NIKO / IraLet me start by giving some key points about Iraq before saying that no way in Hell Niko will turn this into a failure:
- Billions of barrels of oil are still to be explored in every spot in Iraq and one of those areas in Iraq
- All players in Kurdistan have either found oil and gas and it was not easy. Look at at GKP a billion share outstanding. Was it easy? No. WZR had issues, sterling too, and I can go on but there is OIP and yes you may not always get 10,000 flows.
- All majors and juniors are running and trying to be short listed on tenders by governments. If they fail, they either wants to be in a JV or sub-contract, etc.....
- Too much money to be made there
- Pipeline going forward in Kurdistan and many other tie-ups
If we look at the benefits vs investment on the long term, for sure it is attractive. If NIKO says I am going to throw the towel on this from the first well or first problems on that block after got assurances that there is oil in that mountain, they are shouting themselves in the head and not in the foot by telling the Iraqis not to let them in again for life.
Now they know the oil is there and in multiple zones. It may have been better to do their 3D seismic before starting but what the hell they can do it now if it is needed. Otherwise, they can go directional from the point they are at. They can have other development wells up to 2,000 feet and producing smaller amounts of oil which is still worth money.
In the past two days, the stock has lost its pants. But if there was no believers any more this would not be at 16 cents now but at 5. Surely someone out there is happy that a lot of us small traders bailed but the big boys have not.
I might be completely wrong but no one has given up in that area yet. And someone was to do so, it will not be NIKO. Time will tell.