Member Info for Nobull

"During 2020, the
Group actually received on average
US$581 per tonne of CPO at mill gate,
US$110 per tonne more than in 2019." From today's MPE results, which were ahead of my revenue expectations. But I am disappointed in the ex mill gate price - I was hoping for $600 FOB Samarinda for us.

https://tradingeconomics.com/commodity/coal

"the KRG has never stuck to any previous payment schedules, why should it be different this time?" Probably because they can afford to pay, if oil prices remain high, and still have some change left over even if Baghdad continues withholding the KRG's share of the national budget, I wonder?

" increases in production occurring and higher profits are worth betting on." No takeover this morning Surrey Scot, but the news I hoped for, although it is delayed and more expensive than I thought.

My relatives are long in this stock. I just don't believe in fanciful takeover valuations without seeing your valuation calculation.

SurreyScot, I agree with CCC that you are quick to resort to ad hominem ("Hello Bull") ; the problem occurs when you can't sustain your argument. Now you want to use an unattributeable source to sustain a very high valuation in a takeover; you don't supply your own calculated valuation, do you? Others here have done DCF valuations and they are a lot lower than your impecdable source you can't name. Below is a typical PSC that is probably like the one we have signed, and it limits the time we have to get the oil out and recover our costs out of the cost recovery pool. My understanding is money left in the cost recovery pool on expiry of the PSC belongs to our host country (read the PSC), as does any unextracted oil. We already agree the probability of a takeover on any particular day next week or next month is very low as is the probability of a completely new, non-Covid19 pandemic emerging next week, next month or next year, but both events are possible but not worth betting on. Buybacks, dividends , oil prices remaining in sixties, increases in production occurring and higher profits are worth betting on. The City Code on Takeovers and Mergers is highly relevant to GKP if you believe in a takeover being likely, not because the Bermuda Companies Act 1981 and the Bermuda Companies Amendment Act 2006 don't grant the Panel the powers to enforce directions at restraining directors like the UK Companies Act 2006 does, but because The City Code is totally against secret concert parties and because the GKP directors have stated in the GKP Bye-laws that they intend the City Code on TO and M to apply to us. I repeat the idea that people can build up secret stakes in our company is unlikely: the Stock Exchange wants orderly markets, not false markets, our directors are likely to cooperate with that wish to the fullest extent they can (they added the protections the City Code gives to our Bye-laws), the general abhorrence of money laundering doesn't favour it. I expect you theories will find favour with some just as aliens could have built the pyramids without leaving any trace of themselves.

http://mnr.krg.org/index.php/en/the-ministry/contracts
The web site is down at the moment but I think this is where I got a model PSC from, one that applies to all contractors. The time limit for a PSC maybe puts a limit on sky high valuations. JMV.

Coal hit a new 12 month high on Friday at $91 a tonne (not sure which type of coal this is, nor which type we have). The old 2011 report contains details of when REA last mined any, I think. They did once have plans to mine 10,000 tonnes a month. We need coal maybe to be about $120 a tonne, but it tends not to stay at that price long - I will have to ask about it at the AGM. One doesn't know if a development plan has to be approved first and if drilling is required (capex money we don't have) to work out where best to extract coal with the least amount of overburden clearing costs. The new CPO reference price for April should be announced this week. MPE has its results on Tuesday, but I don't suppose there will be any read-across from those, except maybe the average mill gate price of CPO for 2020. I hope it is $600. This year it appears to be close to $700 so far (it has been creeping up) but prices generally are expected to fall as the year goes on. That's all I know.

"And your point is?" There are better reasons to buy GKP than to believe there is some secret stakebuilding going on, that a bid is incoming, that we thick retail don't understand how every barrel of P2 is worth x trillion dollars each based on a completely different PSC in some other part of the world where 99% of oil value extracted goes to the operator rather than to the host country, etc. I think PUTUP has explained very well why secret stakebuilding is a bit unlikely (15:50 post). The likely terms of the PSC make very high valuations of P2 barrels unlikely. My relatives are here for an expected production volume gearing benefit and for a positive financial gearing effect when ROCE exceeds debt interest rate (not in the next set of results but in the FY2021 results published in April 2022). I know you don't do nuance, but I am mindful that a falling oil price could damage my hopes for further gains in GKP, and I won't bore everyone with a verbatim description of all the other things that can go wrong (I am not a bear troll). BB also alludes to some of the issues in his excellent post too.

Finally, SurreyScot is right in that it makes no sense for The Bermudian Companies Act 1981 to have any stake disclosure requirement (I haven't looked) as this would be an extra regulatory burden on exempt Bermudian companies like GKP; rather, it is left to the listing authority on whose Stock Exchange the issuer's shares trade to make the rules on stake disclosure as each stock exchange may have different requirements, and the Bermudians don't want to put off foreign companies from incorporating there. Even the Bermudian Stock Exchange has stake disclosure requirements, which match our own for non-UK issuers (see the Bermudian Stock Exchange's ones below). The question I will ask at the AGM is "What steps have you taken to enforce compliance with the FCA supervised listing rules to ensure secret stake building can't occur? Is it the case your bye-laws once did provide protection but have been overtaken by events, such as the move to the main market?
For the record, my understanding is the bye-laws facilitate a flexible enforcement connection to any particular stock exchange's stake disclosure obligations. Clever stuff.

Stakebuilding
If the bidder decides to build a stake in the target (either through a direct shareholding or by using derivatives) before announcing the bid, what disclosure requirements, restrictions or timetables apply?

The directors or executive officers of the target must deliver written notice and details, without delay, to the Bermuda Stock Exchange if they become aware of any shareholder who:
• Acquires a beneficial interest, control or direction of 5% or more of the target's securities or securities convertible into the target's securities that leads to becoming a holder of 5% or more of the target's securities, or any change in the identity of such a shareholder.
• Has a beneficial interest or exercises control or direction over 5% or more of the target's securities (or securities convertible into the target's securities) and the shareholder acquires, in aggregate, an additional 3% or more of the target company's securities.
(Above info from Thomson Reuters)

"Problem with those bye-laws, supposedly updated in 2019 are they contain information that is no longer true I.e. 900 million $0.01 shares listed on AIM ;)". Agreed.
The Bermudian Companies Act presumably wants to make Bermuda an attractive place to incorporate in; the bye-laws maybe permit a certain amount of tailoring e.g. to provide extra benefits like pre-emption rights, and other features that listing rules on non Bermudian stock exchanges might require as part of their listing conditions. The UK listing rules are interested in preserving the reputation of the stockmarket, and this includes avoiding false markets. Secret stake building goes against that. I am surprised GKP hasn't seen fit to update its bye-laws more comprehensively than it did last time. It is clear to me that GKP has good intentions to stop secret stake building even if isn't actually realised because the wording is out of date. I will raise the matter at the AGM. I presume changing the bye-laws requires a special resolution (75%?). The power to impose restrictions on shares is very powerful: GKP can stop dividends being paid on particular holdings, they can stop particular shareholders receiving offers to subscribe, they can block particular shareholders from being able to vote, they can stop particular shareholders transferring their shares.

Surreyscot,
"1. we are not on aim" Agreed. However, GKP's Bye-Laws don't seem to have been updated for that - although they were amended in June 2019. The point is they have the power to impose a restriction on shareholders who don't comply with their bye-laws.
2. Disclosure requirements under the FCA supervised UK listing rules require disclosure for non UK issuers (like GKP) stakes over 5%, and for various other higher percentages.
3. If there was somebody with a secret 40% shareholding, they would doubtless appear in the top 10 shareholders. I get the impression from reading the Bye-laws that our company wishes to give protection to shareholders under the City Code on Takeovers and Mergers, something which generally is not available to exempt Bermudian companies.

Putup, sorry, I didn't know. I've only just read the GKP Bye-Laws as amended in June 2019. I also had a look at the FCA handbook on the listing rules. I agree with most things you post! I simply take exception to conspiracy nonsense.

Below is from GKP's bye-laws about its compliance with the FCA supervised listing rules on Disclosure and Transparency Rules. My relatives are long in this stock and I wouldn't be surprised if the expansion project to 55k bopd didn't start again in May and complete by about November, allowing time for the odd hold-up. (Other KRI operators at SpareBank Conference said they were resuming their capex programmes then). Buying for a volume gearing effect is maybe smarter than buying for a hoped for takeover in the short term , I wonder? I find it odd that our company publishes a list of top 10 shareholders so frequently. I wonder if it is to stop nonsense conspiracy theories about 40% secret concert party gone AWOL. Proud to be thick retail. Note the ultimate sanction for non compliance is you can't vote your shares.

Notification of voting rights
168.1 If at any time the Company shall have any of its shares admitted to trading on the AIM market of the London Stock Exchange Plc (“AIM”), the provisions of Chapter 5 of the Disclosure and Transparency Rules (as amended from time to time) of the UK Financial Services Authority Handbook (“DTR 5”) relating to the disclosure of voting rights shall apply to the Company, its shares and persons interested in those shares as if the Company were an “issuer” for the purposes of DTR 5 and as if the provisions of DTR 5 were set out in full herein and accordingly the vote holder and issuer notification rules set out in DTR 5 shall apply to the Company and each holder of shares in the Company.
168.2 A Shareholder shall, to the extent he is lawfully able to do so, comply with the requirements of DTR 5.
168.3 If it shall come to the notice of the Board that any Shareholder has not, within the requisite period, made or, as the case may be, procured the making of any notification required by Bye-Law 168.1 and 168.2, the Company may (at the absolute discretion of the Board) at any time thereafter by notice (for the purposes of Bye-Laws 168.1 to
168.13 inclusive, a “restriction notice”) to such Shareholder direct that, in respect of the shares in relation to which the default has occurred (for the purposes of Bye-Laws
168.1 to 168.13 inclusive, the “default shares” which expression shall include any further shares which are issued in respect of any default shares), the Shareholder shall not be entitled to be present or to vote on any question, either in person or by proxy, at any general meeting of the Company or separate general meeting of the holders of any class of shares, or to be reckoned in a quorum.

JL, hi.
Sorry I hadn't seen your other post yesterday when I replied previously. You obviously are an expert on jet fuels and biodiesel, and I am right out of my depth there. I see at lunch time today in KL, the March CPO contract is sky high at over 4,300 ringgit so maybe our best bet is cpo bursts out of the Indonesian Government's reference price regime to give back some of the cpo price upside.

"You have to wonder how much longer this can continue and what to do? A huge RI or Placing to rid us of the Prefs, notes and bank debt?"

Yes, it is important that the company acknowledges the problem and comes up with a credible strategy. I am not interested in debt 'repayments' that occur as a result of currency movements. The bank debt repayments I like are ones generated from cpo sales and not from asset sales or from any other funny business like debt equitisations , debt capitalisations (if those two phrases are the right jargon) or from asset sales or from forward sales or from increases in supplier credit. We know the business model can work (it works for MPE and for AEP), so it is just a question of the BoD doing something right, whatever that is. If the next annual report doesn't give answers, then I expect a lot of questions will be asked at the AGM. My relatives continue to hold and I am recommending them to continue to do so for the time being. Regards. P.S. my time is not always my own so I can't guarantee to be able to read everything or reply to everything but I will do my best.

Excellent summary, your 07:14 post, JL. Thanks. I see Pertamina are experimenting with 100% palm oil derived jet fuel. There have been a few articles in the Jakarta Post about B40 that may indicate there will be more demand for palm oil in the future from that source, but the big question surely is will this extra demand just destroy demand from more price sensitive customers like India? Fingers crossed our Board is on the ball about the slow value destruction on the ords: our main shareholder is a maths genius according to SC, so he must realise what is happening. I make the net of taxes average cpo CIF Rotterdam price since the start of 2021 $743 (assuming the reference price for a given month is always the same throughout, i.e. not changed daily). Don't know how much you have to take off that to get an FOB Samarinda price but say $50 per tonne for the freight and insurance, and that surely is above our cost of production - it is just those damned high finance costs that screw up everything - and the wild currency swings of course.

MrBrie, yes but they have no money to do any extension planting. The discount of cpo to sbo was absolutely huge on 08/03/21, showing that extra demand for cpo from biodiesel manufacturers has not materialised yet, I wonder? Indon export levy and tax is just a windfall tax on us, the innocent beneficiaries of crappy weather in soybean growing regions, I wonder? They should be ashamed. Not even Julia Gillard managed to get away with a rent tax on the iron ore companies as bad as what the Indonesians are doing to us. This company absolutely needs to get the debt down and it can't. I don't know what our WACC is but it surely is more than the 11% bank interest rate we pay on Rupiah debt, and we are not making even that. The result is the ords are slowly having value drained from them and handed to the pref holders unless something is done swiftly: cost cutting?, switch on the coal mine?, change in the tax regime to less savage one, cpo price burst out of the tax bands and restore the cpo price upside, get rid of the pref holders and arrears through a restructuring, the rupiah dollar rate go sky high and cut our bank debt - any of these could rescue us from being a zombie stock. A restructuring would dilute us out massively I expect and would restore the price to book and price to sales ratios to more normal unattractive levels, but I am not sure it would increase the wealth of the current ord holders, rather reduce the risk of bankruptcy if cpo turned down again - we have already had one red light flashing - that auditor's comment about material uncertainty as to going concern. We really need to get that debt down: it is killing us. JMV. P.S. we might be getting $670 FOB Samarinda now, which is maybe 10% more than we got on average for 2020. I can't see more than $10m debt getting paid off in FY2020 and again in FY2021. The strength of the £ is another bummer. Every time we renegotiate the loan note maturity dates, more wealth has to be given up (legal fees and warrants).

Theoryman, I can now answer your post how I got my $2.5m arrrears figure: used the right numbers with the wrong name for them (I called my gross barrels figure "working barrels"). In short, a fluke for thick retail like myself.
Broadford Bay, I agree about the ambiguity on the length of the PSC. I expect it is deliberate. It allows rampers to have it one way and for a value shock to be delivered to some investors if PSC isn't as long as they think. I asked a question about it at the last AGM and was confused by the answer I got. I will have to ask it again, this time more precisely: which year does our PSC terminate in? How many barrels do you think we can get out before it finishes? Thanks for your help: I've located a model version of the PSC.
Nufc9 Sorry I didn't answer your post properly before. Congratulations on your gains.
SurreyScot, the probability of a successful takeover tomorrow is 2.74 x ten to the minus 4 if a successful one is certain to happen in the next 10 years. We haven't had a successful one in the last ten years. The EV/2P appears to make us the cheapest E&P but that's because the PSC sends most of the cash flows to our host country, so that metric is not necessarily predictive of future riches coming our way.. However the strong cash flow should mean we get some decent dividends or buy backs which should support the price. JMV.

Thanks to all who replied with corrections to my post on size of the possible extra payment for January oil sales and on the time left on the PSC. I'll try to read the entire prospectus properly and the 24 page notice of meeting that explains the design of the staff retention scheme/value creation plan, the latter to understand Bravedog's post and to have a more informed view about our BoD . Thanks to all who did DCF valuations and who discussed the discount rate , and especially to those who provided helpful insights into calculating the monthly amounts due under the PSC. Many thanks. I look forward to dividends or buybacks or both and to the restart of the expansion project to reach 55,000 bopd and hopefully to swifter payment of the receivables due.

The $74m arrears will probably take about 3 years to pay back, I wonder. Tomorrow's (or the next day's?) extra payment for January might be about $2.5m (1.066m working interest barrels x 0.5 x $4.77) if the proposed arrears payment arrangement is accepted. The Kurds are masters at stopping us getting our own money back in a timely manner. The proposed arrears arrangement appears to be an incentive scheme to ramp up production. JMV.
PS if the production sharing agreement expires in 2032 and if it takes 5 years to ramp up to 75,000 bopd, I can't see how we could get out more than about 135m barrels between 2027 and and 2032, not a lot of time to get back our $500m capex , and for that matter anybody else were somebody else to do the work. The EV/2P valuation is therefore a misleading metric for making investment decisions: I think BBB/Simon Murray may know this too!

The reference price for March will be $1036.22, which means the export levy and export tax remain the same as they were in February If this sky high tax regime on cpo exports were actually delivering any extra demand for biodiesel, I wouldn't expect the discount that cpo has been trading to sbo to have got so high ($292 price difference on 19th Feb).

If this constant drain of wealth from ords to the holders of the prior ranking finance continues, you would think there would have to be a restructuring: e.g. an ord for pref swap on terms that would dilute out us ord holders massively. This explains the seemingly very attractive Price to Book and Price Sales ratios using the market cap just for the ords in the calculation, I wonder? Market efficiency and all that. I think Buffet's quip about how he wouldn't be rich if markets were efficient is a bit of deft self-promotion. Sure they seem inefficient with hindsight, but hindsight in advance isn't how most people buy their shares, except God and insider dealers.

With the Indonesian Govt. standing on our windpipe with this predatory tax regime, the pref arrears may end up being an investment in the ords.