Member Info for Nobull

The link to the table below (UK Pracitallaw Thomson Reuters web site) suggests all stakes that have crossed the 5% mark have to be disclosed under Bermudian Company Law, although I can't find the actual section in the Bermudian Companies Act of 2006 myself.

https://uk.practicallaw.thomsonreuters.com/1-518-5074?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

As far as up to 35% of our shares being owned by a secret shareholder, I have my doubts : such behaviour runs a coach and horses through the need of most regulated markets, like the one our shares are traded on in the UK, to avoid a false market. FCA DTR 5.8 seems to deal with disclosure and transparency requirements for securities traded on UK regulated markets (Bermudian Law irrelevant? ).

The notion that there is someone called Cashti who controls our company does not sit well either with FCA DTR 5.8 or Bermudian substantial stake disclosure requirements. Kashti is Urdu for boat.

BTW, the failure of our BoD to align themselves (other than Mr. Weatherdon's and M. Papineau Legris's stakes on the downside along with the failure over 9 years to agree a new profit sharing agreement, since the announcement in 2010 on the default of ETAMIC, is very poor indeed. Words like "any new arrangement is likely to be value-neutral at worst" simply don't cut any ice compared with our BoD investing with their own hard earned cash at market prices in our shares and putting their mouths where their money is. For that reason, two directors ought to go, notwithstanding the valuable oversight the non-execs provide for us: Thomas to oversee Caterall, Angle to oversee Weatherall, Wood to oversee CEO's adherence to obligations imposed on us by PSC. If the Chairman and CEO can't be bothered to align themselves on the downside, what does that say about their leadership - it's like putting a pacifist in charge of WWII. I can't understand why the BoD is dragging its feet over cancelling the shares held in Treasury.

Share cancellation equivalent to 7.7p dividend, using 95.1p Thursday closing price (0.08125397 scrip div per share or put another way a 1 for 12.31 share scrip). The div cost 16.35p (£2.01, the average buy-back price, x 0.08125397). The NAV per share at 31/12/19 was £1.84 ($1.23 = £1, and I deducted intangibles off the net asset value) so the scrip is equivalent, on that metric, to 14.95p (0.08125397 x £1.84) . In both cases the share buy back cannot be described as value accretive at the date the Chairman said it was.

On the issue of BoD alignment with shareholders - I agree they are on the upside, but they are definitely not on the downside (they get their shares for nothing; we don't), until the use they hard-earned cash to show there is minimal dilution risk, liquidity risk, permitting risk and production risk by taking more meaningful stakes. Until they buy in significantly with their own hard-earned cash in a big way, I can't see any reason for the shares to price in anything except Brent crude price changes and the value of the 'scrip', the latter when they actually cancel the shares rather than just say they intend to do so. They are not buying with their own money because of they might lose money from an oil price plunge from $42? Oh, tell me another. JMV.

If this topic has already been discussed, sorry.

Highlander, they did answer my questions. as far as the AGM goes, I was, in a word, impressed. Just glad I didn't vote , on behalf of my relative, against CEO and CFO. I am impressed with your posts too. If I had to nitpick, the answer about value accretive buy backs wasn't technically correct, but I think it will be in the future. Finally, the BoD may be aligned with us, but that is still no excuse not to buy shares with real cash at market prices.

Thanks to everybody who replied.

NS, thanks. It was thanks to one of your posts that I was alerted to the spin about the share buy-back being value -accretive. Like you, I don't blame the BoD about the price they paid, but I do object to their description of it as being value- accretive right now. It may be so in the future if the share price can benefit from a volume gearing effect. For me, the spin casts doubt on the veracity of other more important matters, like whether there is a funding gap or not. M. Pepineau Legris said they were fully funded to 125k bopd but only bought a small amount of shares long after his presentation to Hong Kong investors, during the recent Brent crude price weakness. The small amounts invested by the BoD leaves one wondering just how much production and permitting risk there is, to say nothing of funding risk.

SurreyScot, the initial approach was maybe too polite, so they ignored my questions, I wonder? I stupidly gave them the option not to answer if the questions weren't suitable or if BoD did not have time; they ignored me.; but the response was lightning quick yesterday with the ID access code.

Have just received this (after threatening to complain to Mr Ferrier, to the FCA, and to instruct a solicitor),

"Good Morning,

We have not received any request from [stockbroker], as such you would need to attend the meeting as a guest.

"In order to view the meeting, Please join via https://web.lumiagm.com, fill in the meeting (I.D. number given) and select Guest. The website will be available from 1 hour prior to the start of the meeting. Please be aware that guest access will not provide the ability to vote or ask questions at the meeting.

Kind Regards.

[Name of Client Manager for Depository Interests at ComputerShare]"

I hope this does not mean I will have my time wasted listening for the answers, as obviously I can't ask them in person now.

I submitted questions on behalf of a relative to ask at the AGM and have been sent from pillar to post. Computershare answered (as a result of being contacted by GKP):

"In order for your [relative] to take part in the meeting and ask questions, she will need to contact [broker name] who will submit a request on her behalf to Computershare to obtain the necessary login details for the meeting. Computershare will then issue an attendance card for the meeting."

The nominee manager at the stockbroker has of course done this and expressed surprise I had not heard from GKP. The email from computershare was the only acknowledgement of the email to ir@gulfkeystone.co.uk asking the questions I wanted answers to.

I complained again to investor relations at GKP and they said they would send me a GKP annual report but failed to give any further info.

I have authority with the broker to buy and sell on behalf of my relative and have variously requested guest access, and if that doesn't work , full voting rights for my relative's share of the broker's pooled nominee GKP holding.

The questions submitted were as below. The answers to some are in the Annual report, but we wanted to hear the answers spoken again at tomorrow's AGM e.g. the additional expenditure needed to reach 55 k bopd.

Can you explain, given the low share and oil price at the time you signed off the 2019 Final Results, how purchases of GKP shares at times of high oil prices, for holding in Treasury, are, at times of low oil prices, value accretive to me?

Does the requirement to show deference and respect to a production licensing authority require you to give them unlimited interest free credit to the point where it increases the liquidity and dilution risk so much that it leaves your shareholders with almost worthless shares?

Is that the reason you have not personally invested in your shares, particularly when your business model incorporates three different types of gearing, all driven by the oil price, and when there is a contango on the oil price curve and when you say value creation for your shareholders is one of your goals?

How much further capital expenditure is required now to reach 55,000 bopd?

Does the PSC time-limit you to how much oil you can produce from Shaikan and if so does this incentivise our host country to delay production expansion plans? Does the OPEC+ agreement hinder our production expansion plans? What is the constraining factor in expanding production?

Can you assure me that no further significant capital expenditure is required to maintain current production levels? Are the wells’ natural decline rates an ongoing problem, requiring constant high expenditure?

The above questions were submitted about a month ago. Any help greatly appreciated. Thanks.

I think the Board's valuation is based on the Khong Jaafar valuation which uses an ex-mill gate CPO price of $610 (see page 5 of the 2018 report). The REA annual report (I only skim read it) seems to think a Rotterdam CIF price of $600 - $800 range is more normal than the recent CPO trading range, if I recall correctly (although that is maybe quite different from an ex-mill gate price), but then as REA were not profitable at the operating level, they would say that, wouldn't they? Anyway the biodiesel mandate should lift CPO prices near year end as Brent crude returns to more normal prices. Dorab Mistry said so in a Bloomberg video clip on the palm oil price outlook.

The company ought to have more cash now that is not allowed to buy in stock for cancellation, although I think CJ means cash of a much greater amount when the takeover bid was announced, cash enough to pay back the cost of much of the bid, I wonder?

The voting down of the special resolution was undoubtedly KLK: 11m is about 20% of shares in issue and 11m when added to the 16m or so accounts for the other resolutions passing on a vote in favour of about 27m.

The chairman said at the AGM that there were no significant economies of scale from having a greater number of 15,000 hectare estates scattered far and wide throughout Indonesia (15,000 ha is the optimum size) other than to help dilute the central Jakarta office costs against greater cpo output. To me that means the economies of scale KLK would get from controlling MPE are not KLK eps enhancing unless they rip MPE shareholders off by paying less than NPV (Finncap thinks a valuation of about $18,000 per mature hectare is right for world class estates like MPE's). So the only reason KLK would bid is to aggregate the turnover so the KLK directors could give themselves pay rises, IMHO, an action that would just cheese pare KLK shareholders (MPE being under their control after paying a proper price for MPE would dilute KLK shareholders, I wonder?). I can't see how a change of BoD would increase eps: you plant the optimum no. of oil palms per hectare and you should get 5.5 tonnes per hectare of CPO like REA do. How does changing the BoD of MPE improve that? I do think the directors of KLK will have another shot at it, but I shall instruct the person I am agent for who owns these shares that it is inappropriate to accept cash , unless it is going to damage KLK's shareholders massively, and that it is inappropriate to accept KLK paper, to avoid CGT, for that will come with cyclical eps with no additional eps growth outside the palm oil cycle, eps with an additional currency risk to worry about, to say nothing of the problem of dealing on a foreign stock exchange. My views count for absolutely nothing in the great scheme of things, and KLK director self-interest, rather than KLK shareholder interest, may win the day; I hope not (Winning control is like a promotion for KLK directors?). As far as I am concerned, the last bid was all about screwing MPE shareholders (extracting a huge risk free profit). They messed it up, showing themselves to be the absolute skin flints they are. JMV. Other people will have different circumstances, so it may be in their interest to act differently. DYOR.

JL, Fair point about the prefs being like debt and therefore a good reason to exclude them. I don't know what happens in a takeover to the prefs. At the moment they have a vote on things that concern the ords, so I presume, while there are div arrears, they would need to be made an offer too. The yield per mature hectare, from your posts, seems better than other companies have (more trees per hectare?) but the thing that will really rocket the share price is a decent palm oil price e.g. $800 a tonne CIF Rotterdam. I get the impression this is a high cost producer (despite the good yield per mature hectare) because of the high amount of debt. I didn't see the cost of production mentioned in the annual report (not something to they want to advertise?). I hope the palm oil price rises and that the REA ord holders really make a killing. I can't see what the benefit would be of a takeover by a larger plantation company for the economies of scale don't seem worth the bother; it 's maybe the capital structure that needs changing, preferably without diluting the ords. Roll on a high palm oil price!

A fairer comparison with AEP involves including the market value of the preference shares. That brings up REA's market cap to over £60m. None of the financial statistics web sites do, but I do. I am not invested here, but I know people who are. The debt needs to fall for the share price to make progress if the enterprise value has to remain constant. A rising palm oil price will probably allow a higher enterprise value and that might make a successful refinancing of the Indonesian bank debt more likely. Palm oil is set to rise as crude oil prices rise, as then demand for palm oil from biodiesel will rise. Dry weather due to El Nino should help push up the palm oil price too, although it depresses yields if the trees are the wrong age (the average tree age isn't as good as MPE's are). Dorab Mistry reckons palm oil will rise in 2020 Q4 or early 2021. See his video clip on Bloomberg. I think the low share price here is due to anticipation of the auditor's statement just prior to the recent finals but then others will say it was institutions dumping. JMV P.S. Anyone bidding for the company would need to have deep pockets to take out the debt holders as they can demand their debt be repaid instantly on a change of control.

Thanks. Sorry, I can't guarantee to be able to read everything - indeed, I couldn't read anything to do with OXS for more than a year. There is no point in me posting until I have read all the documents I should have: Insolvency Law - the relevant Acts of Parliament to estimate the right level of fear I should have about the administrators running the show what with their £500 per hour business costs, and about what duties, if any, they have to the residual risk takers (us?), and how they can be made, if at all, to balance the interests of the different creditor types; French Law on the grounds for overturning arbitral awards (Les recours contre les sentences arbitrales?); All the examples of successful overturnings of Uncitral awards in France (annulations de sentences arbitrales) where France was the siege d'arbitrage; (I know a little about the Tapie case against Credit Lyonais) Studying the Tapie case is to restore my psychological well being as well as to learn a lot of useful French business and legal language (the highs and lows of the Tapie case are so extreme there seem to be no parallels in our Anglo Saxon world (or maybe I am just ignorant about similar cases here?): he had ambitions to be president of France, he was a media star, he had friends in high places on both the left and right of politics, he was made bankrupt, he spent time in prison and then after bankruptcy he was awarded 400+ millions of Euros in an arbitration award, only for it to be ordered to be paid back by the cour d'appel and later by the cour de cassation (Supreme Court?); Read our arbitral award (i.e. the bits I have not wanted to read) and see whether it violates le principe de contradiction or un ordre public. Work out why two French speaking "QC or High Court Judge" equivalents, both with distinguished careers, would make a ruling that apparently breaks French law; Discard my theories that don't stand up to scrutiny by other people attending the meeting on 12/9/16 (i.e. RW, Pug, Nick2412, et al. An interesting Youtube video is here https://www.youtube.com/watch?v=GmZg8bBLMAo where you see a re-enactment of un coursier (a motorcycle courier is the cultural equivalent here?) deliver an arbitral award to Tapie's lawyers' office (61 Rue de Miromesnil) take place in the first few minutes, where the commentator explains about the lawyer turning straight to relevant page to read about the award of 400m euros or whatever. The highs and lows of Bernard Tapie seem more extreme than anything I have suffered so, and I am greatly encouraged by any meeting organised by any of the staff of Oxus, even if there is nothing they can technically do at present to rectify the injustice we seem to have suffered (some recognition of contributory fault by the Uzbeks to the failure of the financing without any corresponding compensation being awarded surely must be a violation of le principe de contradiction, but WDIK?

At a guess, it might mean the Uzbeks aren't even paying Calunius, the litgation funders, any of the award because the Uzbeks want to deduct the $10m debt they allege Oxus owes them off the Award first. i.e. there is not going to be any payout to any creditors, even to Calunius (who are ahead of us shareholders in the payout queue), unless a new much larger award is obtained. Am not a lawyer or insolvency practitioner, but that is my reading of it. The prescribed part must be something that the administrators have to do by law as part of the administration process, I wonder?