Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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On Thursday - after the FY Report & Div announcement - G closed at 60p with Brent at $27 ie 2.22x - similar to the rest of the week. But by the close on Friday G was nearly 84p with Brent nearly $28, ie3x . Brent has since dropped back to Thursday’s best.
This is how the last week ran for our usual five: https://invst.ly/q6zay
(DNO not shown in full because this happens: https://invst.ly/q6zbj )
Did confirmation of the dividend cause nearly half of Friday’s 24p sp rise? And, if so, did it take a full 24 hours for that effect to occur? Or was Friday's gain more solidly based? I'm anticipating some retrace but could well be wrong in this weird market.
The value of the dividend is somewhat illusory because the sp will drop by that amount when it goes ex-div (although this change can be offset or enhanced by other market forces on the day). So it is effectively ‘cost neutral’ overall in terms of acquiring a share.
Ultimately a share is worth what it is worth over the long term, with payment of a dividend affecting the price only a relatively short while before and a short while after. The intended dividend has caused G’s yield to become very high currently, which could backfire over time if the sp does not rise, as higher yields tend to be associated with proportionately higher risks.
The risks with rapid risers, where 'new money' is involved, is that the percentage rise or fall is relatively large. So, there's a temptation for some of yesterday's buyers to take a quick profit causing the price to retrace. Volatility can be high as a result.
Here's G over the last couple of days v RDS (brown) and Brent (Green). :
https://invst.ly/q6nwe
For LT holders in G , who might commit new money in order to average down, it might be wise to top up in stages and use stop losses to lock-in profits at each stage. There is an obvious risk that, having risen sharply ahead of the field today that there could be a retrace. The covid saga, delayed payments and the OP issue still have a long way to run. But it seems we've potentially seen the bottom.
An excellent rise today for anyone who put 'new money' into G yesterday. The dividend yield at this level effectively discounting the price significantly, of course. Not quite back to 3x Brent, which hasn't recaptured $30 yet:
https://invst.ly/q6mw5
Here's the Brent based comparison with the others since last Friday:
https://invst.ly/q6m-1
Another observation, why is this Emma Gudgeon loading up and has purchased more shares than I think the entire management team combined?
Happy to accept the criticism. Said the results were decent yesterday. This has still dropped 75% in a month so today’s rise means little in scheme of things? It needs to hold. The current share price remains a joke all things considered and make no apologies for thinking this has been hit harder than it ought to have done because of a lack of progress and payment delays...
Agree Dodger....I bet he is in hiding somewhere under the rocks....
Let me go and find the toad as I can hear ribbet.......))
Totally, the management once again shows their ineptitude by allowing the share price to rise up to today’s level....I’m disgusted at this share price rising ;)
Hi Jim
Thank you and hope for all holders here that we continue to see much more upside ..I am holding lth and debating to sell enq and add more G ...perhaps if I am lucky to get in at low of the day...
I think Dodger..still blaming the management on the rise today...) lol...
Atb
Hasiba - lovely timing, looks like your decision making process has been vindicated - Congratulations. Stop loss set or holding out for dividend?
I have to declare that I'm currently minded to take a further gamble on G when the time is right - which could be tomorrow or maybe next month. But I recognise that it is a gamble: neither OPEC nor the KRG are reliable in my view and the course of COVID-19 is not near a conclusion. However, I think both KRG and OPEC must and will ultimately act pragmatically in terms of business, trade and their own self-interests. COVID-19, of course, will last as long as it can.
During the price drop I rotated investments - ie sold shares in G and PFC and bought in RDS and others , which I will retain. I am now at the point of potentially introducing 'new' cash and today's statement has caused me to favour placing this with G, having re-balanced over the last couple of weeks. I am basing this on a modest OP improvement to $40 - $45 and a G sp of 120p +. A return to 200p and beyond would be desirable but 120p is my first target. For me, the payment issue is an enormous disincentive - I would have bought without hesitation on today's low otherwise.
Hope time proves you correct and me as being overly pessimistic.
But as per Boyo's post - for non Genel holding investors looking to capitalise on the suppressed oil price, a choice between companies getting paid for their output and companies with a questionable / opaque payment schedule seems a fairly easy choice.
Top up Genel or top up RDS?????
Good luck to all and stay healthy.
Respect to all other views and I share with you the problems of where we are and whom we are dealing with but I understand it is the more complicated dynamics and mistrust between the central gov and krg which hinders many things including the turmoils in Iraq excluding Kurdistan...and as I worked in middle-east for over 20 years and the culture of inshalah tomorrow!! But they will pay ultimately and that I was accustomed to when I was there. This is highly likely our ceo and bod getting used to but not the shareholders outside the region...
Yes uncertainities and suspicious ways of the krg delaying /interrupting the payment is not serving us or the sp well..but obviously the krg are not bothered or stupid and corrupt in addition to above dynamics.
I took advantages of all above and added at low with the current turmoils ...I hope I got it right or ?
Believing krg will pay but as I mentioned G and GKP as I hold shares there too who are facing the same issue needs to have another arrangement to get paid regularly and on time..
GLA and really best blogs here by investors....
Hasiba,
I did read it but it is no different than what happened previously. First it was to be settled in January, now they mentionned Q1 (not 100% sure but I seem to remember Q1).
The truth is we are used as an adjustment fuse for the KRG revenue which is far from ideal and they do pay some other companies.
I understand these times are very testing for everybody but it doesn't look like help is a 2 way street in KRI. We have been waiting for Bina to be approved for ... years now.
So something is not quite right.
Coming back to our little exchange the other day (no bad feelings on my part), the reasons why Genel went down from £3.00 to £1.50 are those. Genel overshot a bit on expectations of the gas being approved imminentlyrics. It did not happen. Went down to £2.20 ish ... not in a straight line and then the payment issue arose and brought it down to £1.50.
The potential is still here but the issues as well.
At this price it might now be a bargain, but we cannot be sure because 1) The SAS has been silly (or not depending on what happen next) and 2) more importantly this Covid 19 pandemic is a real unknown and it looks like it will be an economic disaster.
I agree with Boyo, there is probably plenty of time to buy more ... we will see.
IMHO
GLA...
Production….Paym't Due...Month Paid...Status
Aug 19…….....Nov 19……...Jan 20……...Paid
Sep 19…….....Dec 19……...Jan 20……....Paid
Oct 19………..Jan 20……………………....Ovedue
Nov 19…….…Feb 20……………………....Overdue
Dec 19……......Mar 20……………………....Due mid March
Guys read this..last paragraph ...still time !
As per G RNS:
31 January 2020
Genel Energy plc
Receipt of payment for KRI oil exports
Genel Energy plc ('Genel' or 'the Company') announces that payment has been received from the Kurdistan Regional Government ('KRG') for oil sales during September 2019.
The Taq Taq partners have received a gross payment of $7.8 million. Genel's net share of the payment is $4.3 million.
The Company has also received an override payment of $7.0 million from the KRG, representing 4.5% of Tawke gross licence revenues for the month of September 2019, as per the terms of the Receivable Settlement Agreement.
Genel reiterates that it expects regular payments to continue, as they had since September 2015, and to be fully up to date on all payments by the end of Q1.
-ends-
One thing I find a bit worrying is that Dana is still getting paid. It does not say much for our importance in the KRG setup.
Going forward, finding a solution for the payments is crucial. It is very difficult to commit cash to any development if you are not sure to be paid for the oil .... or gas.
For G there was an annual statement today. It was good but it left unavoidable doubts.
The market reacted to that statement and, had there been no doubts, the sp would, in my opinion, have been rising more strongly towards 3x OP, ie 80p+ . It doesn’t seem to be happening, although it did punch ahead of GKP - an equally beset KRI producer.
So doubts remain: about OP recovery and about the ‘Other Thing’. These are huge and any punt on G currently has these two risks, where the likes of RDS and non-KRI oil co's has but one.
Here’s the last six days comparison, DNO is absent on account of a weird trip to +140%, which is presumably a data glitch, that messes up the chart. DNO ended up near RDS: https://invst.ly/q6djh
G, meanwhile did see some boost today and volume was up - as can be seen here:
https://invst.ly/q6dn1
Maybe tomorrow…..
Yes Hasiba - keep cash safe. I do expect to use some eventually but it'll probably be a good while yet.
G closed at 54.60, Leem, which I'll happily take as 'on the support' - especially as the actual low it's based on was 54.5 three years ago.
https://invst.ly/q5toi
Anyway, as you exited a while back you have cash so why are you checking this out? You should be spoiled for choice.
For me no new cash in market crash but rotating existing shares ,,liquidate some and buy others but not touching cash from bank! That is my red line..
May try to rotate more but not many left laggards to sell but a few..
I remember buying in here at 66p after the drop from £10 a few years ago, lets hope i can catch the bottom this time.
atb
Boyo it’s 53.6 now? 16% down. Unbelievable that this was 200p a month ago
Just to add to the previous:
G may well have done badly over the last six days: https://invst.ly/q5pu0 compared to others but see how it has tested 55p support three times whilst OP has continued to fall. Some grounds for optimism there. L'm watching rather than buying - not too concerned about catching the absolute bottom and things are generally still moving down. I actually parked some G trading cash in BT this week at 112 - not expecting any fireworks, just looking for something that might not drop as fast - gained over 15% earlier today although it's dropped back now. Will use it for G or another recovery stock when the time is right.
I see Hasiba has added - it crossed my mind too.
Here’s an interesting chart for those pondering re-entry points. It’s 5 minute candles with Brent (green) and RDS (brown) lines rebased to Friday 13th open. It shows G’s accelerating divergence from the other two: https://invst.ly/q5o1x
The acceleration may well be because investors have assumed the sp will inevitably fall to the historic floor at 55p - like a gravitational pull.
This is NOT a guaranteed floor, of course, but I think it may well pause here even if OP continues to fall temporarily to the lower $20's.
Now the cost of barrel oil = 60 bog rolls
Someone is taking the pi*s!!
I often comment on the fallacy of watching G's sp too closely and drawing swift conclusions when it moves either ahead or delayed in comparison to others, however G's sp (and GKP's) behaviour today has been particularly bad even in current circumstances.
G's sp went a bit off the rails compared to the majors on the 8th (marked), but this divergence accelerated sharply yesterday (marked) and has got worse today: 15 min chart from 18th Feb: https://invst.ly/q5byz
This could be interpreted as: G getting caned excessively and therefore will recover quicker from the bottom OR : G is at greater risk and may well suffer further excessive falls. This week's statement is the BoD chance to present a resilient survival strategy or chuck investors to the wolves. My interpretation - because I have a 'thing' about it - is that G may not get paid for some considerable time and that the balance sheet may well look very sick before OP recovers.