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Thank you @PUTUP,
"However, given invoices have been confirmed by the company it indeed makes sense to look at the company with this broken out; that is, as the sum of its cash, invoices/receivables due, remaining CRP (ex receivables), and the present value of the future profit oil stream."
I understand and agree with it, except that I do not add the remaining value of the Cost Recovery Pool but simply build into the model (so I discount it with the revenues). My question is simpler than this. I try to calculate the NET value of receivables, which is the 151m receivables less the relevant current liabilities (or other payable in the BS). For this I am trying to estimate this value and understand the nature of the company's current liabilities, which includes 35m for CBP differential - which in my opinion should be excluded and most of the rest is to be against future revenues.
Thank you for the correction!
The cost recovery pool is something that I just simply built in into the model. As I understand that GKP's GROSS balance (with 80% paying interest) is 75m USD. But their "current" receivables for cost oil is 120m USD? (I likely misunderstood you because it seems to be impassible to bill more cost oil than they had in the recovery pool).
For me it would be easier to correct my model with the NET receivables added to the cash. My question wold be that what might be the value of the net receivable (excluding the cost recovery pool).
They had apprx 151m USD in receivables and regarding current liabilities (that will be subtracted against future revenues, so maybe should be discounted) was around 128m USD at the end of 2022. Out of it was 35m USD for the difference in the CBP... which should not be subtracted, because they reduced their WI from 80% to 65% for the 10% decrease in Capacity Building Payment. For the rest, I am not sure. If you know the answers, I am very interested.
Welcome everyone,
Here is my calculation for the local sales, assuming 6m USD monthly expenditure, I think around 19k bpd and around 30 USD/barrel, they are cash neutral. ~75% of this is cost oil payment, but on the expenditure side there is over 3m USD CAPEX and over 1m USD OPEX, so there is not a significant drag on the cost recovery pool. Which according to my calculations stand around 150 million USD (213m at the end of 2022 minus 150*0.75 recievable plus 40m CAPEX +12m OPEX while the pipeline was shut down - warn me if I miss something) and the impact of the last 1.5-2 months is marginal)
According to my bottom up model, with a WACC of 15% & around 70 Brent, 30% Shaikan discount and the assumption that GKP will produce 55k from december till the 500m 2P reserves run out... the fair value should be around 2.1 GBP,
While I would personally assume that a modest production increase at least with the Jurassic can be made up to 75k bpd (starting from 2025 or 2026), then it should be around 2.5 GBP. This are just my bottom-up estimations, the geopolitical risks are brutal and in the worst case everyone will be wiped out and can go to court to wait 15-20 years to get a fraction of money back...
Still I believe that it has a strong optional value, even if the pipeline does not reopen in the near future (next 6-8 months). Still, if it reopens (soon) and KRG payments are made, an investor who buys now may get his money back within 2-3 years, even with around 30% Shaikan oil discount and mediocre oil prices.
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Monthly revenue from local sales (m USD)
Price (USD) - horizontal, Production (bpd) - vertical
10,000 11,700 14,000 18,000 22,000
20$ 2.2 2.5 3.0 3.9 4.8
25$ 2.7 3.2 3.8 4.9 5.9
30$ 3.2 3.8 4.5 5.8 7.1
35$ 3.8 4.4 5.3 6.8 8.3
40$ 4.3 5.1 6.0 7.8 9.5
P. S.: I am long and after August 31 I expect to increase my position.