Member Info for DRB83

As the CRP empties we'll be flooded with cash so I should imagine so. I'm sure they'll have one eye on 2023 capex so depends what the long term capex forecast says. Shame we can't see it.

Stray, Oh ok. Yeah I'd say Q1 also. At the end of the day it's better to have the cash in our bank than sat in a unrecovered cost pot. Hopefully by Q1 we'll have had the FDP approval and start spending more capex on that. Once we're producing 85-90kboe/d then the profit share will be worth $200m+ pa.

Stray,

Anyway back in the commercial world:-
The CRP discussion and its full recovery this year is now redundant given GKP’s decision to up the capex anti by $25m.

What do you mean discussion of recovery is redundant?

By the way, 3000 posts over 26 months is less than 4 a day. You had me thinking then, I certainly don't have time to post 115 times a day lol.

Lol. A very interesting read about myself there Stray. I'm sure everyone will appreciate your deep dive into my investing history.

Fwiw, I don't know PUTUP or Hob. I've never encounted them before on LSE. Not sure if the general consensus is that they are trolls but you certainly seem to be implying that. I am a new investor here and they were the only ones helping me understand the finance model here. Which I now certainly have a better understanding of albeit it may not be perfect.

Im either invested in or watching all of the shares I post on except JDW which I use as a study case. I am currently invested in GKP. I come on here to gain and share knowledge if I can. I have no interest in trolling but try to have a very balanced view which sometimes leads me to say or ask questions that may be perceived as negative. I'm certainly not shy in challenging my investments when I feel it is warranted.

Thanks again for sharing history.

Fair point 5x5. The 60 days isn't just for AA to stew on their decision. It's also for UFO to get all their ducks in a row. That means 90% completed, mining lease granted and all other approvals.

Ok, September and October are going to be extremely busy and full of hopefully great news.

Yes, a lot is hinging on this deal and not knowing breeds uncertainty which the market doesn't like for one. As norm states the planning operations are also held back until the agreement is solidified so the sooner we get this signed off the sooner the SP ignites and the better chance we have of hitting that all important Mar/April 23 date for shovel in ground.

Having said all that, it's great news and a huge step forward, I'm just being a little impatient. September has the potential to be a huge month and I don't think I can wait.

True Dip, although managing expectations is important. When 29-30th October comes and we haven't had confirmation people would be speculating that it may have fallen through. You can just imagine the trolls having a field day. I'm hoping the clock is ticking but I'm sure we'll get more insight as time passed.

yes apologies meeting is this week so may have even happened already. I want to see that Financial Model. Come on Bill let's have a look.

It will be interesting to see what they base the DSO price on. In the scoping study $100 was conservative at the time. Now is very different. Breakeven has to be around $75-80 so still some leeway.

Of course GKP will invest again but the cost pool limit is 40% after royalties.

So if oil is $90 less say $20 discount less $7 royalty you have a net oil price of $63. At 45000boe/d that's a $1035m net sales. Upto 40% of that can be recovered with any excess going into the CRP. So $1035 x 40% = $414m max.

Our production cost for 45k barrels @ $3 will be $49m + say $6m admin leaves $359m of capex spend before the CPR starts filling back up.

The bod have disclosed $120m Topps for 2022 so and with the CPR currently at $260m it will be pretty much empty by Jan23. Unless the bod up capex in 2023 to $300-400m then I can't see where the excess is coming from.

I'm not familiar with the rules around capex spend. Can anyone enlighten me. Thanks

Neil, I'm sure Ncyt will also be able to call on the numerous other customers that didn't seem to have any issues as further evidence that the DHSC claim is baseless and full of holes.

Sorry chaps but we'll have to agree to disagree on this one. I don't believe the 60 days has started yet.

Exclusive right commences immediately and will conclude the earlier of 60 calendar days after IOCA delivers to Anglo American an agreed Base Case Financial Model together with all necessary supporting documents or such later date that the parties may agree upon.

It's the exclusive right that has commenced. This exclusive right could be 90 days, 120 days whatever. The 60 days doesn't start until the finance model is submitted to AA and Bill clearly states

"Key is a financial model which we’re pretty close to completing already and they’re keen,"

This is ok because I want to see the model and I believe the meeting next week is to discuss the model. I don't think there is anything else to discuss as the mandate is signed so imo AA are just waiting on the Finance Model so they can go back and forth regarding the finer details of the agreement.

Expect an RNS early next week with a Finance Model.

These upcoming discussions would have gone a lot more favourable if the current iron ore price was $120+ but still, the key is getting everything in place to start filling those trucks in Mar/Apr23.

Is B2 5mscf/d including a sidetrack? A4 same?

PUTUP, your 2023 example is a good year to use as it will hopefully be a clean year.

It should be noted however that we still have H222 to report on which should see the recovery of the remaining $260m in the cost pool. Our 80% share is worth $208m which all hits the bottom line, albeit share of profit oil would reduce slightly by approx $30m but still that's c$180m to hit our bottom line in H222 on top of our standard profit for H2 of around $30m (share of profit oil less CBC less G&A) less DDA of $40m again + capex spend recovery of $60m

So $230m profit to come in H2 assuming we clear down the CRP. Added to the $162m from H1 is $392m profit for 2022. Not bad

In terms of cash at Dec 22.
Jun22 $231m
CRP $208m
Add H2 profit $30m
Less bond payment $100m
Cash at Dec22 $369m albeit some of this will be sat as a receivable.

Then we revert back to your 2023 example

This would give us a Dec22 implied EV or $619m mcap less cash $369m so $250m generating a EV/e of c 2 going into 2023 annual profit of $123m.

Hob/ PUTUP, Ive not built a model yet but it would be good to sense check it against your estimates for Dec22.

Yeah Smiller, maybe our new found friendship with AA could bump us up the assay waiting list a little. Here's hoping

From Dips notes:

Key is a financial model which we’re pretty close to completing already and they’re keen,

So the financial model isn't ready yet. I suspect this will be what the meeting next week is about. We'll get a copy also I hope.

It was JW that used the word immediately by the sounds, I think Bill was referring to the mandate being signed as the green button.

IOCA has granted Anglo American an exclusivity period of 60 calendar days after IOCA delivers to Anglo American an agreed Base Case Financial Model together with all necessary supporting documents or such later date that the parties may agree upon

On a second read, yes it sounds like the exclusive period is 60 days (or such later date that the parties may agree upon).

This could mean that the parties may have agreed a date sometime in the future and therefore the green button has been pressed.

Or it could mean the financials have been sent and the 60 day clock has started.

My thinking was that the meeting next week was about presenting the financials. Maybe Bill has already sent them to AA in advance of the meeting. If the financials are ready then why have we not been shown them?

I read it as once we have submitted base case financial info. Once it's ready I'm sure we'll be updated via RNS so then we'll know when the 60 days expire. I don't think it will be long. Maybe next week.

Thanks Hob for the clarity and the link. That is helpful.

I also note the extract from the annuals

During past PSC negotiations with the Ministry of Natural Resources (“MNR”), it was tentatively agreed that the Shaikan Contractor would provide
the KRG a 20% carried working interest in the PSC. This would result in a reduction of GKP’s working interest from 80% to 61.5%. To compensate
for such decrease, capacity building payments expense would be reduced from 40% to 20% of profit petroleum. While the PSC has not been
formally amended, it was agreed that GKP would invoice the KRG for oil sales based on the proposed revised terms from October 2017. Since
revenue is recognised on a cash-assured basis, the financial statements reflect the proposed revised working interest of 61.5%. Relative to the
PSC terms, the proposed revised invoicing terms result in a decrease in both revenue and cost of sales and on a net basis are slightly positive for
the Company.

In your example the net basis is negative for the company by $12m. The way your model calculates it the net basis would never be positive for GKP. Unless I've missed something.

I guess even with a mcap at $620m and cash $214m giving a EV of $406m, then $123 pat gives a EV/e of 3.3.

I do think the $123m is flawed though. Especially when we've just delivered $163m in 6 months. Albeit with a higher oil price but still. It's a huge drop to forecast.