Gulf Keystone and the acclaimed Exxon and Chinese “conversations” were very open opportunistic mild interests. And that was before the oil price collapse and before it turned out Shaikan is not the giant people made it out to be. Hence majors are not really that tempted for large but uncertain quantities of 22 API, high sulphuric geopressures, and slow exports/payments:

a. Any enquirers were and even more so now would be looking for very cheap takeover projects, not just Gulf but M&A in general
– in contrast to idiots here thinking it was Exxon for £8 or the Chinese at £45

b. Todd Kozel was a continual problem, everyone HATED his smirk and didn’t want to deal with him. There isn’t a single partner, investor, or potential bidder he hasn’t p!ssed off with his amateurism, arrogance and greed. He’s gone now but his legacy of sh!tting on this company remains.
– in contrast to muppets here who backed him and his salary ahead of CG concerns that came too little too late

c. Uncertainty behind Gulf’s claims and technical data
– in contrast to the silly hype many people have pandered on and the regurgitation of blah blah blacksheep’s now impossible 100bn bl prediction, the data room and tests do not concrete the high octane dreams of the ops team. This has backfired onto Gulf’s competency as an explorer/operator, and hence suspicions on the quality of the asset.

d. Kurdistan being Kurdistan
– proof is in the pudding still no O&G law, exports are being legally chased down by Baghdad, KRG seems to have no money to pay explorers

e. Financial health, or lack thereof. Everyone saw Todd was merely creaming the capital injected by investors, before actual findings were independently certified, before revenues, before cash flow, before profits. With low cash on the books, it is a buyer’s dream to sit and wait for a distressed slip up.

Talk about Todd Kozel delivering you lot out on a silver plate to be plucked. I hate to come back to TK but the fact is you can really thank him here given the current slate of problems and debt the company cannot now shake.

SO, ignore the Exxon/Chinese mentions, come to terms that yes there were some kind of.. talks if one could call it, those are facts but no it wasn’t significant to write home about, dispel the myths that this was a hot pancake bidding war ripe for harvest by leveraged PIs

The majors are looking for cheap takeovers, that has been the sector’s M&A mentality in recent years now, as with Tullow’s most recent opportunistic proposal completely from left field.

Time to really buckle down and rethink from scratch the hard work required to get the current problems off the ground:
1. New blood and leadership
2. Financially resolve structural problems beyond just diluting placements or increasing debt ceiling
3. Rethink plans about how to deal with a non-paying KRG.

Potentially an asset swap into something non-Kurdistan with some actual cash flow?

The real goal has always been to demonstrate operational competency, prove continued appraisal and upside, and remain financially solvent. Forget takeover unless you want to be battered on price.

April 14, 2015 by Harry
Category: blog