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Wiseman - You cannot value to company like that for several reasons:
1. This is a PSC so GKP dont own the oil but get a small % of it for being the governments "contractor"
2. There is a discount rate applied to all future cash flow
3. The vast vast majority of the value in this company actually lies with the cost pool rather than the actual reserves because it gives so much near term cashflow
"Putup - what do you feel is fair value? "
'A hair past a frog's knuckle' was, IIRC, my previous response to this question. As I have said before, I see no value in posting my current valuation target here. Suffice to say it is enough above where the stock is now for me to view it a strong buy. It (my valuation target) has the potential to be rerated higher if the economics of going beyond 55k can be shown to be vastly improved. For now, I believe the stock undervalued even on a production expectation of just 55k and hence don't need to worry about any additional upside (or not) in order to justify my holding. That's why I own it. If I didn't think it so I would sell. However, I will tell you that it is, IMHO, a gross mistake to apply a simplistic reserves metric valuation to this company; for all the reasons that have been expounded several times here in the last few months. Understand the PSC, coupled with the (currently) challenging economics of taking production much beyond 55k bopd, and you will understand why. Of one thing I am absolutely certain: the collective individuals making up the marketplace in this stock are in closer agreement with me than with you. I'm happy for you to prove me wrong by buying up more of the stock.
(PS: it is always a good idea to know how many shares are in issue especially if you are going to post valuations, realistic or otherwise, against share prices)
R2R - I was asking put up for a valuation as I don’t believe I have seen one. It’s not confrontational just purely asking his opinion. There are different reasons why people are here. Personally for me I am a long term holder and have always believed the asset is a first class producing field that offers lots of potential value. We all know the challenges that have been thrown at us and the reasons why we currently have such a low market cap. The basis for my valuation is a combination of reserve valuations, cash in hand, outstanding arrears. Please see below values used for reserves:
1P reserves = 240 @ $4 = $960m
2P reserves = 505 @ $3 = $1515m
2C resources = 293 @$1.5 = $439.50m
Total = $2914.5m
Obviously there are so many different models that can be used to determine a valuation each has its own merits. Would be interested in seeing your workings how you got to your valuation and put ups. Also it would be interesting to apply your model to other oil producing companies to see how it stacks up.
R2R - I was asking put up for a valuation as I don’t believe I have seen one. It’s not confrontational just purely asking his opinion. There are different reasons why people are here. Personally for me I am a long term holder and have always believed the asset is a first class producing field that offers lots of potential value. We all know the challenges that have been thrown at us and the reasons why we currently have such a low market cap. The basis for my valuation is a combination of reserve valuations, cash in hand, outstanding arrears. Please see below values used for reserves:
1P reserves = 240 @ $4 = $960m
2P reserves = 505 @ $3 = $1515m
2C resources = 293 @$1.5 = $439.50m
Total = $2914.5m
Obviously there are so many different models that can be used to determine a valuation each has its own merits. Would be interested in seeing your workings how you got to your valuation and put ups. Also it would be interesting to apply your model to other oil producing companies to see how it stacks up.
Your all mad, this isn’t the AIM.....
Not sure why you label posters who put reasonable values up as having an agenda. I think everyone has stated that they believe this is under valued. Personally I think by ~$2-300MM and not by $2.5billion like yourselves.
Why do I have these figures? Because I built a simple model to work out how much value GKP get from the PSC each month and discounted it forward and that’s the figure that came out with a reasonable WACC.
Why do you think $2.5 billion? Or is that a number that’s plucked out the air or based on some very dated info?
Yes agree 2bln market feels about right given history. This had been achieved in the past even with current fields and size. If sold 3.5bln might be possible but not holding for it.
Not sure why PUTUP is on this board? Claims to be a holder and yet is very negative about this share. So either a very disgruntled buyer or has another agenda or just a bit mad. My guess the latter.
Putup - what do you feel is fair value?
I noticed you have joined the board over the last few months and are very quick to respond to any positive posts so would like to hear your valuation and rationale behind it compared to other peer valuations. Take away any prospect of any takeover premium.
The previous highest valuations where when GKP held a licence to 3 fields now it’s one however we are now producing, have a route to market and provide dividends so a lot had changed.
FWIW you're denominator is wrong
(And I wouldn't suggest the prior market cap of a company that spectacularly disappointed and imploded as a guide to future potential value)
For what it’s worth below is a rough guide of market cap and resulting share price. Having previously had a market cap of £3.5bn plus you can see the possibilities.
700000000 3.32746270672492
800000000 3.80281452197134
900000000 4.27816633721775
950000000 4.51584224484096
1000000000 4.75351815246417
1100000000 5.22886996771059
1250000000 5.94189769058021
1500000000 7.13027722869626
2000000000 9.50703630492834
2500000000 11.8837953811604
3000000000 14.2605544573925
3500000000 16.6373135336246
4000000000 19.0140726098567
Personally fair value based on current conservative CPR would be in the region of £2bn. Ultimately in my view we are undervalued by some, even comparing to Genel we are currently tracking approx 100m less market cap. Genel has a much inferior asset and reserve base too.
It’s good to finally landed what seems to be a decent CEO so here hoping a fairer valuation will materialise.
GLA
GKP is a Value play. No-one here disputes that the sp will rise when hit 55k. A plan to 110k will then be announced. The field is large enough to deliver this amount.
The sp has strong momentum over the last 12 months. So now classifies as a momentum play. It will also start posting growth story with growing EPS.
So soon will hit the magic circle with Value, Momentum and Growth in play. This will attract a lot of attention in next 12 months. This time next year will be looking at 300p+. And haven’t even mentioned take-over.