, and exports by any other side are legally recognized as smuggling,” committee member Awad Al-Awadi told Arab News. “The federal government has to gain back control over oil exports as they belong to all Iraqis. No one has the right to control them but the federal government.” The pipeline will be repaired in no more than three months, Al-Awadi said. Baghdad says revenues from oil exported by the KRG goes directly to bank accounts in a neighboring country that are registered in the names of Kurdish leaders. Meanwhile, Prime Minister Haider Al-Abadi said in his weekly press conference that Iraqi oil is for all Iraqis and not for a limited number of (Kurdish) officials who put the money (revenues) in their bank accounts.” He added: “This money has to go to the people… we allocate money from (the oil revenues) to pay the employees in Kurdistan.” hxxp://www.arabnews.com/node/1175791/middle-east
tess_tickle
14/9/2018
08:52
the real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster. Correct Bob And the MNR would want the "best" fdp for their future generations A host of majors no doubt would have best fit plans to pitch to the MNR We are just waiting for the takeover winner to be announced We won't see Gkp fdp or CPR IMO Fill your 👢👢👢 The path to 55000 plus - for the new owners
therealminotaur
14/9/2018
08:51
Great work Bob thank you AN ESTIMATE OF THE COST OF THE 75,000 BOPD PROGRAMME So far as I am aware, nobody on the blogs has attempted to estimate the cost of moving up from 55,000 bopd to 75,000 bopd at Shaikan. GKP clearly have the figure, but they have not released it and they say “Capex guidance to be communicated post FDP submission”. But GKP have actually given us sufficient information to allow a cost estimate for this next investment phase - which they appear to indicate will start in early 2020 - to be derived reasonably easily. So here we go. The method is to compare the work content of the 55,000 bopd and 75,000 bopd programmes. GKP have detailed this work in a way that this is actually easy to do. This is what is said in three separate GKP presentations this week: 55,000 bopd programme: 4 Jurassic wells + ESPs ESPs on 3 existing wells Debottlenecking of Production Facilities PF-1 pipeline tie-in 2 tubing workovers Facilities maintenance 75,000 bopd programme : 4 Jurassic wells + ESPs ESPs on 3 existing wells Debottlenecking of Production Facilities Installation of gas re-injection facility So there are three common components: 4 Jurassic wells + ESPs, ESPs on 3 existing wells, and debottlenecking of Production Facilities. Remove those common components and the differences between the two programmes are then revealed. The 55,000 bopd programme has the PF-1 pipeline tie-in, 2 tubing workovers and Facilities maintenance in addition to the common components, whereas the 75,000 bopd programme has just the Installation of the gas re-injection facility. So how do these compare in cost? Very conveniently, GKP have told us in this week’s presentations the cost of the PF-1 pipeline tie-in and the 2 tubing workovers. The gross cost for this work is given by GKP (derive it by subtraction) as $15 million to $25 million, including a 25% contingency. So how does that gross cost compare with that of the gas re-injection facility which is included in the 75,000 bopd programme? Once again, there is very conveniently a useful guidance figure for that which was published by Gulf Canada Resources in 1996. I wouldn’t expect costs to have changed enough, since then, to affect the figure too much. Gulf Canada installed a gas re-injection facility at their Westerose D-3 oil reservoir near Edmonton. The facility provided Gulf Canada with an additional 18 million cubic feet per day of gas re-injection, at a pressure of 1450 psig. The chosen solution was a turbine driven, tandem compressor (centrifugal, multistage) with a 4,000 horsepower driver. The cost of a reciprocating compressor was $5.3 million, but using a reconditioned centrifugal unit the total installed cost was $3.7 million. And Gulf Canada gave a very useful breakdown of that total: Equipment $1.8 million, Materials $0.5 million, Construction $1 million and Inspection $0.4 million. The Westerose project was quickly completed - the elapsed time from project authorisation to commissioning being just 5 months. The volume of gas to be re-injected at Shaikan is not yet stated by GKP but some of the gas, which comes out of solution in the Production Facilities, is already used at Shaikan for power generation, usefully reducing the cost of diesel. There will be additional power requirements for the 55,000 bopd and 75,000 bopd programmes e.g. to drive the ESPs and also to power the gas compression facility. I can’t personally see GKP using reconditioned equipment, but taking into account the volumes of gas coming out of solution at PF-1 and PF-2 (GKP did give a figure for that some time ago) and the need to connect PF-1 and PF-2 to the compressor with gas piping, my feeling is that the $15 million to $25 million figure (see above) ought to broadly cover much if not all of it. GKP have previously said on several occasions that they intend to use an existing Shaikan well (two wells are not on production) in order to put the pressurised gas back into the reservoir. On this analysis, it seems reasonable to assume that the gross cost of the 75,000 bopd programme will probably be pretty similar to that of the 55,000 bopd programme. The net cost to GKP of the latter, at the 80% rather than the 64% contribution level, is given by GKP in their presentations this week as $160 million to $184 million including a 25% contingency. So a total cost of perhaps $200 million might be enough to take output from 55,000 bopd to 75,000 bopd. That figure would reduce if the amended PSC were to reduce the GKP Paying Interest, e.g. to the 64% level which GKP were previously using, but we don’t know. Whilst 2020 is 15 months away, and the 2018 and 2019 work programme is only recently underway, it might be worth looking ahead to how the 75,000 bopd programme might be funded. GKP already has a very strong cash position which more than covers the gross cost of the 55,000 bopd programme. So what might happen, income-wise, over the next 15 months prior to the planned start of the 75,000 bopd programme? GKP added $121 million to their cash position between September 2017 and September 2018, and the stronger oil price is resulting in increased underlying payments per barrel to GKP. During the next 15 months, there should be further substantial cash inflow because (a) the current account part of the 55,000 bopd investment programme should be recovered quickly under PSC terms, and (b) production volumes will be ramping-up during 2019 as progress is made during the year toward the 55,000 bopd level. It is very important to note that GKP recover much of the costs of their investments in Shaikan via the PSC terms and Cost Recovery mechanism. Whilst there is an inevitable time lag, the 75,000 bopd programme woukd be substantially bootstrapped from such recovery. And in addition, there is the income from production. If GKP do go to the earlier-referenced 58% Working Interest (with the MNR coming back in) rather than the current 80%, there would be three effects: (a) the profit income would drop (though the cost recovery would still be due), and (b) the income would increase because of the rise from the current production level (say, 32,000 bopd) to the 55,000 bopd level, and (c) the GKP contribution to costs going forward would reduce from 80% to 64%. Taking (a) and (b) together, the net impact on income can be assessed: Current level x 58%/80% x 55,000 bopd/32,000 bopd This nets out at a 25% increase to current income. In any case, the replacement of the 2016 10% Notes with their additional borrowing cap, with the 2018 10% Notes with the additional borrowing cap removed, makes issuing some additional Notes - even if such money were required - relatively simple. The 2018 10% Notes were over-subscribed, for example. So all in all, I am pretty optimistic! My guess is that the 75,000 bopd programme could potentially be completed by the end of 2020. And the 110,000 bopd Programme appears to be something for 2021. Quite some way off, and potentially something for another operator to tackle. The sums for that can wait for another day. See less
therealminotaur
14/9/2018
08:51
Wthe real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. the real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? Ithe real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take inthe real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster.the real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster.to account GKP’s funding position. A supermajor might perhaps move rather faster.t might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster.
therealminotaur
14/9/2018
08:44
the real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster. Correct Bob And the MNR would want the "best" fdp for their future generations A host of majors no doubt would have best fit plans to pitch to the MNR We are just waiting for the takeover winner to be announced We won't see Gkp fdp or CPR IMO Fill your 👢👢👢
therealminotaur
14/9/2018
08:42
Oilman #571893 you are catching at straws! how would not going to Kurdistan prevents you from making calculations from reports and other company written material?
s0rayad
14/9/2018
08:42
Tell me Oil Investor have you or any of your clan found out who I refer to when I mention Mr Flintstone ??? I will give you the answer later today.
oilman63
14/9/2018
08:41
Thanks Bob AN ESTIMATE OF THE COST OF THE 75,000 BOPD PROGRAMME So far as I am aware, nobody on the blogs has attempted to estimate the cost of moving up from 55,000 bopd to 75,000 bopd at Shaikan. GKP clearly have the figure, but they have not released it and they say “Capex guidance to be communicated post FDP submission”. But GKP have actually given us sufficient information to allow a cost estimate for this next investment phase - which they appear to indicate will start in early 2020 - to be derived reasonably easily. So here we go. The method is to compare the work content of the 55,000 bopd and 75,000 bopd programmes. GKP have detailed this work in a way that this is actually easy to do. This is what is said in three separate GKP presentations this week: 55,000 bopd programme: 4 Jurassic wells + ESPs ESPs on 3 existing wells Debottlenecking of Production Facilities PF-1 pipeline tie-in 2 tubing workovers Facilities maintenance 75,000 bopd programme : 4 Jurassic wells + ESPs ESPs on 3 existing wells Debottlenecking of Production Facilities Installation of gas re-injection facility So there are three common components: 4 Jurassic wells + ESPs, ESPs on 3 existing wells, and debottlenecking of Production Facilities. Remove those common components and the differences between the two programmes are then revealed. The 55,000 bopd programme has the PF-1 pipeline tie-in, 2 tubing workovers and Facilities maintenance in addition to the common components, whereas the 75,000 bopd programme has just the Installation of the gas re-injection facility. So how do these compare in cost? Very conveniently, GKP have told us in this week’s presentations the cost of the PF-1 pipeline tie-in and the 2 tubing workovers. The gross cost for this work is given by GKP (derive it by subtraction) as $15 million to $25 million, including a 25% contingency. So how does that gross cost compare with that of the gas re-injection facility which is included in the 75,000 bopd programme? Once again, there is very conveniently a useful guidance figure for that which was published by Gulf Canada Resources in 1996. I wouldn’t expect costs to have changed enough, since then, to affect the figure too much. Gulf Canada installed a gas re-injection facility at their Westerose D-3 oil reservoir near Edmonton. The facility provided Gulf Canada with an additional 18 million cubic feet per day of gas re-injection, at a pressure of 1450 psig. The chosen solution was a turbine driven, tandem compressor (centrifugal, multistage) with a 4,000 horsepower driver. The cost of a reciprocating compressor was $5.3 million, but using a reconditioned centrifugal unit the total installed cost was $3.7 million. And Gulf Canada gave a very useful breakdown of that total: Equipment $1.8 million, Materials $0.5 million, Construction $1 million and Inspection $0.4 million. The Westerose project was quickly completed - the elapsed time from project authorisation to commissioning being just 5 months. The volume of gas to be re-injected at Shaikan is not yet stated by GKP but some of the gas, which comes out of solution in the Production Facilities, is already used at Shaikan for power generation, usefully reducing the cost of diesel. There will be additional power requirements for the 55,000 bopd and 75,000 bopd programmes e.g. to drive the ESPs and also to power the gas compression facility. I can’t personally see GKP using reconditioned equipment, but taking into account the volumes of gas coming out of solution at PF-1 and PF-2 (GKP did give a figure for that some time ago) and the need to connect PF-1 and PF-2 to the compressor with gas piping, my feeling is that the $15 million to $25 million figure (see above) ought to broadly cover much if not all of it. GKP have previously said on several occasions that they intend to use an existing Shaikan well (two wells are not on production) in order to put the pressurised gas back into the reservoir. On this analysis, it seems reasonable to assume that the gross cost of the 75,000 bopd programme will probably be pretty similar to that of the 55,000 bopd programme. The net cost to GKP of the latter, at the 80% rather than the 64% contribution level, is given by GKP in their presentations this week as $160 million to $184 million including a 25% contingency. So a total cost of perhaps $200 million might be enough to take output from 55,000 bopd to 75,000 bopd. That figure would reduce if the amended PSC were to reduce the GKP Paying Interest, e.g. to the 64% level which GKP were previously using, but we don’t know. Whilst 2020 is 15 months away, and the 2018 and 2019 work programme is only recently underway, it might be worth looking ahead to how the 75,000 bopd programme might be funded. GKP already has a very strong cash position which more than covers the gross cost of the 55,000 bopd programme. So what might happen, income-wise, over the next 15 months prior to the planned start of the 75,000 bopd programme? GKP added $121 million to their cash position between September 2017 and September 2018, and the stronger oil price is resulting in increased underlying payments per barrel to GKP. During the next 15 months, there should be further substantial cash inflow because (a) the current account part of the 55,000 bopd investment programme should be recovered quickly under PSC terms, and (b) production volumes will be ramping-up during 2019 as progress is made during the year toward the 55,000 bopd level. It is very important to note that GKP recover much of the costs of their investments in Shaikan via the PSC terms and Cost Recovery mechanism. Whilst there is an inevitable time lag, the 75,000 bopd programme woukd be substantially bootstrapped from such recovery. And in addition, there is the income from production. If GKP do go to the earlier-referenced 58% Working Interest (with the MNR coming back in) rather than the current 80%, there would be three effects: (a) the profit income would drop (though the cost recovery would still be due), and (b) the income would increase because of the rise from the current production level (say, 32,000 bopd) to the 55,000 bopd level, and (c) the GKP contribution to costs going forward would reduce from 80% to 64%. Taking (a) and (b) together, the net impact on income can be assessed: Current level x 58%/80% x 55,000 bopd/32,000 bopd This nets out at a 25% increase to current income. In any case, the replacement of the 2016 10% Notes with their additional borrowing cap, with the 2018 10% Notes with the additional borrowing cap removed, makes issuing some additional Notes - even if such money were required - relatively simple. The 2018 10% Notes were over-subscribed, for example. So all in all, I am pretty optimistic! My guess is that the 75,000 bopd programme could potentially be completed by the end of 2020. And the 110,000 bopd Programme appears to be something for 2021. Quite some way off, and potentially something for another operator to tackle. The sums for that can wait for another day. See less
therealminotaur
14/9/2018
08:38
Like a roller coaster pausing and looking down at the precipice. I can hear the click click click... then suddenly woosh... the free fall... See you at 235p for the ride back up
ggm5d
14/9/2018
08:33
I can tell you as fact that no plan exists today and you are talking rubbish !!!
oilman63
14/9/2018
08:30
Most analysts (which your not) that give their views on GKP have been to Kurdistan and visited GKP's operations to see it with their own eyes before commenting. Could you possibly give us some details of any trips out there made by yourself ??? Having a " I love Kurdistan " bumper sticker doesn't count.
oilman63
14/9/2018
08:30
the real minotaur: John Gerstenlauer publicly confirmed that there were in 2012-13 two Shaikan Field Development Plans. The one which was published - or rather, for which a summary was published - was for an in-house development by GKP. The CPR numbers referred to that FDP, and GKP said that the Reserves numbers only addressed 25% of the reservoir footprint and 39% of the formations. Combine those two, and only 10% of the Shaikan reservoir was addressed in the Reserves. That’s what GKP said. The other FDP was for development of Shaikan by e.g. a supermajor. That’s what GKP said. Whether there were separate Reserves figures for that other FDP, I don’t know. Does the same situation apply with the new FDP? It might. My impression is that the 55,000 bopd abd 75,000 bopd programmes take into account GKP’s funding position. A supermajor might perhaps move rather faster.
oil_investor
14/9/2018
08:21
Great stuff Bob AN ESTIMATE OF THE COST OF THE 75,000 BOPD PROGRAMME So far as I am aware, nobody on the blogs has attempted to estimate the cost of moving up from 55,000 bopd to 75,000 bopd at Shaikan. GKP clearly have the figure, but they have not released it and they say “Capex guidance to be communicated post FDP submission”. But GKP have actually given us sufficient information to allow a cost estimate for this next investment phase - which they appear to indicate will start in early 2020 - to be derived reasonably easily. So here we go. The method is to compare the work content of the 55,000 bopd and 75,000 bopd programmes. GKP have detailed this work in a way that this is actually easy to do. This is what is said in three separate GKP presentations this week: 55,000 bopd programme: 4 Jurassic wells + ESPs ESPs on 3 existing wells Debottlenecking of Production Facilities PF-1 pipeline tie-in 2 tubing workovers Facilities maintenance 75,000 bopd programme : 4 Jurassic wells + ESPs ESPs on 3 existing wells Debottlenecking of Production Facilities Installation of gas re-injection facility So there are three common components: 4 Jurassic wells + ESPs, ESPs on 3 existing wells, and debottlenecking of Production Facilities. Remove those common components and the differences between the two programmes are then revealed. The 55,000 bopd programme has the PF-1 pipeline tie-in, 2 tubing workovers and Facilities maintenance in addition to the common components, whereas the 75,000 bopd programme has just the Installation of the gas re-injection facility. So how do these compare in cost? Very conveniently, GKP have told us in this week’s presentations the cost of the PF-1 pipeline tie-in and the 2 tubing workovers. The gross cost for this work is given by GKP (derive it by subtraction) as $15 million to $25 million, including a 25% contingency. So how does that gross cost compare with that of the gas re-injection facility which is included in the 75,000 bopd programme? Once again, there is very conveniently a useful guidance figure for that which was published by Gulf Canada Resources in 1996. I wouldn’t expect costs to have changed enough, since then, to affect the figure too much. Gulf Canada installed a gas re-injection facility at their Westerose D-3 oil reservoir near Edmonton. The facility provided Gulf Canada with an additional 18 million cubic feet per day of gas re-injection, at a pressure of 1450 psig. The chosen solution was a turbine driven, tandem compressor (centrifugal, multistage) with a 4,000 horsepower driver. The cost of a reciprocating compressor was $5.3 million, but using a reconditioned centrifugal unit the total installed cost was $3.7 million. And Gulf Canada gave a very useful breakdown of that total: Equipment $1.8 million, Materials $0.5 million, Construction $1 million and Inspection $0.4 million. The Westerose project was quickly completed - the elapsed time from project authorisation to commissioning being just 5 months. The volume of gas to be re-injected at Shaikan is not yet stated by GKP but some of the gas, which comes out of solution in the Production Facilities, is already used at Shaikan for power generation, usefully reducing the cost of diesel. There will be additional power requirements for the 55,000 bopd and 75,000 bopd programmes e.g. to drive the ESPs and also to power the gas compression facility. I can’t personally see GKP using reconditioned equipment, but taking into account the volumes of gas coming out of solution at PF-1 and PF-2 (GKP did give a figure for that some time ago) and the need to connect PF-1 and PF-2 to the compressor with gas piping, my feeling is that the $15 million to $25 million figure (see above) ought to broadly cover much if not all of it. GKP have previously said on several occasions that they intend to use an existing Shaikan well (two wells are not on production) in order to put the pressurised gas back into the reservoir. On this analysis, it seems reasonable to assume that the gross cost of the 75,000 bopd programme will probably be pretty similar to that of the 55,000 bopd programme. The net cost to GKP of the latter, at the 80% rather than the 64% contribution level, is given by GKP in their presentations this week as $160 million to $184 million including a 25% contingency. So a total cost of perhaps $200 million might be enough to take output from 55,000 bopd to 75,000 bopd. That figure would reduce if the amended PSC were to reduce the GKP Paying Interest, e.g. to the 64% level which GKP were previously using, but we don’t know. Whilst 2020 is 15 months away, and the 2018 and 2019 work programme is only recently underway, it might be worth looking ahead to how the 75,000 bopd programme might be funded. GKP already has a very strong cash position which more than covers the gross cost of the 55,000 bopd programme. So what might happen, income-wise, over the next 15 months prior to the planned start of the 75,000 bopd programme? GKP added $121 million to their cash position between September 2017 and September 2018, and the stronger oil price is resulting in increased underlying payments per barrel to GKP. During the next 15 months, there should be further substantial cash inflow because (a) the current account part of the 55,000 bopd investment programme should be recovered quickly under PSC terms, and (b) production volumes will be ramping-up during 2019 as progress is made during the year toward the 55,000 bopd level. It is very important to note that GKP recover much of the costs of their investments in Shaikan via the PSC terms and Cost Recovery mechanism. Whilst there is an inevitable time lag, the 75,000 bopd programme woukd be substantially bootstrapped from such recovery. And in addition, there is the income from production. If GKP do go to the earlier-referenced 58% Working Interest (with the MNR coming back in) rather than the current 80%, there would be three effects: (a) the profit income would drop (though the cost recovery would still be due), and (b) the income would increase because of the rise from the current production level (say, 32,000 bopd) to the 55,000 bopd level, and (c) the GKP contribution to costs going forward would reduce from 80% to 64%. Taking (a) and (b) together, the net impact on income can be assessed: Current level x 58%/80% x 55,000 bopd/32,000 bopd This nets out at a 25% increase to current income. In any case, the replacement of the 2016 10% Notes with their additional borrowing cap, with the 2018 10% Notes with the additional borrowing cap removed, makes issuing some additional Notes - even if such money were required - relatively simple. The 2018 10% Notes were over-subscribed, for example. So all in all, I am pretty optimistic! My guess is that the 75,000 bopd programme could potentially be completed by the end of 2020. And the 110,000 bopd Programme appears to be something for 2021. Quite some way off, and potentially something for another operator to tackle. The sums for that can wait for another day. See less
therealminotaur
14/9/2018
08:19
And the major fact and only consideration is that Cashti wouldn't allow it lol. Just waffle for waffle sake. You could give us your expert analysis on how many bristles are on the brush in the PFs canteen ???
oilman63
14/9/2018
08:12
nestoframpers: if GKP is sold to a supermajor, I would expect such a company to do the longer-term drilling itself. In the near-term, GKP setting up its own drilling team might be inadvisable. They would need a minimum of two rigs - a workover rig, abd a full drilling rig - and that would take a chunk of capital. GKP lacks drilling experience, and would have to set up a team with all kinds of management, safety and other issues. Then there’s the other costs - logging, as an example. Using contractors is more flexible. It would take quite some time before the cost of the rigs were recovered - and the savings wouldn’t be all that much anyway, at least not before the 110,000 bopd programme. I think the market might not like the idea of GKP - which has never done any drilling work itself, and hasn’t done any subsurface work since the old King was on the throne - getting involved in things in which it has zero equipment, zero experience and zero staff. Squeezing the drilling contractors via tendering abd tea and biscuits is imo a better option.
oil_investor
14/9/2018
08:11
Good Morning 😃 So you spent loads of time sewing together bits out of the companies RNS and put your usual ramptastic spin on it for nothing more than blog adulation and quickly followed by the GOOD POST multiple voting avatar 😂😂😂 Is there any chance you could stitch together the old RNSs where the company says they will meet certain targets over the last two years that they have missed ??? No pumps or drilling until next year no 40k or 2nd amendment or FDP 🤷‍a94;️
oilman63
14/9/2018
08:10
2 alternate FDP's 1 that Gkp can fund using its cash resources organically 2 the fdp a Major(s) resources Who are the new owners ??
therealminotaur
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