Member Info for Nobull

Yes, Morning JL. I agree with all you say. The only thing that has been pointed out to me by those cleverer than me is that a) I didn't know until a few minutes ago that MPE seems to be in play what with £4m traded today; b) if MPE is in play, and it seems pretty obvious it is, although I can't see the reasons for it, there may be some read across to us here, but I wouldn't expect it to be a big read-across, just few pence maybe! We'll see. Fingers crossed.

Yes, Morning JL. I agree with all you say. The only thing that has been pointed out to me by those cleverer than me is that a) I didn't know until a few minutes ago that MPE seems to be in play what with £4m traded today; b) if MPE is in play, and it seems pretty obvious it is, although I can't see the reasons for it, there may be some read across to us here, but I wouldn't expect it to be a big read-across, just few pence maybe! We'll see. Fingers crossed.

Yes, I think you are right Arsenal with £4m just gone through!

Yes, but I can't see what the benefits are to KLK except to have a more assured supply of feed stock for its refineries, if it has any, and maybe dilution of head office costs against greater CPO production.

Getting us at a discount to the £10.00 per share Finncap target price that supposedly gives an enterprise value of $18,000 per mature hectare is maybe more difficult with our shares at £7.40. The only other reasons I can think of are director vanity, and maybe earnings surprises from the associate company (change of land use from agricultural to residential housing can yield high one-off profits, I wonder?). JMV.

Yes, JL, I can't see any reason to stay either. Brave of you to get out. I'll give it a bit longer, but lots of questions come to mind to ask at the AGM. The assets are very good, but the finance structure is extremely risky. The question on my mind is whether the major shareholder is happy to let the value of the ords be destroyed by lower palm oil prices in the future to make a derisory offer to take the business private with a different finance model.

Shore Capital is maybe an example of where the directors simply in effect took the company private right at the bottom of the cycle - er, yes, it is still listed on the Bermudian Stock Exchange but value was destroyed when the company de-listed from the UK, enabling the directors to pick up loads of cheap stock. Fingers crossed this isn't the aim of our BoD, here. Hopefully the BoD will change the finance model but there are no guarantees.

TM, yes, I think it doesn't matter which way one calculates it - that explains JF's statement that if our working interest were to be diluted, the effect would be value neutral ( probably because the capacity building charge would be smaller)?. That's a very good answer to the bashers' arguments that we don't own as much as we think we do. In the end , it doesn't matter which way one calculates it - yes, I calculate it the same way you do.

I also think that once a contract is signed, one side can't unilaterally change the terms to disadvantage the other side - otherwise what is the point of a contract? Yes, there are special circumstances where one side can withdraw (declaring force majeure?). Anyway it all makes sense now, and I am not bothered any more whether our BoD regularises everything by getting the 2nd Amendment to the PSC signed off. I read about this concept where acceptance by both sides of different terms in a contract can lead to the contract being changed by 'custom' rather than by signing a new contract. I don't suppose this is a matter that bothers most people but it is maybe a nail in one of BigDog5's frequent arguments, attempting to suggest the stock has more dilution risk than people think.

$23,286,016.27 is the result I get with your volume figure. I still believe it is a fluke because the company claims it invoices on a different basis to the PSC, although I recall changes to the PSC proposed were, and probably had to be, from a legal point of view (unless there was some way to lawfully impose them unilaterally), value neutral.

Putup, you are right: I used 43,000 for the volume, so that was the first error.

Agree about the spurious accuracy. Sorry. I'll try to post an image of it on ADVFN, and also of my calculation that gives a target price of 266p on 12/04/22, 16p above Charlie Sharp's at Canaccord Genuity. I used a 14% WACC and a rolling forward eps forecast of 51 cents (37.2p), which on the 165.2p share price gives a 12 month rolling forward PE of 4.4 on 12/04/22. I believe with a WACC of say 14% the PE that gives a 14% earnings yield is 7.14, which gives a target price 37.2 x 7.14 = 266p. Not sure about the validity of this, but it is just a model, and the assumptions maybe all wrong. I used Peel Hunt's forecasts for 2021 and 2022 and then a zero growth one for 2023. I used to use Tinypic free image hosting, but they all charge now. Any help please posting images of spreadsheets?

I calculated $24,069,680.28 for February oil sales payment, net (inclusive of arrears payment), so today's payment was a bit of a disappointment, but I see in the Final Results state that they do not invoice on the basis of the PSC in force but on the basis of an amendment to the PSC that has never been signed off. I have heard about the legal concepts of 'custom' and 'usage' in relation to contracts, so I wonder if our PSC has actually been altered by custom rather than by a written agreement, signed by both parties.

"Especially one that thought GKP was till on AIM."
Show me your evidence.

"A £3/ 600 mil mcap not so long ago whats changed?"
The oil price is maybe slightly lower and the PSC is 1.5 years shorter than it was, which for some people, not SurreyScot and the "Twitter takeover tomorrow for a zillion squillion dollars per barrel" ramping gang and its ADVFN "change my moniker every two weeks, spam everybody else off the board" twitter ramp echo chamber, reduces the probability of extracting all the P2 reserves in the time remaining. The shorter time maybe makes it less attractive to do any work that adds to P2 reserves as, if you are strapped for time, that just increases the reversion value of what is handed back to our hosts at the end of the PSC, i.e. we bear the costs and somebody else gets the benefit, I wonder? Maybe also some production expansion failure risk has been priced into our shares, in case we lose the capital we have spent and will spend expanding production to 55k bopd, capital that would otherwise have been available for distribution - our share price would jump sharply on a successful 55k bopd outcome in Q1 2022, I wonder, all other things being equal, which they never are. JMV.

"You were not aware GKP had left AIM ."
Show me your evidence.

WACC should be cost of equity

You can work it out yourself. You can use the CAPM to calculate a WACC, and then use R2R's assumptions if you want are confident in the length of the PSC he has assumed. You are surprisingly quick to be rude.

My relative does not want a cash offer as paying CGT followed by IHT is daft. A successful takeover, a low probability event in the timescales my relative is interested in but high value impact event, is maybe not worth taking into account compared with enjoying a rise in cash flows from a volume gearing effect and a small financial gearing effect and an improvement in the payout ratio. For a takeover value you should have regard to terms of the PSC, and I am not sure that £10 is the right figure. R2R's figures from his NPV calculations are probably more relevant even for a takeover situation. It is daft to compare per barrel valuations from other M&A transactions as it all depends how much net operating cash flow can be extracted in the time left on the particular PSC. £10 sounds excessive. Each to their own on that one.

The reason I recommended my relative to buy GKP last April/May was because it fitted a 66% bagger, the amount of gain you need to be left with the same starting capital after suffering IHT. With AIM stocks you get BPR, so you don't need a 66% bagger, just a stock that isn't going to lose you money. Quoting from the GKP bye-laws about GKP being on AIM does not mean I thought it was an AIM stock. I was one of the silent majority ticking up your Highlander7 posts on ADVFN and have now ceased to do so. For a new investor, they were mostly informative to start with, but I've now figured out who the posters and tweeters are in the boiler room gang.

Many thanks R2R. That's very interesting. At some point I'll try to do my own, if only to counter the boiler room gang. Many thanks.

We have two new institutional shareholders, so it might not necessarily be KLK. Canaccord Genuity and Chelverton. All the good intentions expressed about extension planting and how we won't be having a plateauing production profile after 2027 has gone unheeded.

RtoR, I don't wish to knock your efforts, as you are not a member of multiple avatar boiler house gang (here, on Twitter and on ADVFN), but can I ask what long term oil price you used and did you assume all P2 reserves we have would be produced before the PSC expires and did you assume we would recover all our capex? Yes, I realise the discount rate makes a huge difference.

For the record I do think a 'good news' announcement of FDP approval to 110k bopd would not be good news simply because so many new risks would suddenly need to be priced in, all other things being equal, particularly if the capex amount required is huge in relation to our resources and cash flows at the time, which might be one reason for our BoD to try to time that news to coincide with a genuine good news event. I think we should all ask at the AGM about the PSC terms to be able to assess independently of our BoD whether the 110k bopd is just a pipe dream. JMV.