Member Info for jc_123

https://www.zerohedge.com/commodities/oil-tumbles-pre-ukraine-lows-asia-just-cant-get-enough-pushing-saudi-prices-new-record

Surely the most likely outcome here is an out of court settlement? KRG’s record of winning these sorts of cases is not good (lost vs Dana) and they must have known it would end up in arbitration…

also, they say they are 'not worried' about the spat between KRG & Bagdad. but they would say that wouldn't they...

Investor call just finished - the recurring theme is that they are acutely aware that they need to buy income producing assets to replace the lost income from the override and receivables. They have the cash to do it, however they have been saying this for years, and with a new CFO and interim CEO, I worry they don't have the skill set to make it happen in time.

They are explicitly talking about a 'significant and strategic' investment - problem is presumably every cash rich oil company is chasing these deals...

Some points from the investor call -

- Arbitration is underway in London. Shouldn't affect day to day business
- They are "heavily focussed" on replacing the income from override and receivables (this was emphasised several ties).
- They are cash rich and confident they can find / fund new M&A deals. Looking for something strategic / significant.
- Sarta 2022 forecast 5400bpd, but it sounds they are still confident that this will increase next year with Sarta 6 and also existing wells tapping into different reservoirs. Appraisal programme is "at half time with everything to play for". S6 results delayed to end of year.

Unfortunately no special div, delay on Sarta 6, Somaliland drill now end of 2023, no mention on new CEO, production continues to decline, all the usual waffle about looking got new opportunities- basically nothing we didn’t already know!

I realise they are without a CEO, but there is nothing new in here since the trading update in May.

Frustratingly Genel's radio silence continues, however there is potentially a lot of news in the pipeline over the next few months...
- Half year results. Going to show obscene cash generation, but will there be any surprises? (see below)
- Sarta 6 results due in Q3. Not holding my breath, but you never know!
- New CEO? BH due to stay on in an advisory role until 1st Sept. Obvs this could extend, but implies they plan on having someone else by then.
- Somaliland - due an update as farm out RNS was back in Dec 21.
- QD. Last trading update in May said evaluation of the well and its results is underway, with a decision on licence next steps to be taken later this year.
- Morocco - Last trading update in May said farm out process due to start later in the year.
Whilst I have consigned all of the above to the back burner, news on all the above points is due in Q3 & 4. Sooner or later there is going to be some good news...

I was fortunate enough to be able to sit down last week with UOG CEO Brian Larkin, I have always had a feeling that the company is underrated by the marketplace but also wanted to find out about the portfolio structure and his plans.

The three legs of the business do have symmetry about them, after all Egypt is a high quality, low risk producing asset that will supply more than enough cash flow to cover G&A and more, in the North Sea the Maria discovery is a 100% asset that looks better and better on each assessment and of course Jamaica is a potential monster, also 100% owned but with 2.4bn barrels of unrisked mean prospective resources.

We spoke about Maria in the North Sea which was ironically almost sold at $60 oil but wisely UOG were happy to take it back and the team of in-house technical experts is happily working it up. Add to that a CPR in Q3/4 which might add to the c.6m boe of mid-case recoverable resources should give UOG the green light to open up the data room.

In Jamaica they received a two year extension last Christmas and they have a data room here too, that will be shut by the year end, it is worth remembering that it is drill ready with Tullow having already spent $35m on it of which UOG contributed $2m. Starting with the Colibri prospect with well costs of $25m this prospect looks to be eminently attractive to drill up.
From Malcy's Blog

UOG have ambitious plans, will use their cash on ‘the right thing’ should any exciting M&A deal come up and believe me they are actively looking. Brian has a very strong management team behind him and it would be a brave person who bet against this team pulling off something good.

Very interesting thread about this highlighting how the issue is v complex

https://twitter.com/bilalwahab/status/1542890076618854407?s=21&t=V7pFZvf9afhOAMbukB-iVA

Genel is down about 30% from 52W high, GKP down about 20%. I wonder how much of this is due to the ongoing row between KRG and Baghdad? I'm hoping that we may get +ve news re Sarta 6 and half year results with obscene free cash flow numbers to boost SP. An announcement re CEO would be nice too...

mcap now £11m. O2B@C & Greeno are both correct in questioning a) why a potential farmout partner doesn't simply take over UOG or b) management doesn't attempt an MBO. Market clearly doesn't share the same view on Jamaica as Larkin & co. This share will keep dropping until there is some news or management put their money where there mouth is and buy some more of their own shares at historic lows.

Brent back at $120 - that didn't take long...

Currently at $117. Probably back at $120 by end of week. Are we going to see more upward movement in SP ahead of half year results in 5 weeks?

I run the risk of repeating myself, but GENL are generating huge amounts of cash. $60M vs GKP's $48M received for March production, yet our share price is half GKP's. OK, override will be finished by October, but at this rate KRG will have paid off the outstanding debt by the end of the year and we have Somaliland drill on the horizon. Either GENL is seriously undervalued or GKP is overpriced.

Interestingly GKP received payment today for March production - $48M, yet they are also down around 3%. Our payments should be received in the next week or so - probably around $46M - around 10% of our current mcap. Bonkers...

GKP’s sp is now more than twice Genel’s. Says it all really…

If anyone is interested, this was $23M paid in Dec 21. Yet more cash that needs to be utilised…

Everything is down. Shell & GKP both down over 5%

re the farm-out agreement - "Under the agreement, OSC received a 49% working interest in the block for a cash consideration of 49% of all Genel’s historic back costs, plus a cash premium."

Does anyone what the total agreed payment from OSC to Genel was or if it has been paid? Can't seem to find the info anywhere...

In an attempt to distract myself from the current SP, I re-read the FY results presentation. Apart from announcing a new dynamic CEO, the next two upcoming events which could boost SP this year are the Sarta 6 results and the possible announcement of a special div.

Sarta 6 - spud in Feb and the results are due in Q3. On paper, it would appear that it has a greater chance of success than Sarta 5 as it is 6km closer to the already producing Sarta wells. If it's successful, it can be connected to the existing Sarta infrastructure and brought online very quickly. In one of the investor presentations, Bill Higgs said that Sarta 5 & 6 results could materially affect their assessment of reserves. After the disasters of QD2, BB/Miran and Sarta 5, Genel is due a break, so assuming none of the usual ****-ups, this could be announced in the next couple of months. Fingers crossed...

Special Div - The Full Year Results presentation also states - “Should the current oil price strength persist, Genel will consider a return of cash to shareholders in addition to our commitment to a material and progressive dividend” This was written with a backdrop of POO at $90 for the year. With POO now at $120 and likely remaining in this range for the rest of the year, I think the likelihood of a special div being announced this autumn is now high.

https://genelenergy.com/wp-content/uploads/2020/08/Genel-Energy-FY-Results-FINAL_Presentation.pdf