Member Info for Boyobach

For Thursday 17th Jan 2019

G was up and running after Brent this morning, at one point making up all of the 8p it lost against OP yesterday. Meanwhile Op began to fall back and G blundered into the collision. They eventually ended up at $60.5 and 196p respectively, with G nominally 3p below par wrt OP: https://invst.ly/9t8ph

As I pointed out yesterday, since Jan 1, Brent had been rising at an underlying $3/week but obviously needed to stay above the red line marking that rate. Today did not go well and that unbroken run has now been punctured (just), possibly heralding a slower rate of climb: https://invst.ly/9t8pz

The others all seem to be levelling out too, except for RDSb which is having a worse week than G: https://invst.ly/9t8rp


It's good to see Brent still climbing again tonight - though it hasn't really stopped...

In case the drop in OP over the weekend bothered you, it’s worth pointing out that since Boxing Day - ie for the last 3 weeks - the underlying price of Brent is going up by $3 per week. And whilst it may sometimes go up faster and then drop sharply back, until it drops through this red line it is going UP overall by $3 per week.
https://invst.ly/9sxpp

$3 on Brent should ordinarily be worth about 9p on G’s sp - except when the market is making adjustments to G for other reasons (eg: marking it up by 25p over the New Year for reasons unknown or marking it down by 8p today, after the Update)

27/12/18 close sp = 155
155+27+25-8 = 199
16/1/19 close sp = 195

4p unaccounted ? - but hey, that’s only ¼ p per trading day! It’s not a precise art y’know

Hi Comeonvog -

I've kept a screenshot of that post as a reminder- let's see how that actually unfolds. I'm going to be pretty upset with G if it isn't back to 250p by mid summer - but, then, I'm permanently upset with G at the moment anyway.

For Wednesday 16th Jan 2019

Today, by way of a change and because the relationship between OP and G still seems to niggle folks, I thought I’d post a snapshot of the 15’ chart covering the last two days. As ever, be wary when looking at comparison charts and ask yourself ‘Why did the guy presenting this chart choose that particular zero point?’ This is because the choice of zero can dramatically change the impression it gives. My choice here was - as is usually the case with me- to get the best or most representative fit between the two things I’m comparing. So, I’ve got the peaks of Brent and G matching where they seem right and, where G is not following Brent - like yesterday at 8am and today from 9.45 am, we can clearly see the divergences.

https://invst.ly/9svwx

Today was a good day to choose because, as you can see here, G went it’s own merry way and dropped from 201p to 193p without much influence from Brent. That 8p was still off the price at the end of the day - we can see that G never made it back.

The conclusion is that, irrespective of OP, the market knocked a chunk off what I call the ‘non-oil’ element of G’s value - ie the bit that reflects the company’s value within the market as an investment, irrespective of the commodity they are dealing in.

So if we look at the usual comparison of G’s peers and OP, we’ll see if that loss was unique to G or whether the other oilies were out of favour too:

https://invst.ly/9swct

See what I mean? G (and RDS) are down but GKP and DNO steamed ahead today with OP. The market is clearly not that happy with G since yesterday and much more slippage could see it losing its foothold in the 190’s. By my estimation there’s a further 20p at risk unless the mood changes. I’m starting to regret buying back the tranche I sold ahead of the T&O Update - but it's too late now...

OK H, I kinda agree so this isn't picking an argument with you, just rehearsing my own thoughts-

Today G only has $334 million to play with, including the debt (unless they raise more). And they do also need to develop BB. I didn't put cash into G just to charitably sponsor guys who like drilling holes and pumping them dry for a living - I wanted some return and to eventually get my cash back. Foregoing payouts in order to fund more of what I’ve experienced for the last seven years - absolutely zip - is frankly not satisfactory.

Hasiba earlier provided a link to Malcy, an ‘on-off-on’ supporter of G, who concludes his piece today by saying: ‘The shares offer significant opportunity at these levels’. I wonder what makes Malcy quite so optimistic? I’d like to see some meaningful (5 year) forward looking numbers.

Whilst today I can see cash accumulating, it might only be as fast as the production resources are declining. Meanwhile, untapped ones remain undeveloped. So, after seven years, I’m still not getting any return AND my investment is progressively being pumped dry. Does that sound like a significant opportunity?

Hawkey: 'returning capital to shareholders' is not necessarily a bad idea. On the figures given today:
'..... a free cash flow yield of 27% on the year-end share price [ 177p] '
it would take G just over 4 years to generate the cash equivalent of today's sp from current production - assuming production and price don't drop during that time. But if production and the assets are in decline....
Without the gas, what exactly are G's LT prospects?

G has followed OP pretty closely since 3rd January but understandably deviated today during the first three hours and, less understandably, during the last hour:
https://invst.ly/9sh5x

Here’s the rest of the field: https://invst.ly/9sgev

For Tuesday 15th Jan 2019 or ‘Much Ado About Nowt’

In the absence of any other news, the long awaited T&O Update unsurprisingly revealed nothing particularly new other than an enigmatic sentence implying that the exploitation of oil at Bina Bawi -prominently touted last year - seems to have been moved down the agenda in favour of ‘earliest gas’. Given the present outlook for OP, a step back from BB oil in favour of gas or focussing on existing production that benefits from the override is probably no bad thing. Miran had to be mentioned but there was actually nothing to say other than it’s there and will be re-valued for the annual report. For some reason (padding/bad editing?) this next point was effectively mentioned twice in 2019 guidance: ‘The Company continues to actively pursue growth and appraise opportunities to make value accretive additions to the portfolio’. As indeed they should, along with ‘paving the way’ for returning capital ‘at the appropriate time’. NB: ‘paving the way ‘ rather than necessarily doing it.

Perhaps because of its prudent if uninspiring content, the update was well received in early trading as the sp quickly hit 207 despite OP weakness overnight. However, it was soon brought to heel by the resistance around 202/204 and then the selling by the impatient and disillusioned started. This was fortunately held up at the 192 support, after touching 188, before the sp steadied back towards its recent natural habitat between 197-202, helped - in the background - by Brent, also struggling to get back on an upward path. Today’s long legged candlestick indicates that ‘down’ was tested without much conviction, whilst ‘up’ has now been probed a bit more of late.

Whatever today’s gyrations signify, the long term chart looks healthy, as a symmetrical base seems to have formed around December’s low point and G appears to have held on to the 25p differential with OP it gained over New Year, as can be clearly seen here:

G Daily long term v Brent: https://invst.ly/9sged

In theory the price could progress steadily, though not necessarily spectacularly, from here. Because prospects for 2019 should now leave little to the imagination, it’s possible that OP will be the main driver for G’s sp with little other upward or downward pressure apart from the progressive accumulation of cash. It could make holding G rather less stressful and Friday Club quite boring. For example, if OP rises steadily to $65 in the next few weeks then G might naturally be expected to advance to 212p but probably not much higher as things stand. And OP would need to reach $70 to see G near 230p. Additionally, I reckon the accumulating cash might be worth 5p per share per month (DYOR!). So, if those assumptions are correct, it’s just conceivable we could see the sp above 250p during ‘driving season’ in six months time.

In reality, it was an unremarkable day: DNO progressed and GKP had a slightly down day. Here’s the rest of the field: http

Isn't there a change of emphasis regarding BB here? Last year they seemed to be emphasising early exploitation of the oil, now they are saying:
'Field development plans for both Bina Bawi and Miran oil and gas are under discussion with
the KRG, and may entail a phased development approach in order to reduce initial capital
expenditure and achieve the earliest date for first gas.'

https://www.genelenergy.com/media/2240/genel-trading-and-operations-update-jan-2019-final.pdf

Brent Crude is tonight just under $59 at $58.94 (XBR: NY Spot).

Not a great scene setter for tomorrow and something of a disappointment, as I was hoping to sell a few this month. Quite obviously, there’s still too much oil around.
If Brent descends below $58 then JL could get his (second) buying opportunity. It’ll be interesting to see if the 25p differential that G put on over Xmas-NYr holds up.
I didn't expect anything much from the Update in terms of sp reaction - but had hoped that OP would resume last week's trend - looks like that has petered out.

For Monday 14th Jan 2019

Today the OP dropped back to the lows it experienced prior to the Dec’18 OPEC+ meeting, sub $60 https://invst.ly/9s1ia , severely testing G at 197p.There was not much evidence of ‘pre-T&O Update’ activity either. Not really surprising. If OP remains fairly flat and the Update brings nothing new then we can expect the sp to probably be around JL’s figure of 198 at close of play tomorrow. https://invst.ly/9s1hv

In fact, G was pretty much the worst performer of our usual quartet:
https://invst.ly/9s1h-

Hi JL - that's a tough one! I have it as anywhere between 176 and 225! Ha!

I'll go for 225 - mainly on account of being bipolar when it comes to G, alternating between profound pessimism and naive optimism.

Hi Lemming -

I agree with all your points except, fundamentally, I think G has to spend to expand/develop. It has a limited window - current resources are not infinite (which is the big difference between it and GKP, which can churn out cash for years without the need to develop anything major). I think the cash pile is accumulating too slowly. Hence their current 'bootstrap' plan with BB. Also, surely the KRG are wanting to see more revenue? They must be under pressure from them as much as from us PI's.
What would our collective reaction to a rights issue be? That would have to come with some cast iron sure fire timescales and numbers - not things that G has been ace at in the last seven years - having largely been a list of disappointments and only delivering in the last 12 months. To my mind G blew a lot of credibility under TH and has never earned it back - not the current team's fault. I think that is what they are battling with and why I'm sympathetic to JFT's views but am not quite so critical of the BOD. I think they are damned if they do and damned if they don't - so they are trying to find a middle way, which is frankly rather unexciting. Most of us, I assume, would not stump up more but, equally, want the jam we've waited a long time for.
So back to your plan: I'm thinking- quite brutally, as we all must - what is in that for me as an investor?

Whitehat 206
Boyobach 212
Bunks 218
tiger100 222
Hasiba 228
ocelot 235
Hawkey 250
Kevijoh 274

For Friday 11th Jan 2019
Posted before the close!

A brilliant start but we wuz ultimately robbed by by what is technically called erectile dysfunction - a limp OP that didn’t last the day. It’s embarrassing but treatable with the right medication and isn’t usually life-threatening.
Closing above 204 would have been a game changer, above 200 is mildly reassuring, but closing below 200 would indicate to me that G is still in the relegation zone for a potential drop back to maybe even 176.
https://invst.ly/9rdho
All the runners:
https://invst.ly/9rdhv

My updated ‘Rule Of Thumb’ for estimating G’s ‘average/fair’ sp (in p) relative to OP is nowadays: (OP(in $) x 2.9 ) + 25. The 25, or ‘variable constant’ is subject to change as and when G starts to progress properly through business development and consequent market approval and appreciation. Like software updates, a new one will be issued as and when - or make your own, it’s very easy.

The current sp and OP are pretty much identical to what they were on Dec 5th. Let's hope history does not repeat itself! One reason why it shouldn't is that OP is improving rather than falling.... Closing above 204 could still prove challenging even so.

C'mon Whitehat!

Indeed Bunks, although yesterday I effectively put real money on Whitehat - I want to see 204+ asap - so that's who I'll be cheering on ( an outside chance by this pm, however).

Brent’s progress since Xmas has been surprisingly steady and pretty much matches the autumn rate of decline. It looks on track to maintain the present $61 and $65 could be achieved within a week or two.
https://invst.ly/9r74f
At $65 OP and with the 25p differential I’ve just posted about, I reckon G’s sp should then be about 212p. Of course, market sentiment and the T&O update will surely tweak that.