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I can't disagree with any of those points.
So then, one more 50 mill divi for Christmas?
Straycat.
Amen to that, another year like this year would help.
GLA
Jens,
When I bought into GKP in early 2018, what drove me was the almost sexual attraction to a Company that was so fresh and clean out of a complete restructure, and so obviously set for self-funding expansion.
Neither was it lost on me what a potentially attractive sale proposition it was/is, notwithstanding the ‘awkward’ nature of the geopolitics and my major misgivings concerning the Chairman and his gofer, JF.
I still believe in the sale possibilities for this Company.
But I also believe that as patient shareholders the future looks pretty good, given the options now available to JH in the upcoming negotiations.
And that includes at least some of the LTHs as well…God knows they deserve something out of their difficult and painful experiences.
Maybe we have been sold and returning capital would make an easier transition?
"The art of negotiation is completely lost on you, isn't it?"
Nope
"He will have one eye on his shareholder base and another on his upcoming dialogue with the MNR"
That states the obvious
"But right now all the MNR can see is him taking money out of their only asset without any serious commitment to the future development of the field."
The company has the money already. And will be paid more. The company has excess equity capital.
"He'll probably want to restructure his debt arrangements if he wants to do the latter."
The company can fund expansion through additional debt. The existing debt can only be repaid with bondholder consent. Don't expect that to happen anytime soon. (At best expect it to accompany an approved FDP that has shareholder buy-in for expansion, ie suitable returns, and the issuance of a new bond.) When the FDP is approved the company will have to approach all capital providers with the expansion plan and its capital needs. Until then the company should run a more optimized balance sheet. The company should not hold onto cash now for a plan that is yet to be approved and with unknown returns. The fact that the company is returning capital today is of marginal consequence - at best - to any FDP plans.
The art of negotiation is completely lost on you, isn't it?
He will have one eye on his shareholder base and another on his upcoming dialogue with the MNR...his job is to navigate the best way forward for his shareholders in the context of his perception of what is possible in terms of field development.
Does he milk the 55k bopd asset before the terms move against him?
Or does he dig in and pursue the goal to 110 bopd?
He'll probably want to restructure his debt arrangements if he wants to do the latter.
But right now all the MNR can see is him taking money out of their only asset without any serious commitment to the future development of the field.
And unless they decide to commit, then why would JH press on?
"‘…there may be opportunities to consider further distributions to shareholders and to optimise capital structure.’
This man is clearly setting his stall out so everyone around the table can see and feel his power in the upcoming FDP discussions"
Optimising capital structure has nothing to do with the FDP. He is under pressure from key shareholders for this. The company could easily return another $100m today - even before upcoming months' receipts. Expect this in the form of buybacks and another special dividend at end of the year.
What’s on JH’s mind?
Taking the half year results as presented, the full year P&L looks a bit like this:-
Revenue - $270m-300m;
Post tax (pre dividend) Profits - $130m-$140m;
Dividend payments - $100m;
H2 net capex - $50m - $60m (H1 @$14m);
Estimated Y/E Bank Balance (post second half $75m dividend payment) - $200m-$250m.
Estimated Net Asset value - $475m-$500m. (Current Marcap: $430m)
Note: The 2021 $100m dividend payment has no material impact on the P&L. it only affects the Balance Sheet and the NAV of Company; the P&L carries both with ease @44k bopd and $70+ poo.
It’s worth noting JH’s comments as well.
In his H1 commentary he states his commitment to 55k bopd by Q4.
But his full year guidance stipulates an increase from 40,000-44,000 bopd to 42,000-44,000 bopd.
Since H1 production levels were aggregated at 43,500 bopd, then his full year forecast suggests he refuses to anticipate 55k bopd in the full year forecast at all. Prudent? Or provocative in advance of FDP negotiations?
At the same time he indicates that in the second half:-
‘…there may be opportunities to consider further distributions to shareholders and to optimise capital structure.’
This man is clearly setting his stall out so everyone around the table can see and feel his power in the upcoming FDP discussions…no harm in that as long as he’s read the MNR/KRG right, and understands their needs as well.
Refreshing at last to see a negotiating strategy though, isn’t it?