GBP - Global Petroleum

[EasternGrey1]

OK, I've found a link to the info that I mentioned in my 9 Jan post:
http://www.oilonline.com/news/features/oe/20041201.All_at_s.16706.asp

The Morgan Stanley report credited CSEM with contributing to ExxonMobil's remarkable run of 13 out of 13 discovery wells offshore Angola. This assertion has not appeared in subsequent, updated versions of the report, nonetheless the implications were there to be drawn: CSEM looks like a key risk management tool for future offshore E&P.​

Given the usually low hit-rate for exploration wells, 13 of 13 is a very impressive statistic.

 

[EasternGrey1]

Well, iamtrueblue, if you did wait for 0.17, it looks like you got it.

If so, you have just paid peanuts for a company with nearly 7% interest in one of the largest potential oil & gas provinces in the world. Latest CSEM surveys indicate the presence of hydrocarbons in 7 of their top 10 individual prospects, and they still have another 90+ to look at.

And just in case you missed it, CSEM is NOT the same as seismic. Seismic looks for rock structures that are the right shape for holding oil or gas. CSEM is a deepwater high-tech electromagnetic surveying method that detects the presence of hydrocarbons. So if seismic shows a likely structure, and CSEM shows hydrocarbons, bingo, you're in business.

Exploration companies that do really well get a hit-rate of up to about 30% from their exploration wells. Exxon, using CSEM (they call it R3M), has reportedly been getting 100%. 13 out of 13 off Angola I mentioned before, and I've seen some corroborating info. My info is that they are continuing the hit-rate in deepwater New Mexico.

So if BHP start drilling off the Falklands, after CSEM surveys have been done, you can be pretty confident the well won't be dry.

I calculate that 3,500bn barrels (BHP 51%) would add 10-15% to the BHP share price. So a 7% interest is going to be quite good for GBP (I calculate around $7/share)!! And 3,500bn barrels is just the potential of the first prospect with 89 more to go (smaller of course, but so what) .....

Let's get pessimistic, and say that in spite of Exxon's record, the odds are still no better than even money. OK, divide by 2. It's still a couple of years away? Knock off say 35%. Still nervous? divide by 2 again. No matter how you look at it, you're getting long odds for a reasonable bet.

I've been buying GBP at all prices from 0.20 down to 0.145. I acknowledge that it's a gamble, but you don't often see odds like these.

The hard part comes next - waiting probably a year for BHP to start drilling.

 

[EasternGrey1]

Oops - 2 mistakes. Not 3,500bn of course, but 3,500m. And the GBP interest overall is 4.9% (14% of 35%) not 7%. Using correct figures, and valuing oil in the ground at $US8/bbl (10% of where the price is probably headed) 3,500m bbls would be worth $8+/share on GBP (3500*8*(1/0.89)*4.9%/174.4). The 174.4 is shares on issue.

 

[EasternGrey1]

FOGL up in London last night on >5x avg volume.
No announcement, no obvious news.

Any clues, anyone??

(GBP share price is starting to drop behind the FOGL value again - FOGL 13.1% holding + $A7.975m cash = 20.8c/share)

 

[shaunm]

Yeah ol' GBP has been doing nothing lately except sliding back a little. Would be nice to see something happening.

 

[EasternGrey1]

Would be nice to see something happening.

Looks like you have your wish. Final Results for FOGL have just been published. A lot of info was repeated from earlier announcements, of course, but the following contains some positive new stuff :

Ongoing activity

The company has entered into a new phase of operations where future work, with BHP Billiton as operator, will lead into the drilling programme. The data from the CSEM survey will undergo enhanced processing and interpretation over the next few months to produce results which will be fully integrated with the existing data and with the recent 2D infill seismic.

Site surveys are expected to be carried out in the second half of 2008. BHP Billiton is currently reviewing a number of potential rig options and an update on this will be provided at a future point. If appropriate, discussions will be held with the other Falkland operators with respect to rig sharing.

...

Financials

FOGL started the year with £14.9 million in cash, of which £11 million was invested in the exploration programme and £2 million was used to cover operating costs. At the end of the year, we received US$12.75 million (£6.4 million) from BHP Billiton under the terms of the farm-out agreement bringing the year end cash balance to £12.5 million.

Outlook

This project has been described as high-impact/high-risk by some commentators in the past. While it is clearly high-impact, we have worked hard to mitigate the risks.

As a result of our technical work and data gathering we believe that the exploration risk has been significantly reduced. Deep water, harsh weather and the remote location have all been cited as potential obstacles to success. However, the environment is very similar to West of Shetland, UK Northern North Sea and the Norwegian Sea. In all of these areas, oil and gas have been successfully discovered and exploited and the drilling and production technologies that have made this possible are readily applicable to FOGL’s prospects. Most of them lie in water-depths of 600 to 1500 metres; whereas recent wells in the Gulf of Mexico have been drilled in water-depths of up to 6000 metres. Furthermore, the wells will be conventional (i.e. they are not high temperature or high pressure). Whilst the North Falklands basin drilling campaign of 1998 was not a commercial success, it demonstrated that offshore drilling operations could be effectively supported from a shorebase in the Falkland Islands.

Despite its perceived remoteness, the Falkland Islands is located between key oil and gas markets. It is well-positioned for North and South America, South Africa and Asia. Extensive development case modelling by FOGL based on the use of floating production, storage and offloading vessels (“FPSOs”), has been carried out using various sizes and types of discovery. FPSOs would be able to operate effectively in the licence areas and oil would be exported by shuttle tankers. Using such a development concept, even moderate sized discoveries would be commercially viable, even at oil prices substantially less than today’s market prices. The favourable fiscal terms offered by the Falkland Islands Government and the Islands’ political stability further enhance the attractiveness of this area.

Exploration drilling is now expected to commence in 2009 and given the potential of the short-listed prospects, we believe that the chances of a commercially viable discovery have improved further.


FOGL shares are up 7.8% as I write. Matching GBP share price would be 22.6 (51% above current price).

 

[shaunm]

Thanks for the update EasternGrey1.
I was beginning to forget I had the stock
Well it looks like "bottom draw" until late this year and all will be revealed.
Cheers

 

[EasternGrey1]

FYI - a new annual report has been posted on the Falklands Oil and Gas (FOGL) website, dated 15 April 2008, but it appears not to have been posted in any stock exchange announcement here or on AIM. Find it at http://www.fogl.com/ - the pdf version is easier to read.

The report is much more upbeat about their prospects off the Falklands, saying

"Our largest prospect has the potential to contain hydrocarbon reserves of over 3.5 billion barrels"​

and

"Top 10 prospects have potential to contain hydrocarbon reserves of over 10 billion barrels"​

They also point out that the area is not particularly daunting for development, being much less deep than a lot of the Gulf of Mexico, and similar to North Sea areas off the Shetlands. They have only looked at the best 12 prospects, there are "over 90" more being kept for later, presumably rather smaller potential.

BHP are looking for a rig to start drilling in 2009.

FOGL shares have started to move up, and at current exchange rates make GBP shares worth 22.6c, ignoring all other assets except cash.

My calculations show that if there is indeed 3.5bn barrels down there, and if you value it in-situ at say $US8 per barrel, then GBP shares are heading for north of $10 (yes, that's ten dollars). Pro-rata if there are 10bn barrels, of course.

This could get quite interesting over the next 12 months or so.

 

[shaunm]

Hmm...very interesting. What calcs have you used to get $8 per barrel from.
3.5 to 10 bill is staggering!
I wonder what it will take to catch the eye of buyers here in the medium term?

 

[ColB]

Gooday Skippy, Great reading your research and evaluation on this one. Tell me, if BHP aren't organising a drill rig until 2009 why would anyone need to get on this one if there is not much in the way of good news to come out until then. Granted, it would be good to be in before the sp spikes but it seems to be going nowhere at the moment. Am I missing something? Regards Colb

 

[EasternGrey1]

Good questions. $US8/bbl? I can't find any "official" way of valuing oil in the ground, so I took what seemed like a pretty conservative figure, based on long term oil prices maybe being nearer $US80 than today's price, and reckoning on a net 10% profit. I now see FOGL's presentation, also on their website, estimates £75 per FOGL share if Lorigo (the "3.5bn bbl" field) is successful, based on $50 oil. It's more conservative than my calculation, so you could take it down from $10 to about $8 to be on the safe side. Still looks like a nice profit to me.

About not buying till BHP start drilling : OK, you take the risk! The market is incredibly unpredictable at times. Shares like GBP tend to lurch up and down by large %s, but once they jump up there's no guarantee you can ever get back in at the lower price. FOGL may well publish the detailed CSEM results at any time, or BHP could announce they have a rig, or a sharemarket newsletter might tip GBP, or a couple of funds might start buying in - any one of a number of things not necessarily tied to company announcements could get a big move going. I would rather have bought in and wear the ups and downs, than sweat on whether it might suddenly jump up before I bought in.

FOGL hit an intraday low of 91.6p in January, now they're over 140p. Once an upward move gets noticed and the mo-mos get on board, who knows where it could get to, once the company has put out a number like £75.

I've finished my buying of GBP - I'm now clean out of cash - at an average price (17.8) embarrassingly above today's price, but I'm still satisfied that what I did was reasonable. Time will tell .......

PS. The map in FOGL's presentation looks awesome!

 

[EasternGrey1]

Very bad news today - but read on before you dump your GBP shares!!

GBP has sold out most of its holding in Falklands Oil and Gas (FOGL). From an original 14%+ of FOGL they now hold only 1.85%. I have processed all the numbers at today's exchange rate and FOGL share price, and they are as follows:

Exchange rate $A1 = 0.4744 UK£
FOGL holding 1.71m shares
FOGL share price £1.3592
Market value of GBP's FOGL holding $A4.9m
GBP's cash balance $A34.6m
Total value, ignoring GBP's other interests $A39.5m
GBP shares on issue 174.4m
Value of GBP's FOGL holding + cash = (39.5 / 174.4 =) 22.6c/share
[ETrade give shares issued = 174.4m, but I had previously been working on 192.6m. Not sure where this change has come from. At 192.6m we would be looking at GBP shares worth 20.5c]

If Lorigo (FOGL's biggest prospect) contains the 3.5bn bbls they expect, then I calculate that GBP shares will then be worth around $1.50. Still quite nice, but nothing like the $10+ that they would have been worth if GBP hadn't sold down its FOGL holding.

To me, this is all a disaster, as I had been keen for a long time to put my money into the Falklands prospects, and GBP was the only way of doing it in Australia. If anything, the GBP shares should actually move up, because they now have cash worth more than the share price, but what I really wanted was the prospect of making a massive profit not just doing quite nicely.

Such is investing, I suppose.

 

[shaunm]

Strange decision on face value indeed; perhaps they had a good reason. Did the news say why they decided to sell down their holding?

 

[EasternGrey1]

"The increased working capital will enable the Company to progress its existing projects as well as seek other opportunities for acquisitions, joint ventures, or investments in the resources sector."

Shares up this morning, but I'm p'd off big time.

 

[robs12]

Time to brush the cobwebs off this thread... (Which I notice I started some years ago now..). I sold a long time ago but have recently bought in again - looks like a very good situation to me. A quick summary:

GBP seems to have slipped under the radar for a little while – little mention on the boards to speak of. Be aware that I have a holding & hence a vested interest, so please DYOR etc.

Until recently, GBP had no booked reserves, no revenue, and have a less than spectacular history, having been involved with Falklands Oil & Gas (FOGL), & with a joint venture with Woodside in Kenya which came to nothing (unless there is a successful law suit – the Woodside farm in tied them into drilling two holes, they drilled one & then backed out – GBP & other JV partner Dana Petroleum have started legal proceedings against Woodside…will be an interesting case!).

GBP now have a 15% interest in Leighton (Texon operator - recent well flowing, more to be drilled), so a little revenue coming in.

They sold out of FOGL a little while ago (keeping a small 1.85% stake, worth approx $2.5m), and as a result have cash in the bank – considerably more than the current market cap. As at 30 June 2008, cash was $34.5m, shares in issue = 174.4m…34.5/174.4 = 19.8c per share… current SP = 14c. Cash has probably come down a little, & they are about to spend a little (read on…), but currently it appears that market cap is still significantly less than cash.

The directors have some pedigree: Peters Taylor & Blakey are ex founders of Dana Petroleum, along with Mark Savage … so they would appear to know about the business & pulling deals together. Blakey & Taylor have been buying shares recently & hold significant stakes.

On Friday, Tower Resources (UK based exploration tiddler with some common directors to GBP, and one of only two non producing oil stocks I hold – three now, including GBP) confirmed that the Ugandan government will permit GBP to become a JV partner with them – 50% stake for costs of drilling two wells (capped at US$6.5 for the first well).
After the first drill, GBP state they will still have net cash of US16.25m, equivalent to A$25m or 14.3c per share…which is about today’s share price.

They are due to drill just to the North of HOIL/Tullow’s successful finds in the Albertine basin in Uganda. They are due to spud in March, maybe stretched into April. They are shallow wells, and in TRP’s opinion, the chance of success is high (50%). More info can be found at the TRP website & there are a couple of good research notes out there on TRP (Fox Davies & Hoodless Brennan). There are two prospects, the first targeting 100mmbbl. Tower suggests net recoverable resources for the block could be 225mmbbl.

So…. spudding in the next couple of months (with potential for 100mmbbl+ net to GBP if field is successful), already some revenue (Leighton), market cap less than cash in bank (or roughly equal if you take off the cost of the Uganda drill), experienced & well respected directors who are buying, SP is lower here than in UK (dual listed – an arbitrage opportunity over the last few days), & they haven’t hit the radar yet…looks like potential for excellent upside with very limited downside risk - DYOR!

 

[robs12]

Any interest yet?? Some reasonable buying recently (SP now 22c rather than 14c at time of my last post), but still a long way to go IMHO. Looks like mid May spud date & who knows what may happen after that!!

 

[onshow]

Hi all im please to say after doing some reaserch of my own and listening to other peoples views i bought my first batch of GBP today at .225 , even though they finished lower today and i have bought at a high i dont think in the long term and short term what i pay for them as long as i have some in the kitty. I liked the look of the balance sheet and seen that the amount of cash in the bank for a small company was very encouraging and also the position of the future drill hole in uganda which should be drilled in the near future looks very promising as the company tower resources have had a success of drilling and hitting oil/gas 8 out of 8 holes that they have drilled which GBP is located near and shows very promising signs. If GBP are able to drill and find what they are looking for it will do wonders for the company. Nothings garantied in this world but as someone else stated on here , the best place to find oil is near where it has already been found !! And that is what GBP are doing!! Good luck to all share holders on a good report back in the near future.

 

[BESBS Player]

Decided to buy into GBP over the last few days to get set for expected drilling in late January/February;

* Drilling potential high impact Ugandan well by end of Q1 2010. (possibly late January)
* They have over $25M in the bank and a market cap of under $29M.
* Last drill reached 29.5c pre-results. Given slightly better market conditions now, and less likelihood of capital raising at these lower prices (given cash situation), looks OK.

As always, DYOR.

Bought in GBP at 17c ave

 

[BESBS Player]

Decided to buy into GBP over the last few days to get set for expected drilling in late January/February;

* Drilling potential high impact Ugandan well by end of Q1 2010. (possibly late January)
* They have over $25M in the bank and a market cap of under $29M.
* Last drill reached 29.5c pre-results. Given slightly better market conditions now, and less likelihood of capital raising at these lower prices (given cash situation), looks OK.

Announcement out. Drilling rig is now booked with OGEC. Once environmental regulations are okayed, drilling scheduled for early February. I'd expect GBP to hover for a week or two until new year then hopefully we will see a late pre-spud run into January. Time shall tell.

Holding GBP at 17c

 

[BESBS Player]

Looks like GBP are now starting to leave the station-SP has now touched 20c As Avivi-1 is less than 2km away from the initial drill location, GBP must believe that they narrowly missed and are confident second time around.

I suspect that the following extract might explain the confidence of the JV:

"Since the beginning of 2006, there have been 27 wells drilled in the Albert Basin, with 26 of these wells encountering hydrocarbons."

http://www.heritageoilplc.com/uganda.cfm


Happily holding GBP at 17c :