Member Info for PUTUP

"So my question remains valid: WHERE DID THE COMPANY FIND THE 7 MIO SHARES VESTED TO JZ AND SZ AS THEY DIDN’T HAVE THE SHARES IN TREASURY!"

Just to be clear on your shouted question. The shares don't vest; the options do. And not all of them have. Only when the options are exercised do shares need to be delivered. So not only is your 7 million figure wrong - some of the options aren't eligible for vesting until 2022 - it's quite probably the case that NO shares have had to be delivered.

pass=press (damn typo and autocorrect)

@Bravedog

So in 2019 "as a result of the Company’s strong TSR performance of 117% in the period from December 2016 to the second measurement date in April 2019, the maximum number of nil-cost options have been awarded to participants." We can probably presume that the prior grants "to the CEO and CFO of 1,681,839 nil-cost options each at the first measurement date in May 2018" vested but this should be confirmed. Just because the options have vested doesn't mean they have been exercised (see below).

They then "could only receive 2,087,756 and 1,565,817 nil-cost options respectively due to the cap in place" in 2019. Up to 50% of these could have vested in 2020 but didn't because the TSR was not met. The TSR will be tested again soon.

"The options outstanding at 31 December 2020 had a weighted average remaining contractual life of 2 years." One wouldn't exercise the options unless one wanted to sell the shares that you get from exercising them. There are only two ways that the company can meet the obligation to deliver shares pursuant to the exercise of an employee option. Either deliver existing shares that have been purchased (into treasury or held in an employee benefit trust) or issue new shares (diluting all shareholders). The recent pass announcement provides an example of doing a bit of each. I haven't looked to see if any shares were issued following the vesting that possibly took place in 2019 but will do so. The issuance of stock must be announced.

As for the TSR hurdle for the upcoming test, have you confirmed your listed threshold with the company?

(Opulentia is still living in the past. GKP died in 2016. Long live the new GKP.)

Happy Easter all

I suggest you read carefully the relevant disclosure on pg 98 of there annual report and accounts for the period ending December 31 2019 (https://wp-gulfkeystone-2020.s3.eu-west-2.amazonaws.com/media/2020/05/22081140/Smart_annual-report-GKP_AR19.pdf) and the disclosure made yesterday in relation to 2020 particularly that under note 23 https://wp-gulfkeystone-2020.s3.eu-west-2.amazonaws.com/media/2021/03/31074916/Gulf-Keystone-Petroleum-Limited-2020-FY-Results-vFinal-reformatted.pdf. It's funny how the numbers add up. Don't confuse receiving good leaver status and hence retention of the options (subject to vesting criteria) with actual vesting, exercise and receipt of stock. The original grants remain outstanding and only vest if the performance conditions are met. Next test end of May.

Bravedog, best you contact the company, its independent directors and its auditors right away and point out the material misstatement in their accounts as of December 31, 2020. (Update their IR team while you at it.)

EDIT: You'd think if vesting were likely IN LESS THAN 30 DAYS....

Bravedog, the company's annual results outline the current situation of the VCP. No options vested in 2020. The test date for 2021 is 30 days from the announcement of results (the other day). Maybe they have stock through other means but not, as of yet, via the VCP. 50% of the 7mio options can vest if the performance criteria (8% TSR since restructuring) are met. You'd think if vesting were likely the company would have added a lot more shares to the EBT than they did just now...

increase output by 350,000 barrels a day in May, another 350,000 b/d in June and around 441,000 b/d for July

"what would you call good gains,"

The reference stock price for this grant is 178.6p. I haven't checked the LTIP for awhile but as I said I fear the threshold for TSR from this reference is too low. ( I certainly view the TSR required return under the old VCP at 8% CAGR was far too low.)

As for the last 3 years, I don't give a toss. If the performance criteria haven't been met for old grants/option plans then the stock won't be issued to employees. Doesn't look like any VCP will vest in 30 days from now.

"the awards should have been priced at a 12 month average , not a 12 month high, which it virtually has been set at, "

support for this? It's tested on one day only 3 years from grant, 50% against a TSR threshold and 50% vs performance of peers

Just another emotional unsupported accusation?

The options don't pay anything and the shares aren't issued until the performance criteria are met. Only circa 1.5m options are in the money (and hence the company transferring stock to the EBT). Very happy for management to get paid a bundle if we make good gains from here. I fear their threshold for TSR may bee too low however. Certainly the 8% CAGR of the old VCP isn't anywhere near high enough.

"Yes; hopefully there is some change to the algorithm that means GKP still make a good return once the cost pool is emptied."

You need to understand the PSC and model it accordingly. The company's Jan 2020 presentation explains it (last slide). When the cost recovery pool is depleted the production is traded as Profit Oil. When the R factor swings we get much less of Profit Oil. R2R has provided more input on what goes into the Cost Rec Pool and what goes into the R Factor calc.

*guest

"PUTUP, can you explain if issuing new shares rather doing a buyback is significant ?

I'm asking because a poster on Twitter seems to think this supports their view of an imminent takeover"

You just got diluted for no consideration (zero money in). The company has excess equity capital. Far better to buyback shares, returning cash to shareholders and using those shares to meet EBT obligations. So, IMHO when you have excess share capital issuing more is not th best way to do things.

As for the issuance of options indicating a takeover, I couldn't laugh any more loudly. As noted they issued a lot more one year ago than they did today. If you want to punt on an imminent takeover be my guess. It was just an ordinary grant coincident with the publication of annual results. Read the terms of the LTIP.

They make awards each year. They award less this time than last time.

Just a glance. (I don't have the time to audit your model.) You need to model the R factor (cumulative revenues/cumulative costs) and ought to disclose it (and the workings thereto) for anyone looking at your work. The R factor has moved from 0.7 to 0.82. If it moves above 1 the split of profit oil swings. Your capex for 2022 and beyond is way too high for constant field production. The capex for 2021 covers basically everything (except maintenance) to produce 55k bopd. Watch what happens to the Cost Recovery Pool when that capex rolls off. (Your average production for 2021 is probably light.)

Note the LTIP award announcement including the issuance of new shares for the EBT (as opposed to buying back more shares and transferring them). A lot of awards were made in the 2020 financial year. Another 2.75 million now.

Thanks. I must be blind as I was looking but didn't see it. I will look again.

That figure suggests that opex is indeed added to the cost pool. Previously the company had said there was c$500m of cost pool at end 2019. They received approx $57 million of cost recovery in 2020. Capex was $46m. You can check whether opex solves for the difference.

Where did you get the $548 million figure? I haven't seen an updated figure as of the end of 2020. Maybe I missed it.

It is a pool that is depleted as production is shared according to the PSC (cost recovery oil; about 79% of monthly receipts) and added to as capex is incurred. It is not clear that opex is added.

And someone not