Tuesday 21 August 2012

Tony Hayward's new start in Kurdistan

Kurdistan Region Licences

Genel has offered to buy into a big chunk of Hertage Oil's assets in Kurdistan today. For long-term readers, you will know that I held Heritage for a long-time before selling out at a decent profit back when the share price was twice what it is now. Heritage is an interesting company, run by the very bright and capable Tony Buckingham - who also happens to be an ex-mercenary.

Meanwhile, Genel is a rather opaque Turkish funded Oil explorer, they tried to merge with Heritage a couple of years ago and it fell through as their directors could not be passed fir by the FSA. Now to remedy this they have Tony Hayward, the ex-BP CEO in charge. Mr Hayward is keen to build another big Oil and Gas company and this is one of quite  afew deals he is doing.

Why is this of any interest to a wider audience? Well, Heritage's Miran assets, the ones sold today, are in Kurdistan. This is where GKP and other companies like Afren have been findning massive oil and gas deposits for the past 4 years. Indeed, it is the best area int he world for new finds of Oil and Gas.

It is also steeped in diffculut political intrigue, with the Kurds of Turkey, Iraq, Syria and Iran all wanting their own state and now owning the means of financing it. So the challenge to oil companies of not just finding but safely extracting and selling their product is pretty high. Shell of course and others have small armies (well a battalion or two) in Nigeria protecting wells, so it is not as if these companies are not used to the realities of the world.

How all this works out will be a key driver in the middle east, with Syrian Kurds now deciding what to do as regards the civil war in their own Country. Turkey too has a tough choice, having fought the PKK for years, it still wants a pipeline from Kurdistan to export all this oil and gain some decent revenue. The Kurds in Iraq are a loggerheads with their own Government about an Oil Law that will agree the distribution of the funds raised from Oil and Gas sales.

Kurdistan is certainly a complex and interesting place to look at, with Hertage selling today and OIl majors like Total moving in, I am even more confident in holding my GKP shares for a while yet. GKP have the biggest reserves of all to date found in Kurdistan.


Budgie said...

I sincerely hope you are right about GKP and a favourable outcome in Kurdistan. But when Heritage made its announcement today its shares shot up 20%.

roym said...

i think that reaction was more a response to securing funding without dilution for their other ongoing projects. Genel has hardly moved so perhaps no one was scared away by this acquisition.

Anonymous said...

Gulf Keystone do not have reserves. They have a gross oil in place number from a resource report. This is not the same thing.

Whilst they clearly do have reserves (as they have oil production), you cannot say how large they are as there is no independent audit of the reserves. On any other exchange, this would not be allowed (3.5 years since first discovery).