Member Info for Boyobach

We all know there’s plenty of work to do if G is to match some of the aspirations expressed on this board and I have found that the ratio of G’s sp to Brent $/barrel, G/OP, provides a reliable indication of G’s progress without the distraction of the ‘noise’ generated when the sp is simply tracking OP.

After reaching 3.9 last August, G/OP swiftly fell back to around 3 and, despite some brief uplifts, has made no lasting progress since then. Since OP reached its nadir in late December, it has produced a number in the range 2.86 (weakest) to 3.49 (best so far).

This morning, as OP has fallen back, G has remained surprisingly resilient and G/OP has consequently increased to a modest 3.15. This is ok but well short of the 4+ that would be needed to produce an sp near 300 at an OP of $75. In the meantime I find it’s a number worth watching, especially when I’m considering potential trades..

That's an interesting thought - though the MNR hasn't worried too much about FI in the past. Did FI approve the Pearl deal?

Investor relations briefly explained to me a few months back that the sticking point was that the MNR is keen to keep the oil and gas projects linked,....

Presumably MNR don’t have a buyer/can’t get the right price for the gas and once the oil flows the clock is ticking on exploiting the gas. So they’d rather not proceed with either at the moment. Does that sound tight?

To be fair Hydrogen, the reality is probably somewhere between us.

I happen to think the market was about right with G’s price last April (215) and that the continued rise from 220 to 290+ was where expectations got somewhat out of hand. In my view, it was no accident that, after the market over-exuberance and denouement at the HY report, the sp eventually fell back to 221 (Brent at $77) and a G/OP ratio of 2.9 - a metric I’ll elaborate on tomorrow and which the market has not deviated from much since then.

If G was worth 221 at that point then it should be worth more now. But if gas is to be consigned to the back-burner (ha!) then G needs to have sufficient oil reserves in order to maintain revenue for a good few years - that’s where GKP hasn’t got a problem, of course.

Without 215
JL 217
IANAA 220
SCRDAG 223
Boyo 225
Klassic 227
Hasiba 240

G hasn’t done too badly compared to the others so far this month bunks. Comes out top of the usual bunch actually. This period does slightly flatter G, admittedly, because it has been slowly recovering from March when it was clobbered by the impact of the FY statement and the Miran write down etc.
https://invst.ly/an8lc

Are you serious H?

Interesting that you have added the previous year of good sp progress (April 2017-18) to the last year of zero sp progress (April 2018-19) and claimed two years of 'pretty good turn out'. Are you a PR guy?

The fact is that, as a multiple of OP, today's sp is materially the same as it was last April. Sorry mate, but I don't regard that as pretty good. Far from it.

Ok Hydrogen,

The two year chart is below. It comes with a ‘health warning’ although I’m sure you know how comparison charts work. They usually rebase the data being compared to the start date of the chart. In this case, as you requested, it’s 26/4/17 (bottom left of chart). Because G was much cheaper then - for reasons well understood - the Brent line is offset considerably on today’s sp, making comparison of recent G v B movements much more difficult to evaluate at a glance. This is why I would not ordinarily post such a comparison here. I also think it’s rather irrelevant since the market revised its view of G a year ago but ‘overshot’ in the process. With hindsight we can see it should logically have settled at around 210p for Brent at $70 but kept going, apparently due to assumptions about Bina B and Miran that never materialised.

Two years ago G’s sp (p) was around 1.5 x Brent ($). The market has effectively doubled this ratio in the intervening time to 3x. When G was near its height in the 280s last year the ratio reached a max of around 3.5x. But when the market discovered that it had been ‘over-exuberant’, as you rightly suggest, it knocked the ratio back to about 3x - ie today’s level. That ratio is, in my view, a quick way of evaluating how G is performing whatever the oil price.

That’s also why I feel the the charts I post that are ‘in sync’ with G v peak oil (including the ‘one year’ posted earlier) give a useful and fair reflection of G’s current performance against Brent. From them, it’s easy to spot any improvement or decline in performance, irrespective of the actual OP, because when G moves independently of OP an obvious gap develops between them. But for this to be useful - and not misleading - it’s essential to select a suitable rebasing date and is why I’ve started putting a ‘sync line’ on some charts which helps me do this as accurately as possible.

The chart you asked for therefore has a massive gap between the two sets of data from January 2018 onwards, which renders it pretty useless for evaluating G’s current performance. However, by choosing April 26th 2018 this problem is eliminated, hence my comment in the original post: https://invst.ly/an5n7

For Friday 26th April 2019

It is some consolation that, at today’s close, G was about 8p up on where it was for a similar OP at last week’s close. So, a reason to be cheerful I guess.

Today’s single chart is a bit special - https://invst.ly/an3wr
It’s a 12 month plot of G (candles) v Brent (green line). I often post very similar charts but it so happens that a year ago today the relationship between G’s sp and OP was virtually the same as occurred on Oct 3rd when OP peaked at $86. So, as comparison charts go, this one provides the longest consistent picture of G at present-day sp levels v Brent that I can achieve. Prior to April 26th 2018, G was increasing rapidly as it was being re-valued by the market from a lower level, so the comparison becomes distorted if rebased to an earlier date.

If you struggle to understand the relationship between G and OP - why G sometimes follows OP slavishly but diverges at other times then, with hindsight, this chart might provide a ‘light bulb’ moment and demonstrate how the factors governing G’s sp fit into a pattern. If it’s still an utter mystery to you after that then, maybe, oil cos are not the right investment for you.

The chart clearly shows how the market apparently over-estimated G’s prospects during May last year, with the price running well ahead of Brent, followed by a ‘correction’ that took place after the half year results revealed lack of progress in the anticipated areas. By the 10th September, this ‘correction’ had brought G back in step with the earlier Brent ratio. This situation has mostly prevailed since then, with only limited and temporary positive excursions as and when G has achieved a premium over the underlying price ratio (which approximates to G (p) = 3xBrent $ ). For some people these peaks and troughs relative to OP can signal trading opportunities.

The chart also shows that 230 is a significant resistance level for G and that, unless there’s a market revaluation, levels above 230 could be elusive unless Brent climbs above recent peaks of $75. However, since last summer’s ‘correction’, G has achieved as much as 258p with Brent at around $82 so ‘elusive’ does not mean ‘impossible’.

These are, as always, just personal observations. DYOR - obviously.

Correct me if I am wrong....
OK:

‘.....look at PMO, GKP, DNO etc over last few months, completely trouncing us.

Firstly: PMO and GKP dropped much more than G as Brent collapsed from $86 - so their increases since December are ‘catch-up’. And PMO is still behind in that respect, having been a bit of a disaster for the last quarter of 2018. GKP hasn’t been trouncing G in reality - unless trouncing means ‘equally volatile but doing about the same overall’ as this chart shows:
https://invst.ly/amub2

DNO is diversifying out of KRI and making acquisitions - so fair enough to see that one fly.

‘...Struggling to even break out of the 220 range with oil at $75, makes no sense…..’

Well it might be disappointing but it makes perfect sense because G has recovered as well as benchmark RDS since OP fell in October: https://invst.ly/amul-
Yes, we’d like it to be doing better but 230p is a resistance level that was bound to cause an obstacle for G and, historically, 230 is within the expected range for G’s sp when Brent is $75. https://invst.ly/amujx
If G breaks through 230 with Brent at $75 it will be a significant achievement in terms of market revaluation of G’s sp.

For Thursday afternoon 25th April 2019

A bit of a nail-biter for G fans. With Brent at $75, G should be secure above 226 and tackling 230. ‘Should’ being the operative word here. The alternative is a drop to maybe 218 - in which case boyo will be topping back up.

https://invst.ly/amowy

Yes Justin, the market response has certainly been disappointing. Hydrogen and others have done much to document the positives and there's been a noticeable improvement in the company's communications - so the drilling data you want should be available but I don't have it to hand. The significant downturn seems to have been as a consequence of the FY statement in March. The sp was progressing well (within the upper trend channel of the chart) up to that point but has not really recovered since - the chart looks deceptively healthy but it's largely been driven by OP which, in my view, rather masks the underlying stagnation in price.

For Wednesday morning 24th April

G closed last week at around 216p and, after yesterday’s spate of over-excitement, regarding OP, the sp has duly fallen back into step with G’s more typical relationship with OP. As some have observed since the FY results, G’s sp has not responded positively to recent company news and developments. In fact, it is starting to appear that any sustained upward progress only comes with increased OP and that the sp might otherwise be drifting downwards.

Here’s the usual chart of GvBrent from January which I’m going to reference:
https://invst.ly/am5sg

The chart plainly shows that the prevailing upward trend (lowest red line) for G closely parallels the rising price of Brent. We also know that the rule of thumb for getting the ballpark for G’s sp in p is to multiply the $ price of Brent by 3. If the actual sp is higher then G is performing more strongly, if it is lower then G is relatively weaker. This little trick worked as well for GvBrent on 27/12/18 (Brent=$52, ballpark G= 155p) as it does today (Brent=$74, ballpark G=222). The obvious conclusion is, of course, that despite all the ‘news’ and production increases, G has effectively gone nowhere in the intervening period other than by virtue of OP. Or, to put it another way, if Brent dropped back to $50 then G would probably be back around 150-160p

When G last hit 230p briefly on 5/3/19, Brent was about $66 - the ‘x3’ ballpark was therefore 198p, indicating that G was 32p above par and therefore performing very strongly. The chart confirms that this was the case because G is touching the upper red trend line. However, by early April, G had declined to the point of dropping out of the trend only to be rescued in the nick of time by Brent’s continued rise.

Folks here will sometimes talk of G ‘soon reaching £3’ but, unless G starts to impress the market, it’s sobering to reflect that it would currently require Brent to be $100 to achieve that level.

Thanks Ocelot.

I remain cautious on G - as I expect you've noticed!! I take profits when I can and use them to set against the cost of my core holding. On Mr Fink - would I, as a PI, take too much notice of what the likes of BlackRock choose to share with me? Hell no! I liked this quote from a report about him and his views:
'Fink’s comments follow the release of better-than-expected earnings from BlackRock. However, the company’s overall revenue missed expectations as it fell 7% on a year-over-year basis.
'Melt-Up' is a classic headline grabbing phrase - trust no one Ocelot. Bonne Chance!

About Taq Taq:

It is not what it was - even now. So don't kid yourself! Here's the quote to remember to remind yourself of how G (and Taq Taq) is a shadow of what was promised. By all means be 'cheerful' but don't be a sucker. Does the claim to be 'holder of the largest reserves and resources in the KRI' match up to actual production? Here's what was touted at the time of the RTO (I often quote this when folks get starry eyed):

"We want to be producing 110,000 barrels per day by 2012 and by 2015 the expectation is 150,000 barrels,"

For Tuesday 23rd April

No surprises today for anyone who follows this thread, quite text-book for G. The $2.5 rise in OP would ordinarily only have been worth around 7.5p on the sp but coming after last week’s dismal close of 216p and in one hit, driven by ‘news’ and speculation of more OP rise to come meant it punched somewhat above weight. 226 provided the expected resistance at first but G went on to land at the next level and triggered my 229 limit sell for a trading tranche acquired at 201. I’ll take 14% gain over a few weeks anytime, especially if I don't have to stare at a screen to get it . Apart from the planned trade, a spot of de-risking prior to any Bina B news seemed a good idea. Not a day to be buying in my view.
As a resistance level, 230 is going to be interesting: I can’t figure what will drive G up from here unless OP does the heavy lifting or Bina B actually becomes more than just gas in the ground. If OP’s rise turns out to have been a brief spike then G is likely to pull back, providing an obvious opportunity for me to replenish.

Here’s the long term view v Brent from October: https://invst.ly/alx6p

And for those who think G is performing badly against GKP, here’s the mar-cap comparison as of today: https://invst.ly/alx8e (NB: subject to correct data re shares in issue - dyor)

And the rest of the runners: https://invst.ly/alx93

226 is a point of resistance, many folks will have set limit sells in the 225-226 area. Once exhausted the price might continue up - depends on OP at the moment, of course.The next resistance is at 230.

I think it's the potential impact on OP, rather than on G's export route that's being pointed out here Klassic.

With G lingering in the bottom half of the trend it has been following since early January, demarcated by two outer and one central set of red lines here,
https://invst.ly/alny7
it’s easy to see that G is well below the upper line it reached in mid January and immediately prior to the FY results. Had it stuck near that limit, with Brent now boosted to $74+, G should have been comfortably heading into the 250s this week. As it is, however, even 230 could prove elusive. An interesting day or another anti-climax in store for G?

Good points Hasiba. It may well be a temporary spike.

Although the extent to which KSA can ramp up production may be more limited than many might suppose. Russia will obviously assist, as will US tight-oil producers as WTI picks up. I also wonder how accommodating the KSA will be as far as Donald is concerned - given what happened last time they agreed to plug the Iranian gap. Given the seasonal tail winds I guess $80 can't be ruled out which, in that scenario, should comfortably propel G into the 240-280 zone with 258 an obvious target.