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Even with the disaster of the last hedge if I was on the BOD I would be discussing doing another hedge.
A hedge at these levels for delivery in 2021 would secure enough cashflow to
Invest $25m in Singida
$10m divs
$15m in West Kenya
$5m in NL exploration
That is a tempting prospect
I suspect that any loan to fund Singida will have a hedging agreement attached.
Exact Sciences is an interesting comparison - Basically no sales in 2014 (FDA approval Aug 2014), 2015 $40m, 2016 $100m.
Taking FDA as a given otherwise there is no point investing here, I wonder how many more capital raises there will be and how quickly will sales ramp up. We desperately need to sign up multiple big partners post-FDA.
FDA approved blood test for cancer should be front page news around the world !!!!
Best guess is £2m sales in 2021 and £25m in 2022
Another £25m capital raise required
Thanks Dodger and Theoryman. It is clearly a lot more complicated than I thought.
The wording in the RNS for feb 2016 is then totally misleading?
Further to the KRG's Ministry of Natural Resources ("MNR") press release of 1 February 2016, this payment is being made on the basis of the Company's monthly contractual revenue entitlement under the Shaikan Production Sharing Contract ("PSC") for Shaikan crude oil exports in January 2016 of US$5.8 million gross.
Did the BOD renegotiate a worse deal compared to that in place in 2016 ?
Jan 2016 oil price $30.7, production 37k bopd and $5.8m gross received in Feb 16.
Last month similar figs produced and POO and we only received $2.7m gross ???????? Did we get part payment ??? Does not mention in RNS as per PSC entitlement.
Another poster previously mentioned we received much less than he was forecasting ????????????????
Further to the KRG's Ministry of Natural Resources ("MNR") press release of 1 February 2016, this payment is being made on the basis of the Company's monthly contractual revenue entitlement under the Shaikan Production Sharing Contract ("PSC") for Shaikan crude oil exports in January 2016 of US$5.8 million gross.
The average oil price in June was approx. $40, production 36k, so based on historic payments I’m expecting $12m net to GKP.
Anyone expecting any significantly different from the above?
The average oil price in Dec 2015 was $38, production in Dec 2015 was approx. 37k bopd and we got paid $12m net.
Jan 2016 Rns
Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq, is pleased to confirm that a gross payment of US$15 million (US$12 million net to Gulf Keystone) has been received by the Company for Shaikan crude oil export sales.
This payment satisfies the Company's invoice for the month of December 2015 submitted to the Kurdistan Regional Government's Ministry of Natural Resources ("MNR").
At this share price the KRG should buy us. We would be virtually free to them.
They could write off $73m debt, write off $400m of sunk costs that normally get repaid through oil sales, bank net cash of c $60m and in the future they not need to worry about paying GKP.
It's a no brainer.
BB
You are correct there is a further $18m a year in G&A to add on.
Also $3.9 is on the high side as it is based on 30k bopd , when we are currently producing c 38k. So, I still think we will finish the year with $100m in the bank.
Also I'm not a big fan of share buy backs., and hate debt. The $50m buyback should have been used to reduce the $100m debt. Companies nowadays are obsessed with gearing , debt and buybacks. Very few seem to hold any rainy day fund.
2019 half year results webcast Sami was even talking about increasing the debt !!! He was challenged about the very expensive debt from a member of the audience who said that they should be reducing the debt levels . Sami disagreed.
Where has financial prudence gone. Approx every 8-10 years we have a crisis, you can't just extrapolate into the future without due regard.
Opex per barrel $3.9
40,000 bopd * 30 days * 3.9 = $4.7m monthly operating expenses
Which were covered by last months payment of $5.9m.
Reduce capex to a minimum, approx $40m committed for the rest of the year. Should finish this year with $100m in the bank.
That's a good place to be. GKP is in a strong position to ride this out.
Has anyone been keeping a track of how much each production well is approximately producing ? Just trying to get better visibility into how we are going to reach the magic 55k bopd. The timeline for this does seem to be getting pushed every quarter.
Have ESP's been installed in SH 5, 10 and 11 yet ?
Many thanks
Surreyscot
Great post, may I also add net cash of $160m in the bank and the mkt cap is only £160m ish.
My one concern is the gas situation. I had assumed the result of SH-9 was bad news as the long term plan of gas re-injection to maintain field pressure and production rates was now defunct, Feels like we are now back to square one and have to draw up a whole new plan.
Do we now need to build a load of infrastructure to sell the gas or is this straight forward ?
I have been a buyer over the last few days and this reminds me of Dragon oil back in 2008 ish when it got hammered and was trading at cash value. It went from £1.20 to £4 in about 6 weeks when a buyer came in.
Many thanks for your thoughts.