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Ah Straycat, your poetic excellence knows no bounds. A basic sum of value:
Cash as of Aug 8: 27p per FD share
FCF created in Aug: 0 (or somewhat negative)
FCF created in Sep: likely zero, possibly a small positive, but, in any case, likely immaterial
4Q of '23: some where between zero and that which we make if we get back to 55k for all of the 4Q so: 0-16p (the bulk of this is from cost recovery)
So that's free cash flow per share between now and the end of the year. A 0 to circa 16p per share swing. Almost irrelevant in the grand scheme of things and, as you say, one might simply forget everything performance related that one might expect for the year.
(For completeness, at the end of the year we are still owed CRP - somewhere in the region of 13p per share assuming a full return to normality in the 4Q and ignoring receivables. Ok, you want to ignore this - fine.)
It really comes down to two things:
(A) Will we get paid for the $151 million in receivables we are due? This IS material. 51p per FD share. The receivables DO matter. A lot.
(B) Do we have a future business at all? If we ignore the CRP balance as you requested, we have just the value of the Profit Oil stream. I value 55k in perpetuity at somewhere between 80p and £1 per FD share (and more like the lower end). If you are really prepared to pay now for 85k you might scale that accordingly (but certainly the investment required to get to 85k crashes the free cash flow generation until you get there).
Unsurprisingly, it's all very binary. Will the GKP business model (as per the current PSC) survive and will we ever get paid for the receivables? Markets hate all or nothing scenarios.
Given A and B are inextricably tied (ie they can be summed together) you can even estimate the probability the market places currently on a good (things are resolved before 4Q) versus bad outcome (worth only current cash). Perhaps unsurprisingly, that probability currently works out to be about 50:50.
To say "we're in shape for the long haul" beggars belief in the face of current circumstances. On the contrary, everything is at risk. I'm long and I hope I'm not wrong. Place your bets, but it could go either way.
Giddy up.
So take the $80m and look at any future cash flow projections that you might propose over the next six months.
ignore recovery costs et al. Irrelevant right now because outside of JH's control.
In fact, ignore everything else that has been contractually agreed.
But control manageable operational costs, including development capex where it is clearly unnecessary in the circumstances..
We're in shape for the long haul.
Ignore the P&L. Right now it doesn't matter.
Not relevant right now.
Btw, If you stop saying 'huh', then I'll stop accusing you of being from the USA and a Hick to boot!
Yeehah!!!
Ha! What American heritage is that? I have none.
I believe/hope that oil will flow - else I would have sold out (in contrast to recent, albeit small, buying which is already underwater). It's not a certainty, however, and certainly not as to when. Each month direct costs aren't recovered means we are owed more and more by the KRG. The current situation doesn't self-finance anything... The stock is cheap - only if you believe we are back to 55k production and pre-closure sales mechanisms before year end. Until then it's all a yawn.
It is good for Genel to have some positive news from Kurdistan where DNO has, after reopening to check all was OK, found that it was and that local traders were flocking around to buy some 20/- b/d. As can be seen above prices are at a discount but are paid in cash and in advance which has a nice feel about it.
It’s like the old days at Tawke as the tankers collect the off-take from the field and whilst it’s not Christmas it is better than the proverbial sharp stick and such revenue is very welcome and probably covers G&A costs to a large degree.
At 80p this is no time to jettison Genel and although there is no sign yet of peace on the pipeline front I still believe it would be ridiculous for it to remain shut and therefore Genel will have significant further upside for the patient investor.
From another aboard so can't vouch for authenticity.
Kurdistan Watch
@KurdistanWatch
Economist and university professor Nabil Marsumi claims Turkey has presented six conditions to the Iraqi government for the resumption of KRG oil exports:
1. Suspend the Iran-Iraq oil for gas agreement, given Turkey's 50-year oil contract with the Kurdistan Region.
2. Provide compensation for restarting oil exports from the Kurdistan Region.
3. Withdraw Iraq's second complaint at the International Court of Arbitration (2018-2022).
4. Maintain the $13 per barrel oil discount to Turkey as before.
5. Pay the $7 per barrel transportation fee to Turkish company Botaş.
6. Iraq should cover the expenses for repairing the Iraq-Turkey pipeline.
Words like Court Win, shoot, self and foot come to mind....
Some of us have been saying for months they should have been resuming production and making sales.
Was the only way to get the idiots to come together and reach a deal.
PUTUP.
Brilliant!!
Your excursion into the English language and its meaning shows no bounds in its ignorance of the subtleties of OUR language.
I forgive you because of your American heritage and lifestyle.
And your complete ignorance, or have I already mentioned that?
You panicking PUTUP?
You should relax.
The oil will flow. The model of self financing growth to ca. 100k bopd is still alive.
Unless the people that pay you tell you to write to the contrary.
In which case you're going to look stupid sometime soon.
Love
Straycat.
"Enough to sustain the business model for now."
There's a massive difference in "sustaining the business" temporarily and "sustain(ing) the business model". The latter isn't happening with these local sales. They have yet to cover costs in a massively restricted cost environment let alone generate free cash flow enough to justify the current valuation. We still require proper solutions to the various challenges facing the company. I agree with the rest of your post except to say, yes, the problem is being paid, but also what volume and what price. Nothing new there and the clouds have far from lifted. We just have a little more breathing room than before. The rampers are grasping at straws. The realists patiently wait for proper news and demonstrative progress.
Things looking up?
Have you looked at Genl share price today?
Iraq is also expected to increase the volume of heavy fuel oil it sends to Lebanon this year by 50 percent, to 1.5 million metric tonnes, under a 2021 deal.
https://oilprice.com/Alternative-Energy/Wind-Power/Lebanons-Energy-Strategy-Offshore-Drilling-Iraqi-Fuel-And-Solar-Power.html
Things are looking up!
Irrelevant is any deal struck with krg as you would actually be dealing with the Bar-z boys (and they won’t be paying what you think had been agreed, and don’t hold your breath waiting for the phantom payment to arrive - if it arrives at all).
We live and learn (eventually perhaps) ?
Will be interesting to see the deal that GKP has been struck with KRG. If SOMO are covered with 20kpd and the rest can go to local dealers who may be able to sell internationally then the cat is out of the bag. Getting instant payment is a big deal in this corrupt region. Also heavy crude is in big supply.
In the meantime KRG can block water supplies from Turkey to Southern Iraq citing the need to check water quality and pollution damage from chemical weapons residue.
I bought my shares (then added later) in early 2018.
At that time the oil was being trucked at 32k bopd for that year. There were problems with hi-jacking, but the oil flowed. The pipeline connection resolved those issues.
The problem is not whether the oil will flow.
It will.
The problem is about how we'll get paid and by whom.
For what it's worth, I reckon JH has done a sterling job in very difficult circumstances. And we've got incoming cash as a consequence.
Enough to sustain the business model for now.
But that's not the solution. The solution is inevitably beyond his remit.
All JH can do is manage GKP resources around issues within his control.
And he is.
Be aware that Tawke crude is of higher quality than SH crude; SH oil is much heavier and more sour, and has higher Sulfur levels.
SH crude will be purchased at a greater discount than the 50% applied to Tawke crude.
Quality differentials continue to be applied - even in a disfunctional- and corrupt local marketplace like KRI.
So is iraq happy with oil being sold in kurdistan for $35 a barrel ?? So much for SOMO krg has ignored that and rightly so the way iraq has been behaving lately.
Iraq is the only loser now and the IOC situation has become stronger.
If gkp can sell 50kbopd locally the pipeline becomes irrelevant and moneys payed are instant.
CAPEX will be at a minimum so overtime production levels in kurdistan will drop of drastically at some but time is on our side for that to happen.
And the pipeline should be open before production starts to drop. But always be prepared for a worse case with these idiots .
The fact that IOC’s are getting substantial revenues, Iraqi government won’t like this as oil is being sold even cheaper.
Turkey also won’t like it too as it reduces their bargaining power, this is positive in all 3 directions; with 3rd being liquidity improves in the IOC’s
Expect a more swiftly resolution
So we have become an oil station now fill up pay and leave!! Instant cash but Mr Market doesn't agree with our situation at the moment they want the pipeline open and us pumping 60kbopd.
Then they might mark us up.to the giddy heights of 120s .
Can we expect a Christmas divi ???
The old saying of "oil will find its way to market", has never been truer.
We don't know if GKP are actually increasing the amount of crude oil being trucked away, however we do know that DNO are seeing increasing crude sales with instant payment so pretty sure GKP will be seeing similar.
Well the Iraqi people really know how to turn a profit, where fuel and labour costs are some of the cheapest in the world.
Can bet your btm dollar that many entrepreneurial drivers and tanker owners will be trucking long distances in order to make a decent up grade on crude sales, delivering to whoever is prepared to buy it.
More tankers moving, more local diesel required, so local refiners will also be upping local production as well, so even more tankers shifting crude oil.
Word soon gets around, and wont be long before its not just local drivers, but truckers from every local country like Jordan and Turkey turning up waving the credit card and wanting our crude.
Run the calcs...well worth the trip even with a few "gratuities", to grease the border guards for "fast track", pass through service.
Turkey best settle quick, or might find its better by private trucking..
Why send by pipeline if not being paid, swipe the plastic as the tanker fills is miles better for us, and the tanker operators and bosses.
There’s obviously someone who’s selling who hasn’t seen the news yet, Genel will finish up by tomorrow around 85p plus, it always takes time to filter
We need some transparency from the IOC on exactly what they are getting per barrel locally!!
Market doesn't like uncertainty hence why Genel is down and we will follow.
To many pigs noses in the trough. How much per truck load and how far are they going?
Lots of questions unanswered to be honest
How’s that rise working out for you? :-)
Genl down on news, paid half for production, we'll see at our presentation end of month, how little are we actually getting.
A company producing 20k bopd should be mkt share above 3 billion!!@
Be quiet itsaponzi this is great news and will show that GkP has most likely increased to around 20,000 plus, regardless of the price we are still receiving income, great news and a big bounce off todays lows
It's read to me that the IOC are getting shafted all ways !! At this rate they will be giving oil away for nothing.
These thieves will never change as for the pipeline that is going to take months to resolve
There must be saying somewhere. To many thieves ruin a country..
UK no different but they just hide it better than these idiots .
Rant over and still holding