Member Info for Boyobach

Tartine mentioned the risk of a soufflé effect (drop back) at the end of the buyback period and I guess there is that risk if the buyback isn’t managed correctly. But let’s assume that it goes to plan and that G progressively achieves a stable new price threshold after absorbing the majority of investors who are inclined to sell below it. What level might G want to establish?
It may be worth looking at G’s most recent best in relation to OP, which would be 230p against $72 that’s a ratio of 3.2 (chart below). At $65 Brent the proportional sp would be 208p. Given that G’s sp decline started immediately after reaching that level at the end of April it would not be an inappropriate target and $10m might well be sufficient ammunition to achieve it (bearing in mind that the cost of the buyback will rise non-linearly as more sellers come forward at higher levels of sp). The apparent flaw in this rationale - that 230 was a ‘high’ rather than a ‘low’ - would allow for some drop-back after the buyback completes - maybe to 200 or so.
I find the rationale for putting G back into the 200+ price range quite compelling - although 210+ would obviously be nicer - but if either of these strikes you as too low then the absolute best ratio that G has recently achieved against OP has been 3.5x which would place the best probable sp for $65 Brent at around 227p. I rather think that, even if it could be achieved, it would trigger a soufflé effect when the buyback stops as increasing numbers of investors might contemplate selling near the 230 resistance level.
https://invst.ly/b3v-b

Cheers Leem1. I share your frustration here sometimes, you have a moan and I bash out silly charts - it all amounts to pretty much the same thing.

Grrr - G apparently started as an entity worth around $4bn = £2.5Bn .

Would be good if I got my $ and £ the right way round!

From last post: 'How much did G start with? Rather more I think.'

Looks like it was around $2.5Bn according to this by Garry White from the Telegraph 07 Sep 2011 :
Vallares, the oil investment vehicle floated by Nathaniel Rothschild and Tony Hayward, is expected to announce a merger with Turkish oil giant Genel Enerji as soon as Wednesday, in a deal that values the combined entity at $4bn (£2.5bn).

Cheers Comeonvog and JackSalad

To be fair, I think 10 years would be a good run, they could accumulate maybe $2Bn if they just banked it couldn't they? How much did G start with? Rather more I think. They are sure to use the cash - and we expect them to - but hopefully a bit more astutely than some previous buccaneers on the board. No more expensive poking around places like Malta to locate some dust and sand, hopefully. There are risks - but let's see them shrewdly assessed. The early guys had grand ambitions and too much to spend, assumed Taq Taq was much bigger than it turned out, and went on an aggressive and fruitless campaign. They also assumed they were going to get paid promptly - no fault of Erbil: ISIS and Maliki put paid to that. Let's hope G is good for the Kurds and good for us too.

Here’s the 15 minute Brent v Genel since last Friday’s close, G is up 5.65% whilst OP is down a touch:
https://invst.ly/b3nux

The ratio of Gsp (p) to Brent ($) was 187/64.5 = 2.9. Not quite 3 but an improvement nevertheless.

Here’s G and the others since the OP Peak near $75 of April: https://invst.ly/b3nx6

A cracking day by G’s recent standards - still a bit to go to catch Brent’s green line here though. Never mind about GKP - it’s strength v OP that counts.

This 6 month G chart: https://invst.ly/b3n-g shows the route and usual stopping places along the road to 230 and beyond. Holding 187 for starters then around 195-197, 203, 209, 218 - we’ve seen them all haven’t we?

It all hangs on OP staying in the $60 to $70 range, of course.

Of course I've checked:
2P : 155 MMboe
1P : 99 MMboe

How many years do you make that at current production? I reckon 7-10. Would love to find I've underestimated. G has a good window of opportunity but it is finite.
Much depends on what G does with the cash flow, buying its own shares may boost the sp for a while but it isn't what will fire up the market properly. I didn't say gas had fizzled - I said the sp rise could fizzle. I said prospects for gas had evaporated - if a write down isn't an evaporation of near term prospects I don't know what is. Gas has been touted since 2011, certainly expected to be flowing by 2020 and knocked back again in last summer's H1 statement - the market doesn't like serial disappointers, which may be why G is 'undervalued' relative to the expectations of this board (which is a naturally biased group).

As a very long term holder I find it essential to manage my investment in G and that requires a fair understanding of why G's sp is where it is and what its realistic near-term prospects are rather than assume it's low because of something like a big conspiracy. I think it is undervalued but I'm not convinced that it'll get near £3 again on the basis of current activity and cashflow alone. Are you? Rhetorical question - only interested in your answer if it's got some numbers attached.

H -

The timing of the buyback RNS today is a helluva coincidence given GKP's announcement of similar at their AGM on Friday.

Yes Jack. The RNS timing couldn't have been better I guess - G had already broken through the trend we discussed yesterday. Today's rise is news driven, ie anticipation of the buyback (which is relatively small beer in the big scheme of things). The two combined could act as a catalyst for G to progress to a more appropriate sp, somewhere in excess of at least 200p. Of course, it could all fizzle out - there hasn't been much enthusiasm for G since development prospects for its gas resources evaporated. I suspect its other production assets are on too short a production life to generate high levels of interest on their own. It should still be good for 230p though.

The buyback RNS presumably having the desired effect. G remains 'cheap' in relation to the current OP and recent performance, so hopefully this will kick-start some more significant long term progress:
https://invst.ly/b3gwn

As discussed with JackS this morning, the six week G 15’ chart https://invst.ly/b39ot
shows Friday’s potential break upwards and today’s ‘kissing the line’ (or backtest as Jack says) before continuing onwards. So far it’s a positive sign and would explain G’s movements in the first half of the day. As I mentioned earlier, the pitchfork pattern in the chart is an indicator rather than a predictor - it provides limit lines for spotting potential breaks etc.

Here’s the 15 minute Brent v Genel since last Friday’s close, with GKP overlaid today for comparison. It may look dramatic but G’s spread is only about 4p:
https://invst.ly/b39pi

This chart should look less dramatic as the week progresses and the scale reduces. All we want to see here is red higher than green by as much as possible. At the end of the session Brent was 1.6% down and G was level with last Friday. The ratio of Gsp (p) to Brent ($) was 2.75 so effectively unchanged.

And G and the others v Brent since October: https://invst.ly/b39ng

It all hangs on OP, of course, so: https://invst.ly/b39nm

Finally, anyone using Invest.Com (and possibly other platforms) may have noticed that their live Brent Futures price was suddenly a full $1 below other sources (like Bloomberg) today. It’s that time of the month again, when they rollover to the next contract - which is why I’ve switched to XBR ‘spot’ (very similar to OANDA) for today’s charts.

I know there’s some interest here in dividend reinvestment intentions. For me the divi just goes into the pot and could be spent on any investment at any time - certainly not immediately unless the timing is appropriate . It just so happens I did buy G today - for rather more than the divi - for reasons explained separately and a total coincidence. A dividend payment rarely coincides with the right time to buy or the right quantity to buy

An interesting morning. https://invst.ly/b369a

Brent more or less unchanged since the close on Friday but lots of volatility for GKP - execution of orders placed over the weekend maybe? Some ducking and diving to/from G maybe ? Who knows, but GKP ended up down more (surprise!) after a good start. G appeared dismal at first but, frankly, not much different to DNO. RDS always the star of the pack these days. https://invst.ly/b36cd

FWIW Jack I went ahead with a small buy on the basis of that pattern as the follow-on trading seemed to confirm it.

The pitchfork in this chart is there as an indicator rather than a predictor - if the sp falls below it I'll be manning the sell button!
https://invst.ly/b3662

Yes Justin - it's in my ii account.

Potentially yes, Jack
https://invst.ly/b34-9

But I'm a bit surprised at the steepness of the test (if that is what it is) because OP has firmed up. Been hovering on a buy but not utterly convinced.

JustinD - I use ii, will keep a check.

It's certainly having a bad day Leem1,
Slightly pedantic but when Brent was last at $60, G actually fell to 167 (12th June).
Still, at $65 Brent G should be at least 195 and more typically 205 - so, yes, pretty dreadful!

'AVERAGE' omitted - corrected text:

I also interpret the report as saying that $1 variation in average OP has roughly $6m effect on revenue and receivables (also on page 21) (dyor to verify those figures).

As we approach a new week let’s hope G steps up towards recent levels for $65 Brent. G’s performance previously at this OP is shown here …. https://invst.ly/b2zzy

The green verticals highlight times when Brent touched or crossed this level (green horizontal) in the last ten months and show the value of G (red) at those points - ranging between about 197 and 225, that’s 20p or more above Friday’s disappointing close.

$65 is significant because, in the 2018 Results, it appears to be G’s estimated average OP for 2019 (table at top of page 21), so I assume their guidance is based on this value. I also interpret the report as saying that $1 variation in OP has roughly $6m effect on revenue and receivables (also on page 21) (dyor to verify those figures).

Having had the $50m dividend approved on Friday and announced an intended share buyback of up to $25m, it seems likely that GKP will continue to move ahead of G for the time being. There is no doubt that the simpler business model and more straightforward cash generation from Shaikan is attractive for both income and growth investors and it would not be surprising to find that some are switching.