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Better than i expected. doubled my holdings since Mr. Market is asleep at the wheel. When this tuns it will be a fast increase of the SP. DYOR

Cooper3, TA for the update.
My view is that it is not so important who wins. The takeover panel still has to make it pronouncement.
More important are 2 facts: Gold is above $2000 (and the direction of travel is up), Seaborne index 65% Fe price is around $130 (the increase is relentless. This could make IRC a very valuable asset (POG' stake could easily ve valued at $75M or more). The bottom line is that POG's value is increasing every day. I know that not everyone has the nerve to sit tight. But if you sat tight when there was a RI at 5p and had to wait 5 years, it is useful to keep the goal in sight, All IMHO. But DOYR.
GLA

Boyobach, I would stop the dividend. But prior to that I would reduce CAPEX and tell KRG that if they want beans on toast they need to send GENL the toast, otherwise the beans will be spilled...
This situation only reinforces my view that to de-risk the SP diversification is needed. There are a lot oil companies under financial distress that might be willing to bring partners into their production assets for a lump sum of cash today.
GLA

KRG is what it is, but they will pay once oil recovers. There are other players involved that will want the money owed to them as well, i.e., DNO. I am confident it will come through even if there is a wait. Nevertheless, Genel should diversify its activity and pick up some producing assets elsewhere. It should also tell KRG that w/out the money flowing it cannot keep on investing to keep production. Obligations go both ways.
I copy the part of he release below: "It is a testament to our balance sheet and careful financial management that, even with $121 million outstanding from the KRG for production in November 2019 to February 2020 and override payments unpaid, we are able to continue allocating capital to direct returns to shareholders, and our interim dividend of 5¢ per share has been retained. While the mechanism through which the receivable from the KRG will be recovered has yet to be finalised,
we are confident that a solution that works for both parties will be found, as has been done in the past, and our discussions with the KRG continue."

GENL should also repay some of its debt to reduce interest expenses running at close to $30M a year.
GLA

Londoner7,

Thank you for your comprehensive response. Your outstanding observation, data interpretation and investigation skills are
much appreciated.

Scolty/Crathes: My suspition is that the 12MMbbls have been revised upwards, but neither partner (Enq&MOL) has explcitly stated it, unless I missed something. Thus my interest in the profuction figures because the depletion rate will surely be below 40% y-on-y. The reference you make to Eagle leads me to believe that it might go ahead by the end of 2021 because of the synergies it brings to the Kittiwake hub, by extending its life.

Magnus: Thank you for adding to your previous statements.
I am still expecting the half-yearly payment of the 75% vendor loan to have gone ahead, despite the low POO b/w March and June. But, I am not counting on much cash have been sent to BP as part of the 50/50 cash sharing agreement. And, I am quite keen on such repayment being made at a fast pace to enhance the BSheet.

Kraken: I am a bit puzzled how the current levels of production (which will decline, but are still good) plus Worcester, and
in the future, the Maureen sands will fit with Bressay production. As you and Chilting have mentioned AK probably on average cannot handle more than 40/45Kbopd per day. If so, I would expect the natural decline from the wells in production at the moment to be compensated by the oil from he Worcester/Maureen sands in the future (these have plenty of 2C reserves). So, there would be no space for the Bressay oil for 2/3 years.

POO: With epiphany121 on holiday we have not had any comments on rig count and US Oil companies results. I have read some of the recent earnings transcripts, and as usual I see them still talking too much about growing production if the poo goes up. One has to wonder if elasticity of production wrt price will be very similar in the current upswing to that in the last one. This would not be good news. We shall see, but I am planning to use $47.5/bbl for August in my calculations.

Modestus,:
Goehring & Rozencwajg are some of the very best in their business. But while their neural network models can be good
at capturing shale production, they, like anyone else, has no idea in what mood MBS wakes up everyday. And, that as we have seen can in the short term bring pain to the E&P oil companies, as we saw. Going forward, a lot of oil can come into the market at some point, e.g., from Libya, Iran, Venezuela, etc. The world is awash with "potential" medium-term spare capacity, and that is will keep a ceiling on the POO. As Londoner7 wrote a few years ago every man and his dog believed in the sustainability of high oil prices in the years ahead, but that is no longer the case. Notwithstanding this, I still see the POO returning to levels above $55.

GLA

OGA: Therapist, thank you for the updated data. Could you please share your lovely graphs and excel spreadsheets with traffic colors?Thank you.
Londoner7, your comments on Magnus's production are key to my views on the accounts. I was wondering if you could elaborate further. As per the latest ENQ's production forecast Magnus was supposed to average 18Kbopd this year. You write "Enquest reported gas compressor problems through April so there may be more to come from a fix, and additional water injection capacity expected in the summer." I had not read anything about additional water injection capacity. Was this in an update? Excellent production from Kraken, but VFLSO prices were low at the time. (Imagine what the May production would do the Excel spreadsheet if AB was not a gambler and had hedged Q2 when the poo was in the $60s in Jan/early Feb...) It pains me to see ENQ selling its 1P reserves at the low May / $31/bbl prices.

Bressay: Thank you to Hitman1a, Londoner7, gkb47 and several others for all the information you posted on this oilfield and ideas on how to
develop it further. I am pretty sure the deal with Equinor must have been underway before the pandemic hit. It is a good deal, but we have to bear in mind that it is a challenging project. The field has not been developed for over 40 years. It is good to add those 2P reserves, but the market does not give a toss about 2P reserves at the moment, given the term structure of the oil prices (poo in 2025 still below $50). At $60 poo, that would be a different story. I hope CNE is brought into the project.

Accounts: Londoner7, you say Scolty/Crathes's production might decline henceforth. My understanding was that the 2P reserves were 12MMbbls. Since 7.2MMbbls have been produced, less than 5MMbbls left. Unless the 2P reserves were increased. I cannot find a reference to this. Have you seen any revised figures on the reserves?
Another one for you. You wrote; "My conclusion was that the shutdowns at Thistle and Heather had limited cash impacts because they had marginal netbacks to begin with. They were not operating well before the failures which forced shutdown." I believe you, but I am puzzled by this because money was spent on the Dunlin bypass to service these fields (does it service any others?). Why would that happen if the netbacks per bll were negligible in an environment with $60/bbl oil? How did you get to your conclusion? If indeed the OPEX of thase 2 fields was that high, that would have been another reason to hedge their production at high prices well into the future. Why? Because a drop in the poo would cover the losses and allow to keep them going (of course you can decouple the derivatives from oil fields, but they provide "insurance for short term losses" which buys option value if the poo goes up.
Finally, for Pelle: No time on the spike mat allowed!
GLA
p.s.: Londoner7: "Build it, and Marmite will come."

https://www.ft.com/content/8f2095ff-3eb0-4ba1-8213-3c2c319b219b

i voted for 19. want to see an audit of the transactions. i agree with JRC1000's comments (ideally POG should not need to rely on (money advance for gold) loans for working capital, but it is still ramping up the POX HUB. Fortunately, that loan is now $66M smaller (thus a saving of $5M in interest every year). the conversion of the bonds will also mean savings of $4M yearly. this should all add up and allow debt to be repaid faster. PVX233 is right. we need an audit.
GLA and smile to 50p POG

All,
- The UGC takeover is more than priced in. As otherwise this would be above 50p. In fact, even if UGC win I still expect this to go up. What is priced in is not a clear winner but a protracted battle. This has left the SP at a bargain. I expect IIs to be accumulating at a decent pace.
- Cash. Pls see last year's report. POG "borrowed" money from Gazprombank which will repay with gold. Where did that money go? It is all shown in the accounts. At the end of 2019 inventories increased from $158M to $309M. Flotation concentrate in inventory increased from $26M to $98 (difference +$72M), gold available to sell (in circuit) in inventory increased from $17M to $38M (difference +$21M), ore in stockpiles (to be used within 12 months) increased from $36M to $68M (difference +$32M). Bullion in process went up by $4M. This all adds up to $129M. You have to finance all this increase in inventory. POG did so via that loan from Gazprombank (which appears in trade payables). This is effectively gross debt going up. And you could argue that is net debt too. But the inventory has value (e.g., what is best to have in hand: Cash or gold, like POG has in inventory? Cash's value does not go up. But gold's value went up! By more than the 8% in interest Gazprombank receives for the money that it advanced). In addition the inventories of spares and parts went up from $69M to $87M (difference +$18M).
Now note that the advances from customers (i.e., US$152.5 million and US$34.9 million advance payments
received from Gazprombank and Sberbank, respectively, under gold sales agreements), were only $57M more than in the previous year. Also note that in trade payables there ae $81M for flotation concentrate purchases, of which there were none in the previous year.
If you balance everything you get $138M more in trade payables and $147M more in inventory. So, I would not be much worried about the money advances from the two Russian banks. But I will say more in part (II) of my post.
- IRC doing better by the day. Iron ore prices are up, which means deleveraging will happen faster. Efficiency levels are high so all on track. Finance costs will go down faster than anticipated.

Summary: This is a gem and that is why everyone wants a part of it!
GLA

Down with the takeover. The gold is ours to sell in the years ahead. Everyday POG's cash pile (our cash pile btw) grows by $1.5M.

Clearly, there is much that Devro has to learn from Viscofan. Viscofan is the real deal in the casings market.

Clravav, I voted for it, I want Pavel and Hambro to be transparent. I voted Hambro out. I want him out of IRC too. It is incomprehensible how with iron ore at the current prices the cash balance at the end of the quarter is just $5M. They should be repaying Gazprombank debt much faster. I bet there are all kinds of stuff behind the scenes at IRC, be it lavish remuneration/spending with the board, etc. Had Pavel and Hambro been transparent with the financial affairs they would have been supported by a lot more people at the last AGM.
To our German-based LTH, Rheingold, you can force the banks to follow your instructions. Just tell them they have to give you the option, otherwise you are sending a letter to the regulator that same day.

Pelle and Hitman,

Kraken can acquire AK at the residual value, which ENQ might push to happen. Then it would charge Bressay's parties. I bet there is anther document we have not seen where an interval of the daily rate to be paid is mentioned.
Hitman, I doubt the CAPEX needed would be less than $250M to get the Bressay field to production. Lots of holes need to be drilled. Late 2022 for first oil seems a bit too early. How do you get that time horizon?
Pelle: how is the spike mat?

Anyone with technical knowledge of this oil field who would be willing to provide perspective on this deal, please? (ProdOpt and Matrix, wakey, wakey. We need your expertise)

What we know is that it was discovered decades ago, and that no company has found it worthwhile developing it all the way to production. Why would Equinor give away half of its holding, if it believed it could make it a success by itself. Equinor has experience bring heavy-oil fields to production. What can Enquest offer, apart from the use of the FPSO (AK) near it. anyone has any ideas?
Not clear what the timeline for putting this field into production, but I bet it would not be until 2023 the earliest. So, not much of a short term catalyst for the SP. Assuming the FPSO is used what would be the CAPEX required to get a mammoth field like this into production? Less than $1B or more than $1B. Any ideas? As Chilting notes this investment would require a RIssue and/or restructuring of current outstanding debt.
The next issue, is that we need to assess the second order effects of such investment decision: will Eagle not be developed? Will the approved drilling in the Dons (submitted 2 years ago) area not go forward?
Is there a deal in the making for the Alma/Galia FPSO? Or will the Bressay acquisition make it harder to also invest in another field that would fit the Alma/Galia FPSO's capabilities?

On more immediate issues, I look forward to ENQ announcing they have repaid the $65M due in April/21 by early September.

Londoner7: I am seeing the jam getting more and more distant in time... A lot of things have been built but the SP rise has not come and stayed.
Pelle: did you sell and buy back in the meantime?
E121: you have been silent lately. Still a holder?
Therepist: If you can pls post both the graphs and summary spreadsheet after the new production figures are released tomorrow/Monday.

GLA

Lawrence13, Relax. They have not even converted their bonds, otherwise the corresponding RNS would have been issued. Only by keeping the long run in sight can you make serious money. The turbulence is driven by the news about Abramovich's sale of his position in another Russian goldminer, but at a record high price. Here, that would mean 42p on the cards! But we are very far away from such a situation. UGC wil lose the vote.
GLA

Whitehat, the deal won't close for some time, so plenty of time to buy CNE shares.

Londoner7, Thank you for your insights. I believe CNE might have wanted to exit Senegal, rather than seeing its oil production increase. Yet, the price for which it is selling its position is a low one. In this case, I would have waited until the POO rebounded and only dis-invest then. I do hope they spend the money from the sale in a wise way. Buying oil producing assets would be best.

My votes are in. I strongly believe UGC will not get their way.
News from IRC are encouraging. Repayment of debt on track. The only negative is that the bridge will take longer to open.
At 35p, this is a bargain. Thinking about adding. The question is will I get more votes since I have already voted... not sure when ii sends the votes of the PIs holding shares through it.. Only by the 4th, i.e., Tuesday?

spot on rusty, keep up the good work.

50p not too far in the future.

Hi Londoner7,

A quick comment of appreciation for what you have posted. My small holding here was on the basis of the Catcher/Kraken and Senegal coming online at the right time of the oil price cycle. I might well be wrong, but I suspect that CNE might have tried to get financing for the CAPEX needed here, but the conditions attached offered were so poor that it messed up the IRR and NAV_10 of the project. So, they had to sell their position.
I do not want them to drill further. They have been rubbish at it recently. Whoever is in charge of this side of the company needs to be quizzed to see if s/he is up to the job.
With the Norway and Senegal projects sold, not clear what is next. I hope they do not overpay for a position in the Shell Egyptian assets. A jurisdiction that is not as safe as Norway and Senegal.
They would do better by increasing producing assets in other jurisdictions, like the North Sea, or buy some assets from Tullow. They can bid their time before buying assets.
I am neither selling nor adding to my position.
ATB
p.s.: Much appreciated your comments on ENQ. Yes, My sketchy CAPEX numbers did not add to what ENQ released, thus my need to wait for further clarification. I am also surprised that Heather/Thistle had such low margins, as conveyed by the accounts. I wonder what ENQ's differential capabilities are, if they cannot reduce OPEX in all aging assets, but only in some: Perhaps this tells me that the achieved cost reductions are in part down to luck!

The fundamentals have not changed. Reaching 50p would still leave the market cap low.
Conversion of the bonds will save POG a lot of money. Interest expenses will be smaller.
With the pre-paid gold loan being reduced by several million USD every week, it will be a breeze.
The auditors' position is actually helpful: they want clarity.
If SP drops further I will add.
I have punt-size positions in PAF and HUM, but the real deal is POG.

RetiredBanker,
Why sell now? Wait a few more days and you would contribute to the UK public finances. We need a lot of taxpayers like you to pay down all the debt.
When POG's SP started to go up I wondered whether I should keep my POG holding in my SIPP or transfer it to my ISA. In the end i did that for a small transaction cost: the cost of selling and buying again. The result is that my ISA's tax rate on my hopefully nice gains in POG is 0. But then again, my holdings are shy of 175000 shares.

I am actually not impressed with the TU. How is it possible that the cash holdings went up by such a little amount. Of course, it might be that the working capital changed, with a lot of payables having been paid down.

What is happening with the prepaid sales of gold? I thought that was in the past. Might that be where part of the cash in H1 went?
GLA