Member Info for Bravedog

@theoryman
@Straycat

Logical that you don’t have any reply.

A corrective RNS means the cy isn’t sold before October 4th.
No corrective RNS means that the shares held in treasury are vested and this can only happen if the Bod accepts an offer they can’t turn down.

I guess the date is once the PRC has finished the 70 th anniversary which is October 1st. On that day you will see the mightiest military parade with weapons unavailable in the West, implying that China is the world leader.
www.thedrive.com/the-war-zone/29857/china-appears-set-to-unveil-a-very-high-speed-drone-during-big-beijing-military-parade

@Straycat

We are both right !
The management is also right !

The explanation is given by the time lag between September 20 and October 4th.

If between these two dates the cy accepts an offer from the Chinese, the treasury shares are vested and everyone on this bb is happy.

Remember that the Iraqi government spent a week in China. The main topic of the discussions was OIL.

So I think Paul got it right this time.

@shandypants2
They wanted the price up in 2018 and for that purpose managed to be included in MSCI Indexes. This attracted some institutions. To keep the II, they decided to give back money to shareholders, first with a dividend, then with a buyback. But this buyback is to have the shares in treasury in case the cy is sold. If no shares in treasury, no incentive for the management to get a good deal.
I think they don’t want the price up either, as it would attract active hedge funds able to blackmail them.

@Straycat
Normally we should be right, but Paul posted something interesting:
https://mobile.twitter.com/Paul47293202/status/1176067134054707201
Does it mean that they plan to issue more options or bonus and to whom?
Don’t forget we have not only ordinary shares, but also non-voting shares of 0.01$, preferred shares of 1000$ and Serie A prefered shares of 1000$. In case of TO, what do they get?

I think all this is being settled in Beijing where many Iraqis minister are spending a week. BRI advancing quickly.

Straycat,

As I wrote it on another bb, I am shareholder in a private cy that bought back shares from a leaving partner. When a dividend was paid, the shares owned by the cy where not entitled to receive the dividend.
If they had bought back 50% of the equity, they would pay dividend for only 114.7 mio shares.
This implies that they could never pay out an announced amount allocated to shareholders as they always keep half for themselves.
In case of closing down the cy, ie paying out money to shareholders, they would keep half for themselves which is illogical.

You have another accounting problem. Dividend is money going out from the cy. One half goes out to shareholders. Does the accountant treat the other half as a financial income which could be taxable in a normal country? Of course this income would more than offset the interest charges of debt!

All this is part of the deal made when they hired these clowns: you’ll be very rich if you keep the price down as long as possible. And the way to do it is to have investors lose faith in the cy, never disclose anything positive and never meet the announced production targets that each year are delayed. Add to that several mistakes which convince any II that the management isn’t reliable and the cy not investment grade.

This is an asset play, not a growth story. To have an idea of its value, I suggest that you look at the deals China seems to be doing with Iran and with Iraq which were summarized recently on zerohedge.com in two separate links, one last week.

The « resignation » of SZ was perhaps organized by the management. A way of telling the market « we will be sold ».

This is for the optimists and I don’t know what it’s true.
An article on Iraqi gas was published on the 17th and I looked at the posts.
On one of them, I read the following:
« Many years later i was working with the man representing the Kurds in Iraq, they had discovered enough oil and even more gas reserves than any other oil and gas field in the world today… I had view of the official reports… ».

I don’t know if he was a LTH...

@VCB2
That is the big question !
The sale of GKP will allow the buyer(s) to negociate a longer deal which will allow the IOC to develop the « block SH », as shown in the Chinese study, which confirms that this « block SH » is probably a monster. I hope you remember that below the Triassic we have the untested (?) Permian.

There are several shareholders: the Kurdish families, the bod acting as requested by KRG and institutions like Capital Group who were insiders because they guaranteed the capital increase in 2016. So the price will be very high.

Of course it depends if we have an OGL law or not. If the OGL is agreed, the Kurds should be able to keep some control on the cies taking part in the auction.
If no agreement, Kurdistan will be included in the Chinese Belt and Road: the Chinese will overpay, because it will allow them to price oil in CNY. As a matter of fact, the amount in USD will have no meaning as Sinopec will pay back in 80 years in worthless money.

As to what GKP is worth, I use the OIIP. We have 15 bil bl OIIP, which gives 15 bil $ = 53$ per share as a minimum. The only problem is that it could be a multiple of that amount. 30 mio $ or more is possible. You just can’t put a price to a 80-100 years field with an unknown (?) potential where the production costs are 3-4$/bl, even if the investments are very large.

The access to block SH is only possible when GKP is sold and it’s size suggests that a high price will be given.

@Tom
If they announce a dividend on September 10, they can perhaps start the buyback on the 16th. From September 16 to November 2nd, you have 35 trading days.
To buy the missing 6,393,000 they need to purchase on average 183,000 per day which is more than the previous buyback rate which increased in the last week to 172,000.

Then, we will not need a CFO. By the way, why should a new CFO be hired and take part in the LTIP, when the management isn’t doing anything ?

Hello Straycat,

« But not now because their interests have been protected BY SPECIAL RESOLUTION. »

I disagree, but I might be wrong:
Shares held in treasury on 8/30: 5,225,933

From AR 2018, we have (in thousands):
Staff retention plan: 1440
LTIP: 1614
Equity settled share option plan: 326
VCP: 3364 (the 920 from 2016 have disappeared!)
Total at end of 2018 (in 000): 6744

Without what has been awarded in 2019, 1,5 mio shares are missing as treasury stock.

We take into account what has been agreed by the board in 2019:
LTIP: 448+773 (not to PDMR)
VCP: 3654
So the cy must also buyback another 4,875 mio shares.

The total needed in treasury stock is around: 11619 (in 000).

Thanks for mentioning the link to OilPrce.

I would like to highlight the other link included inside which is perhaps more important.
https://oilprice.com/Geopolitics/Middle-East/Chinas-Ultimate-Play-For-Global-Oil-Market-Control.html#

Basically, it explains how Russian and Chinese are teaming up to control all oil from the Middle East. That is good for the GKP holders. The negative is that we will have turmoil on the FX markets because much more trades will be made in CNY and RUB and less in USD. But oil prices should go up in USD.

10 days aren’t a trend, but between 5/7 and 19/7, we have different performances for the Kurdish oils cy:
DNO -5.93%
Shamaran -4.69%
Genel -3.6%
GKP +0.7%
Currency effect vs USD not significant

You are mixing up GKP with Genel.
Then there is another problem.
If you it is true that the price moves up when a major holders sells and the price moves down when a major holders buy, then you deserve a Nobel price.
You only see one side: today Canacord bot shares or snapped a block of 120k shares at 8:14 in the morning. The fact that GKP closed down on the day 8:15 hours later has nothing to do with the purchase they made. So what you highlighted today is wrong.
The stock went down because they were more sellers than buyers.

With your L2 level, you have probably spotted something the brokers try to hide when they « work » the order for their client. Trading desks with II are a profit center, so they try to earn a couple of points on their in house clients. Business is business.

@****eye,
When JF came, he said he would increase production.
Instead, he tested the field without any announcement.
Now when he has the money and the regular (?) payments, instead of investing more heavily, he invests in his stock.
In other words, he’ll leave the big investments to someone else. Small cies never develop alone such big fields.
He could of course sell some shares on the market provided the stock is higher if OGL enacted, but they would be bought by a major...

I voted for STAY because we don’t need a change in the management as it weakens the cy.
JF is only here to do a job controlled by MNR.

By the way, I read on Rudaw that the list of Ministers has been made public, but there is no MNR Minister!

Comments
-Buyback ends on October 31 and Sami leaves on November 2nd. Strange.
-Bonus: from AR 2018, p. 67: « The Executive Directors are not eligible to participate in any other long-term incentive scheme until the VCP has ended in 2022 ». It explains perhaps why SZ is leaving. Better leave the company and buy now that he knows what the cy is worth. He’ll have no insider problems.
-« The Company confirms that it currently has no inside information ». That is new for this cy.
First question: Will SZ and JF start buying shares ?
Second point: What about the non disclosed upgrade in reserves that MOL’s mentioned at their ID on November 8 2018 ? As the partner of the field has the information, the operator must have it.
-IMO the management deems that it is more profitable for the shareholders to invest in the company rather than in the development of Shaikan due to the time needed to reach higher level of production. In other words, putting 25 mio$ in stock buyback will increase the EPS more than operational investments to boost the production.
This means they are not managing the cy for the long term but take the opportunity to increase at a little cost their potential holding in the cy. Or said otherwise, they expect to be taken out.
-« The Buyback Programme will be undertaken until the earlier of the Maximum Amount being repurchased or the 2020 AGM ». Does it mean all this will last one more year?
-At least, they have started quickly.

Where is the 36 inch pipe? Taq2 -> FKB?
Where is the 48 inch pipe? Not sure that it is ok for 2mio bd.

I know there are two in Turkey, but I don’t remember the capacity and which one is currently used. From memory, they started repairing the unused one years ago.

Interesting that Erdogan is open to increase business with Kurdistan. It can only be oil.

And for those who don’t know the economic problems between Krg and ICG, they can read this report: http://www.bayancenter.org/en/wp-content/uploads/2019/06/9876544.pdf

Not a word about Shaikan. A hint that the arbitration court in London might decide something about the Kurdish oil exports thru Turkey.

The conclusion is
« Coupled, with the current Iraqi leadership that does not seek a zero-sum game over the dispute on the salary allocations for the KRI, the environment is ripe for the GoI-KRG to strike a new deal that is shepherded by the country’s international stakeholders ».

I think all this will be solved when the ayatollah surrenders as a pipe from SH to China could then be built.

Normally, the members of the BOD represent the shareholders and have a significant interest in the company. They are therefore labeled insiders. As it is not the case here, the main shareholders (former bond holders) must be in contact with the managers and the bod. (Note that Capital Research was an insider because they did offer a guarantee for the 2016 capital increase.)

What is their interest ? Increase their holding in an undervalued cy !
How? By slowing the development of the cy which increases the excess cash of GKP which will be used to buyback shares at the lowest possible price. Interesting is the fact that they don’t seem limited to the 12.7% of resolution 12 because resolution 13, if agreed, allows them to buy an unspecified amount of treasury stocks. If I am right, it could explain why no good news are coming out.

Will the shareholders agree to the dividend ? If they don’t, I think the stock will be smashed as many of us are buying this stock for the good yield. That would provide a good opportunity for the cy to buy back shares at a ridiculous price. Fortunately, the big investors will also be there and will keep on buying shares for months. As the liquidity of the stock will disappear, we should expect more tree shaking.

I don’t know which mistake SZ did. Perhaps push for a dividend as it attracts investors. On the other hand, a dividend will enable the shareholders to buy more stocks.

When Straycat analyzed the VCP, he concluded that once the managers had all their options they could start promoting the stock.

Nothing happened, except that the stock went down on announcement of dividends and share buybacks higher than 10%, SZ (« instrumental in the introduction of the Company's maiden dividend policy ») stepped down without explanations and no payments were made in May.

Normally profitable cies announcing dividends and shares buybacks see their stock price rise strongly.

Buybacks without disclosing the true reserves, the 2nd amendment and the new FDP will allow the Kurds to slowly squeeze out all the other shareholders as they will increase their holding in the company.

How long will the board keep quiet on informations that should normally be released? What can the shareholders do to avoid being stolen a second time?

Hi Billfish,

Thanks for that as I missed it.
It only means that this stock will always trade at a discount to peers because it will only attract money from specialized or focused funds.
Fortunately, they belong to two MSCI Index.
BD

The managers « managed » to get their nil options and can’t be awarded more: the stock is allowed to rise!
The company will pay a dividend and be allowed to buyback up to 10% of its equity which is positive for the stock price.

For the first time, the annual report 2018 is available before the June 4th review of the FTSE, just on time for the analysts to issue « speculative buy » recommendations if the May payment is made.
Strangely, it will be the first time the AGM is held in June, just before the quarterly change in the indexes on the 24th: More II will attend.

FTSE makes a complete review of all the constituants of the stocks listed on the LSE only in June. So if GKP is to be included in an index, it is in June 2019 or June 2020! Did the managers empty the VCP pot to have the stock included in an FTSE Index one year later?

Not being included in an FTSE Index would be negative for the company which has to fight against giants. It would lower their rating in case of debt financing (straight bonds or convertible) and make them vulnerable to hedge funds.

Nowadays, inclusion in an index is a necessity as it easily attracts a lot of money in the stock:
- Without the inclusion in an Index, it is pointless for the managers to make 1to1 with II: portfolio managers buy stocks that are in the benchmark and brokers make studies on stocks that are in these damned benchmark.
- most of the funds have to follow a benchmark, specially in UK but less in Germany.
- this benchmarking process affects also the Small Cap Index.
- 85% of money managers underperform their index. Therefore an increasing amount of money is invested thru ETF, which can easily be explained to clients.

I think the conditions for inclusion in an Index are met : https://www.ftse.com/products/downloads/FTSE_UK_Index_Series.pdf

-GKP has « Premium Listed Equity Shares ».
-GKP has 50% free float ( https://www.ftse.com/products/downloads/Free_Float_Restrictions.pdf ). Only two funds have more than 10%.
-The nationality doesn’t prevent GKP to enter the FTSE as Bermuda has been approved by FTSE ( https://www.ftse.com/products/downloads/Low_Taxation_Jurisdictions.pdf ).
-The liquidity threshold are met ( https://www.ftse.com/products/downloads/Guide_to_Calculation_Methods_for_UK_Liquidity.pdf ).
-For the Index Qualification Criteria, here are some indications http://www.stockchallenge.co.uk/ftse.php
FTSE Small Cap exit level = 90.9
FTSE Small Cap entry level = 136.4
FTSE 250 automatic exit position: around 530
FTSE 250 automatic entry position: around 715
With a market cap of 540 mio £, GKP misses the FTSE 250 but is eligible to the FTSE Small Cap, which is a part of the FTSE All Shares Index.

Can somebody explain me why it isn’t in the interest of the cy to have stock included in an FTSE Index ?