Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
roduction was held up by the pandemic last year, but even though vaccination in the area is only just starting, life is returning to normal. New wells and the removal of bottlenecks have led to guidance for 2021 of average gross production of 40,000 to 44,000 bpd, with a 55,000 target. With an eye on its ESG responsibilities, the company has employed more Kurds, reduced routine flaring and drilled a water well for farmers.
Shares in Gulf Keystone have bounced back from the low of less than 61p touched last April, but at 178½p yesterday (down ½p, or 0.3 per cent) they are still far short of the 675p of five years ago.
Harris prefers not to be drawn on longer-term strategic plans, but some diversification must be on the agenda eventually, if only to other oilfields in the region. Meanwhile, he argues that there is plenty to do in further exploiting the Shaikan field.
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TEMPUS
Calm restored bodes well for Gulf Keystone investors
William Kay
Thursday April 01 2021, 12.01am, The Times
Among the investment opportunities being generated by the retreat of Covid-19, few are more fraught than those facing the oil industry. While consumption is still closely tied to industrial and commercial activity, making oil a fairly straightforward bet on economic recovery, companies increasingly are being required to adopt a more diverse approach.
The likes of BP and Royal Dutch Shell are having to tackle the change head-on by investing in alternative energy sources, but every player in the sector must show that it is at least aware of environmental, social and governance issues. That includes Gulf Keystone Petroleum.
This is something of an all-or-nothing investment. In a mountainous region of Kurdish Iraq, it has only one oilfield, the Shaikan, and the local Kurdistan Regional Government buys the entire output to sell to traders.
The company acquired the field in 2007 and began production six years later, when Islamist rebels were uncomfortably close. But it weathered that threat, Islamic State stayed in nearby Mosul and Gulf Keystone established good relations with the Kurdistan administration. While the company’s relations with local politicians seem stable and positive, the region has to be seen in the context of the wider Iraqi political situation and, of course, the continual question of whether Isis will revive and return.
Then, of course, there is the question of the oil price. Its revival this year has been welcome for all involved. After last year’s decline to 92 million barrels of oil a day (bpd), global oil consumption is predicted by the US Energy Information Administration to revive this year and to top 100 million bpd in 2022. That is expected to keep the price in the $50-to-$60 a barrel range, after the slump to below $20 last year.
Suffering its own difficulties, the Kurdish authority ran up arrears of $73.3 million at the start of last year and under pressure from the shrinking value of oil, the company’s $43.5 million post-tax profit in 2019 turned into a $47.3 million 2020 loss. However, the recent recovery in oil prices has helped the Kurdistan Regional Government, as it makes a bigger profit from selling on the Shaikan oil. And that bounty is being passed on to Gulf Keystone shareholders in the form of a reinstated dividend of 8.8p a share in July, which translates into a 4.9 per cent dividend yield. That looks sustainable, as long as the oil price holds up and the region is stable.
Jon Harris, Gulf Keystone’s chief executive, has dropped a broad hint that there may be more to come. Depending on the oil price and the continuation of Kurdish government payments, a share buyback or special dividend may be on the cards towards the end of this year. His rule of thumb is that the company makes money on anything over $35 a barrel, barring other hurdles, such as the corona
I’ve now been here 5yrs. Through the Taq Taq debacle, war, failed Kurd independence and the constant problem of late and missed payments from our sole client. Once again the late January payment is a worry but I’m sure it will, on this occasion, materialise. The KRG has come through worse situations in the past.
As Flyinghorse1 and holleraa have pointed out, your claim to have a holding of 450k here and £12m in total is laughable when it is so clear you have such little understanding of the market.
You have stated that a buyback is simply a return of cash to shareholders willing to sell. Errrrr aren’t you aware that there is an open market where shareholders can sell their shares at anytime, thereby taking back their capital investment?
Actually the purpose of a buyback is the repurchase of shares which are absorbed by the company, thereby reducing the number of outstanding shares on the market. Because there are fewer shares on the market, the relative ownership stake of each investor increases. However the risk is that the share value decreases, causing a loss.
GKP bought $50m of it’s shares between March 2019-20 at an average of £2.05p, so is still showing a significant loss. Hence the reason I have asked for no more mistimed buybacks.
You might understand, but I doubt it.
Increasing news-flow from the GKP boardroom bunker is reflected with rising confidence.
Next up;
December payment (will be watched carefully for signs of delay)
Public dissemination of KRG proposals for payment of arrears (keep calm, they have only a sixpenny bit, some fluff and an old tissue paper in their coffers).
Despite the headline this article is not entirely optimistic. It reflects the widespread concern that potential supply far exceeds demand. The shale co’s are certain to take advantage of OPEC production cuts. That said, the IOC’s in Kurdistan remain deeply undervalued—- if production can be raised and further positive plans for payment arrears materialise, then continued recovery is likely.
https://digitaleditions.telegraph.co.uk/data/474/reader/reader.html?#!preferred/0/package/474/pub/474/page/112/article/122291
https://www.nytimes.com/2021/01/04/world/middleeast/iraq-economy-debt-oil.html
GULF Keystone Petroleum, the closely watched oil firm that was once a darling of the stock market, unveiled a new CEO today following an investor revolt last year.
Jon Harris, a 30-year veteran of the sector, will replace the departing Jón Ferrier, who was under fire from investors over the disparity between his pay and the performance of the business.
Operational news has lately been disappointing and there was a missing payment from the government of Kurdistan which didn’t help sentiment.
Today the shares rallied 5%, 6.5p, to 129p on news of Harris’s appointment. It hit a low of 68p in October, but was once at a now astonishing looking 41,000p as investors bet that it would become a major oil player.
Harris joins from SASOL, a South African oiler. He was at BG for 25 years before that.
Jaap Huijskes, the chairman who was also under pressure from investors, said there was a “global search process” to land Harris.
"Jon is an experienced executive who brings a wealth of highly relevant project delivery, asset management, production operations and technical experience within the sector to the management team and to the Board,” he added.
He thanked Ferrier. “Under his leadership, GKP was successfully restructured and transformed, as evidenced by today's strong operational performance, low-cost structure, robust financial position and pathway to further production growth and value creation.”
Best wishes lads. Bunks party cancelled this year presumably, but next year we’ll have the usual knees-up.
I sold up back in February but still have a toehold here. Now in upto my boiler plate at GKP so still awaiting the fulfilment of KRG promises but in a different place. The G management team has definitely done a better job than GKP has over the past few days.
Anyway Mrs Klassic continues to painfully remind me of my failure to sell G at 3 quid, as long promised, so this time I’m definitely selling GKP at 2 quid for the retirement bolthole in Torrebenapalmamalinos. I’ll hold G though so I can drop be here occasionally.
Good luck to all of you.
Attyg
Would you like to reread the RNS 16/3?
I think you’ll find $50m was spent on 19m shares, not $25m as you’ve stated.
Then consider the merits, for example, of spending that $50m on redeemption of some of the $100m bond debt with it’s 10% coupon.
HL1970
Yes
The company purchased $50m of it’s own shares.
The second tranche of $25m was completed on 16/3/20 at an average price of £1.76. The first $25m was purchased at even higher prices.
Some misguided people here seem to think it was good business and further buybacks should be initiated.
How about a cash distribution through dividends?
Or some director share purchases?
Or an update on progress for collection of arrears from the KRG?
But please, no more share buybacks.
“As well as conserving cash wisely, I would also argue that it has engaged in a share buyback programme at a good time as well, which will pay off for investors in the future”.
So buying shares at twice the current price will pay off in the future? That’s a great strategy.
Gkp and Genl having another good day on prospects of improved outlook for poo with all that follows—revenue increase, return to field developments, increased production and (ahem) back payments from KRG.
Even better, the chat boards seem quiet.
Friday half year results 3rd September;
“During the period, the Company completed its share buyback programme by repurchasing $20.2 million of common shares, bringing total share buybacks in 2019 and 2020 to $50.0 million. In June 2020, the Company resolved to cancel 18.1 million treasury shares and retain one million treasury shares to fulfil potential future exercises of share-based rewards. The process to formalise the cancelation of the treasury shares is ongoing”.
Does anyone have any sensible ideas to explain why the share cancellation does not yet appear to have happened?
https://www.nytimes.com/2020/07/29/magazine/iraq-corruption.html