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Gulf Keystone, Afren, President Petroleum, New World Oil & Gas news briefs

Contributed by Fox-Davies Capital

Gulf Keystone - The Missing Link…: The interims today have provided little new news, but plenty of detail. The fact that there is approximately $135mm in cash at the end of the period provides the Company with plenty of headroom to complete its immediate programme. Whether GKP will need further equity, will depend very much on the availability of debt financing. We believe that Kurdistan risk is low within the region, but that the regional risk is high, especially with Kurdistan sandwiched between Iraq, Iran and Syria. This raises financing risks and the uncertainty as to whether the debt markets will be open for Kurdish business. Still, with a number of government organisations and development agencies supporting the region, we believe the financing is there, it is just a question of ownership, structure and investor returns. There is little doubt that GKP's assets are world class, and the Global crude market is hungry for supply, which makes access to an export route, and therefore the pipeline, the critical path for the Company. With everything else in its control under control, this is a wider issue that will need to be resolved by the KRG, Turkey and Baghdad. In order for GKP to achieve market value for its asset, it will need access to world prices (local market ~$50/bbl), and global market depth (regional demand ~150 - 200m bpd). Following this news we are reiterating our BUY recommendation and 350p Target Price. In this news:

Afren - Commences Drilling on Ain Sifni PSC: Following the success of Simrit-2 discovery well, Afren has commenced drilling of third well (Simrit-3) on Ain Sifni PSC (Kurdistan). Simirit-2 exploration well was drilled to measured depth of 3,800m and encountered 460m of net oil pay throughout Cretaceous, Jurassic and Triassic age reservoirs. The objective of Simrit-3 exploration well is to re-confirm the presence of oil within the same Cretaceous, Jurassic and Triassic reservoir intervals. The net 2C resources of the block are independently estimated at 183mm bbl which we believe would be revised upwards following drilling of Simrit-3 and completion of Simrit-2 drill stem tests.

President Petroleum - On Expansion Mode: Following award of two new exploration licences in Argentina last month, the Company today announced Farm-in agreement for 2 blocks - Pirity Block (59% WI) and Demattei Block (60% WI) in Paraguay. The Company estimates gross risked recoverable resource potential of greater than 150mm bbl from two blocks. Entry in Paraguay provides geographic strategic fit given the Company's extensive operations across the border in Argentina and thus presents an opportunity to utilize its regional technical capabilities and knowledge. On the financial aspect, the acquisition will be financed through issue of new equity shares. It has already placed 115.8mm new equity shares with investors at a price of 20p/share, to raise gross proceeds of £23.17mm (approx US$37.07mm). In this news:

New World Oil & Gas - Confirms Rig arrival for Blue Creek Project - Positive: The Company announced today that it will commence drilling shortly on the B Crest prospect (one of three drill ready prospects) on the Blue Creek Project located in the productive Petén Basin in Northwest Belize. B Crest is estimated to hold a P50 un-risked prospective oil resource of 92.1mm bbl. We will be waiting for the updates on the commencement of drilling operations.