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There could well be three obvious phases in the market reaction to the KSA facility attacks: an initial over-reaction, a correction and a longer term averaging out. A cynical person would surely observe that the Saudi desire for $100+ OP was not remotely achievable unless an event of this sort occurred.
OP rarely shifts by more than $10 in a week and the effect of the attacks on crude supplies could prove relatively quick to fix, especially as OPEC+ countries will presumably cease to apply their restriction quotas and US producers can quite quickly ramp up production to take advantage of any price increase. Nevertheless, it’s impossible to gauge where the market will initially land when trading in Brent resumes after the weekend break, the near term price at which it will settle and the speed with which it will do so.
If the effect on Brent is indeed significant then the mid $80s - near $86 - for Brent would fit two-year trends etc and feels realistic to me as a top-end price: https://invst.ly/c9yl5
This could put G at around 270p based upon last week’s 3.2x ratio. Not too shabby, as H might say.
How quick and sustained will any rise be? Even if you don’t intend trading, this could be a week for adjusting stop-losses, which, if the sp moves up sharply, might more appropriately be termed ‘lock-profits’.
Finally, yet another apology from me for Friday's sloppy 'end of week' post: My ‘off the cuff’ comment 'What’s the best sp of the last 18 months? £3 at $86 Brent?.' was inexcusably inaccurate as £3 was never a closing price and $86 didn’t coincide with it - memory fail!. The 290p close at $74.65 (7/8/18) would probably have been last year’s best achieved G:OP closing ratio of 3.88x. Just imagine if 3.88x was repeated with an OP of $100 !!!! Ha! I’ll just dream on!
Well done Dodger!
OP volatility this week should not obscure the fact that G has had a good week with the G:OP ratio exceeding 3.2x for some of the time from little better than 3x a week ago - that’s worth 12p on the sp at the current level of Brent. What’s the best sp of the last 18 months? £3 at $86 Brent? That ratio was 3.48x, the recent worst was below 2.7x in May- so G has climbed over half way there in four months. Let’s hope it keeps going even if the OP remains quite weak.
This is the week that was for the KRI trio: https://invst.ly/c8y-9 and here’s G’s progress of recent times - note how it has progressively moved above the 3x Brent line:
An overnight anomaly with data for DNO (Oslo Exchange) makes this weekly comparison chart of the three KRI producers look a bit odd but, nevertheless confirms that G gained slightly with respect to the others and Brent over the five day trading period: https://invst.ly/c5hey
The routine G v 3x Brent also confirms the same picture and that G is just 4.5 above that particular reference: https://invst.ly/c5hd7 . We are, of course, looking for a substantially bigger margin than that if it is to match its performance leading up the FY results, where the margin was 33.
Buybacks were not a factor during the week and it may well be that these have now ceased even though a substantial proportion of the budget appears to remain. Ocelot has suggested G’s potential concern about liquidity in the stock as the reason. If correct then it does beg the question as to why they bothered at all - to which the simplest response is to point out the 8% gain in sp relative to Brent that has occurred since BBs first started. G at that time was -15 compared to 3xBrent. So, without bbs, todays sp might easily have been around 175 or less. Provided the sp rises from here, they have also acquired shares at ‘value accretive’ levels for use in employee incentive schemes.I daresay that some would quite like to ‘average down’ the per-share cost of their holdings from around 210p.
Here’s a last view of the comparison since bbs started, I won’t return to it unless bb’s resume before the announced end date on the 17th: https://invst.ly/c5i5f
Looking at the usual group since OP peaked in late April we can see that G about the same relative to OP as it was at that time and that it is performing about average as far as that group are concerned: https://invst.ly/c5i86
Ha! Whitehat - I nearly did type fork handles but wasn't convinced the reference would be recognised.
Anyway - on obvious typo in the article: 'The most notable recent example of this was just after the KRG’s independence vote in September 2014' .... it was of course 2017.
Iran is a major meddler in Iraq as it is almost everywhere in the region. The pressures they bring are many and, I'm sure, not always as reported. The Barzani's are still powerful aren't they? I'm equally sure that KRG sources would point to Baghdad, under Maliki, for failures regarding the budget - they'd almost certainly say they had no alternative but to sell oil themselves because he withheld the budget. As I recall, Soleimani had a 'serious chat' with the Talabanis (powerful in Sulaymaniyah province) around the time of Abadi's military response to the referendum. I believe he outlined his military threat to their forces in the region of Kirkuk and it was their effective capitulation, rather than anything else, that seemed to split the Kurds and cause the collapse of Kurdish resistance and ambitions. Here's a quote from the Guardian at the time:
'While Iraq’s military indeed played a prominent role in reclaiming Kirkuk, so, too, did Shia groups who report to Suleimani and the joint leaders of the PMU forces, Hadi al-Amiri and Abu Mahdi al-Muhandis. Days before the referendum, it was al-Amiri who sent an envoy to Barzani threatening “war” if the poll went ahead. Suleimani also sat opposite the de facto Kurdish president to try to dissuade him, according to a senior Kurdish officials. When that did not work, he requested – and was refused – a second meeting. And, over the past two months, he had been a regular visitor to the rival political camp in the Kurdish north – the Talabani family, in the region’s second city, Sulaymaniyah.'
All I can say is that Federal Iraq appears to be a hotbed of corruption, nepotism and tribalism with each faction probably as bad as all the others. It will not be unravelled any time soon. The one common factor is that they would all undermine themselves if they impeded the flow of oil - so, to that extent, let them get on with it: Don't mess with Mesopotamia the birthplace of civilisation and all the sh-t that seems to come with it.
Another great analysis, Boyo, but was that four candles or fork handles? :-)
Here's an interesting read:
Not sure what to make of it myself so would be interested in any comments from the board.
Here is the last week for G/GKP/DNO v Brent(LCO): https://invst.ly/bz0c9
with only DNO traded on Monday because of the BH. Buybacks were apparently only conducted during two of the four days which, perhaps, explains G slipping by 1.5% whilst the others, including Brent, gained over the period.
Unfortunately there is no obvious sign of enthusiasm for G in what is already a weak market. When we look at the same three v Brent since G’s buybacks first started the picture is deceptively encouraging:
This shows G keeping pace with GKP but, in reality, whilst the first phase of buybacks, which ended in early July, boosted G by 10% relative to Brent, the second phase has added nothing further - indeed G has slipped back slightly. Where would G have been without the buybacks? If DNO offers a clue then that’s pretty grim because, even at half of DNO’s drop, G might have been around 160p today.
The G v 3xBrent chart gives a more rigorous guide: https://invst.ly/bz07z
Here we can clearly see when G drops below the green indicator line (3xBrent) and how badly last week (the last four candles) compares with the previous week. There’s also that steep downward trend - the orange line - putting a lid on things, with the sp squeezed into that wedge pattern from which it must, inevitably, break out - either up or down.
Meanwhile, September should be a relatively strong month for oil prices according to seasonal precedent but, despite a few days of rises, there’s no real evidence of it improving sufficiently to break out of its four month downward trend https://invst.ly/bz00a ,with $62 representing the immediate trend ceiling, potentially falling to $59 by the end of the month - so G’s immediate prospects for 190 + look decidedly poor unless the buybacks start to have a more tangible effect. I believe there is still over 45% of the budget so, if I’m right, they’ll need to spend over £300k a day to use it up by close of play on the 17th. I guess that might shift the price.
Finally, here are all the usual runners:
G/GKP/DNO/RDS/PMO since April 2019 Peak Oil: https://invst.ly/bz091
PMO is bucking the trend, apparently on the back of a ‘good news’ week involving ‘bumper production’ and the sale of an offshore Mexico interest - potentially reducing its fairly hefty debt burden.
Here are the last five days G/GKP/DNO v Brent: https://invst.ly/bvehf
Brent is nearly on the 0% line, so nearly back at the same level as a week ago, for the second week running . But the wider picture for Brent is really not good as the next charts will show. Of the Kurdys, GKP took the biggest hit today, ending down over 4% on Brent over the week. G and DNO were both 5% up on Brent over the week with the G:OP ratio ending up stronger at around 3.1x.
Having established the very long term (3 year) alignment between G’s sp and 3xBrent, I’m now using that as the basis for the long term chart comparison of the two, not least because it simplifies the scale: https://invst.ly/bvekm
Here’s a closer look at the bit that matters, since April: https://invst.ly/bvel8
I’d draw attention to the parallel pair of falling trends, green and orange, that mark Brent’s and G’s respective declines since the end of April. There can be little doubt about their alignment. Now that they are both fast approaching the intersection with the bottom red rising trend line - effectively marking the worst expected value for either of them and already breached once - the question is, obviously, which trend will get broken? Bear in mind that often, when a trend is broken, the price will move more sharply. So: will OP continue downward, dragging G with it or will the reverse apply and OP turn upwards as it did in January? Either way, Brent is in the driving seat and, despite some upward moves like yesterday’s blip, it has not been looking good since it started to fall at the end of April: https://invst.ly/bvelr
Runners and Riders since April 2019 Peak Oil: https://invst.ly/bven3
A good week for G - considering carnage in the wider market and always remembering that sp alone is meaningless unless you know and factor-in the prevailing oil price. For example: 250p for G would not rate as ‘good’ if Brent were at $90!
So the G/Brent ratio is essential in order to make a judgement as to how G’s sp is performing. At Friday’s close it was back up to 3.06x, which is a tad above where it was at the end of the first phase of buybacks. The second phase has just started and within a day appears to have repaired the slight erosion in strength experienced as OP has dropped below $60. Just as a guide, remember that pre-buybacks the G/Brent ratio was around 2.75 - so the sp might easily have been 160 or less today - ie over 10% down.
Here’s all that and more encapsulated in last week’s picture: https://invst.ly/bo2jp
And with that cheery thought, it’s worth a review of the other runners and riders over the period since G’s buybacks started seven weeks ago in June:
Over that particular timeframe G happens to have been the best of the bunch - by a gnat’s ahead of GKP, which is also doing well with the supporting influence of buybacks. I’m not keen on comparing G and GKP on a penny for penny basis - they have totally different numbers of shares in issue, market caps, ev’s etc etc etc. So their respective sp ratios to Brent may not necessarily be comparable under all circumstances. Nevertheless, I know that some on this board do draw the comparison because the prices happen to fall in a similar range, so it’s perhaps worth noting that GKP’s buybacks have currently set GKP to OP ratio at 3.98x , which would be a nice number for G to achieve and would be essential to place it around 250p at average oil prices in the mid $60s. RDS has obviously had a dreadful time since its result day whilst PMO, which I don’t follow, is generally more of a roller coaster and not my ‘cup of tea’ at all- what was that spike on Friday all about?
The week since last Friday’s close G/GKP/DNO v Brent: https://invst.ly/bhs4a
A good performance today by G, given the carnage across the board. Buybacks seemed to be in evidence supporting GKP above 230p.
Looking at the whole pack rebased from October peak OP: https://invst.ly/bhs2l
OP was about the same as today ($62.5) on 1st Feb so it’s marked on the chart, where we can easily read across the lines to see that:
RDS has been knocked back to its 1st Feb price vis-a-vis Brent - pretty much the same as G and PMO. DNO looks to be about 12% down over the same period and, in the last couple of weeks has given up the last of this year’s gains and is now back to its lowest since 3rd Jan.Only GKP is up - by about 12% - with buybacks responsible for some of that performance.
On balance, by comparison with this group, G is actually holding its own. Very sturdy today in terms of sp p/$bbl ratio at 2.97
The three amigos, G/GKP/DNO, tracked Brent dutifully this week. DNO appears to be slowly making up for its 30% drop from April 23rd to late last week. It has a long way to go. There but for buybacks goes G, which was dropping a similar percentage prior to the company’s action but is currently only about 15% down since the fateful day:
Although G slipped under the 3x ratio by the close, it and Brent are currently in a fairly familiar and unexciting relationship that goes back to last autumn Whether the long-awaited market revaluation is likely to happen at the H1 is anyone’s guess - there’ve been a couple of false calls this year (March and April) but they both ultimately fizzled out with G dropping back to around 2.7x Brent only to be rescued by the buybacks
G of late - quite unexceptional, will it hold above 188?: https://invst.ly/bf9as
All the runners and riders since October, equally boring overall except for DNO which seems to suffer the same over excitement followed by disillusion that sometimes hits G and GKP, and PMO, which looks very like G but on sedatives:
Could have been worse I guess but always next week. Had a few scoops so shouldn’t be on here commenting as I need the rest but I’m very optimistic but at the same time very tired of Genel. If I wanted a pure oil play I would have gone the way of something like pmo. One of the attractions of Genel was we DO NOT NEED HIGH OIL PRICES, yes, it’s better if oil is higher but it’s not the be all and end all. All this does unfortunately is track oil, nothing more. And it’s really starting to p*ss me off. I’d we had some progress and management that were more in tune with the NEED for communication we arguably wouldn’t be just tracing oil. In the absence of updates or drilling updates or let’s face it ANY news at all, let alone gas, we seem to just kick about with the oil price. I was really counting on billy boy to get on top of this and rectify the issue. The buy back and dividend were handy but let’s face it progress over the last year has been rubbish and I know some may feel otherwise and that’s fair enough. I’m running out of excuses and defence for this share price. It really isn’t acceptable and they have had a year to get some things done. All imo. Like I said, fantastic prospects but until they get a move on guess we are stuck. Sorry for boring everyone, maybe better next week ( I say this every week!)
Summary of the week: OP down $5, G down 3x5 = 15p
Ok - it was nearer 16p
Maybe the 1p was a conspiracy or pesky MMs?
Nope -I don’t think so really. Do you?
‘Nothing to see here’ to quote Hawkey.
G managed to maintain its level with respect to Brent last week, whilst GKP strengthened somewhat: https://invst.ly/b96kl
For GKP this was something of a ‘catch-up’, as both GKP and DNO have both lost ground against Brent over the last couple of weeks, whilst G gained over the same period, benefiting markedly from the buybacks, as can plainly be seen here:
But how are they really doing against Brent over the long term? The comparison chart from last October’s peak in OP still seems to be a reliable guide as far as I’m concerned and it paints a fairly unexciting picture: Brent was at the same price as today ($67) on 16th November at which point G was 211p and GKP was 191p. G’s sp ratio to $Brent was 3.15 at that point but is just 3.04 now.
Whilst this might seem more encouraging for GKP holders, it appears to be because GKP suffered disproportionately more than G as the OP fell. They both went on to reach much higher sps in March for the same OP.
So, basically, there doesn’t seem to be any real evidence of a significant shift in the respective market valuations of the two companies since last autumn, with G’s relative position potentially much lower and only recently restored thanks to the buyback scheme.
As the last trading hour approaches, I can see that G has held on to the essential 3x OP $ ratio that should mark its minimum sp. So $67 results in an sp of at least 201. Prior to the buybacks G was doing significantly worse. So there hasn't been much slippage in the pastweek.
Well done Dodger.
End of the buyback and something of an anticlimax for those looking for a 200+ sp, with the sp having stayed at nominally 197p most of the week. However, quite an improvement in terms of G’s recent sp performance, now stronger against OP and regaining its position v OP with its peers. Will it last now the buy back drip feed has been removed ? Maybe, but it wasn’t encouraging to see the day finish with a doji and the sp a tad down against rising OP.
G v Brent 15’ chart from start of buyback: : https://invst.ly/b6psq
G progress this year v Brent, looking healthier: https://invst.ly/b6ppg
And a similar view v Peak Brent (October $75): https://invst.ly/b6pqs
G and the others, also from Peak OP in October: https://invst.ly/b6po-
Gsp/OP$ ratio dropped slightly to 3.05 at the close indicating a tendency to weaken but would still equate to an sp of about 230p for an OP of $75.
I hope you are all enjoying this fine game of poker.
Well done Stockbuster btw.
As an LT holder who trades on the side I have two separate targets in mind for next week - neither of which will be my next FC entry. But enough of me - the chart shows some existing trends and hints at some valid direction changes. Is 197 the final destination or will we see G safely back on the 200+ shelf? 205 is starting to look like a bit of a stretch but there’s plenty of ammunition left isn’t there (if they choose to use it)? Ha! Friday Club is going to be like a fairground ‘duck shooting’ fest.
The week v Brent (15’ ticks): https://invst.ly/b4q7-
The current buyback scene, with back-story from April (1 hour ticks): https://invst.ly/b4qda
The rest of the field since April $75 OP: https://invst.ly/b4q72
OP may be up but G has made little progress v Brent over the week, especially after a 3p drop to 177p for the close. Even 180p v $65 OP was not good: The sp remains well below par having averaged above 210p at this sort of OP in March (see the 6 month G chart below) . Here’s the 15 minute Brent v Genel since last Friday’s close: https://invst.ly/b2n6a
Except for G’s sp being kept up by 170p support on Tuesday as OP fell and followed by an over-done rise and correction on Wednesday, G actually tracked OP very tightly over the week. At the end of the session Brent was up by nearly 5% over the week and G was up just over 4%, so Gsp (p) was still under 2.8 x OP $/bbl (virtually the same as last Friday)
Here’s G and the others since the OP Peak near $75 of April: https://invst.ly/b2n7z
And G and the others v Brent (since October): https://invst.ly/b2n6u
It’s sobering to note that RDS has been by far the best of the bunch - and the safest play - since October. PMO has been the biggest roller coaster of this group, whilst. GKP has shone more recently - maybe the Blackrock effect? - powering ahead today despite the 2020 production delay, with G about middle of this ‘risky league’ along with DNO. Not a stand-out performance.
Note how much time G (red) has recently spent below the Brent (green) line, and that this weakness was established immediately prior to ex-div and the collapse in OP, when others were peaking around 17th May.
This G chart with trends, 6 months: https://invst.ly/b2n7g shows just how much G has to do to get back to the level it achieved prior to the 2018 Results day in March.
Finally, OP Chart over the last couple of years: https://invst.ly/b2naj
G and others v Brent End of Week
A 15 minute trace of G (red) v Brent (LCO ‘front month future’ light green and XBR ‘spot’ dark green) from 8am Monday to today’s LSE close: https://invst.ly/b0lft
OP was approx 2.5% down over the period
G was approx 4.5% down over the period, so losing ground v OP over the week but with most of the damage this morning according to the chart.
At the end of the session Gsp (p) was approximately = 2.7 x OP $/bbl (very weak)
Long term G & Others v Brent (LCO & XBR) from Peak OP October 2018: https://invst.ly/b0le4
G chart with notable trends, 6 months: https://invst.ly/b0lfi
OP Chart: https://invst.ly/b0ldz