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@FH1, how on Earth have you come to that conclusion?
My analysis shows that with the 5Ps not causing problems, then at LEAST for the first 9 months of 2022, GKP will still be operating in Cash Cow Type 1 mode.
Highly cash generative due to boost to PO from significant chunk of CO having no previous costs to repay because the DFE wiped out the debt it should be repaying.
The analysis takes now, tries to work out when the boost will stop and what the consequences will be under different scenarios.
Under the low cost environment of steady 55k bopd, with the CRP working normally, the company is STILL cash generative but not at the level some are hoping for or relying on.
Cash Cow Type 2 is not about negativity, it’s a potential situation that could occur and is ignored at an investor’s peril IMHO. It’s not deramping to refer to it but it certainly might put the dampers on some investors hopes. No apologies about raising it , it’s just one component of doing a risked analysis.
IF the company then gets involved in expansion to 75k, then the PO will drop further as costs get repaid through CO but as PUTUP has pointed out, those staggered costs get repaid in months rather than years. What’s negative about that?
Guess what happens then when the expansion is completed?
Correct, the PO now rises above where it was before the expansion started. Again, what’s negative about that?
[ Production PoO Payments Politics PSC(R factor in particular)]
Theory based on your analysis hope you and putts have sold up today
@JMarsh1, I owe you, readers of this BB and the company, an unreserved apology wrt to information I posted the other day - it was wrong.
I posted that the difference between using the previously agreed PSC values of WI 80% & CBC 40%, as required in the accounts, and hence by the Auditors; compared to that which the company was using in the invoices it sent to the MNR of WI 61.5% and CBC 20% was “at least revenue neutral”.
It should have read “at least receipt neutral”, since the above paragraph is on reflection, revenue NEGATIVE.
There are then further compensating effects that turn this negativity back to at least neutral in terms of the receipts.
Since my previous model using 80&40 was often working to 0% error in predicting receipts and the new one using 61.5&20 is still OK to within 0.5%, then I’ll stick with it.
In terms of cash flow, using either model makes very very little difference to the numbers output for the receipts, the CO:PO and hence the conclusions drawn.
It might make a difference to the value of the CRP and the rate at which it is emptying - resulting from costs either being recovered by that mechanism or directly through an invoice. Hopefully the Jan update will provide current values and clear the matter up once and for all.
"Theory no one is interested in debating in with you or Putts. It’s a waste of time as your motives are clear."
And you know what everybody else thinks? Are you God or what? The arguments put by Theoryman and Putup sound too challenging if you have to attack their person rather than their arguments. There is a set way to value a stream of cash flows. You can differ on what those cash flows are and on their quality/reliability, unless you wish to argue for GKP shareholders getting a share of the benefits of a change of control, which is a different valuation basis.
Theory no one is interested in debating in with you or Putts. It’s a waste of time as your motives are clear. Best advise on this bb is to block you and so I advise all genuine investors to do so. This board has had a long history of this kind of behaviour and we know what to do to sort it out.
Onepoundfish, if you don't like Putup's and Theoryman's well reasoned arguments, why don't you buy "Valuing oil and gas companies: A guide to the assessment and evaluation of assets, performance and prospects" and read it. It is by Nick Anthill and Robert Arnott. It's about 20 years out of date, but all the stuff in it isn't different to the commonsense way of valuing future free cash flow returns per share. If you want to big up low probability events into high probability ones, then that's your problem: we've had two failed takeover events in about 10 years. What makes you think a takeover premium should be embedded in the share price now? Do you like betting on terrible odds? Do you think a PE ratio of 7 on FY2023 eps is too low?
"it is undervalued"
Yes
"( but not by much )"
Depends on your view of "much". I'd say the discount is significant. An expected 41% appreciation isn't small in my view.
"the ONLY way to value the company is (My WAY ) only on cash generation"
Your words not mine
"no chance of a takeover "
Again, your words and not mine. Could the company be taken over? Of course it could. Is that probability high enough to justify basing an investment on it? In my opinion, no. Would a buyer over pay? No, I very much doubt it.
"I'm a yankee doodle dandy but I wont admit it"
You're so wrong it's hilarious
"Just like my mate theoryman"
Never met him so I couldn't say he is a mate. But he does seem level-headed.
As to JMarsh1, you claim there has ben a statement that's factually incorrect? Ok, if I have a fact wrong I'm happy to hear it and amend my opinion if need be. But you've so far been unable to articulate what you deem is incorrect.
I challenged DubiousInvestor's calculation and he asked for the workings that led to it. And so it was posted. It was merely an extrapolation - 'times 12' if you will - of an accurate estimator of monthly receipts, applying that same methodology to a day count of 365 rather than a particular month's number of days. It's not a difficult analysis. If you think something was wrong, point it out - specifically. Of course it requires a number of assumptions, not least is what you decide to put in for Brent. I used DubiousInvestor's assumptions. My own ones might well be different. I'm bullish on oil for 2022 and think it can appreciate some more. But I'm not banking on it averaging $85 (a level it has only exceeded on 9 days in the past 7 or so years) forever.
" As I said, I have flagged content on this forum with GKP and been told it’s factually incorrect."
Such as?
@JMarsh, pity you didn’t post up what would be necessary to get a handle on what your communication with the company was and what their response was - might be good enough for you but what about the 8 people who Recd my request? (The other day you thought the number of Recs gave a post significance, obviously a one way process!)
The information used by myself comes from company documentation, so it will be interesting to find out why it is factually incorrect.
There could well be a time delay between things changing and the company informing us. Take for example the 61.5%, in use from 2017 but makes first appearance that I can find in 2021 - can anyone else find an earlier reference?
'A few months ago you posted that in your view GKP is worth £3.50 to £4 pumping 55K BOPD and oil at $85 dollars'.
He did, I recall. Is he suggesting otherwise now?
@FH1, my analysis is not special in any way shape or form.
All it requires is a basic knowledge of what drives every PSC and then find the figures that apply to this particular one.
After that it is GCSE Pass level numeracy to arrive at the outputs in terms of CO and PO for any combination of inputs. It really is BODMAS without the O.
I have previously taken the October numbers through this PSC with every step explained, including underlying assumptions.
What surprises me is if I am making it up, why no-one has taken my analysis apart.
I don’t just post numbers, I show how I have arrived at them - that is the mathematical equivalent of putting my head above the parapet :)
FlyingHorse1 you really seem to have no idea. Do you really think anyone posting here is going to have a significant influence on the share price? Do you think the Blackrocks of this world bother to read this forum. Even the ultimate ramper GoodnightCharlie with all his avatars couldn't ramp the price despite endlessly posting one conspiracy theory and BS 'analysis' after another. When someone posts some actual solid work that doesn't resemble hype you think they're working against you in some sort of underground cabal hellbent on diddling you out of the money in your pension account? Please. If you think my views on valuation are wrong then by all means scrape together whatever you can find in the back of your couch and bid the stock up. I think it's undervalued and that's why I own it. If you think its worth more than I do then I will sell you my stock at my target price if you want. I'm willing to bet I own a bit more than you do now but that will give you the chance to significantly lift the size of your position. Alternatively we can debate forecasts and value using analysis. If you have one at all then please present it.
The new tactic is give the impression that are genuine investors and get people to think that their they have special insight and analysis. But all the time emphasising the risks and downside. It’s psy-ops type behaviour. The old tactic of constant ****ging off obviously can’t work now so has to be more subtle.
That was if you assumed $85 oil in PERPETUITY. That would be a rather foolish assumption on which to base an investment decision.
Ah there's no helping some people... Good luck. It sounds like you and a few others here are going to need it.
"Canaccord Genuity reiterated their BUY recommendation for GKP, raising their target price from 295.00 to 315.00."
This valuation is inline with mine. Scroll back a ways and you will see me posting a price target range of £2.50 to 3.00. This was at a lower oil price and with less progress made on 55k bopd production. These have now moved my target to the top of my earlier range.
Canaccord and I get there by endeavouring to understand the company and its cash generation capability. Not from blah blah blah. Over half that target value comes from net cash on hand, the CRP and arrears. The balance, and smaller portion, comes from generating profit oil post 2022. In 2022, I expect the CRP will likely be fully monetised to cash and the arrears should be recovered. A lot of this cash will be paid out of the company to shareholders as people clammer for dividends and buybacks. When it does, the value of the company will, all else being equal, fall and price targets will reduce accordingly. If you think you have a better analysis than mine and Canaccord's then post it. Else you're just blah blah blah.
Don't look up!
FH1, I like the linking of the two avatars, better class than the manipulations of PUTUP’s one that were posted yesterday :)
Hope the irony of the situation doesn’t get missed.
Our calculations are based on numbers e.g. 61.5%, that are in the public domain even though it was on Page 117 of the 2020 results.
JMarsh1’s post has yet to be backed up by any verifiable evidence that their answer even exists or applies to those numbers or the conclusions drawn from them - let’s wait for his posting of the relevant information.
Hope he doesn’t use the excuse it was a private exchange, such emails from the company are not labelled Private and Confidential. The person writing them expects them to end up in the public domain and hence why they are so carefully worded.
Super news that GKP are looking into this activity.
There’s a theory that you have been put up to this. lol
Yes it is blatantly obvious what Put is up to. There remains a concerted effort to constantly berate GKP. And given the amount of effort that goes into it, suggests it’s backed up by some kind of money making outfit.
Well they have cleaned out the "swamp" over on ADVFN.
Looks like they need to come over here.
@JMarsh1, you are new to this board so might be unaware of how previous communication with the company has been dealt with before.
After blocking out any personal details, could you please post your original question and their response.
You have accused posters of making numbers up, even though they come from information in the public domain..
Having done that, unless your information is put in the public is lends you open to the accusation that you are making this up.
Even if you aren’t, it needs clarifying which numbers are being made up and by whom. It could well be that the rampers on here and elsewhere are the culprits.
If anything "shareholder expectations" need managed upwards.
Isnt that what the BOD trying to do currently ?
Get the SP up to where it aught to be?
Interestingly onepound. This board kept that little Gem quiet. Makes one consider the reason why some posters take on the way they do.
None of it makes sense. Unless he is employed by Exxon of course.
Keep dampening expectations Stuckup.
"These are not the actions of a genuine investor." Total gut rot. They are the actions of a reasonably circumspect risk averse investor who believes in the principle that a promise of £110 in a year's time is only worth £100 today if the going rate of return for the risk taken is 10%. There are advantages in gaining control of a company, but that's a different valuation basis, and until a bidder emerges, the valuation basis Putup argues for is the one that matters, for now. The probability of a successful takeover in the very short term is extremely low. That said, it can still rain if there is only a 0.001 chance of rain. The best reason to be invested in this stock is either you believe oil prices are going to rise (and the eps forecasts are going to be revised up) or you believe acid stimulation will increase our production to over 50k bopd. I believe both are possible (rising oil price and production volume growth and that the latter has a very high probability of success - I don't fancy betting against chemistry). I will love it if there is a takeover, but I am not counting on that. Good luck all LTH.