GBP - Global Petroleum

[robs12]

I have just moved down under, & have held these for a little while now (they are dual listed on ASX & London AIM). From what I can see they have never had a mention on the forums here....which is a little surprising (to me at least).

A quick summary of GBP:

GBP has a 20% free carry on two wells about to be drilled offshore Kenya, operator is Woodside, with other partners Dana Petroleum (DNX - UK) & Repsol. First well (Pomboo) is due to spud right now.
Has cash of A$6.7m at end September.
Has a stake in FOGL (Falkland Oil & Gas) now worth ~A$24m (and has been dropping rapidly with FOGL share price dropping from 175+UK pence in February to 75p mid yesterday.
They have acreage in Ireland & Malta, but I’m ignoring them as worthless for now - though they are currently shooting seismic in Malta, with potential for farm-in partner RWE to drill next year if something looks good – GBP free carry, but stake reduces to 27%.

GBP at A$131m capitalisation means Kenya is currently valued by the market at ~A$100m (~57c/share). The big question is what is it really worth? If they fail to find any oil, then of course... not a lot.
Merrill Lynch valued Dana's 30% at 89p/share, which equates to approx 75c/share risked for GBP’s 20% stake, so if ML are anywhere in the right ballpark in their assumptions, GBP currently looks cheap (i.e cash & FOGL thrown in for free).
IF the first well (due to spud right now) Pomboo comes in & there are say 1200mboe at 30% recovery at US$4/bbl, that would be worth approx A$377m (A$2.16/share without discounting) to GBP.
On the other hand, if there are 1bn bbls RECOVERABLE (a figure quoted by some), that is approx a whole load more per share….
If Sokwe (2nd well) subsequently came in at 750mboe OIP too, another approx A$1.37/share.
But perhaps more importantly, IF Pomboo were to come in, irrespective of size, the upside is considerably more than that well alone, given that figures of 20bn bbls RECOVERABLE are being banded around (by GBP) for the two blocks in total (unrisked)….20% of that would be very welcome….about A$122/share… nice whatever risking/discounting you apply.
They would probably be snapped up at a nice premium in quick order.

Other factors - Woodside have little to say about Kenya, & have just farmed out 20% to Repsol (presumably in exchange for some share of the drilling costs?).
GBP state “Woodside and Repsol earn their farm-in equity when these two wells are drilled”.
Would they really drill Sokwe if Pomboo is dry?
Directors hold many shares (& options), though there has been some selling recently, so a lot at stake for them...
So all in all, a big gamble on whether the first Kenyan well is successful. I’d expect to see the SP rise nicely in the next month or so in expectation of drilling results.
All IMHO, DYOR etc.

 

[exgeo]

So now that Sokwe is not going to be drilled in this campaign, what is GBP worth? Zero? Close to it? Shame really as I just bought some at 32c!

 

[EasternGrey1]

It's been a while since the last post on GBP. The market hasn't woken up to what a bargain GBP is (high risk, but still a bargain). Time for an update :

GBP owns 14% of Falklands Oil & Gas (FOGL in London (AIM)).
It also still has an interest in Kenya, plus interests in Malta, Ireland and Queensland, plus $A6,325m cash (Quarterly cashflow report 31/7/07).

FOGL at last night's price £1.165 and exch rate $A1=£0.4031 has market cap $A265.2m, so GBP's holding is worth $A37.13m.
Adding in the cash gives $A43.46m.
That is 0.229 per GBP share.
At this moment, GBP share price is 0.145.

So you can buy GBP's cash + FOGL holding at a huge 36.7% discount, and get all its other assets for free. If you are disappointed at Kenya being dry, no matter, you're paying zero for it anyway.

I'm in!!!

PS. The upside potential is absolutely massive. This is no ordinary small oil exploration company with a few exploration blocks. From the FOGL website:

Falkland Oil and Gas Limited (“FOGL”) is an oil and gas exploration company focused exclusively on opportunities offshore of the Falkland Islands. It was admitted to London’s Alternative Investment Market (“AIM”) on 14 October 2004 at an issue price of 40p. The current major shareholders of FOGL are: Falkland Islands Holdings plc (16.31%), Global Petroleum (13.97%) and RAB Capital plc (32.67%).

At the time of the admission to AIM, FOGL held a 77.5% interest in seven offshore production licences covering approximately 33,700 sq km to the south and east of the Falkland Islands. FOGL holds these licences in a joint venture with Tullow Oil plc. In December 2004, FOGL was awarded a 100% licence over an additional 50,000 sq kms adjacent to its existing licence areas. The 65,354 sq km area held by FOGL in 2007 is equivalent to 297 North Sea blocks: as large as the Southern Gas Basin and the Central Graben combined.

FOGL’s work programme in 2007 is specifically designed to de-risk and define the prospects already identified on its acreage. As such the Company has undertaken a CSEM programme and infill 2D seismic programme to identify the best prospects for drilling in 2008. The results of these surveys are expected later on this year.

FOGL’s stated strategy has been to also introduce a suitable farm-in partner into its acreage. The Company recently announced that it is in advanced discussions with a Major Natural Resources Company in respect of this, although there is no guarantee that these discussions will lead to that Company participating in FOGL’s future plans. Further announcements will be made updating on this situation in due course.

 

[EasternGrey1]

Update :

FOGL price in London has gone up to £1.38.

GBP price has gone up to 0.17.

BUT, value of GBP's cash + FOGL holding is now 0.258c/share, so even though GBP shares have gone up 17% since my last post, they are still selling at about the same discount - 34% - to (cash+FOGL) with all other assets chucked in for free.

You don't often get a bargain like this!!!

 

[EasternGrey1]

Is anyone out there, or am I talking to myself?

GBP update :

FOGL price in London has gone up to £1.56.

GBP price is still 0.17.

GBP shares now have to go up 70% just to match the value of their cash + FOGL holding (0.289c/share), with all other assets chucked in for free.

This is insane!!

 

[EasternGrey1]

Doesn't look like anyone's listening. I suppose when GBP share price goes up enough to catch everyone's attention, someone will take a look here, and realise that I am a genius to have identified it at such a low price!!

FOGL in London closed last night at £1.605.
GBP closed yesterday at 0.215. That's 48% up in the 2 wks since I first recommended it on 22 Aug.

The discount to GBP's (Cash + FOGL) assets now stands at 36.9%. A lot less than 2 weeks ago, but still worth having. Add in a few $m for GBP's other assets and the bargain looks even better.

BTW, I firmly believe that GBP is worth putting a few $$$ into for the much bigger reason that FOGL has a very good chance indeed of finding large quantities of oil. Read all about it on the FOGL website http://www.fogl.com/ (extract in my post 22 Aug).

 

[Burnham]

Keep posting skippy - the story is a good one.

I got burnt on Kenya and am a little gun shy on Global as a result and have held off pending some sort of resolution on remaining drill .....

Have followed the Falklands tale for a while now and suspect long awaited (and now pending ....?) farm in announcment by FOGL will initiate a return to the fold of GBP posters in due course.

If Britain was prepared to go to war over potential oil there I figure I can slot a few quid in GBP for the drills.

Regards,

 

[EasternGrey1]

Update :

FOGL in London closed last night at £1.73, up 11.6% on the week.
GBP closed Friday at 0.19, down 5.0% on the week, even more since my last post.

The discount to GBP's (Cash + FOGL) assets now stands at 38.3%, ie the share price has to rise 62.1% just to match the (cash + FOGL) value.

Some helpful weblinks :

• GBP website - http://www.globalpetroleum.com.au/

• GBP owns 14% of Falklands Oil & Gas (FOGL) - http://www.fogl.co.uk/

• Broker report on FOGL Nov 2006 - http://www.fogl.co.uk/documents/Equity%20Development%20-%20Report%20-%20November%202006.pdf

 

[EasternGrey1]

Update:

FOGL announced interim survey results on Monday - data looks encouraging but no definite info, final results due late October.

UK market obviously didn't like it, FOGL shares now down to £1.38.

At current exchange rate, that values GBP's (cash + FOGL holding) at 0.245 per share.

So at 0.19, GBP is still at a 22.3% discount. That's still a nice buffer, but nothing like the absurd level previously.

There's a few more rolls of the dice to go. I suspect strong nerves will be needed between now and late October.

 

[iamtrueblue]

Ok Eastern Grey I have a look at this and you now you have my attention.

I will put this on my watch list for now. I expect this may drop as low as about .17 as is a small downtrend. I will watch what happens in late august. keep posting any new info.

The current price trend is the lowest for about 3 years so worth watch given its infrastructure. Just needs some good results. My chart indicates that this was once a $12 stock-Jan 1996??

On my watch list.

 

[EasternGrey1]

Good luck, but you might not get in as low as 0.17 - FOGL up 9% in London last night. Discount is back over 30%.

 

[EasternGrey1]

Time for another update ..

GBP price has come up a bit recently, and FOGL has been a bit softer in London. GBP closed yesterday at 0.21, which is now just a 12% discount to the UK price 1.3417 (exch rate 0.4491).

That seems like a reasonable level to sit and wait for the next developments.

Now GBP is into a new phase - from being obviously undervalued vs the FOGL share price, they are now dependent on oil being found. Still high risk high reward but a different risk profile.

As a matter of interest, I did a rule-of-thumb calc on FOGL's stated 'risked' potential of 860m bbls (the amount of oil they are likely to find, rather than the full potential of the prospects).

'risked' potential 860 m bbls
valued at say 8 $US/bbl
exch rate $A1 = 0.94 $US
FOGL interest 35% assuming BHP take up addnl option
GBP holding in FOGL 14%

implied GBP mkt cap 358.6 $Am
GBP mkt cap now 40.4

potential upside 787%

That's enough to keep me in there.

 

[EasternGrey1]

FOGL down 10.6% in London last night on no news and on near-average volume, GBP down 7.0% today on similar volume. Every stock tests your nerve at some time - this is it for GBP. I decided a long time ago that I would not sell shares simply because the price was going down, and it's a rule that has paid off very well over the years. So I'm staying in till I hear new information, but there are obviously more than a few bailing out. If you are trying to get on board, here's your chance- though with drilling not starting till well into next year(?) the share price is likely to be pretty volatile between now and then.

 

[EasternGrey1]

Maybe I should have waited another day before posting that last post - FOGL share price is back up again last night. But the points were valid

• Investors will be severely tested by share price movements at times.
• I'm not selling until I get more information [unless I think the share price has gone too high - but that's very high].
• We have a few months of volatility ahead.
• Yesterday could have been a good day to buy in, but there will probably be more.

 

[iamtrueblue]

Yep easterngrey a number of shares are taken a hit at the moment and probably more to go given the downturn in the dow/US economy. Still watching this stock. Keep posting people are reading your posts. Anyone else have any info on this stock that they might like to share on this forum??

 

[EasternGrey1]

I can't say I'm wildly enthusiastic about this evening's FOGL announcement.
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But then it didn't look like the FOGL shareholders went wild, either.

Basically, BHP have bought 51% for a song. OTOH, they are paying a few $m and 68% of the cost of 2 wells for their 51%. Given that in that location I have seen suggestions that wells will cost up to $US200m each, that implicitly values the whole project at around $600m, and FOGL still owns 49%. After allowing for FOGL's future costs, and for the fact that BHP would have negotiated a large discount on their own internal valuation, then FOGL and GBP shares don't look too badly priced.

What really counts is that (a) drilling is now virtually assured, and (b) it's the drilling which will hopefully deliver the true value.

Fingers crossed!!

 

[EasternGrey1]

On reflection overnight, I am feeling a little happier.

"BHP Billiton will pay four thirds of 51% (approximately 68%) of
the costs of the near term work programme, including the drilling of two
exploration wells and all other associated work to the completion of this
drilling work."​

I really don't think BHP would commit to the expense of drilling 2 wells if they weren't pretty confident that there was a good chance of a large amount of oil - they wouldn't be interested in a mere 2-300m bbls, for instance.

"Note to investors: FOGL is planning to make an announcement on its 2007
exploration results and operational plans shortly."
​

Should be interesting.

 

[EasternGrey1]

The GBP/FOGL announcement on 14 Dec is significant - positive CSEM anomalies over 7 of the top 10 prospects with "individual prospects containing potential recoverable volumes .. ranging up to 3,500 million barrels".

CSEM surveys, unlike seismic surveys, actively survey for hydrocarbons not just for likely-looking structures. They can only be used offshore and deep water is best. The Falklands would appear to be an ideal place for them.

Whereas a high proportion of exploration wells tend to be dry, Exxon and others have been using CSEM surveys (Exxon call it R3M) to dramatically increase their offshore 'hit-rate', reportedly to nearly 100%. They are also finding that once a field is proven to exist, delineating wells are not needed, as CSEM accurately shows the field's boundaries.

So the fact that there are positive CSEM anomalies for 7 of FOGL's top 10 prospects is IMHO an extremely significant factor. It very dramatically increases the probability that when BHP starts drilling, they really will find oil.

I reckon that each 1bn bbls that they find is worth over $A1 on the GBP share price, so at around 0.20 it's an extraordinarily attractive bet.

Apologies for not giving links for the above info. I searched and found quite specific info on CSEM and exploration success rates before Christmas, but can't now find it again, so I'm afraid you'll just have to trust my memory. You can read about CSEM generally at http://www.noc.soton.ac.uk/gg/research/geophysics/em.php, http://www.ingenia.org.uk/ingenia/issues/issue26/Macey.pdf and http://www.ohmsurveys.com/. The Falklands get a mention in http://www.ip2ipo.com/ipo/media/portfolio_news/p_2006/2006-11-14b/.

PS. FOGL shares have been being dropping steadily on AIM over the last week or two but I don't know why other than maybe just no new news. Anyone know anything I don't?

 

[michael_selway]

The GBP/FOGL announcement on 14 Dec is significant - positive CSEM anomalies over 7 of the top 10 prospects with "individual prospects containing potential recoverable volumes .. ranging up to 3,500 million barrels".

CSEM surveys, unlike seismic surveys, actively survey for hydrocarbons not just for likely-looking structures. They can only be used offshore and deep water is best. The Falklands would appear to be an ideal place for them.

Whereas a high proportion of exploration wells tend to be dry, Exxon and others have been using CSEM surveys (Exxon call it R3M) to dramatically increase their offshore 'hit-rate', reportedly to nearly 100%. They are also finding that once a field is proven to exist, delineating wells are not needed, as CSEM accurately shows the field's boundaries.

So the fact that there are positive CSEM anomalies for 7 of FOGL's top 10 prospects is IMHO an extremely significant factor. It very dramatically increases the probability that when BHP starts drilling, they really will find oil.

I reckon that each 1bn bbls that they find is worth over $A1 on the GBP share price, so at around 0.20 it's an extraordinarily attractive bet.

Apologies for not giving links for the above info. I searched and found quite specific info on CSEM and exploration success rates before Christmas, but can't now find it again, so I'm afraid you'll just have to trust my memory. You can read about CSEM generally at http://www.noc.soton.ac.uk/gg/research/geophysics/em.php, http://www.ingenia.org.uk/ingenia/issues/issue26/Macey.pdf and http://www.ohmsurveys.com/. The Falklands get a mention in http://www.ip2ipo.com/ipo/media/portfolio_news/p_2006/2006-11-14b/.

PS. FOGL shares have been being dropping steadily on AIM over the last week or two but I don't know why other than maybe just no new news. Anyone know anything I don't?

Dude do you know what GBP resource/reserve status is atm, and whats the expected mine life at full production etc

Business Description
Global Petroleum Limited (GBP, formerly Apollo Group Limited) targets exploration of oil, gas and minerals. The company has operations in Kenya, the Falkland Islands, Ireland, Iraq and Malta.

 

[EasternGrey1]

Some time ago, they reported their interests as :

20% of Kenya Blocks L5, L7, L10 and L11;
14.0% of Falkland Oil and Gas Limited – listed on AIM;
10.1% of Falkland Gold and Minerals Limited – listed on AIM;
100% of ATP728, Surat Basin, Queensland;
100% of Blocks 57/3, 4, 8 and 9 – Ireland;
100% of Blocks 4 and 5 of Area 3 – Malta.

The Falklands Gold has been sold, and from memory ... I think two Kenya blocks L10 & L11 have been relinquished. L5 had a dry well (the collapse in GBP share price in Jan07), and partners Woodside & Repsol are still to decide whether to drill another and whether to drill L7. RWE has come in as a partner in Malta.

My only interest has been in the Falklands oil. The dry well in Kenya was great for me, as it allowed me to buy into the Falklands without paying anything for anywhere else.

You can download the annual report from http://www.asx.com.au/asx/statistics/announcementSearch.do?method=searchByCode&issuerCode=gbp&timeFrameSearchType=D&releasedDuringCode=6
and their blurb on Kenya, Malta and the Falklands is pretty straightforward.

You should also be able to get the annual report and earlier reports from the GBP website http://www.globalpetroleum.com.au/.

Happy hunting.