Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
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Can we please do a little analysis in the context of Board responsibility?
As per the FYR and JH’s summary of ITP closure:-
1) ‘…we suspended the ordinary annual dividend’;
2) Ref capex and costs; ‘…with our aggregate run rate expected to remain at or below $6 million in 2024’;
3) Sales resumed in July by trucking to local markets;
4) Sales tracking at 43k bopd @$25 currently;
5) ‘At current local sales levels we are cash generative, with our current low gross production breakeven of c.22,000 bopd providing downside protection’;
6) ‘…GKP is currently owed $151 million net’ (although I reckon that delinquent debt will potentially be compromised for the greater good! N.B. hope I’m wrong);
7) ‘With the resumption of exports and the normalisation of payments, we would consider incremental investments to realise Shaikan’s potential.’;
The key words there are ‘consider’ and ‘incremental’.
And that’s JH’s negotiating position, i.e. these are choices GKP will make whatever the ICG think or say.
Otherwise known as make your mind up because we’ve got shareholders to consider.
Because we’re debt free!!!!
People without money (aka the rest of the APIKUR members) will always be susceptible to financial intimidation.
But not GKP.
Oh yes, and we’re sat on an oil field with a twenty eight year expiration date.
GKP will end up negotiating its own outcome, and I’m good with that.
Thoughts?
Straycat,
GKP's PSC expires in 13 years (2012 + 20 + 5 - 24)
To obtain another 5-year extension, to 2042, the company has to put in a REQUEST six months before end of period.
There is absolutely NO guarantee that said request will be granted - it might not even be wanted, who knows?
Your "28 year expiration date" remark is disingenuous...
BB,
You're not arguing the main point are you?
Just obfuscating.
So let's say you're right and the contract ends in 2038 (and I don't believe that to be the case)...so what?
Argue the point For Flip's Sake!!!
Other language is available if required...
Stracat,
I don't mean to obfuscate, but it seems important to define one of the main contract parameters.
The other main contract parameters (CO and PO determinations) are being jiggled as we speak.
I will post up my thoughts on these matters quite soon.
Why don't you have the PSC? - I downloaded it from the MNR website as soon as it was posted there (had to screen capture every single page due to the manner in which it was presented at the time).
First of all, the 'name' is Straycat', not Stracat'.
Second of all, what are you talking about?
Who said I don't have details of the PSC?
Third of all, get involved in the debate about the Board's position in the context of current issues.
That is the point of my original post.
The missing "r" was purely a typing mistake.
If you do have the PSC, are you then saying you don't believe what it says?
As far as I can see there is no current debate about the "Board's position in the context of current issues".
I specifically asked for 'Thoughts?' on my take on the Board's position, as I see it.
You clearly have no thoughts on the matter.
Terrific contribution to a live time issue which will inevitably have an influence on current and future GKP valuation...well done.
Give us your reasons for not believing.
If you do not believe that the contract ends in 2037 as stated in the published PSC (with, as I have detailed in my posting, the possibility of requesting an additional 5-year extension), why on earth should anyone even attempt to start an informed debate with you?
You two need your own board.
You're squealing like a stuck pig, skewered by your own inability to address the key question of whether the Board is behaving responsibly given the current commercial climate.
jjj is right, but it's gong to be a bb of one.
I'm only interested in the larger debate.
Are the Board behaving in shareholders' best interests...
So we can all assume the pipeline didn't open today ?? Why do people post garbage and get people's hope up !!
Only 17 months to go
"Are the Board behaving in shareholders' best interests..."
If the board returns excess cash to the shareholders, then yes! There is no need to keep $86 m + sitting in the bank doing nothing. This is the shareholders money, and I am sure they'll find better use for it.
Best Regards ValueS
It's not sitting there doing nothing if there's another political shift and local sales are curtailed, so prudent to have a war chest, but I agree it would be nice if some of the surplus came shareholders way💰
Absolutely agree with ValueS. They should return half via a buyback.
Straycat, thoughts on what exactly? Were there questions in your ramble?
"Oh yes, and we’re sat on an oil field with a twenty eight year expiration date." Well, this bit is wrong but that's been pointed out already.
Your item 6 is where a big chunk of value rests / is at risk. It's a particularly big chunk because it contains a lot of cost recovery.
Re 7, yes, they will consider investment (as opposed to the current minimal maintenance capex) when/if things (contracts, arrears, exports) are resolved to their satisfaction. Not before. "these are choices GKP will make whatever the ICG think or say." A Field Development Plan requires an agreed contract (particularly with respect to cost recovery). Both go hand in hand. The level of cost recovery in the contract scopes the size of the FDP that can be agreed. If the discussions, when they start in earnest, break down fundamentally (e.g. low cost recovery envelope in the contract and large FDP expected) then we are really in trouble. Sure, we have no debt. But we do have a current equity value to lose. What would that be worth if there was complete and utter disagreement with our employer? If you've no business then the existence or not of debt doesn't matter that much.
So, as I've said before, everything is at stake. Luckily, we are still likely best-placed to develop our field (just as the other APIKUR members are with respect to their fields) and so replacing us isn't a sensible option for SOMO/Iraq...although it doesn't have a zero probability should discussions get protracted and ugly.
'Were there questions in your ramble?'
What the f*ck's wrong with you?
I was opening a discussion about whether the Board were /are heading in the right direction.
And I'm interested on other bbs' opinions.
Don't like that do you?
ValueS may be supportive, but the rest of us just need to get to grips with our current environment...and looking for an informed debate.
In my view, capital returns to shareholders would be plain stupid right now given the current position GKP finds itself in.
I note you posted your opinion at 23.09 last night...what's the weather like in the US right now?
Any buyback or dividend should wait until the contract picture is completely clear as well as a plan agreed to past unpaid invoices, in my opinion. Personally I am not in favour of buybacks.
Retain all the cash and keep belt well and truly tight.
Besides, local sales are not guaranteed to remain at current reported levels and we cannot be certain of the pipeline re-opening any time soon. (I was completely wrong last year suggesting that the closure would be temporary).
Actually I would prefer that the company diversifies the business, but that is another topic for discussion perhaps.
Straycat, I don't think the non-executive Board have had much to consider of late. Twiddling their thumbs the lot of them. Management, however, is doing a very good job of controlling costs and managing to eke out a little free cash flow. Well done management and operations staff. That's entirely obvious. Considering the severity of the situation (to belittle it is totally disingenuous) they are doing what they can. Discussions with SOMO re contracts and FDP remain ahead. Let's see how they do. The Board are hardly heading anywhere at the moment.
The fact that local sales are the only thing keeping the lights on will not be lost to SOMO/ICG. If they move to halt those then it really will mean they want to go nuclear... It won't matter whether there's $86 million in cash or $50 million in that case.
So your single point is that you don't want the company to distribute any cash. Ok. I disagree. Was that it?
The weather? Much more pleasant than London earlier in the week. A nice time in the sunshine. Current temp about double London's. The beach looks very inviting... How about you? Traveling as well or moping around home?
Unfortunately 'moping' at home.
Just back from two weeks in Dubai and about to go out again to southern Europe, seeking the sun.
Because I'm a narcissist.
Do it a lot. And as a Brit, which I am, you should understand my need.
Anyhow, my larger point was about the Board and the way it's conducting its affairs right now.
Because that's about shareholder confidence in their direction of travel.
And no, it's not just about whether they should squander precious cash resources in rewarding loyalty...it's also about where they go from here.
Got a view?
Management are doing what they can. Unfortunately SOMO and ICG have yet to engage with them on a serious basis. They are carrying excessive cash in light of current cash generation and balances. They should return that excess to shareholders via a buyback. That be my view. While I would have preferred them to act when the stock was below £1, I'm happy to increase my relative stake, without deploying additional personal cash resources, at these levels. If management are confident, they should do it. If they don't, that says a lot about their confidence.
IMO it would be foolish to commit to any cash return at the moment.
We don't know what the final situation will be re implementation of the next phase of SH devlopment (we cannot just assume it will be as per the previously advised development as there is now a new top dog runnibg the show), nor do we know what development pressure will be exerted re the Gas Management Plan, nor do we know just what volumes of SH crude will be allowed into the export pipeline and thus gaining a much better $/bbl, nor do we know the outcome of the revised CO and PO determinations.
I would say that every penny should be retained to help cover these issues.
Surely the last thing we would want is another Share- or Bond Issue to cover urgently needed Capex requirements forced upon us by SOMO?
Therein lies the rub and why any contract discussions will be so important. Should GKP ever again embark on field development that requires the significant use of its capital? When the company was first formed they spent a bundle of shareholder and bondholder capital on behalf of the KRG knowing that it could only be recovered many years hence. It ended in disaster for many. Should they take this risk again? If so, to what extent? How much investment (FDP) can be conducted within the recovery envelope provided by an agreed contract?
Now that the field is operational, with reasonable baseline volume, my view is that they should not and that they should only invest to the extent that expenditure is recovered within payment terms. If great amounts in excess of this are demanded of them, $30-40 million or so will likely be rounding error. Return the excess now and let us decide if the risk is worth it should we ever be called upon to invest great sums of stakeholder capital again.
I don’t see what the problem is. What’s wrong with everyone? Don’t you see?
All GKP have to do is to navigate the following:-
1) Re-negotiate a PSC which is not currently recognised by the ICG;
2) Redefine the parameters of the FDP which will inevitably change during the re-negotiating process;
3) Somehow arrange a payment plan which enables self-funding growth AND is reliable/trustworthy;
4) Lean into a new set of politicians that can/will/probably won’t be honest to their word!.
Don’t understand the problem. What problem??????
Jesus. I hope JH is being well paid (which I’m sure he is btw…really hope so).
Because he’s got a real job on his hands.
I’m pretty ballsy, and I wouldn’t fancy it.
Yet here we are.
Don’t you just love this share?
All very simple, innit?
Sounds simple S-cat…. What’s holding these four dreams up then ?
1) PSC - are we under Erbil or Baghdad rule ?
2) Is there anyone on either political camp capable of technically understanding any FDP in order to decide on the ‘best’ option ? Best to accept whichever facilitates the score for pilfer.
3) Firstly: Identify Where the funds withheld from our outstanding invoices evaporate to ? ) ….. that will kick off a shipload of biscuit meets which will outlive most of us on here I suspect.
4) Where, in the Regions comprising Iraq, (extend that to the entire Middle East), could one find a politician not in it solely for personal wealth generation ? Remember where we are attempting to run a n honest business……