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Fat finger strikes again.
Best guess on expiry date, all things being equal, is based on production by end of 2022, so profit boost will continue into first three months of next year through delayed receipts.
Yes. A lot.
Where are the current record breaking profits coming from?
What is the source of the extra monthly top up which is above and beyond the Profit Oil and how long will it continue?
IMHO, first posted Jan 2021, it’s the side effect of the DFE on the CRP CO mechanism in the PSC and the paragraph below outlines how I picture it in terms of numbers.
It’s the conversion of pre-restructuring debt that should have been repaid in the future, into post restructuring equity. So when the money to repay the “debt” comes in through the CRP CO mechanism, it stays within the company because there is no debt to repay. (Applies to $500 million of the original $600 million.)
Best guess on expiry date, all things being equal, is based on production by end of 2021, so profit boost will continue into first three months of next year through delayed receipts.
I think it's time you melded the CRP into the published accounts for a more nuanced view.
'Profits are much less than 20% of receipts. Note I said: "the bulk of the cash available"
As per 2021 accounts:-
Revenue - $301m
PBT - $164m
Cash receipts - $222m
i.e. profits @ 74% of receipts.
Not 'less than 20% of receipts'.
Am I missing something?
'Profits' are much less than 20% of receipts. Note I said: " the bulk of the cash available "
You need to look at free cash flow not accounting profits; the latter being grossly distorted. Look at the last receipt. How much was recovery of prior expenditure (no gain on that)? How much was from Profit Oil? What expenses (unrecoverable via cost oil) need to be covered by that profit oil component? How much is left after those expenses have been deducted?
When JH returns excess capital to shareholders, which he surely will (decision already taken), how much of that was derived from profit oil less expenses? How much is giving back to investors money that they paid in previously?
Unfortunately that analogy doesn’t work.
Because it ignores the profit imperative.
Eventually, without tangible and demonstrable profits to plough back into the ‘cash machine’ then sooner or later it runs out of cash and needs replenishing from elsewhere. Typically new/existing shareholder support in one form or another.
Internally generated profits are the antidote.
And guess what? GKP is awash with profits right now. Record profits. Soon to be revealed.
Like a self-funding ‘cash machine’ with no debt and an oil price to pit prop its ongoing performance for the rest of the year.
And JH has to decide what to do with his excess cash...
No Clue Opu
Yes, it is like a literal 'cash machine'. Just like a high street cash machine the bulk of the cash available is that which was deposited in. So most retail shareholders are just getting their deposits back. The smart cookies who saved the company in the restructuring were well aware of the off-balance sheet asset called the CRP (created by the 'deposits' of pre-restructuring shareholders). They, alongside all post restructuring investors, have been collecting this asset (the deposits of pre-restructuring shareholders) ever since. The cash actually created by the company is a small sliver of the total cash flow. The bulk of the current month invoice is to recover investments from last year - and soon to be that spent earlier this year. Money out, money in.
So you can call the company a 'cash machine' but it's not creating cash in the manner which would normally lead one to assign that moniker from an investment case point of view.
Heh, toppy-uppy!
au contraire - I see a number of positives for GKP...but I also see a number of negatives.
As only the positives seem to get emphasised here, I'm very happy to point out some other things.
Any positivity, is always Pounced on by BB,
GLA LTH He cant bear it that GKP are now a "Cash Machine"
BB give it a rest. The precise cash figures don’t really matter here. The point is GKP is a debt free oil producer that is churning out cash. They have no clear plan on spending the money so can easily afford to return 50m plus to shareholders this year. Sure KRG could stop paying and oil can dip below 60 but that’s a risk am happy to take. Anyway as a non investor why are you here?
My dear chap,
you said "...will have ca. $250m in the bank."
You did not say "...will have $250m in cash and outstanding invoices."
You are sloppy with your numbers and inconsistent in your use of language.
"nevertheless by the end of September GKP will have ca. $250m in the bank."
"Assuming the May- and June Revenues are both received before end-Sept, the cash at bank will then amount to about $160M."
Actual cash in bank, I agree with BB. If we add in the invoices up to and including September then add another $90 (very rough numbers).
But little of this is uncertain except as regards what the price of Brent will be post today (out of the company's control) and what production volumes will be (the only thing we can expect the company to focus on). Paying out the CRP as it is recovered (and earned profit oil) has been the mission statement since restructuring. Nothing new here. More interesting is just what, if any, progress the company is making on production volumes - that alone will drive sustainable share price performance in the face of ex-divs.
Oh no, not you and numbers again.
You don't even know the difference between an invoice and a payment.
i.e. a Profit and Loss account and a Balance Sheet.
Remember?
To get into a discussion with you about how your spreadsheet works would be both tedious and tortuous.
We'll know in a couple of weeks what the direction of travel is.
And the precise amount in the bank by the end of September is hardly the point.
It might be $200m (as I have previously suggested). Equally it might be $250m depending on payment schedules.
Critically, JH has to manage the trend of surplus cash inflows and what to do with them for the rest of the year.
"...nevertheless by the end of September GKP will have ca. $250m in the bank."
What on earth are you on about?
Assuming the May- and June Revenues are both received before end-Sept, the cash at bank will then amount to about $160M.
In the (unlikely) event that the July payment is received by 30th Sept, increase the sum to just over $200M.
The latest Op Up states:-
‘Year to date production has averaged c.44,900 bopd. We are prudently managing our wells to avoid traces of water and, as a result, we are tightening 2022 gross production guidance to 44,000 – 47,000 bopd. The installation of water handling facilities will unlock upside production potential and we continue to explore acceleration options in a supply constrained market. In the near-term, we continue to progress our well workover and intervention programme to optimise production. While timing of approval remains uncertain, we also continue to make positive progress on the FDP as we prepare to resume drilling and ramp up production.’
On that basis, with oil prices remaining at current levels, a declared net capex of $95m for the year, $190m in dividends and a $102m debt repayment (plus accrued interest), nevertheless by the end of September GKP will have ca. $250m in the bank.
Doing nothing.
Except that JH will have to do something with it. And I reckon we’ll be the short-term beneficiaries in his 1/9 announcements which will most likely take effect a month later.
‘While the timing of approval remains uncertain, we also continue to make positive progress on the FDP as we prepare to resume drilling and ramp up production.’
A fascinating use of oblique language to mask a whole world of negotiating pain.
The implication is that, with approvals, ramping up would be no problem.
And, according to the text, it’s only the timing that remains uncertain.
2022 was always going to be a BIG year for GKP.
"So if JH doesn’t announce significant shareholder distributions on 1/9 he will have to answer some difficult questions. Like what he’s is going to do with the massive cash surplus he’s building.
More pertinent is how he will redistribute and at what level."
More distributions - the return of existing capital to shareholders (and there's a clue in that) - are highly certain and largely 'not news'. In any event you have that capital in the share price already. All those distributions are doing is giving some of your share price back. One pocket to the other.
Of far greater importance are any updates with respect to those things that actually generate capital, e.g. progress with respect to increased production. There's a lot here that hasn't gone to plan over the last two years (or even longer). Hopefully they've got some good news to report on this front (in addition to sugaring announcements with capital distributions).
yes!!, fairly confident we will recieve another healthy dividend before the year end,
GLA LTH
This from the 2022 AGM & Operational & Corporate Update as 24/6:-
‘Assuming timely payment of invoices and strong oil prices, we expect continuous robust cash flow generation in 2022 providing flexibility to consider further shareholder distributions and an increase in capital expenditure to resume drilling’
Well, with a couple of weeks to go to the H/Y results, GKP have regular invoice payments including full delinquent debt recovery.
Also very strong oil prices to the half year with every prospect of that continuing through the rest of 2022.
So if JH doesn’t announce significant shareholder distributions on 1/9 he will have to answer some difficult questions. Like what he’s is going to do with the massive cash surplus he’s building.
More pertinent is how he will redistribute and at what level.
On my figures, GKP will have at least another $100m to release by the end of September (which is when any announcement will likely take effect).
We’ll see. But 2022 was always going to be a big year for the Company.
And then there’s the FDP…any progress there would be fundamental to GKP’s market positioning.