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Who would have thought a year ago - when G was around 220 - that 196 would be regarded as good. It isn’t, of course, but by recent standards the last week has been the best for a while. It is however, a sobering thought to realise that, over the last four years, G rarely gets better than this in relation to OP - with July-August of 2018 and March-April of this year being the only real highlights: https://invst.ly/c6n6r The dashed line represents 3x$63 Brent - so where the green trace touches or crosses it you can check how G was doing on that day.
Let’s zoom-in on the latest part of that: https://invst.ly/c6n9m
And also a slightly different take with the Bollinger Bands thrown in: https://invst.ly/c6n9-
The nub of the last two is that G might well keep going. It has been known to stumble near 199, and 203 has always presented something of a barrier, but the trend indicates 210 as a possibility if you are of a highly optimistic temperament - but it will need a fair wind and an equally fair OP.
Here’s the last five days: https://invst.ly/c6ndb DNO somewhat resurgent and technically off the chart at about +12% over the week. G tracking Brent rather than blazing ahead of it. GKP stumbling a bit today but perhaps it had got rather too far ahead. Here are the five since April’s peak OP: https://invst.ly/c6ng3 RDS remains the class act for participating in Oil and Gas without all the drama of the other four.
Well at least OP was up but, to be frank, G is not responding to it with any particular vigour - the market remains quite unimpressed with G, it seems. The handy score calculation puts G at a measly 3 above 3x Brent - pretty poor but not disastrous (workings below).
Here’s the last five days - DNO hidden for the time being because an anomaly on Thursday messes the scale up - suffice to say that DNO is at about the +5% level, 12.7 Kr.
https://invst.ly/c66hu
Brent is, as I said at the start, showing some promise and might just break upwards for a while:
https://invst.ly/c66gj
All the runners since oil peaked in late April: https://invst.ly/c66jk
For me it was a de-risk day - sold off just under 15% for a nice but smaller than hoped for profit. With OP rising there’s a reasonable chance it will track it further but I’m not anticipating much over 194 unless OP lifts strongly and I was keen to offload some at a profit before a potential autumn drop, or fall fall.
G’s sp, rounded = 192 = A
Brent, rounded = $63, x3 = 189 = B
A-B = the score = 3
For the upcoming week, it looks like G will have a tough job reaching and conquering 194. One trend and a separate resistance level to beat:
https://invst.ly/c5lgr
Looks impossible unless OP and/or buybacks provide the necessary upward pressure.
Nothing further to add for this afternoon, G:OP ratio up a bit to 3.11x (based on LCO, which flatters slightly compared to OANDA) but sp still about 8p below a satisfactory level by recent historic standards.
Last 5 days G/GKP/DNO v Brent: https://invst.ly/c1ony
With G popping up to the 190 level it’s perhaps worth a quick look at the long term picture of G v 3xBrent rather than the day by day: https://invst.ly/c1283
From this we can see that G has broken through that orange downward trend that was casting something of a shadow. We can also see where the 3xBrent line has touched 180 (ie when Brent has been at $60) in the past and what the G sp has been on those occasions. January offers a couple of good examples, where the sp managed 197-203p. So that probably gives a fair indication of where our short term target might be until there’s positive news to push it further or if Brent continues to climb on the EIA or other OP news. It seems the US EIA figures are always taken a bit more seriously in the industry and the media than those of the French based IEA, btw,
Buybacks may yet play a part, of course, but I would not count on it given the lack of activity over the last week whilst the sp was markedly lower.
Here’s a snapshot of G v 3xBrent this morning just to illustrate one way to interpret it.
https://invst.ly/c0slu
The height of the pink line is the positive lead of G’s latest price above 3x Brent, which in this case is 190-181 = 9, which is also what you get doing the ‘quick check’ calculation:
G’s sp, rounded = 189 = A
Brent, rounded = $60, x3 = 180 = B
A-B = the score = 9
0 to +15 is average,
+15 and over is good,
(+30 excellent)
Hey bunks. Still here and watching with interest. Had some good fortune with fresnillo made more in weeks than Genel in years. But lost a lot on PDL so not all great. As I say even though people despise me saying anything negative what reason or news has Genel given investors to be cheerful about in the last 2 years? 2k at Taq Taq and chevron acquisitions. Hardly inspirational. This company has bags of potential they just never realise any of it so people won’t invest until they do. I may reconsider if they start doing what they are paid to be doing and run the company in a way that actually returns shareholder value befitting of one with a balance sheet like they have. Patience? 2 years is plenty enough time for them to do stuff, I think. Share price reflects this and I sure don’t have even the slightest impact or influence on it. Happy to talk pros and cons and am rational even though people just say I’m annoying and not welcome etc...
It really is disappointing that we can't manage a decent rise with Oanda above $61, GKP has had some up days when everyone else is down, not reading more into it than that - when will G get it's mojo back? Queue Lem to rile up some of the locals, sorry in advance, couldn't resist it - G has a tendency to exhibit delayed reactions, maybe this is one such example. GLA - up is up as boyo says.
Yes bunks - OP up nearly $3 since yesterday’s close and G up 5p - that’s ok but not great in the grand scheme of things. 9p would have been nearer the mark.
In fact the G:OP multiplier dropped back to 3.06x during the day from a high of about 3.15. Never mind - up is always better than down and why is GKP inexplicably down?
Here are the last five days of G/GKP/DNO v Brent(LCO): https://invst.ly/b-k9q
We should be up 4% ish - we've recently followed pmo on the way down but not so back up seemingly
As far as I can see OP is up nearly $2 from yesterday’s close, which would logically translate to a potential 6p G increase - very welcome but nothing too unusual. However, G v OP has been strengthening over recent days to about 3.14x which is certainly a positive.
DHC I guess the point you are missing is that no matter however correct you individually may be that a stock is undervalued, for it to increase the market needs to believe that too and be prepared to invest its money. What the charts do helpfully is show what that market sentiment has done and what it is reacting to.
Just look at GKP - what is the material change in value that has ticked it up from 2.00 to 2.40?
What is the change in G That has caused it to go down as it marches towards sarta whilst delivering on its cash promise.
I find this chart really interesting.
Thanks for posting.
When you look at the cash flows and ‘growth’ required to deliver each the market cap of each company it is really hard to understand the relative share price today. The market seems to believe in material unforecasted growth / improvement in GKP despite a lot of spend to come, but doesn’t see any at all for G.. in fact doesn’t even believe the cash generation, which alone supports more than current share price
Here are the last five days for G/GKP/DNO v Brent(LCO): https://invst.ly/bzuz7
GKP has issued an RNS saying their initial $15m phase of buybacks is complete. G meanwhile still has some way to go until the 17th deadline. Although activity has apparently paused over the past few days, it did appear that BBs might have been stabilising G’s price against the fall in OP this morning, although GKP, now standing on its own feet, was also firm .
Looking at the period since G’s bbs first started: https://invst.ly/bzuxq it is clear that G and GKP’s sps are up by roughly 10% with respect to OP - both are slightly up by around 2% over the period whilst OP is down by nearly 10%. For G, the beneficial boost of the buybacks occurred within the first phase whilst the second phase has so far only maintained the improved ratio to OP as the latter has fallen.
A year ago Brent was $20 higher - that’s equivalent to +60p on G’s sp.
Quite agree DHC - I never rely on charts. But I do like to know what the form is.
My posts always clearly labelled - easy to skip.
G is actually very straightforward - but I find it worth figuring out what the main drivers are, especially when I've a few 10s of k at stake. ATB
Agree with DHC post below
Just have to be patient here and get through the ups and downs of the oil price.
Also happy with the CEO even though a certain irritating poster no longer invested knocks him for his incompetence in this ‘dog of a share’
Typos..
DHC...well posted and totally agree.
SP is no longer an issue at the current OP but solid balance sheet,big dividends, growing investment prospects and very low production costs are.
OP will pick up and can’t stay low very long.
GLA
DHC...well posted and totally agree.
SP is no longer an issue at the current OP but solid balance sheet,big dividends, growing investment prospects and very low production costs are.
OP will pig up and can’t stay low very long.
GLA
Utterly correct DHC, market valuation - sentiment - undoubtedly holding G back.
It's sad to say but from an historic trend perspective, things have never really been much worse for G than they are at the moment. Here’s an ‘all-time’ chart of G v OP from the Vallares RTO to today (Brent, as usual is green) with the lowest trend line in red:
https://invst.ly/bzqxf
Also in red are a horizontal and vertical pair that highlight a point in 2015 when the sp was roughly the same as today. You’ll notice the OP on that day was a lot lower - about $37, in fact. That gave an sp:Brent ratio of over 4.7x . We can only dream of that kind of ratio today, as it would put today’s sp at around 280p! To be fair, that was before the state of Taq Taq’s reserves fully emerged.
I agree Whitehat. Debt and the rapid decline of individual wells certainly seem to be the main problems with shale in the US and the reason they are overproducing at rock bottom margins. It’s a downward spiral which only ends when producers go bust. The majors are better placed to match their production to demand at a sustainable price.
Crazy that this oil depression has lasted almost 5 years now. Things like these are usually cyclical and that is also what slipped me up investing in Genel. I remained invested far longer than I ought to because they now have a strong balance sheet and can succeed at lower oil prices. Unfortunately over the previous 12 months it seems as if management are asleep at the wheel and don’t have any clue what to do with the cash they have. Almost like running out of ideas. I was expecting them to be doing and taking lots of strategic actions and building the company, not buy into Sarta and sit back for a year. Is this not the worst oil price depression ever? Correct me if I’m wrong. Everybody wants to talk down oil prices no matter what. It wouldn’t surprise me if there is no glut at all and it’s just smoke and mirrors but as people rightly say don’t fight the trend
Yes Leem - All I would say in defence of G (not a recommendation to invest in it) is that the company has no control over OP. It also has to maximise production - it cannot, for example, choose to cut back when global prices are too low. So Mr Higgs’ hands are tied in those and many other respects. They are already targeting growth and ‘value accretive’ use of capital - what else would we expect? G currently has only one customer and that’s a highly significant disadvantage of being a KRI-only company. It is probably one reason why the market is reluctant to price G higher than it does, other reasons being historic disappointment in terms of investor value destroyed, imprudent/unsuccessful exploration campaigns, big write-downs and failure to develop supposedly high value resources. People perched on the edge of their seat waiting for G to shoot the lights out are almost certain to be disappointed in the short term - especially as we head into an historically weaker season for OP at an already soft price. I'd have to agree, it isn't a rosy picture.
Don’t even watch the oil price anymore there is nothing that seems to stop it declining. It’s just a given it’ll fall for me now. That’s what the market wants so they take it down regardless of fundamentals- a bit like Genel I guess. Hope billy boy has something up his sleeve in the meantime for holders
Cheers Leem - I was about to pose this question,as it happens:
With Labour Day comes the end of the US Driving Season and a switchover in refined product demands. So where will OP head now?
Trends, like rules are there to be broken. Here’s a ten year view of Brent:
https://invst.ly/bzf8o
It’s hardly any wonder that smaller oil co’s like G offer a decidedly choppy investor experience when the underlying commodity is so volatile because the market for it is rarely balanced. One of the shorter term trends (dashed) should be first to go but which one? And will OP stick to the neat shaded four lane highway or take yet another detour? Has anyone seen anything even remotely bullish about OP recently?
Still read here as I enjoy your comments Boyo. Be interesting to see what happens as oil is still in a downtrend and is going lower. Next stop will be 55-56 dollar range then if that goes then look out below. GKP stopped buybacks so they won’t look as strong i suppose from now. If this is just tracking oil and not fundamentals as you suggest then price action self explanatory going forward