Member Info for Boyobach

Maybe Friday Club Dreamers could start guessing about how low oil might go?

The goat's entrails suggest $60 to me but $30 isn't out of the question....https://www.tradingview.com/x/wrvexTf8/

Having crossed the literal 'red line' and the next 'blue' yesterday, it was necessary to take another look at G to the year end. No comment necessary beyond saying that staying above 180 would now be good, 210 excellent.

https://invst.ly/9a5ft

For Tuesday 20th November

Brent is now seriously going down the pan and. I guess for those forever sceptical about G’s sp being linked to it, there’s finally convincing evidence. Even RDS has taken a pasting.

Here’s the comparison chart since oil was at $86: https://invst.ly/99vcl

And here’s this week’s so far: https://invst.ly/99vtg

G clearly going to be down for as long as the OP is depressed - could be a while. Also, based on the last couple of days, OP looks like it could have further to go and G will certainly be sensitive to that. Bunks was right - my ‘undemanding’ projection for G served its purpose much sooner than I expected as G crashed out of it today - G is certainly heading down for the moment, following the green trend down towards 180.
https://invst.ly/99vxg

Hi Ocelot. Yes, you've echoed the prevailing story that has been used as an explanation: 'The producers did not know that Trump was going to offer waivers to quite so many of Iran's most important customers.' BUT plenty of voices had been warning for some time that, one way or another, Iran would circumnavigate Trump's sanctions (if necessary by collusion with the usual suspects). There was also the fact that US shale production was bound to increase sharply as the OP got over $65-$70. Frankly, if the story as told is correct then I'm astonished at the naivety these people have exhibited, although I suspect the reasons have more to do with greed, opportunism and toadying to Trump in the wake of the Khashoggi murder. .If the KSA did not anticipate the supply/demand situation correctly then I am truly incredulous.at their ineptitude. Surely only a very few people were imagining a return to $100 oil ? That isn't going to happen until the lack of investment in discovery/replacement of existing resources starts to bite - which is a few years off yet.

Yes Bunks, it's not a clever time is it? It was pretty foolish of producers to ramp up as they started to hit the weakest season for OP. Bizarre really. Now they have to get the genie back in the bottle - always a tough task.

For Monday 19th November

Because Brent was fairly flat for the first three hours, it appeared that the two KRI oil co’s were being knocked back by factors other than the weekend change in OP. Whilst G took the bigger hit initially, GKP ended the day slightly lower and appears to have suffered most as the OP has fallen from early October. So there are two comparison charts today in order to put this in context and answer an earlier post about G seeming to be at variance with OP, although it hasn’t really been over the last six weeks.

So the first chart rewinds to the start of the drop in OP around the 4th October, when Brent was at a peak of $86. https://invst.ly/99ebv
With this view, it’s much easier to see the impact of the fall in OP upon the respective companies and where their SP has sometimes moved contra to expectations and in response to other factors. In general, it can be seen that G has tended to track Brent more closely than GKP over the period. Also notice how G has tended to find support at 200p (-19.8% in this view) apart from the fairly brief dip lower to 186p (-25%)

The second chart shows how things have moved today since Friday’s close:
https://invst.ly/99fjn

I posted my view of G’s prospects to the year end earlier today. Nothing since has changed that view, the updated chart including today is here: https://invst.ly/99foe

Although it can be very satisfying when an sp ‘follows the plan’ as set out by a chart, it is more usually the case that it’s the failure to do so that gives a stronger and more useful indication. For example, when the price definitely crosses a long standing trend it can mark a significant change in direction.

This week, as a matter of course, I’ve revised my target track for G (shaded). G has consistently followed then crashed downwards out of these recently, which is unsurprising as G's underlying trend has been steadily falling since the end of May, with just a few ‘false dawns’ along the way. My latest track is not that demanding given the supposed monthly cash accumulation and potential for Brent to slowly strengthen. You’ll quickly see that I don’t expect G to get to 250 again this year and that just getting to and staying above 225 will be ‘good’. Falling below the track will simply indicate continued negativity and pose the question of whether, and for how long, it is worth waiting for G to regain it’s upward momentum..

Broken lines show possible/apparent resistance, solid lines support..

https://invst.ly/999oc

PMO has a fairly hefty net debt doesn't it? As I recall the end of year target is around $2.4b - which is rather dependent on OP, cargoes etc. So maybe not surprising that it was hit badly by the fall in OP. Looks a risky one at the moment but I guess it could pay off. The chart doesn't look too inviting to me - G is about as risky as I'll go currently. Good luck with it Hasiba.

For Friday 16th November

Brent has continued on an upward path today and so has G with a serious stab upwards in the afternoon. In contrast, GKP has inexplicably spent most of the day slipping downwards. RDS has been pretty level.
https://invst.ly/98hxz
A very strong performance this week from G given the background of the drop in OP, which probably held G back by about 5 to 6p over the week. So, given we ended last Friday down at about 203, a recovery against the tide is encouraging. Here’s a long term view of G:
https://invst.ly/98hxj
You can see that the prevailing trend lines (green) are down and we are on the bottom rung, bouncing against that ominous red line that marks the bottom of ‘the wedge’ and what some would view as a critical barrier. It was somewhat validated on Wednesday and I’d have to say that below it there’s a bit less history to help chart the way. What we really need to do is to latch onto one of the blue trend lines and start climbing back upwards. Finally there’s that purple wedge top line - again some would think that it marks an upward barrier. Until it’s tested, hopefully next week, we won’t know but punching through it would certainly be reassuring. My own view, FWIW, is that this weeks drop in OP tested G pretty thoroughly when the sp dropped to 186. The market reaction to that was swift and decisive and tested the accuracy of three of the chart lines (which have since been tweaked accordingly). That was a super entry point IMO and an immediate 24p (over 12%) to be made in just two days (which I missed) !

My Friday Club call for next week is: 225

I haven't recalculated the EVs but, yes JL, two of the three scenarios would maintain EV roughly at a constant because as the net cash increases then the SP should rise sufficiently to cover it. With oil at $50, however, the SP doesn't rise (in that model) enough to cover for the net cash accumulated- so the EV would probably start to fall in that scenario.

I thought I’d do some ‘back of a fag packet’ calculations of sp in 12 months time to assess the risks to my holding depending on changes in OP.

Basic assumptions:
Production levels do not change from current.
G currently adding $20m per month to cash
SP increases by 27p per $100m increase in cash.
SP varies by 2.8p per $1 change in OP.
Today’s OP rounded to $70.
Today’s SP rounded to 210p

1) At $50:

If OP drops to an average of $50 over the entire period, that’s $20 down, so 56p off the sp. But cash in the bank will rise by $15m per month (based on $20m per month currently, reduced by a factor of 50/70) = $170m, so that’s +46p on the sp, based on 27p per $100m. Resulting in an sp down 10p on today ie 200p.

2) At $70

If the OP averages $70:
Cash in the bank has risen by 12 x $20m = $240m,
that’s an sp rise of 2.4x 27p = 64.8p
So the sp should be about 270p

3) At $60

The average of 1) and 2) gives the $60 OP scenario and an sp of around 235p

For Thursday, November 15th

https://invst.ly/980sw
A fairly flat day, although up a bit by the close. GKP’s price showed less calm - dithering about as usual, like a teenager that can’t decide whether Brent, RDS or G are its best mate.
Odd, really, as GKP’s sp should probably be the most straightforwardly linked to OP.

Nothing special to say about today’s G chart, except to point out that three key lines have been tweaked from 'predicted' to 'actual' representation of this week’s lows. https://invst.ly/980t-

Q: Has anything changed? ....

A:

Masoud Barzani - gone
Maliki - gone
Abadi - gone
ISIS - gone
OP - up

Cautionary note: 'gone' may not be a permanent or complete status for these politicians, but reasons to be cheerful perhaps. The Barzani's still exercise rather too much power, but the Kurds operate as clans under dominant families, they are probably no worse than their immediate challengers.

Yes JL - I've always voted that way too, not just out of habit - taking care to listen to the opposing view.. I've always had a great respect for many in the Labour party, even some on the further reaches of the left. Good government invariably comes with good opposition. A landslide election victory was, to me, as bad as a hung parliament: the ability to govern should not be so absolute that the ruling party cannot be challenged. I think Plaid might well get my vote next time as it may be my only 'electable' option to avoid supporting either of the currently deplorable mainstream parties

Here's a rant about the Tories and the useless shower in Opposition, nothing about G here:

The incompetence of the Tories has been profound since they came to power under Cameron. The government should not have given the country a referendum about an issue that it could not deliver. Cameron clearly understood this and promptly resigned because he realised the irretrievable mess that he had led the country into. Because he did not grasp the difficulties, Cameron compounded his Referendum error by failing to present sufficiently clear and compelling arguments for Remain. May believes in process - ie that process can resolve issues. She has sought to follow process without having a well defined vision - like competently driving a car without being absolutely sure of your destination: you will arrive safely but almost certainly in the wrong place. And, having delegated others to drive the car she has insisted on keeping her hands firmly on the wheel, thereby undermining the process and neglecting her other responsibilities.

Sadly, the opposition is utterly incompetent too. Whether you agree or disagree with the left wing philosophies that govern Corbin, the fact is that he does not have the leadership skills essential to fulfilling his vision. In fact, his vision is somewhat limited to a fuzzy ideological picture, with not a clue about how to put it into practice. He has almost certainly given no thought as to how he would handle Brexit, although it must be what he wants as a socialist, for the idea of a technocratic super state dominated by corporate interests (the EU) must be an anathema. He and May are almost (not quite) two halves of what a leader should be: a visionary and an implementer.

In the past one could accept that if one’s party of choice did not get into government it was due to democratic process, the people’s choice, based on a distinct set of manifesto pledges made by a party with the competence to deliver them. When neither party is sufficiently competent to run the country it is a much greater calamity than mere Brexit.

Hi JL. I think the main point is that EV is partly based on SP - not vice versa.
When you said just now: '[the market cap] might be above/well above the EV which is only the starting point.' you were incorrect. The EV is not the starting point for determining the market cap because the EV is, itself, dependent on the market cap.

JL yesterday commented that G is worth ‘$800m tops (220p)’ presumably based on a recent EV he quoted.

As we know, cash is deducted from a co’s EV. This is because, if a co is acquired in a takeover, the cash can effectively and immediately be set against the cost of acquisition. Whilst this seems to lead to the paradox that a company generating and holding cash is progressively lowering its EV the natural mechanism for correcting this is an increase in SP because the cash is an asset that shareholders have an interest in. So, for example and according to my reckoning, every $100m in cash held by G should lead to a 27p increase in SP (based on 279m shares). I'm making this point because, on cash generation alone, G's sp should be progressively increasing - it does not have a fixed 'top' value of 220p as JL's comment suggests.

Today @ 16.32

Nothing to get bothered about....just a remark.

What’s with all the shafting talk?

I think JL was referring to Market Makers but not entirely sure - best if he answers you bunks....

sorry about typo.....'Death Cross' sounds a bit over dramatic to me etc etc,

According to Investopedia: 'the death cross is not always a reliable indicator that a bull market is about to end. '

Read more: Death Cross https://www.investopedia.com/terms/d/deathcross.asp#ixzz5WrxQGfHU