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As PUTUP has elaborated many times before, it does not matter whether we get a buyback or a dividend as both actions are equivalent returns of capital. What matters is your reaction as a shareholder to the events. If there is a buyback and you don’t like it - sell some shares to bring you back to the same percentage holding as before the buyback. If there is a dividend and you don’t like it - take the cash and buy more shares.
My vote would be for a buyback up to a limit price in mind, paired with a dividend. But as outlined above, in some sense it doesn’t matter because as a shareholder I can adjust my holdings accordingly to create the desired outcome.
"Any buyback will only be to the benefit of the BoD......"
"I'd prefer the company not to start a buyback again and instead diversify the operations with investments in another country."
Buy another stock. This is best as a pure play.
I like buybacks personally, although I do understand why many don't.
For me, I think they work best when done alongside a dividend policy, because it causes that dividend payout to gradually increase on a per share basis while the firm can keep the actual dividend payments flat. Additionally, most shareholders will derive the majority of their returns from selling their shares rather than via holding for the dividends, in which case they may as well accelerate that process with a buyback.
Only my opinion, but either way, it doesn't look like you necessarily have to worry about an imminent buyback or else they would have done one already.
Any buyback will only be to the benefit of the BoD......
I would be ok with a buyback, provided it was set at a higher price than the prevailing share price. Tax rates on capital gains are lower than tax rates on dividend income.
I would also like the board to do more to talk up the value of the company (if they believe it to be under valued) and properly address the excess capital situation in a way that benefits shareholders.
For example, San Leon Energy carried out a very successful and well received share buyback 15/18 months ago. They did this by way of an open tender to shareholders and the buyback price was set at a price much higher than the then prevailing share price.
So could GKP re-purchase say 5% to 10% of the shares at a price say 20% higher than where it is today. Unless, of course there is something else going on the background!
I find it interesting that the driving force behind SLE is Martin Hughes (the "Rotweiller") and perhaps the board or one of GKP's larger shareholders could adopt some of his tactics to achieve greater shareholder value.
Yes no buyback. Want to hear from Jon as to what the long term strategy is!!!!’n
I'd prefer the company not to start a buyback again and instead diversify the operations with investments in another country.
I know people quibble about the best way to return capital to shareholders, but I really think they should be performing a buyback alongside this dividend. Frankly, they're making so much cash right now there's little reason not to.
TM I believe we are both using a very similar calculation for the monthly payments and that this relies on an 80% working interest in the field. It projects the numbers rather well. I'd be surprised if a different WI was being used for the receivable recovery and believe it more likely other factors are at play. In any event, the difference in time value of money for the recovery based on a simple calculation vs what has appeared to be the case this time is completely immaterial. Let's see how it swings for March which should lead to yet another $30m of excess equity capital that should be returned to those shareholders wishing to reduce their VAR at these levels.
TM, yes, I think it doesn't matter which way one calculates it - that explains JF's statement that if our working interest were to be diluted, the effect would be value neutral ( probably because the capacity building charge would be smaller)?. That's a very good answer to the bashers' arguments that we don't own as much as we think we do. In the end , it doesn't matter which way one calculates it - yes, I calculate it the same way you do.
I also think that once a contract is signed, one side can't unilaterally change the terms to disadvantage the other side - otherwise what is the point of a contract? Yes, there are special circumstances where one side can withdraw (declaring force majeure?). Anyway it all makes sense now, and I am not bothered any more whether our BoD regularises everything by getting the 2nd Amendment to the PSC signed off. I read about this concept where acceptance by both sides of different terms in a contract can lead to the contract being changed by 'custom' rather than by signing a new contract. I don't suppose this is a matter that bothers most people but it is maybe a nail in one of BigDog5's frequent arguments, attempting to suggest the stock has more dilution risk than people think.
@PUTUP, doing it the way they appear to be doing it, based on two sets of data, makes perfect sense on reflection.
If they use the same (slightly flexible) ratio in both export and debt payments, they finish the debt repayments to GKP and MOL at the same time.
@Nobull, I am getting the export revenue to within 1% based on what now appears to be the public but wrong version.
Does it matter? The changes produce neutral or slightly beneficial outcome for the company but at I least I think I understand the original. The nuances appear to be how cost are recovered, directly or via cost pool.
When it comes to the change, where from the 80% they give the MNR 20% leaving themselves with 61.5%, I know I don’t understand.
"Problem seems to be IMO that the holders of GKP are both relieved and happy with the payment but everyone else is focussed on the next payment arriving even later or getting missed altogether."
The bigger issue is limited NEW interest in the stock. When, for example, Blackrock re-accumulated we saw good strength on the bid. Now with limited new interest the price languishes. That's just fine if you're here for the distributions and not just a quick turn. I hope all who believe the stock is undervalued intend to reinvest their dividends in the stock...
"The debt bit was circs $200k below expectations"
Same. Will look at your tweak (although a couple of hundred k is insignificant in the grand scheme of things).
3 to 4% discrepancy - is what I typed!
The debt bit was circs $200k below expectations, which was in the region of a 3 to 4% deicreoanct, when I can usually get the export figure to within 1%.
So why the difference?
I’d assumed they would split the gross debt repayment 80:20 as in the working interest but they are using the rough slightly variable 78:22 they use with the gross export sharing - makes sense because it a debt based on missed export repayments.
So for the March production I am going for net $21.9 million export and net $8.1 million debt giving a rather chunky $30 million give or take a bit.
The two early trades that formed the rapidly closed gap up were a single digit UT and a double digit SINT. The rest of the price action was very subdued, based around previous CP and below, given the arrival of the RNS and the figures within it.
Problem seems to be IMO that the holders of GKP are both relieved and happy with the payment but everyone else is focussed on the next payment arriving even later or getting missed altogether.
Given all the risks usually associated with oil production, pity we are stuck with a customer where payment risk is so centre stage.
$23,286,016.27 is the result I get with your volume figure. I still believe it is a fluke because the company claims it invoices on a different basis to the PSC, although I recall changes to the PSC proposed were, and probably had to be, from a legal point of view (unless there was some way to lawfully impose them unilaterally), value neutral.
Putup, you are right: I used 43,000 for the volume, so that was the first error.
Agree about the spurious accuracy. Sorry. I'll try to post an image of it on ADVFN, and also of my calculation that gives a target price of 266p on 12/04/22, 16p above Charlie Sharp's at Canaccord Genuity. I used a 14% WACC and a rolling forward eps forecast of 51 cents (37.2p), which on the 165.2p share price gives a 12 month rolling forward PE of 4.4 on 12/04/22. I believe with a WACC of say 14% the PE that gives a 14% earnings yield is 7.14, which gives a target price 37.2 x 7.14 = 266p. Not sure about the validity of this, but it is just a model, and the assumptions maybe all wrong. I used Peel Hunt's forecasts for 2021 and 2022 and then a zero growth one for 2023. I used to use Tinypic free image hosting, but they all charge now. Any help please posting images of spreadsheets?
Show us the workings of your calc and maybe we can highlight the error. Volume? (41,600 is what I used consistent with the company's presentation.)
Rather spurious accuracy calculating an estimate to nearest $1k let alone cents. ;)
I calculated $24,069,680.28 for February oil sales payment, net (inclusive of arrears payment), so today's payment was a bit of a disappointment, but I see in the Final Results state that they do not invoice on the basis of the PSC in force but on the basis of an amendment to the PSC that has never been signed off. I have heard about the legal concepts of 'custom' and 'usage' in relation to contracts, so I wonder if our PSC has actually been altered by custom rather than by a written agreement, signed by both parties.
Numbers as expected (within a couple of hundred k). Expecting $21.9m for March with arrears repayment of $8.4m.
GKP has to return more capital to shareholders. Via the approved buyback makes most sense. Followed by another special dividend second half of this year. No point initiating the buyback before the end of this month however.
welcome news, not surprised that the government delay like this , but they aren't going to kill the golden goose , they are on the same side as us
sp2, the monthly production was lower though for two reasons. Well workovers and only 28 days.
I gave my pencilled in figures earlier, think it was last week - debt chunk seems a bit low from memory, other is well within tolerance.
I will put the March figures into the spreadsheets and post tonight when I am back at base.
yes, about time.
Notice the Feb payment (not the arrears) was only slightly higher than Jan - $17.5m v $17.1m.
I thought it might be slightly higher based on crude prices in Feb v Jan.
Assuming March payments will be similar - both oil sales and arrears. Is this a fair assumption??