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I sincerely want to apologize for claiming that GKP was fully valued and a sell at 92p back in February, while making victory laps today and this week when we hit 135p. Surely it might confuse many of you that I, being so bearish from 90p to 130p, have been holding and buying all this time.
From now and onwards, I'll align with what I write here and how I actually trade myself.
I’m sure we all graciously accept your profound apology PPUTUP.
Whoever you may be.
Haha. Posted by someone that can't read properly.
PUTUP So you post here “sell GKP @92” and you are “bearish” all of the way up 130. If that were true you’re a hypocrite. If that’s true you wouldn’t have been a buyer.
Change your name because PUTUP is tarnished. Almost as much as Itzafool
I never said sell at 92. I said local sales at $25 or even $30 a barrel forever would mean the company was fully valued there. As I made clear then, and now, that's not my assumption. Only a complete dipsh*t would misread what I wrote.
No-one cares fella...
The grande delusions are Very real with you and fraudulent...
for all those that would like to read it again, here was the post (in april):
(in response to a comment by rog the dodger):
"no problem if i’m wrong because @ 35 dollars a barrel 108 p and a reasonable profit margin"
i love it how people expect $35 when the company was last paid $25... a 29% lower figure.
just for kicks i plugged $25 per barrel forever into my model. without arrears recovery (there isn't room for it at those prices) it suggests a fair value for gkp (50k production in perp sold at $25 and assuming the current contract remains intact) of 83p per share. (£1 year end discounted at 20% to end april.) the current share price assumes a lot better scenario than limping along forever with domestic sales at $25 a barrel. the equivalent but assuming $35 a barrel sale price is 114p. so you could say the (bullish?) $35 per barrel scenario is pretty much fully baked into the current price already. we need a return to exports and recovery of arrears to make appreciable gains. "
i told you guys back in march the company would be doing buybacks this year.
performance talks. bull**** walks. i'm at 3x investment on gkp right now. others?
PUTUP What part of saying one thing and doing the opposite is Credible?
So who’s the “dipsh*t” The man that bought at 89 and said so and why at the time on this forum, or the hypocrite?
"PUTUP What part of saying one thing and doing the opposite is Credible? "
Who did that?
"Link: [LINK REMOVED] "
A pathetic try. You'll have to do much better. 😂
Gosh, this putup fella is such a bore. Glad not to waste my time reading his posts on here, as I had much better things to enjoy in life than spending here reading his pearls of wisdom.
Good luck all genuine investors in GKP, waiting for the pipeline to reopen. Now, back to my caipirinha on Copacabana beach. 31°c and great food.
:0)
ST
@PUTUP, thanks. Wanted to check - when you say fully valued - what kind of FCF yield do you assume? I agree that the company is fully valued here if there are just local sales, but I am getting higher numbers.
Basically at 40kbd production (optimistic), sold at $25 (would probably think pessimistic), looks like they are making 5.2mm per month (assuming 6mm costs)? So overv $60mm pa. This would go down to 4 and change (as R-factor increases) at some point, but not that fast.
Their current EV is circa $300mm? I would say one would want them to make 50-60mm p.a. at least (otherwise, why not buy Shell) - but it seems to me that 1.2-1.4 price with local production still could be justified ... Am I missing something? (appreciate the above is quite high-level and not precise).
HobGoblin, to be clear, I said that IF YOU ASSUME 50k production in perpetuity sold at $25 a barrel, or even $35 a barrel, then the stock would be fully valued. I'm assuming a very different scenario. The point was to say that the stock was already factoring in a better scenario than local sales forever. (IIRC the stock was about 110p at the time.) Simply that.
I'm modeling a MUCH better scenario (than local sales in perpetuity) and hence my current targets of 201p (149p if you exclude receivables) which I discounted to end May to derive 180 and 129p, respectively.
I don't use multiples or assume yields but my target year end enterprise value represents about 5x normalised free cash flow. (By normalised I mean the cash flow that can be generated in perp once the CRP is normalised with 48/50k production and a $70 Brent, current contract terms and the other assumptions I outlined regarding discount to Brent etc.)
The R Factor isn't such a big issue. Normalisation of the CRP is entirely different. Remember we are still recouping historical costs faster than we are incurring because there's a little CRP left. That doesn't continue much longer.
Good luck.
PUTUP, thank you. Yes, you are right abt CRP being the main thing (have not looked into a model for a while and got rusty).
But on the other hand, CRP was $224m at year end, still above $200mm and at 50k production @$25, decreases at 7.5mm per mo? this would still last 2.5 years (more at a lower production assumption).
No argue Putup is talented, but I'm also very confused how we se this complete fall in profits from +$220m per year @ $60-70/b to $50m in perpetuity. I've read up on the CRP personally and I've shared sheets with two separate analysts covering the stock; both have it att +$200m profits per year for years to come. They also say the same thing: the CRP is quite big currently and they can't see it depleted before 2030. (GKP will invest, they have plans to +100k k/d).
Disclosure: Long since 90p and haven't sold a share.
Alexeliasson
You can only recover costs that you incurred in the past (CAPEX + OPEX). From the past there is a CRP (unrecovered cost oil). The mistake you are doing is double counting. Now, what the company reports (idk exactly and wont chack it: around $ 200m I guess) is a GROSS figure, 80% of it belongs to the GKP. Then, a large amount have been already billed via the receivables (75% of the 150m is cost oil). So what remains in NET terms after the receivables is around $ 45m NET for the GKP (So do not doublecount it). Now, what they invest for field development, of course they can recover that amount, but that is NOT free cash flow. How I remember, when I modeled, GKP can do around $ 80-90m for $70-75 Brent (thus around $ 50/barrel realized!) from profit oil. But of course there is this $150 m receivables and another approx $ 45m for the NET CRP (pls do not correct me if it is only $ 39 or 50m cuz I do not care). Thus, how this story looks like: $ 90m cash (lets round up), $150m receivavles, approx $ 45m CRP that can be recovered fat and idk what about with payables.. I wont check it cuz again I do not care less substract 15m. So we are now at $ 270m and we need to add the PV of PROFIT oil. Lets say for simplicity, a FCFF of 80m/annum (approx $70 per barrel for brent, 55k barrel production/day), lets use 20% wacc (or 15% wacc and -5% 'growth', all the same).. So the PV of profit oil is $400m. So a'fair' market cap, - assuming the recovery of receivables - is approx 270+400=$670m vs the current Mcap of approx $ 400m (now, of course you can use higher wacc or you can also substract the cost of the disassembly of the field.. in the book there is a $ 40m item for that ) a . This indicates for me(!) a GBP 2.37/share or 66% upsdide but I will get the f*** out here around 1.8 I think (if I can). Belive me or not, this is the approx situation. Have a nice day everyone
GKP made $266m in net profit at 44k b/d @ $74 oil price in 2022, and $165m in net profit at 43k b/d @ $49 oil price in 2021. This is not "double counting" or minorities - it's net to GKP. (and it was all flexed out as dividends, remind you). Receipts and arrears can and will fluctuate.
Now, let's assume exports are restarted and we get a -$18 discount on brent i.e. $65 oil price @ 44k b/d (lets discard that they reached 55k b/d the weeks before closure); it's hard to envision net profit below $180-200m in 2025. Where the CRP currently stands. Will the profit fluctuate on a declining CRP? Sure - I'm just saying (or the analysts, rather) that the huge drop to $50-70m per year in perpetuity is very hard to model.
Alexeliasson
Sorry, but you are wrong.
75% of ANY past revenue was cost oil [due to the PSC formula], which came from the depletion of the CRP (cost recovery pool=historical unrecovered cumulated OPEX+CAPEX).
Thus, 2/3 of the $ 266m and $ 165m, $199.5m and $ 124.5m was cost oil payment (made possible by the large accumulated CRP at the time). This means only $ 66m and 40m was the profit oil for those years. If you do not understand this, then you do not understand the contract.
I checked my model, personally I model around 70-80m USD FCFF (which comes from profit oil) after the depletion of the CRP, which is quite close if the company got paid. Let me remind you that the CRP is somewhere $ 200m, 80% of it belongs to the GKP. There is a claim for $120 via the receivables, thus approximately $40-50m remains, which is currently getting gradually realized via local sales.
Another possible value creation is to run up the production to 80k/day but we are very far from that in every regard (and I would be very happy by just preserving approximately the terms of the current PSC). I think that could create an extra value of around GBP 0.3-0.4 per share.
Btw, the $ 18 discount for Shaikan oil is likely too low, it was initially set at $21 then after the inflow of Ural oil - which is also heavy crude - to Turkey (due to the war and sanctions) it widened to over $30. I think its a lot safer to assume a $25 discount at least... So once again for $75 Brent again I would say $50 realized price.
All this modelling based on what you choose to see
..
Reminds me of another couple posters?
I do understand the cost oil component of the net profit, what I'm trying to say (for a couple of times now) is that I don't see that component fall to 0 next year, and stay there in perpetuity. Not only do we have a pool of +$200m currently, it will also not be depleted considering the growth ambitions ahead.
I appreciate your input that we will top out at $70m annually the coming years, and I guess we just to have to agree to disagree on that part. Thanks for your input.
"Now, let's assume exports are restarted and we get a -$18 discount on brent i.e. $65 oil price @ 44k b/d (lets discard that they reached 55k b/d the weeks before closure); "
It would be bold to assume such a discount when, prior to closure the discount was about $32 a barrel. Good luck!
It would be bold to assume a discount of 32 dollars given the Iraq pressure on the illegality of the sales at the time
PUTUP,
"It would be bold to assume such a discount when, prior to closure the discount was about $32 a barrel. Good luck!"
First, GKP discount the last 6 years pre ITP shut-in has been $22 i.e. you misrepresented the facts with 40%.
Source: https://i.imgur.com/3KyC1Kg.png
Moreover, the discount to dated brent is not isolated to GKP low API gravity ("heavy oil"): Shamaran and the other IOCs with high API gravity ("light oil") also had a double digit discount to dated brent the last 6 years. The reason was that the oil that was sold was illegal and Turkey were only to take on this risk with a substantial risk premium. Something I'm confident will disappear when/if the contracts are approved by Baghdad.
You know all this, however, and I have some difficulties understanding your motivation as to why you misrepresent easily verifiable facts.
@alexeliasson, time for you to visit Specsavers and apologise to PUTUP 🙄
The average discount for the years you quoted was not $22, the last one was $27.2 which you obviously read as $22.2.
Otherwise it would have raised alarm bells, why the sudden increase?
Then you would have searched the RNSs for the one where they gave the added discount to Brent caused by the swap to KBT.
The one where there were four months, 2 @$11 extra, 1@$12 extra and one at @$13 extra, giving a convenient average of $12 extra a month.
So if there were 8 months at $23 and 4 at $35, what would the average be?
What a surprise, it’s $27!
The $32 that PUTUP is using is an improvement on that $35.
It surprises me that nobody here puts in doubt the future ability of the company to operate. Considering that Iraq is already producing above the OPEC quota and the oil smuggling through the Turkish and Iranian borders would be halted as some point when SOMO demands the oil revenue that nobody is collecting right now (the KRG already announced it hasn't received any funds from oil since March 2023). The deal between the KRG and the Federal government consisted of SOMO controlling and receiving all oil revenue in exchange for federal funds.