Member Info for Boyobach

I agree with Tartine regarding the market reaction. Current events in Iraq do not improve confidence in the likelihood of payments resumption, which presumably depend on the delicate issue of 'KRI oil for ICG budget share'
During the last quarter, G's 'average to top' performance against OP was 3.0x to 3.6x the $/bbbl price ie 207 to 240 at $69.
Bunks recently asked how much the resumption of payments might be worth IF it happens - to me the answer looks like at least 25p on today's price.

Correct Comeonvog - no cash, no cash flow, simples.
In fact, if you are spending money to keep the business running the cash flow is negative - two months and counting.

Attacks on the US Embassy were the last straw. The sectarian militias are out of control and Baghdad's reliance upon them - which comes at a hefty price - is key to the power plays within Iraq. It's a pity that Iraqi's can't resolve these issue for themselves. Will be interesting to see how this affects the militias in the north, around Kirkuk and the disputed areas, where ISIS remains a threat.

.... seemed to be everywhere: and, almost certainly, the attack on Saudi oil installations.

You could well be right Hasiba.
But Iraq remains a mess - corruption and foreign interference continue to deny the people's rights to live in peace.

Yes, Ocelot.
Soleimani was clearly a major influence in Baghdad and in Iraqi military affairs- and seemingly had a hand in the KRG crumbling after the referendum two years ago. The Kurds are hardly likely to benefit if US influence diminishes further.

The killing of Soleimani is a significant event and it remains to be seen how Iran's influence in Iraq will develop from here. Given the geopolitical dimensions, the market seems very wary with G and GKP hardly reacting to OP's boost towards $70 and remaining pretty flat over the last five days:
https://invst.ly/pcz3v
It does mark G's worst performance with oil at near $70 for a very long time.

In terms of closing prices*, G hasn’t moved much in the last fortnight - consistently closing in the 186-190 band since the 18th December. That’s quite a narrow range for G. Although there have been intraday flicks up to 192 (after opening prices as low as 183.6), there seems to be no sign of a serious move above the blue dashed ‘intermediate’ trend line here, https://invst.ly/pcex0 , which I’ve moved down to better reflect the current position.

There’s plainly little market enthusiasm for RDS or Chevron either as, like G, they have both fallen behind Brent’s advance in price since September.

*this was posted before today’s close

...No, but it may be running on fumes according to this :
https://oilprice.com/Energy/Energy-General/Is-The-Shale-Boom-Running-On-Fumes.html

"The upshot is that the shale boom could be on borrowed time. As Hughes wrote in his November report for the Post Carbon Institute, while “the ‘shale revolution’ has provided a reprieve from what just 15 years ago was thought to be a terminal decline in oil and gas production in the U.S., this reprieve is temporary, and the U.S. would be well advised to plan for much-reduced shale oil and gas production in the long term.”

With the end of month roll-over in futures 'front-month' pricing, we are in the period when Brent prices from different sources can vary by up to $2. The two green lines here show the sudden divergence between crude (like OANDA or XBR) and London Futures 'LCO'.
https://invst.ly/pc9kw
The gap invariably closes over several days. Oil Co sp s seem to respond to the average.

I agree with you Bunks.

It does beg the question that, if the payment scheduling was a purely administrative matter with prior consultation etc. then why wasn't the PR handled rather better ?- a 'heads-up' announcement that there would be an agreed shift in payments. The way it has happened and been communicated gives a lot of scope for speculation and general wind-up. It certainly will have set the KRI reputation back as far as investors are concerned .

But meanwhile - a Happy New Year all!

That’s an excellent question Bunks.

As we know, at any given time there will be a number of issues affecting G’s sp and it’s not always easy to identify how much influence each one has had.
Since the 10th October, G’s sp diverged upward from the others that I routinely use for comparison. It then emerged that share purchases by Bilgin had possibly been a factor and this may have been amplified by the market ‘follow the herd’ effect which resulted in the unsustained peak of 7th November.

The subsequent fall-back in price seems to have been a natural pull-back after the peak plus a general weakness amongst oil cos in general - the sp shadowing the path taken by RDS, for example. OP has remained fairly firm throughout and has been steadily climbing through the entire period. Although it has progressively weakened against OP, G today is at least 8% up on its 10th October price, 8% up on GKP and 10% ahead of benchmark RDS over the same period. https://invst.ly/pbgsi . It would be nice to think that the reason G and GKP have not tracked Brent upwards more strongly is because of the payment issue but RDS hasn’t tracked Brent either.

Although it’s tempting to suppose the market was aware much earlier, there’s no obvious evidence of a possible link between the payment issue and the sp until near the date of the RNS - which unfortunately or by design - coincided with ex-div. On that day the sp closed 6p down, 4p of which could legitimately be due to the dividend discount. There was, however, an interesting drop of about 5p three days before on the 9th. So there’s maybe 7p if your inclined to that line of thinking.

I think the chart above indicates that the sp might have have settled at around 200p in November at an OP of $63 - a ratio of 3.17x but that a combination of factors, including payment delay, combined to weaken the price. My feeling is that IF the payment issue is fully resolved during January and OP remains above $65 then the sp should strengthen to at least 3.1x OP, say 202p, with scope to get back up to 3.4x OP (around 220p) if the T&O update is well received. OP does usually firm up from January onwards, which would help.

I also think that the payment delay is going to result in a disappointing FY FCF - which the market has hopefully priced-in already.

Looking at the lack of impact buybacks are having on GKP's sp, I hope G do something better with their (our) cash Hawkey:
https://invst.ly/pb4qi . Sure GKP has been rising but it's been trailing G in real terms for a couple of months and hasn't tracked the rise in OP over the period either. Of course, they are being held back by the same payments issue....

Not a very interesting day. In fact OP was turning sharply down as the share market came to a close.
Whilst some of us do tend to moan about G - it's an inevitable consequence of watching it too closely - it's worth remembering that things could be worse and, as we saw in November, stand a good chance of getting much better if a couple of niggles get sorted in January .
Here's G v Brent(x3) , RDSb and Chevron since around the end of July: https://invst.ly/pb4d1

Ha! - I don't do day trading ordinarily, Hawkey - it's too much like hard work. In fact, it is hard work!
Scalping a measly few p per share whilst glued to a screen doesn't seem like much fun to me.
Trading is more like fishing for me - not that I've ever done that either - try to cast the line in the right place then have a snooze till the right moment.....which will be sometime after the cash rolls in and defo not before.

Although G doesn’t necessarily track RDS, it often appears to take a cue from the direction that RDS is moving. Today, for example, RDS has been consistently falling whilst G was positive at first but eventually turned to shadow the major’s trend…
Last five trading days, comparisons: https://invst.ly/paxvq

Here’s a snippet from an Investopedia article on FCF which refers to the treatment of receivables and payables:

If a company’s sales are struggling so they extend more generous payment terms to their clients, accounts receivable will rise, which is a negative adjustment to FCF. Alternatively, perhaps a company’s suppliers are not willing to extend credit as generously and require faster payment. That will reduce accounts payable, which is also a negative adjustment to FCF.

https://www.investopedia.com/terms/f/freecashflow.asp

Cash is cash, Hydrogen. You either have it in your pocket or you don't.
Try walking into a shop and buying a pint of milk with an IOU from a mate.
That's why FCF is such a golden number as far as investors are concerned.
The results can be published anytime but must reflect the position on a given date - in this case Dec 31st. They can show 'receivables due' but I'm certain this would not qualify as 'cash in the bank' which I believe is essentially what cash flow measures.

Considering the timing issue of the delayed payments a bit more seriously, my understanding is that the FY accounts, compiled on an accrual basis, will show a 'Receivables' amount to reflect the fact that cash was earned but not received for oil supplied within the relevant period. However, because FCF is a record of physical cash transactions within the period it cannot contain any such accruals. In other words, 'Receivables' are excluded from FCF and any cash received after Dec 31st should not qualify for inclusion in 2019 FCF. I'm not an accountant but have never been in much doubt about the difference between readily available cash in the bank compared to an amount owed by a debtor. If outgoings in November & December exceeded FCF generated in October - which they possibly did - I would expect FCF for the full year to be less than $121m.

Assuming we get the payment before trading update it won’t be a problem......

I guess you guys are right IF payments for invoices raised are received in time for normal inclusion in the FY audited accounts. It would certainly stretch the meaning of the words 'free' and 'flow' otherwise. Ha!