Member Info for Nobull

Titan, "Turnaround" is not a risk rating; it is an investment style. In the time my relative, and now I, have had exposure to GKP, Stockopedia has called GKP a contrarian spec (when I told my relative to buy), a turnaround spec, a momentum trap spec, and a neutral spec. In all cases the risk rating has remained the same: speculative. The investment style is probably set by a software algorithm. I do not expect the risk rating to change any time soon (title risk reduction e.g. by the MNR and Iraqi Government cosying up to each other more would help a bit, I wonder e.g. knock 0.5% off the discount rate?). Other things that might improve the risk rating are: host country diversification and project diversification (diversify the exploration risk, the risk that what you think you've got might not actually be there ).

No idea what the difference is between a risk and a hazard. I can probably think of about 12 different risks associated with GKP. When some of them change, they cause other risks to change, and when you have multiple risks changing all at once (often because they are linked in some way, the share price, for the market to be efficient, has to move in very big jumps).

You can mathematically measure share price volatility. TM and a few other posters will know how to do it: something to do with adding up the square of the variances from the mean share price and calculating a standard deviation. In a reasonably efficient market, the share price volatility (the mathematical calculation I have described, a calculation which I can do when I have my maths text book open - I don't do it every day so I have to re-learn each time, is a reasonable proxy for a risk rating). Digitallook (Sharecast) seems to use this method to calculate a numerical risk rating. Stockopedia probably uses analysts who a have nuanced risk vocabulary (people capable of naming at least 12 different risks) and who have a good understanding of GKP's accounts, business model and of the environment in which GKP operates in, and Stockopedia has assigned GKP a risk rating of "speculative". Panther Resources is "highly speculative" (not a producer yet and so it has a lot more dilution risk than we carry, at present: the MNR might be free to vary our dilution risk by using permitting risk e.g. refusing to approve an FDP that requires anything less than $1bn capex for the gas processing solution - I simply don't know). By definition a risk is an unknown that you cannot predict, so you shouldn't be crediting yourself for cleverness in getting the outcome of a risk right, nor should you be beating yourself up if you get it wrong (that applies to people who lost in the big wipe-out). But you should beat yourself up for failing to understand how the risk are linked, not for the outcomes that eventuate. JMV.
P.S. The day when GKP has the same risk rating as Colgate Palmolive or BP will be when the whole of the Middle East is at peace, lives under the rule of law, is full of Westminster style parliamentary democracies,has fully functioning independent judiciaries, has no censorship, has a tradition in investigative journalism, have no human rights violations...

"you address him and CCC..." should be "you need to address him and CCC by their proper monikers."

SurreyScott, this share has a speculative risk rating. To me that means the share price will go up and down more than a share with an adventurous risk rating or one with a balanced risk rating. You seem to only want people to talk about the share price drivers that push the share price up. Your mate on ADVFN, the one with 150 avatars, won't even allow discussion of the negative share price drivers, with his spamming off of everybody with his repeated "£25 a share takeover next week" assertions, mis-attributed to respectable firms of stockbrokers. You seem to think that you can change this share's risk rating by only saying positive things about it. Do you really think PSC cancellation risk or production risk (pipeline shut down, strikes, civil unrest, missile attacks) can be eliminated by what you and your mate say? I am long, have a profit (but not enough compared with what I would have got buying Brent crude) on paper but am mindful I can loose it all on a speccy like this very quickly. You seem to want every one to self censor. You have the audacity to call me a troll; you've tried to distinguish between longs and genuine longs and you've made up stuff about me saying I didn't know this was a mainboard stock because I copy pasted something from the company's bye laws that indicated it was listed on AIM in a row about something completely different - I was probably trying to show the company was trying to comply with UK City Code on Takeovers and Mergers (despite being a Bermudian company), in particular the disclosure requirements on stakebuilding to destroy your mate's conspiracy nonsense about a 40% secret concert party to support his repeated "bid next week" nonsense. The probability of a takeover bid next week is 0.0019 if a bid in the next ten years is certain. You owe me an apology and no doubt others, given your modus operandi to vilify anybody who disagrees with your rose tinted view of the world e.g. Broadford Bay: you address him and CCC by their proper monikers. I've got nothing against people trading this stock but people who try to make an extra turn by downplaying the risk and upping the probability of improbable (but possible) near term high value impact events are ... JMV

" In other words GKP is risk-adjusted a worse investment than Brent outright." Well said Kaaran. That has indeed been my experience. I had the choice to buy oil or GKP. I chose the latter. I didn't read the PSC beforehand and didn't realise I'd be giving 84% of the oil revenue to the MNR. Sure, I got some other people's previously spent capex back and a benefit from JF's production volume increase, but I'd have still been better off in buying the oil. As to giving free shares to the new Human Resources Director, well that's just really irritating. What is her contribution? The person who matters is the COO. I hope we are not transitioning from an E&P into and E&D - that's not explore and develop, but explore and dilute. All I need now is a good news production expansion announcement deliberately paired up with a impending mega cost blow-out announcement, the latter linked to FDP approval . Nothing would surprise me.

The extra value added from an industry re-rating (so that an equal amount of extra market cap has to be added to the market cap of two identical companies, one of which did a buyback before the re-rating and one of which didn't means the shareholders of the one that did the buyback get a bigger share of the extra value added FROM RE-RATING, that is the change from boring PE Flat Liner to PE Growth rating. Alternatively, I can post an image of a spreadsheet on ADVFN, to show the effect.

Usually when a company swings from a positive outlook to a negative one, the share price doesn't just fall because of the change in the present value of the future cash flows but also because, as in our case, the survival of the company becomes an issue, so the rating has to change to price in more dilution risk, the reason our shares fell so precipitously when the oil price crash occurred: I suspect GKP suffered a de-rating right after the buyback, which made the shares bought back, with hindsight, very overvalued, something our directors couldn't have known (not their fault - nobody can predict the timing of a pandemic). Of course there is no smoking gun maths proof of a de-rating having occurred because there is no PE ratio when company becomes loss-making, as we did, but there maybe other ratios that indicate part of the share price fall was due to a de-rating e.g. EV/EBITDA. Okay, I should do the maths to back up my argument, but in the mean time you could look at Phil Oakley's maths proof. In about a month's time, I will have more time to argue my point with you better. All the best.

"the company is merely returning capital". Yes, you are right, but there is a little more to it than that.

"A company doesn't buy its shares because they think the stock will be rerated." If the stock is re-rated, shareholders' shares go up in price - we agree on that. If the company buys in its shares for cancellation before they are re-rated, the shareholders shares go up AND shareholders benefit from the re-rating of the shares that were cancelled, meaning the shares they own go up more than just the rerating on what owned prior to the buyback. That's value accretive in my way of thinking. When a company does a buyback it is not only returning capital but also betting on a re-rating (even if the BoD aren't conscious of this at the time). Yes, my relative benefited from the buy back because of the change in the eps forecast to an lps forecast (due to the oil price crash), and the concentration effect meant the shares fell in price more than they otherwise would have, so my relative got in cheaper. Phil Oakley shows in the second last table in the article the effect of doing a buyback at 160p and at 75p of his fictional company Buyback plc. The 160p buyback destroys value and the 75p buyback doesn't. Please study the table.

For the record, I prefer our BoD to do buybacks because I don't get a dividend allowance and because I think they will succeed in increasing our production and I don't think increased production has been fully priced into our shares, as it can't be until there is an RNS, unless there is an info leak, and I don't think there has been. No, I am not naive about people in the Middle East - I've lived there.

https://www.investorschronicle.co.uk/comment/2019/03/08/buybacks-versus-dividends-which-is-best/

Putup, "Nobull still thinks the company trades in its own shares" i reject that completely. That is total *******s. The company does not make a gain or a loss in its accounts. A company that trades on a forward PE of 20 buys in its shares because it thinks it thinks the market will soon price it shares on a PE of 30. Something unforeseen happens and the market thinks the whole industry is finished, requiring the shares to trade on a no growth rating PE of 8. Phil Oakley provides a worked example in Investors Chronicle showing that although the eps may be concentrated from fewer shares being in issue, the change in the stock's PE ratio from super growth rating to no growth rating leaves shareholders much worse off. The shares fall in price more than they otherwise would have but for the buybacks. The change in the rating has a bigger downward effect on the share price than the rise in eps from the concentration effect.

" how do you explain why the Company hasn't already started the buy-backs"

1. Company is in a close period now and they didn't have a pre-arranged buy-back schedule set up to allow them to buy in during this period.
2. They fear buying shares back that subsequently turn out to be overvalued due to unforeseen events. (PSC revocation, law and order deterioration, payment default, oil price crash, eps growth rate anticipated turning into a decline rate)
3. They only have the authority, I wonder, in case it is needed e.g. to stop shorters raising the price of equity finance to prohibitive levels, and as long as the share price is efficient at discounting everything that is known , then there is no need for a buyback - the facility is just there, as the Chairman said, to provide flexibility, which is quite different from having it to bet on making value-accretive purchases. Personally, I think 1 and 3 are the reasons. On 2, we will find out, to some extent, when the H1 results come out.

SS, that may be, but he is capable of getting facts wrong: the buy-backs were not value-accretive at the time he said they were, and they still aren't. He also said the directors were fully aligned with shareholders - they may be on the upside, but not much on the downside, and in his case, not at all. I think that is a reason for him to go. The one thing I do take comfort from, a statement not attributed to anyone, is

"Gross production is now expected to increase towards 55,000 bopd in Q4 2021, versus previous guidance of Q1 2022." Ops update 11 06 21

"Anyone know what part of the value could be attributed purely to money in the bank?" They had $195m on 10 06 21. Since then they have paid out $50m in divs and have received two net payments of $27.4m and $28m. Were it not for running costs and capex they would have circa $200m. How about $160m?

On other matters: TK was not responsible for the outcomes of the risks that went bad (the oil price crashing, production slowing, payment default, cash running out, non availability of alternative loan finance at a reasonable price) but all those things occurring at once was maybe what caused the big wipe out. However, TK was responsible for the MANAGEMENT of those risks. My guess is he used more debt finance than he should have (looking at it with hindsight he did not have) because the Excalibur case increased the cost of equity finance more than he liked (the litigation uncertainty halved the share price, right?).

An edited version of the role of the Chairman and CEO at BUPA is of little relevance to us. Posting such info in no way redeems your association with someone on ADVFN posting both fake broker target price upgrades and valuations, and attributing them to reputable firms of stockbrokers, and now posting fake unpublished share price sensitive info (a production figure over 50k bopd for last Sunday). The best reasons to be in GKP are those listed by LongandStrong because they have a higher probability of occurrence than a takeover in the short term. JMV.

TM, hi
"Nobull had to laugh at the reference to probability based analysis amongst the many others. "
Yes, but the probability of a takeover next week or the week after is terribly low, although over a longer period e.g. 10 years it maybe is quite high (takeovers occur for all kinds of reasons). SS and his fraudulent multi-avatar mate on ADVFN of course will call anyone a troll if they don't agree with their big-upping of the probability of a takeover next week and anyone who doesn't agree with their theory that the KRG are going improve the terms of the PSC just because we only get 16% of the oil revenues (ignoring return of capex, albeit with a substantial lag).

I agree with everything else in your post, and I've softened my views a bit about technical analysis after reading "Technical Vs. Fundamental: Friends or Foes?" by KRISTINA ZUCCHI in Investopedia, but I still can't move beyond the idea that markets are near efficient, and that GKP is priced the way it is for a good reason., so the low EV/2P isn't necessarily something I will ever get excited about, particularly if our Chairman can't get excited about the planned production expansion with his "We have a great opportunity to create value for all our stakeholders, and to make a positive contribution within Kurdistan." view.

CCC, I agree with you about SS. I'll refrain from clogging up this board about the stuff I've had made up about me.

Truth is GKP is a stock with a speculative risk rating a d a low probability of a high value impact event occurring next week or the week after, at least from a takeover.

No poster can change that, not that SS won't keep trying. Reasoned arguments, nuanced risk analysis, DCFs and probability are like trying to shine a cross on Dracula. One gets a lot of crap back for it. Fingers crossed for good H1 results.

PUTUP, hi
"Honestly, do you actually think he penned that? LOL Perhaps he reviewed and provided comments on the text but I very much doubt he wrote it from scratch (ever)."
Well, he signed it. Yes, maybe the financial PR company does it for him. I shall be voting against him next time: I can't understand why he doesn't invest himself and why he doesn't execute a buyback. Okay, they are in a close period now, so they can't do either.

"he is a poor communicator". I've got my gripes about the Chairman, but for a foreigner he can certainly draft more impressive and effective sentences than a lot native speakers can:

"Faced with these unprecedented challenges, the Company responded swiftly and decisively, protecting our people and those we work with, contributing to the welfare of the communities close to the Shaikan Field, and managing the cost base to ensure the financial health of the Company; all while maintaining safe and stable production operations. "

Well they could spend some of the company's money on buy backs to concentrate earnings per share before an increase in the eps growth rate, couldn't they? That way they would be sure to be buying undervalued shares. But they don't seem to see our shares as undervalued, except JH, who, commendably, bought a few for himself.

GKP has a speculative risk rating and is stacking up cash, for now. If it is as good as you want people to believe, why doesn't the chairman buy any, Tom 48? Which moniker are you on ADVFN? He didn't buy even when the oil price curve was in contango, did he? And our BoD don't appear to have any plans to buy in the shares for cancellation when it is logical to do so if they are confident in the success of the production expansion plans and the oil price remaining high (if I may simplify things, and leave out all the other risks SS refuses to admit are present).

Many thanks, CCC. I will remain circumspect of his postings.