Member Info for PUTUP

Keep pondering

It's just as well you're not an analyst. Seriously, there's no helping some people. It's no wonder so many here get hoodwinked. The level of financial illiteracy is appalling. GLA.

Malcom, this is really basic stuff. It would be well worth you getting your head around it properly. Take the time to think about it. You argued that the less shares o/s creates scarcity of supply. The company can control the number of shares in circulation at any moment in time by splitting or reverse splitting its shares. But as you note that doesn't change market capitalisation (again, ceteris paribus). It doesn't create value. Buybacks and dividends distribute money out of the company. Money (that's already been created or received) leaves the company and the value of the company will fall as a result.

Not when money leaves the company. If the company pays out $50 million, it's equity value is worth $50 million less (it no longer has the cash). If it pays out the $50 million as a dividend, the number of shares o/s doesn't change but the company is still worth $50 million less - and so the share price adjusts ex-div by the div per share (ceteris paribus). If it pays out $50 million by buying back $50 million of shares, the share count goes down by $50 million / share price and hence the equity value of the company goes down by share price x number of shares bought back/cancelled ie $50 million. If the share price is lower, $50 million buys back more shares but the market cap still only changes by $50 million. The two actions are the same except in so far as who gets the distribution of the $50 million. In the case of the dividend it is distributed to everyone (whether they want it or not) while in the case of a buyback it is only distributed to those that sold.

"to achieve the same market capital."

Yup. No change at all.

"The less shares available the higher the price. Basic economics of supply and demand."

Duh. Following that argument the company could create value by doing a reverse share split. Hint: it doesn't work.

"And putut ofcourse it matters what price the company buys back the shares. If they spent 50mil on buyback when sharepeice was 75p then twice as many shares would be cancelled if they had done it at £1.50"

In both cases the market cap of the company changes by share price x number of share cancelled. In both cases $50m, the amount of money distributed to those that sold.

"remember the $50m spent on buybacks at £2.06 avg in 2018-19. We’re still not there yet"

So? They company returned $50m and cancelled the shares. That's it. Doesn't matter to the company what price was paid. It's irrelevant. It's not like the have the shares in a trading account and are waiting to trade them for profit. To individual shareholders who did - or did not - sell it might matter but all the company did was pay out $50m. You still don't get it.

" I remember your boasts about having 450k in GKP, representating 5% of your net worth -£12m"

I never boasted anything. I was asked how much I held. Reluctant to disclose with specificity, I said I had about 450k worth - intentionally not specifying whether that was # of shares, pounds, euros, dollars, yen or whatever. I also mentioned that I wouldn't place a bet for more than 5% of net worth (initial investment). You can construe those two however you wish and you're free to speculate just exactly what I own. FWIW I now have about 570k worth... (Yes I've bought more shares between then and now.) Suffice to say it's a decent chunk of change and I suspect a lot more than you own.

PS: I'm quite happy I reinvested the latest dividend at just under 153p.

Arma: "This share hit 4 billion without a prayer, it was hundreds of million before finding oil. "

And then had to be restructured to avoid bankruptcy. That should tell you something about prior valuations. The old GKP died. Long live the new one. I'm glad you will be on the bid when I'm ready to sell...

"This is a cash cow, even at 40 million a month it pulls in profit of nearly 500 million a year, so at 4 billion it would be 8 times annual profit, with no other future earnings "

Good ol' Arma. It's important, I believe, for readers to understand the huge flaw in Arma's statements. He calls receipts 'profit'. But as we all know the monthly receipt is not 'profit'. The bulk of the monthly receipt is repayment for past expenditure - capex and opex. The 'profit' element is a mere fraction of it. As ought to be obvious, the recovery of a $1 incurred today over time in the future is a negative NPV event. So the value of capex and opex without the gain from 'profit oil' is negative. Any sensible analysis of the value of GKP must look at the profit oil payment stream discounted to today (while also recognizing that capex and opex alone reduce value). The company today trades at just slightly more than the cost recovery pool plus arrears, for the first time in a long while. It's true that little value is ascribed to profit oil. That's why I think we have further to run. But as we look beyond the valuation of the current cost recovery pool and arrears, bearing in mind that future capex and opex alone are negative NPV expenditure, one has to be extremely careful valuing the future profit oil income stream because of the dynamics of the PSC. Anyone who doesn't endeavour to understand this is a fool.

"The valuation I gave , is not mine , I dont have the skill set"

Enough said. Let's just leave it there aye SS?

" They have millions of shares so will not give GKP away."

How so? Another load of complete BS from SS.

Nobull, don't bother with Arma - he is incapable of basic financial analysis.

"You disagree with the £25-£35 valuation for GKP I was given by an expert past work colleague of
mine."

SS with that view I really wish you had the balls and wherewithal to buy the stock up. You could have all of mine on the way up and still make a ton of profit if your view were right. And I wouldn't have to read your utter rubbish anymore.

That's what the 'key shareholders' seem to be doing. Taking the cash flow (dividends), ie recovering their investment, and reinvesting elsewhere. Except they know the current cashflow doesn't last 5-10 years. The bulk of the 'cash flow' is the return of pre-2016 restructuring cost recovery pool. At this month's run rate the cost recovery pool is being recouped at circa $250 million a year while current capex and opex add a fraction of that.

"What better way of getting the KRG's attention than to demonstrate the other tools at his disposal to return shareholder value without reference to the KRG at all."

Huh? There's a very big difference between returning and creating. Paying a dividend doesn't create anything. Rather it pays money away from the company and gives it back to shareholders. Special dividends essentially say "we, the company, can't put the money to suitable use, the capital is excess to our needs, so we're going to give it back." Shareholders merely get what they already own. The KRG already paid away the money now being returned to shareholders. I suspect they were fully attentive when they sent the funds each payment.

The reason for the special dividends is completely obvious. The company has excess capital, capital it can't deploy for suitable gain, and shareholders want it back. It is interesting to note that few of the key shareholders have reinvested this returned capital into greater ownership.

"the new 'interim'dividend shot across the bows should be enough to energise the FDP discussions imo. "

In what way could a dividend be a 'shot across the bows'?

Arrears are worth a mere 17p per share now . Small in the grand scheme of things. Interest? Ha. Rounding error in minor fractions of a single pence per share. Far better to maintain as best a working relationship with the KRG as possible.

Carry on GKP and keep focusing on delivering value via operational progress. The CFO can concurrently expedite the further return of capital to keep pushing towards a sensible capital structure. Net debt remains negative at $(82) million. The approved buyback should be actioned NOW.

"First time I haven’t needed the give or take 0.1 in both my figures from the spreadsheet."

TM What average daily volume did you have? The numbers were a little light vs my expectations.

"if you're happy with a 10% return"

LMAO!!!!

(Any valuation of GKP based on 'dividend yield' is deeply flawed)

No way. I can diversify at the portfolio level. They need to focus and focus hard on this asset only.

Capex - investment - brought forward. Good.