Member Info for G_G_G

Monthly dividend payments mean just that - paid monthly. I think the only question is whether they will continue with monthly payment schedule or move to quarterly / half yearly. I'm hoping things remain the same. And of course I'm hoping for a double digit divi increase. I'll be content with 15% and happy with anything above 20%. We get a higher income. The sp will move higher by a similar amount. And we'll still have money to maintain / increase production depending on commodity prices next year. Hopefully Majid does something of value for shareholders and we hear about it in the coming days. GLA

I'm not sure it will happen on Monday, or that it will even happen at all Stas. I'm certainly hoping for at least a 15% hike to the current divi payment. If we get 20% or higher I'll be happy. And if we do get such a divi bump I'm also quite confident with a little bit of PR the sp jump by at least the same amount, just like with Premier Miton. Shame a 20% sp jump only takes us to 26p though. Not long to find out either way. Have a good w/e all.

Thanks for that Dartron. Looks like a decent divi announcement re-rated the PM sp by over 15%. And of course you still get the divi payment. Interesting.

Tony, no need to rant we're just having a difference of opinion again. Firstly, they wouldn't be pushing the envelope too far as you've been using a 15% reduction in current commodity prices and they can still afford a 50% increase plus maintaining 25kbeopd. My use of 50% by the way has only been to demonstrate that's how far they could push it. I'd be more than happy with half that amount, which would give them £10m spare cash at such reduced commodity prices. And the dividend is paid out over the course of the year, not some up-front payment. This means they can re-fill coffers with every month of production and re-evaluate whether they can add more to the sustaining development budget of £25m throughout the year. You've been supportive of Eric Nuttall views on here for some time. So how can you agree with his 50% fcf shareholder payment suggestion and not be supportive of doing the same here in dividends on lower modeled commodity prices? As for dividends being committed, why would they need to do this if it's only locked in for a year and they can easily afford to do it. And if they have to cut it in 2024 then so be it. Every commodity company on the planet has cut their dividends in downturns. And it would be no different with us if poo broke below $60 in years to come.

As for the theoretical benefit to the shareholder of a £10m buy-back (around 3.5% of shares in issue hen washed through) versus boosting the current monthly dividend payment by 50%, well I'm quite certain the difference in income would make it far more attractive and would reward shareholders with not only sp appreciation from new money chasing yield, but a much greater monthly income for those continuing to hold. A buy-back of £10m is a bad joke, and would be seen in that way by the market. If they decided to do this rather than increasing my income then I assure you there will be buying back my 4.5m shares over a relatively short period of time and the sp apprectaion will be bugger all as many others I think would do the same.

As for a share buyback or special divi being a 'one off commitment with excess cash', well that's exactly what the base dividend increase would be using. It's just that it would be paid over 12 months rather than spunking it in one special divi. That's what creates unsustainable swings in the sp.

Happy for the debate, but your arguments don't sway my pov. And if they do what you're suggesting with buy-backs then I'll happily sell my shares back to them for a small premium on todays price before it drops back to the low 20's when the pitiful £10m is eaten up. Majid needs to make a call either way and do something, anything. If he kicks the can then I suspect the sp could even drop further. AIMHO GLA

Older, I'm suggesting the divi hike.

Tony, really appreciate your workings. Out of interest does this include 3rd party revenue?

As for the numbers, it would seem that I'm about £15m off in my top-of-mind estimations in a low commodity price environment. But this doesn't change my position on a divi hike. What Tony's workings show is that in a repressed commodity price environment we still generate £60m fcf. That means a 50% divi hike alongside maintaining our current much higher production level of 25kboepd can be afforded. It just means 50% of fcf goes into divis, which funnily enough is what Eric Nuttall is advocating. But this is in a commodity price environment 15% lower than current prices. So pretty low.

What these numbers also clearly show is that you cannot do a 10% buy-back (£30m), plus maintain the current divi (£20m), and maintain production (£25m). So those advocating this avenue whilst saying a divi hike is unsustainable can now see the numbers.

Good thing to my mind is with a 25% divi hike (£25m), plus maintaining 25kboepd production (£25m), we will still have £10m spare cash in a low commodity price environment (15% lower than current low prices). And if commodities stay at this level ($80 WTI, CAD$6 AECO, NGLs 38% WTI) I imagine we'll have significantly more than £10m left-over to do whatever we wish with it. Tony, sorry to be a pain but what would we have in such circumstances?

Either way we can afford a 25-50% divi hike and maintaining production even when WTI is $69. On the loan notes, to be honest I'd like them to roll-over payment dates. Or reduce by no more than 50% and keep the remaining money to put into production. AIMHO GLA

I don't have your spreadsheet Tony but happy with the price assumptions providing NGLs are normally calculated at that % of WTI. Would you mind inputting those numbers plus the $30m maintenance capex into your spreadsheet and letting the board know what remains? That should provide us with a relatively conservative number for 'real' free cash that can be attributed to growth and dividend payments.

They just need to re-allocate £10m to the current dividend from their development plan budget for next year. So total annual divi payment of £30m (50% increase on current run rate). Sounds like a lot, but it isn't when you consider our fcf position. Even if commodity prices ease significantly by 10-15% they should still comfortably make £75m in fcf at average production of 25kboepd in 2023. That's only £30m out of £75m for next year. And if they're worried about commodity prices tanking then hedge some more of our production. The remaining £45m ($55m) being put toward development should add an incremental 3kboepd to our 24kboepd exit rate by year-end. That's 27kboepd production (+10% growth) and a stonking dividend. Suddenly we're in the mid-30's and still getting a 6-7% dividend yield. Have to remember there's no more Nth Sea drilling costs this year as well.

This is how I think they can fix our valuation issue, which to be honest is the only problem with being invested here. Majid needs to make sp appreciation a priority now. He's an incredibly smart man, but I don't think the sp has ever been near the top of his list. I wouldn't be surprised if it' hasn't been on the list at all the past couple of years. This is a fundamental part of his job. And if he doesn't care to make interventions when they're clearly necessary then I hope someone else will value us more highly and make a bid. If I was one of our major fund managers I'd be saying the same thing to any would be buyers i.e. make a bid for 40p and you can have our XX% of votes. To be honest they can have my shares at anything above 35p. Reckon the IIs would go for a similar amount. AIMHO GLA

Sorry the first sentence was confusing and not at all simple :) Meant to say:

'I'll say it again for those who are saying 'buy-back + maintain divi', and at the same time saying 'we can't afford to INCREASE the divi'.

Jesus, this is getting frustrating. I'll say it again for those who are saying 'buy-back + maintain divi', and at the same time saying 'we can't afford to maintain the divi'. It's very simple.

- If you want to do a 10% buy-back and maintain the divi it will cost £50m (10% buyback £30m + £20m current divi).
- If you want to increase the divi by 50% it costs £30m.

So how can we afford to do a buy-back and maintain the divi, yet not afford to just increase the divi by 50%?

Jezzoo, you could argue this point. But in the above scenario where you're not doing a buy-back plus paying the current divi (£50m), you can increase the divi by 50% (£30m) and then reinvest the remaining £20m into production. The production as I've been saying is semi permanent. It also drives up the value of our company due to increased production levels plus greater reserves being proven up. And given a lot of divi money gets re-invested into the company it's not really leaving. Rather it's increasing the value of our shares plus attracting 'new' money. Tony, that should hopefully answer your queries around my thinking as well.

As for other companies / people suggesting buy-backs. I'm not against them, and I do see it being a reasonable thing to do when a company is under-valued, is generating 'windfall' levels of cash, and doesn't have a great deal of short-term growth potential. We do have short-term growth potential so reward shareholders with an increased divi and plough whatever was going to be used as a buy-back into more production. We're on-shore. It's quick and cheap to bring online. Use that advantage in such times. And in doing so you generate a greater cushion to maintain the divi in future from incremental production versus less shares.

Guys if the company cannot afford a £30m divi payment next year (and following years) then we're all f@cked either way, but at least you'll be getting a 50% increase to current payments. But there's zero chance of us not being able to afford it, as poo and gas would need to halve and OPEC will never allow that to happen, let alone the war ending within the next 12 months and Russia being allowed to sell oil/gas to their previous markets.

We're making in excess of $100m in fcf per annum at the moment. So it's easy to payout the $35m in dividends (over 12 months) and the remainder is a variable amount for further development. The further development is what maintains the divi in future years. A 10% (£30m) buy-back doesn't help production, which is also semi-permanent and adds to company valuation. It also doesn't help 2P reserves upgrades, also adding to company valuation. It does very little to the dividend and shareholder income. It will do little for the sp. And ultimately it won't be beneficial should we be a t/o target because it doesn't really add much value. Imo there's literally no way that buy-backs of 10% (£30m cost) + current dividend (£20m cost) will do more for shareholder income plus value, and company valuation, than a divi hike + production for the same £50m amount.

Anyway, we have to be close to some sort of 2023 divi / buyback / development announcement. My guess is w/c 12.12 so around 2 weeks from now.

Exactly Stas! Hopefully Majid is thinking the same way.

Slick, I agree they need to be done on a large enough scale to have any impact, hence the numbers that were provided by doing just 10% and maintaining the divi. Also, what has them being permanent got to do with anything? It's more about how much they cost, what else could be done with the money, and what value is ascribed to the sp post any interventions. A large divi increase (e.g. 50% to £30m) PLUS still significant development plan rewards immediately, and the development (also somewhat permanent) supports the divi payments moving forward. Being so undervalued also means that any divi increase makes the yield ridiculous, which is why it will +vely impact the sp due to the crazy income value. Buy-backs are also a great way for funds and large shareholders to re-balance their position. I'd rather they're i.e. they sell into them. I'd rather they're given more reasons to hold via a dividend jump, versus reasons to sell. AIMHO GLA

Refer to my previous posts on the cost to maintain the divi at current levels (£20m total annual payout) plus 10% share buyback (estimate £30m). That's £50m total. Yes you get a 10% divi bump when it washes through, but the cost is huge.

My suggestion is increase the divi by a minimum of 50% from current levels (£30m total cost). No buy-backs. So £30m v £50m total cost. The extra £20m gets put back into development, which in turn supports the divi maintenance in future. You'll also get superior sp appreciation. So investors get value plus income. The amount of 'paper' doesn't matter if it's tightly held, and by increasing the divi you'll attract more investors and they'll be stickier, which drives the sp appreciation. Also, if they can't afford £30m in dividends then how do they afford £50m in dividends plus buy-backs...?

Either way Majid needs to do something or he should put up the 'For Sale' sign. The value of the company is a key component of his job, which is why part of his performance bonuses should be linked to mcap. His bonuses have been all about production in the past, which is f@cking easy to hit if you've got spare cash and decide to just plough it into drilling. If he uses commodity price weakness after ploughing over 80% of fcf into production this year then I'l be bitterly disappointed. Investors have waited long enough. He needs to focus on the sp a little more next year (whilst still pushing production along). AIMHO GLA

Understand Tony, but my point is they can almost certainly guarantee a £30-36m dividend next year (£2.5-3m per month) based on current production levels and commodity prices. I'm not sure how low commodity prices need to go for us not to be able to pay that figure, but it would likely require another major lockdown globally given how willing OPEC are at cutting production if required. Plus the war isn't ending anytime soon.

As you've said previously they're doing things @ss about by starting with allocating £XXm for development and then what's left over is committed as a dividend. What they should do is the opposite and commit to the dividend as the starting point and leave the development budget as the variable.

I was someone in that camp when it happened cmcc and still dream of that scenario every night. Thing is, it's pretty hard to ask for 45p when the sp is 21p. But it's far easier to get to that number when the sp is 35p. And the only way we get to those levels is for mgt to put their hand in their pocket to attract more shareholders. Adding another £10-15m on the current dividend (+50-75% payout increase) is going to have a negligible impact on our production levels i.e. it amounts to around 1-1.5kboepd. But it will most certainly take the sp into the 30's and leave us in a good position should a buyer emerge. We're talking an incremental 1.5k on +25kboepd, versus a 75% increase in the dividend.

Basically I don't think any suitor will be swayed too much in their bid on the back of being at 27k v 28.5kboepd next year. Their bid however will be swayed by the sp and the premium they think they need to pay to get the sale away. I honestly believe any bid coming in above 40p will be jumped at by major shareholders. But when we're sitting on 21p I think any suitor is more likely to offer 30-35p and try their luck. So if mgt are indeed wanting a sale they will need to get the sp moving to avoid a demeaning bid.

I don't think it's an issue to go for a larger guaranteed dividend if we're working off £75-85m fcf for the year. It's committing less than half of that amount to get to 3p p.a payout (75% increase on current monhtly payment). And if mgt are concerned about this they can hedge more production. The point about guaranteeing the dividend is it assures investors no matter what their income is secure. We may not drill as many wells if commodity prices drop, but at least the income stream is protected. This is why people will invest here, as the divi is guaranteed, and the company should quite comfortably be able to maintain production even in the case of a price crash.

I did also acknowledge the extra 10% yield on the current divi run-rate if spending £30m in buy-backs for 10% of stock. But you still have to maintain the run rate, so total divi and buybacks = £50m for a 10% income increase. To me that's crazy. Guarantee 3p (£36m) and leave the production budget as variable. One of the main benefits of being 'on-shore' is we can be nimble with development spend and plan quarterly. So we should take advantage of this and make it the variable factor. Anyway, up to Majid, but I'll be quite p!ssed if he doesn't hike the divi given he has ample means to do so.

Buying back 10% of stock each year is way too expensive imo. Running the numbers just current depressed share price it would cost £25m to buy back 10% of stock. One would expect they will be buying back 10% at a higher average so let's say £30m over the course of a year. Now add in the current divi run rate as being stable (.1425p = £20m payment in 2023). On the back of this for £50m you get 10% less stock, and a dividend bump of 10%. That's it.

Now go the other way and put the £30m of buy-backs on top of the current run rate (so paying out £50m in dividends for 2023) and you'll get 4.2p annual payment for the year. This is equivalent to a 20% yield at current share price.

Based on these numbers there's no way I think a buy-back is better than a straight dividend hike for the share price. By ploughing £50m into the dividend alone you could double the share price to 42p and still get a 10% yield.

Fwiw I'd like them to do something in the middle. Say 3p payout for the year (£36m) and everything else goes into production. We'd still be churning out $100m (£85m) fcf even at today's depressed commodity prices and current forecast exit production rate. That's up to £50m to plough back into production, which in turn should add another 2-3kboepd to the 24-25kboepd exit rate. Plus you get the added benefit of appraising resources and potentially adding to 2P reserves.

Anyway, can't be long until Majid makes a decision. I for one am hoping for significant divi hike and more planned production. This should safely get us to the high 30's and still pay us +7.5% yield. It rewards shareholders (including mgt and staff). It keeps hands sticky even in a high inflation environment. And still positions us for production growth. What's not to love.

You guys haven't been paying attention. The % fcf numbers being thrown around are pure fantasy because the way they calculate it is after development capex. Tony has mentioned this a number of times. For arguments sake let's assume we make a similar amount of NOI next year based on higher production but softer commodity prices. Then you've got over $100m cash / fcf whatever you want to call it left to spend. You can dump it all into wells, or you can boost the divi to $35m and still put $70m into future development. As for re-rates in the current market, I think that's exactly what we'll do, but sadly from this ****ty sp level. There's simply no way if they boost the divi by 20-30% the sp won't move in a similar manner. Otherwise you've got a Canadian O&G company with zero debt, reliable production, blue sky development opps, and paying a double digit divi. We moved the last times the divi was increased and it will happen again. It may not happen immediately, but it will def. attract new money over the following days and weeks and current money will sit tight on the income. Hence the sp rise. It's the perfect company for such ****ty times.

Agreed Tony. Reckon we'll get a divi bump, but I think they need to raise the current payment by 20% if we're to see a decent re-rate. I hope Majid recognizes this and goes +0.17p as the monthly pay-out.

Tony, many thanks for your workings. Really helpful. Also reinforces my point about plenty of scope to reduce Capex marginally to boost the divi. A relatively small incremental amount to the current divi run rate will make a massive difference to yield. If they increase the dividend to .18p it's an increase of .0375p per share. This amounts to an extra circa £5m payout on current run-rate for the year. It will most definitely put us back on investor radars and no doubt will boost the sp by a similar amount i.e. 25-30%. And even with a 30% increase in sp from current levels we'll still be yielding 7%. A small drop in Capex, which can be regulated through the year if commodity prices increase / decrease, will make a big difference for shareholders. We'll still be spending +$60m on development, so adding a 2-3k incremental barrels to our 24-25kboepd exit rate for the year. Can't see how we won't be back to 30p area if they do this. I'll be quite disappointed if they keep things as they are after the significant investment this year, which I was in support of doing providing they were going to give more back in 2023. Thanks again for your working Tony.