Can you say "an additonal block?"
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Yes indeed Pitts, I do believe I can!
As you say, a wee bit more than expected. And a wee bit earlier than I was expecting - why so much, and why NOW? I guess we are soon going to be told a "good story" about "a stunning development" (Daniel Stewart):
http://www.ft.com/cms/s/0/d62b061c-d...dc0,s01=1.html
So what good story do GKP have to tell - about "a stunning development" that "goes well beyond what we were originally talking about", and has prompted an over-subscribed placing at essentially zero discount to sp?
Well, for starters, I don't believe in coincidence. On the same day that GKP raised $175m, another Kurd oily, Genel, did exactly the same:
http://www.businessweek.com/news/201...5-million.html
Now I'm sure that UI Energy have been rather well advised about the potential of their investment - by none other than our very own Tony BLiar but that's another story (or two - or was it number 3?). Be that as it may, apart from both raising $175m yesterday, what else have GKP and Genel got in common?
Why, Ber Bahr of course.
And? Well, before yesterday, both had lots of stuff going on with current projects in Kurdistan, but not much moolah to spare for new prospects such as Ber Bahr. We know this is true for sure with regard to GKP, their May Presentation (p.4, 6, 27, 28) shows that the previous (May) $165m placing would only be sufficient for ETAMIC buyout, EWT and Production Facilities, 3D seismic on SH and SA, and the drilling of 3 appraisal wells (SH-2, 3, 4) and one exploration well (SA-1). And those that followed the failed Heritage-Genel merger will know that Genel is (was) strapped for cash to fund their Taq Taq, Tawke, Duhok, Miran, Kewa Chirmila, and Chia Sirkh license interests - not to mention Ber Bahr!
Anything else? Well yes - both companies have a Shaikan type problem when it comes to BB. Shaikan has a problem? No - it HAD a problem, but this was sorted temporarily by E-man, and then completely cleansed by the $165m placing. So what was the problem? Closure. And I don't mean closure as in removal of E-man, I mean closure (or more accurately, lack of it) on Shaikan. Oh dear, so why does BB also have this problem? Sh, it's not really a problem, it only requires 'fixing' because the structures in this part of the world are so MASSIVE. And if this particular structure is filled to spill - which is becoming increasingly more likely as a regional aquifer is proved up (we already know the most important 'result' from Bijeel-1) then the 'problem' of BB closure is clear for all to see on page 18 in the GKP May Presentation. This shows that BB has no closure to the south-east (into SA) and no closure to the north-west (into Headless Horseman). But we own SA, so why is that a problem? It's not (except that Genel may get jealous). Ok, so the problem is to the north-west then? It's not a problem - it just needs 'fixing' - before pouring money down a hole in BB, GKP and Genel will need to know that it won't end up being wasted in a bottomless pit to the north-west. GKP and Genel need to buy the Headless Horseman license - before drilling BB. IMO.
Apologies if I've skimped on some of these explanations/opinions, I have waxed lyrical about these things before:
The BIG picture:
http://www.iii.co.uk/investment/deta...ail&id=6668856
"Headless Horseman":
http://www.iii.co.uk/investment/deta...ail&id=6919929
Sorry for the verbosity, just my way of saying "an additonal block".
BBBS
P.S. For the avoidance of doubt, my previous statements about 100 billion barrels POTENTIAL were made in the context of AH + AB + SA + BB. This number would of course be absurdly conservative if there's a new kid on the block (HH is definitely big fat bully material - run your ruler Hub).
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