Member Info for PUTUP

For every buyer there's a seller. No need to get giggly. Down 13% in last 7 trading days. Could well see 127/128p again. SM now calling Feb 1. No worries, he's going save us all - he's just trying to help.

I'd like to think within 12-18 months but we need a better bid than overly-hyped retail. (I see SM/Goodnight Charlie continues his BS on Twitter - he now expects a takeover announcement on Feb 1.) Company bid via buyback is key. Don't expect real institutional support for this stock. Happy to hold for cash flow generation. Only really focus on stock price if I were to want to add.

Thanks for the compliment.

"and whats your target exit price on GKP?"

250-300p

Do I own other stocks? Of course I do. (I would never invest in a single stock an amount exceeding 5% of net wealth - that would be stupid. Is this the only company I post about on LSE? Yes. Was my lowest purchase in GKP at 70p? Yes. Was it my highest? No. So what?

"PUTUP, hope this helps because it’s the best I can do.

https://www.gulfkeystone.com/wp-content/uploads/2020/02/gkp-corporate-presentation-22-jan-2020-vfinal..pdf

Slide 26/26 last grey box on bottom left."

That was the chart I quoted from. I will find out more when I get a chance and report back. IR is quite responsive to polite requests for clarification.

Such is business. Do you have a tantrum and pull up sticks when partners don't pay or do you work with them? I vote for the latter.

Theoryman, are taxes 30%? The company presentation says "corporate taxes paid BY THE GOVERNMENT". I admit to not understanding this.

600 million isn't owed...

Not quite me thinks. First you won't see 110k bopd in the next 5-6 years but let's keep that figure for the calculations. Please correct the below:

Gross proceeds from sales 40.15 million barrels per year (110 bopd x 365) sold at Brent of $55 less $21* = $1,365.1m
10% is taken off the top => $1,228.6m
40% goes to cost recovery. We have a lot to recoup here ($500m mentioned in Jan 2020 presentation, plus capex in 2020 of $48-50 million) - even more if the stupid amounts are spent to get to 110k. $491.4m in the door.
60% is profit oil. For now (as of Dec 2019) the R factor is 0.78. So 30% (since R<1) goes to the contractor of which we get 80%: $176.9 million from which tax is paid.
I understand the payments received by GKP are for both cost recovery and profit oil combined.

But assuming 110k bopd is rather foolish. At 55k bopd (Brent @$55) which is still well above where we are today:

Gross proceeds from sales $1,104.1m
Less 10% => $997.7m
40% cost recovery $397.5m
60% profit oil $596.2m. 30% to contractor of which GKP gets 80%: $143.1m Assuming 30% becomes a little suspect here as the R factor will change rapidly with low capex and higher revenues. It will rapidly move towards just 15% to the contractor. Of course, offsetting some of this shift is that fact that once costs have been fully recovered cost recovery moves to profit oil. But for now we win much more from cost recovery than from profit oil. (Thanks old LTH for paying for this for the benefit of new LTH.)

* IMO this is a contentious discount and should be reduced

RtR produces the best post in this company thread over the last year. Well done.

Now you're cooking. A lot of cooperation and investment required. Well beyond a GKP issue.

Good luck. Let us know how your call goes.

"But I thought the company would be highlighting this outstanding cost pool far more than they are (as I said no mention at all in the 2019 annual report)!"

Pg 6 of the Jan 2020 company presentation. Highlighted perfectly well. (Special thanks due to those old LTHs who paid for it.)

An extra $8m a month for an expenditure of $400-450 million. Payback period of 4-5 years. Hmm....

Despite what the likes of Carpatthis might think, it's all about the gas. My query of Straycat led, as I expected, to the right place - the company's presentation showing the investment/product stages - but the conclusion wasn't arrived at as bluntly as it should have. Spending $400-450 million to raise production from 55k bopd to 75k bopd makes no sense IMO at $50-60 oil (or even quite a bit higher). I haven't seen a breakdown of this expenditure to just how much is associated with gas reinjection but I suspect it's a good deal. An alternative plan is needed - one with returns that make economic sense given the risks involved here. Unfortunately I think the alternative plan will extend beyond just what GKP can do. Likely it will require investment by the KRG/central govt and/or other IOCs in the area as well as their coordination/cooperation. (A gas-fired electricity generation plant might be one example.) So I wouldn't expect the company's gas re-injection plan to be executed within the next, say, 5 years at least. So we chug along nicely at 55k and distribute cash, first in the form of a further buyback and later in the form of dividends. Maybe production can be squeezed a little bit higher without much capex, I don't know, but I suspect not much. That's great for investors who entered the stock post restructuring and particularly newcomers over the least year. The likes of Armasmaximilian will need a lot of dividends before he recovers his investment at six quid.

Back to the dreariness of lockdown.

"And plan diversification out of Kurd."

Never going to happen. If you want to diversify, buy another oil stock. Done.

High since restructuring 303.50. All before is irrelevant, another time, another place.

"Has always been worth billions, everyone knows that."

Not with oil where it is. Production won't go much beyond 55k for years. Calm down lad - lockdown's going to your head and you're getting all giddy.

Old LTHs have a lot of history with GKP - by definition. But to think they can sit up high and cast dispersions on relative newcomers is hilarious. I certainly sympathize with their horrendous losses, but it's their fault. Investing involves risks. It's a big boys' game. Invest commensurate with the risks involved and don't dump huge proportions of your wealth into one very risky investment. Admission and ownership of the real problem, rather than yelling on a forum that I assure you management and key shareholders don't bother to read, is the first step towards healing and learning. Many made a huge mistake. That's not to say that others (management or board) didn't perform to expectations but ultimately the responsibility for the loss sits with each individual investor. Whining gets you nowhere.

While I have been aware of GKP for many years, I first looked at investing in mid 2019 and passed on it. Even then I wasn't comfortable with the risks and other opps were more attractive. Only when the stock was pounded as a result of COVID did it make sense to me to take on the risk and then only in sensible proportion to wealth. So far it's going well but I am under no delusions as to the risks involved.

When someone comes along and tries to provide you with insight on some aspect of financial theory or practice you might want to consider the possibility that this person has something to offer. I've offered insights as to how professional investors and advisors (and any knowledgeable investor) view buybacks. They're aways returns of capital to shareholders and never 'company investments'. They're analogous to dividends except with a dividend you have to buy more shares if you wish to reinvest while with a buyback you have to sell a little in order to collect your return of capital/dividend. Shares in issue is a metric continually adjusted for to reflect in the money dilutive instruments/agreements and stock bought into treasury. When treasury stock is cancelled is an accounting issue and not a value issue. The only 'risk' with treasury stock is that they re-enter shares in issue as a result of a corporate acquisition/investment (used to pay for something) that would otherwise require shareholder approval. That was not a risk here. The buybacks were conducted to return capital to shareholders. Period. The shares were (initially) held in treasury to cover dilutive options in issue and when they were no longer required for this purpose they were cancelled. No big issue or surprises there. (And don't get me started on the BS that SM was touting.)

As for the board, some of whom I know professionally, yes I think we need some changes. All in good time. Soden's appointment was a start. We shall see what happens throughout 2021.

The company's communication is poor also and there's some really easy improvement to be had there. They're not getting - or not taking - good corporate broking advice. Again, let's see how things develop thi

"Throughout our engagement you have displayed an astounding ignorance of the Boardroom matrix. And I know why; you’ve never operated in one have you?"

Many, but you knew that - really - didn't you?

We will likely agree on one thing: this company is poor at communicating with its broader shareholder base. Easy improvement to be had there. Obviously they need to spell things out very clearly. (An example would be explaining separately the rationale for a buyback versus the rationale for taking time to cancel. People seem to have confused the two.)

Boardroom changes will happen. It's just going to take a little time. We need management anchored with a fully up-to-speed CEO first. 90 days.

No, this is too much fun. Great sport. And the stock has much further to go over the next 3 years (albeit not in a straight line and not because of any 'already agreed takeover'). Strong buy/high risk.

I'm sure because this is what the main shareholders want. And a further buyback has already been approved. It wasn't going to be initiated without the new CEO but now he's onboard it's just a matter of him getting settled and then we will see that buyback commence IMO. Certainly, in the absence of undue severe dislocation, within the next 90 days. Then you will all be worrying about whether the company 'buys well' and how long they take to cancel... LMAO