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A few comments on recent posts: BroadfordBay is also contributing as Broadford Bay....... a subtle, but significant difference in names - who cares ? The ostensibly unnecessary 100m loan would not have been approved of by a rational mystery new buyer - or is that exactly who has requested and approved it to kick off a hugely accelerated expansion phase as soon as they take over ?? America's abandonment of the region will have pulled the plug on USA based IOCs binding for us (irrelevant if we are already sold of course).
SC - I agree the loan note is bizarre, why waste £10m a year interest when we could just pay it off out of cash.
The only logical reason I can see is it's a reserve in case monthly payments get deferred for a lengthy period of time. I don't think it will be used for workover programme - the 55k increase is already funded and so if needed for 75k or 100k surely arrange it at that point in time.
He's not the Broadford I met once unless he had a bang on the head....and Bigdog5 on ADVFN seems to have become possessed by a demon! Doesn't even answer his emails these days. It's as if someone has access to the inner workings of the blogs. Who'd do a thing like that?!
good luck getting anything out of broadfraud boy that remotely reflects putting "meat on the bones" of his negative diatribe
he cant be the same poster from yesteryear, this new chap seems to be someone that is quite a few sandwiches short of a picnic ............if he is the same then its sad to see what has happened to him of late, time has funny effects on some.......
......... or is he simply doing oilmans bidding and if he is BB's puppet master then he was always going to end up looking somewhat simple
Not necessarily. They might take their preferred route of Loan replacement in 2023.
However, I would make two points here:-
1) That is a stupid way to spend money and degrade profit. 2) GKP could have easily paid off their existing old Loan Notes last year out of cash flow. They would still have generated enough cash to develop their capex to schedule, initiate a dividend plan had they wanted, and engage in some buy back activity.
This is the innate strength of GKP because of the stupidly low lifting costs and the size of the field. It is a CASH GENERATING MONSTER.
So if you run the numbers through to Loan redemption in 2023, GKP won’t even notice the Loan payback then because it will be petty cash in their bank balance terms as their plans bear fruit.
The question therefore that requires answering is, why take on extra loan facilities that will never be used for trading purposes? It looks stupid. Unless there are other motives for sacrificing profit.
And it’s not enough to talk of covering ‘eventualities’.
As a matter of FACT: 1) No facilities have been used AT ALL since they New Notes were created; 2) They have cost us over $10m in the past twelve months with an interest charge of $5192k applied in the first six months of 2019.
When will these extortionately expensive funds ever be required prey tell? And why couldn't they be raised on need, bearing in mind the operational slush fund that our bank balance has become?
'to cover eventualities' you say?
Please name one that is even remotely possible.
By the way, more properly I should have 'lost the plot' according to you, not the place.
Indrid can probably help you understand this better.
'Given the uncertainties that the Shaikan field development has thrown up up over recent years'.
Come on BB, your retorts have always lacked the KO factor, but this is poor by those same standards. What difficulties do you refer to? Detail them, them justify that detail against the $200m figure raised.
The following is just one way of interpreting recent events, making sense of commercial nonsense. If there are other ways then these should be investigated too.
Hidden in the 2018 annual report, apropos the new Loan Notes, GKP stated that:-
‘The New Notes give the Group the flexibility to raise up to $200m of additional borrowing.’
It’s not just a set of replacement loans for the previous arrangements. This steps it up a gear.
Can someone, anyone, tell me why we would possibly wish to seek out additional (and unsecured) facilities at this level given our natural cash flows?
These facilities are CLEARLY NOT for operational purposes and were CERTAINLY NOT required in 2018. Up to $200m in required additional operational borrowing? Please.
But the Board agreed it and with a ten percent annual coupon which has already cost us well over $10m in interest charges since announced. By 2019 y.e. Those charges will have risen to approx. $16m since the new deal was struck, and $10.3m in the year. That’s all off our bottom line and the Loans are completely unutilised. Excellent deal for the Lender, who clearly regards the Loans as risk free because they are offered unsecured.
If the Loans were an insurance policy against operational mishap then they would have inevitably been secured against assets, given the absurd market capitalisation and net assets of $498.8m at the time of the loan.
Not so much a good deal for us though, unless they’re required for an entirely different purpose.
And that might mean share buyback under Resolution 13(b), specifically requested by Jaap Huijskes and passed at AGM. That Resolution gives the Board new and untrammelled rights to buy back ANY AMOUNT OF STOCK for treasury or cancellation as Companies Acts allow!
The Board could concentrate the shareholder value presale by buying back their own shares.
That’s why they’ve had to take care of those staff option shares. That’s why Sami’s gone…he’s no longer required. There will be no meaningful replacement. Less than six weeks to go and nothing after a five month ‘search’. It’s why the production plans are slightly delayed. Why would you commercially develop an asset you’d already sold in principle? Utter commercial madness. Better to stick all your spare cash and your loan facilities into GKP via buy back. If it’s already sold, it’s the best and safest investment you could ever make!
The P&L projections for this business are off the chart as it proceeds with plan….now is the optimal time to sell.
But this also implies a level of sophistication and obfuscation beyond the talents of JF and SZ.
The acid tests will be:- 1) whether any buy back is recommenced; 2) Whether Sami is replaced by a heavyweight Newbie.
This is controversial stuff I know, but it deserves discussion based on the facts as they present themselves.