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Bravedog,
Back to that inscrutable VCP we go. You may well be right!!
Indrid,
We’re not going to see eye to eye on this, but that’s okay.....this sort of dialogue is what the bbs are designed to encourage.
Good chat Indrid.
Sorry stray I haven’t articulated myself quite well enough - GKP’s forecasting is more guessing than others/normality, to forecast well you have to have a certain amount of clarity and stability, GKP doesn’t have that luxury. From politics, to PSC amendments, to FDP approval, lack of real knowledge of the field, with those risks still there, why start now. It’s not the right time. And if the rumours are true it’s not even GKPs idea to start the divi, the instis have demanded it. Then you think it prudent to spend more cash via a buy back on top of that, that would be poor cash management IMO
And my point still stands and facts are facts - buy backs are artificial means to enhance share holder returns
They are already behind schedule on the workovers and drillling. FDP was rejected. So much work ahead of them. So much more of the field to explore and exploit. Get that cash into the assets rather than the pockets of institutions. You simply can not argue that will create more fundamental value.
Indrid,
What is a business plan if not a forecast, plain and simple?
You’ve just dismissed the basis for all responsible commercial lending as ‘guesswork’.
Come on Indrid,,,,
If you’d have stuck to the line of conservative cash management then you’d at least have had an argument....fragile, tenuous.and lacking business imagination, but at least an argument.
But the whole of the O & G industry is based on forecasting for goodness sake.
Forecasting, or guesswork as you call it, and it’s interpretation, is pivotal in the decision making process.
And one of the key management challenges is how to assess forecasts. They help inform opinion and assist risk evaluation, then decision making.
Otherwise there are a lot of lucky businesses out there.
So I’m going to ignore your guesswork analysis and concentrate on how to best use any forecast cash wholly surplus to requirements.
And share buy back is a tool often used to reset real value in an undervalued company.
Stray sorry I can’t agree with you, a buy back is artificial SP enhancement, it’s nothing but that. The company doesn’t become any stronger or healthier because less shares are in circulation, that’s why it simply is cosmetic
And that’s the problem with “forecasting” it’s guessing, educated guessing, but to say the buy back can suddenly be halted should it need to be is correct, but that’s not the point, the cash has left the company and it will never be seen again and if for some reason GKP needed an extra $200mil more than forecast on the way to 110kbopd and that went on a few years worth of divis or buybacks, stopping it doesn’t really solve the problem, the cash is gone
Like I said and bravedog touched on......the KRG, the PSC, Iraq, etc etc........so many unknowns.......so sit on the cash until it’s clearer skies ahead......I simply think they have moved too soon on this front and the cash should be hoarded or spent on achieving organic growth
Sorry Indrid, just got back from supper.
We”re not creating a better sp by artificial means.
Finally the sp can only grow if we double, then triple production over the next three years.
The buy back just makes it more expensive to join the club.
GKP is grossly undervalued right now and unless we do something about that, the IIs will continue to profit at our expense.
The buy back only operates using surplus, unrequired funds. It can be paused in a moment if funds are suddenly needed elsewhere for operational reasons.
Do your own cash flow forecast for the next eighteen months using the Plan figures and timings. Use your own conservative oil price predictions and build in a buffer for unforeseen circumstances. Then tell me of a better way to utilise the surplus funds in the second half 2020.
Cockeye,
« the decision not to engage in a buy back but pursue a divi was taken by the board primarily to attract large institutions. But why? ».
Because some US institutions can only buy if it is a dividend paying cy.
Straycat,
Why no buy back announced?
They didn’t want to give good news! They were in the 20 days period of the VCP and a high price wasn’t in their interest as they needed the lowest price possible.
Indrid and CCC
They simply can’t invest to much because their PSC and the payment system hasn’t been approved by ICG and parliament. This prevents heavy investments from the IOC which isn’t good for Irak.
Indridcold. totally agree and well put.
Cockeye, yes I agree, but what is better for the SP isn’t necessarily better for the company, but if something is better for the company it is almost always better for the SP
Always better to grow organically than artificially .......that was my point, that’s how the cash should be employed
Stray I agree what you are saying, but creating a better share price through artificial means like buy backs does not create a fundamentally better underlying company, that is my point. Any share buy back ever done and ever to be done will not make the company a stronger company.
It is fine for companies that are so flush with cash and have no upcoming substantial OPEX or CAPEX commitments to employ such a strategy, but to say GKP should commence a divi and a buy back at the same time is not at all prudent
If anyone can categorically confirm that on the road to 110kbopd that GKP won’t have any sort of cash call, equity or debt, then fine give that cash away and divert it away from the companies operations and balance sheet. But I don’t think anyone can confirm that.
That money will be put to better use growing the company organically or at least ensuring we have enough of a buffer that most unforeseen circumstances can be funded. This is GKP and this is Kurdistan, keep that safety net of cash!
Failing that buy into another asset, diversify, pay money to make money, not to use it for keeping greedy institutions happy.
Wouldn't a higher share price benefit us when we are sold as I cant see it being x 10 our current price?
You need to do some research on Resource Companies.
Of course the SP is unrealistic. But you never ever get anywhere near the core value for a Resource Company until its sold. Thats probably why savvy investors and shareholders are hanging in here. Thats the only reason Im still here.
Somehow you misread what I said. The HNWI's, like Baron Day Trader, thought a buy back would have been better for the SP. It's hard to see right now how they could be wrong.
I expect that they will hold it in Baghdad
Is there any genuine GKP shareholder who thinks the current sp represents fair value?
Of course not, It’s a joke, or it would be if it wasn’t so serious, particularly for LTHs.
A phased buy back plan including share retirement (rather than withdrawal to treasury) would be an excellent cash investment in our undervalued stock and would result in a significant concentration of shareholder value benefitting us all.
Fewer and fewer shares coupled with an aggressive dividend policy funded by increasing monthly receipts ( anyone done a forecast cash flow for GKP according to their targets.....it’s stunning!) means we”d be showing real belief in our future and we’re prepared to prove it by our actions.
...Because it concentrates the value of the stock in circulation.
cockeye
sorry but your post isnt very logical - of course sami wouldnt phrase it like that, but then you know that
like i said to Stray - buy backs are cosmetic only. divis given out just to keep investors happy is a cop out. keep investors happy buy growing organically, not by handout forced upon you
how many years did Apple go without paying a divi for?...............never hurt them becoming the biggest company on the planet
and of course HNWI's want divis......why wouldnt they??! doesnt mean its best for the company, just means its guaranteed short term cash in their accounts........
stray
any buy back is just a ploy to create a higher SP or enhance EPS artificially - buy backs are purely cosmetic, how does it make the company itself a materially better company?
Paying a small dividend to (hopefully) encourage Institutional buyers / other Investors is also a common ( and legimate) means of attempting to get the SP higher.
They need to disperse some of the cash, rather than leave it for Tkeover chaps to distribute, it has been getting embarrising with over 300 million of cash sitting in the bank,
GLA LTH next year will be a bigger problem and the years to come after that, Special divi,s in the years to come
I would have preferred a share buy back over the dividend as they've hardly given us any confidence back or a lift in the share price ....in fact its worse now than before It was announced. On the dividend front is anyone else reinvesting it back into gkp or taking it off the table ?
Indrid, you're the only person I've heard or read suggest that. A number of HNWI's invested here suggested the company should have either conducted a share by back rather than a divi or done both, but you're suggesting Sami when asked what he intends to do with his cash pile should have replied, 'This company is extremely high risk we need to keep every penny banked as we don't know what's around the next corner'? Yeah, that's a confidence booster to the markets.
IndridCold,
‘Why risk cash on a purely window dressing ploy’,
I don’t understand.
Care to explain?
"Strikes me that the truly aggressive play would have been to launch a share buy back plan at the same time as the new dividend policy"
aggressive and foolish........they have a huge (thats operational and financial) task ahead of them to get SH where it should be, why risk cash on a purely window dressing ploy - there is so much risk around this company that cash should be hoarded at all costs except when needed for essential operational issues/expansions
grow this company organically, under promise and over deliver - that will make the insti's happiest and get fresh money flowing in - i dont mind the divi coming in as its money hitting my account, but if i was in charge i wouldnt have gone that way
'SZ was quizzed on it and didn’t rule it out in the future.'
Straycat, what he did was dangle a carrot that we'll almost certainly never get to taste. He said that the decision not to engage in a buy back but pursue a divi was taken by the board primarily to attract large institutions. But why?
Look whats happened to the SP since. You have to ask, was this the objective after all?