Member Info for PUTUP

Straycat. I'm trying to help you understand some basic finance but as I said before clearly there's no helping some people. Best of luck to you. Just don't think ever of a career in anything relating to finance. Any buyback, for whatever stated reason, is a return of capital to shareholders. Expect more buybacks, and very likely before cash dividends.

I'm happy to be up 72% currently on my GKP investment this afternoon even if it's not at all my best investment of 2020. How about you?

I dare say Straycat, there's no helping some people. What should one do when thinking about the value of a company's equity when there's issued share options that are in the money? One adjusts, pro formas, the shares outstanding for those in the money share options. We get what's called fully diluted shares outstanding. Even if there is no treasury stock one would account for such options by increasing the share count to pro forma for their exercise and issuance.

It's not uncommon at all for companies to buy some shares into treasury in part to meet the needs of in the money employee stock options. But one would only count those shares needed to meet in the money options. Treasury stock in excess of those is NOT counted for the purposes of FDSO. As the share price fluctuates, and employee options or other dilutive instruments are issued or otherwise become in or out of the money, the FDSO figure is continuously adjusted by astute investors.

Best get used to this as there's a lot more buybacks coming.

"The cancellation of the shares is supposed to boost eps (profits shared between a smaller number of shares), and the present value of a more valuable eps stream lifts the share price. Well that is the theory."

The number of shares in circulation is reduced the day they're bought back. The divisor changes then. Not when they're cancelled.

In your subsequent post your debating the pros/cons of returning capital to shareholders. That's a separate item (a precursor to deciding how to return capital).

Again, you guys are thinking about things as if the company is trading in its own stock. It's not.

"A dividend in the hand is worth more than two in the buyback IMO."

They're the same thing. It's just that with a buyback YOU have to sell some to collect the return of capital. With a dividend it's the opposite - YOU have to buy more shares (reinvest the dividend) if YOU don't want the return of capital. With a dividend the share count remains the same and the shares (ceteris paribus) drop in value to reflect the capital that has left the company. With a buyback, the same amount of capital has left the company and the share count falls to reflect that (amount of capital returned divided by the price paid).

"Share buybacks can only be of shareholder benefit if there is a resultant boost in the share price creating a capital gain"

You still don't get it. As soon as the stock is bought back the capital has left the company. It can't make a gain for it. The company isn't trading in its own shares. There was never any intention for those shares to return to circulation. The sooner you get your head around this the easier you will sleep at night.

The first fundamental question is whether the company has excess capital and should return some to shareholders. Assuming the answer is "yes' (if it is "no" it shouldn't pay a dividend or do a buyback) the next question is how to do so - through dividends or stock buybacks. Either way you're just returning capital. Once you've returned the capital that's all there is to it as far as the company is concerned. Now, those that do not sell into the buyback, and thereby collect their share (or more) of the return of capital, increased their ownership at those prices and they may well lose (or gain) by doing so. But, again, that's up to them as individuals. Contrastingly, those that did decide to sell and collect their pro rata share (or more) of the return of capital will have had a different result.

With a buyback the board needs to decide on the process which will determine the price paid. There are many ways this can be done including a fixed price tender, an open tender, or daily VWAP replicating purchases. The last one is the 'easiest' (= most easily defendable) because there's the least singular-day impact on the stock price i.e. the idea is to be a buyer but not a direct influencer of the price. In any scenario, what the stock price during or after the buyback is utterly irrelevant for the company as a whole. It is only relevant for individual shareholders - but they face that relevance on a minute by minute everyday basis as they choose to buy, hold or sell as the shares price moves.

"as a tangible demonstration of belief in the underlying Corporate strategy. And a statement of intent that the shares are massively undervalued given the position of the business and its ambitious self funding plans now under way and laid out for the next few years. "

You still think of buybacks as an investment in the company's stock. That's never the case (regardless of whatever rhetoric there may be at the time). They're a return of capital to shareholders, just like a (more tax effective) dividend except the dividend goes to those that sell while those that don't reinvest at the then stock price. The decision to reinvest rather than take the cash sits with shareholders and not the company. The price at which they're conducted is irrelevant as far as the company is concerned. It is relevant to those that don't sell - they're reinvesting, disproportionately so, at that buyback price - but for the company as a whole the price is irrelevant.

Expect buybacks well before a dividend. Why? Because the key shareholders are happy to reinvest the returned capital at these levels and they will influence the way the return of capital is conducted.

Zedy's confidence on Twitter is enormous and yet he has to ask such a basic question here... Hmmm.

Not that I'm aware of... You coming to the beach? Who do I look out for?

Why anyone would put more than 5% of their net wealth in something this risky is beyond me. Unless you are so wealthy you can lose it all and still be fine with a shrug of your shoulders...

GLA NLTH

IMO US equities need a good 5-10% blowout before markets improve markedly. That would undoubtedly affect GKP. Post that we move higher. It will be a grind and not a pop despite what SM might think.

Buy/High risk

Straycat, if you're going to play such a childish game why not collect a set of signatures and post the list online. That way newcomers will know not to take investment advice from anyone on the list.

For GKP to take production much beyond 55k bpd they need to find a solution for the gas. They can't keep flaring it. A gas energy plant for the region would be a nice solution. (GKP is too small to fund a build alone.) It would provide another source of revenue and allow expansion of oil production.

FFS Invstrat you'd think your mum was a crook

And they don't need "to make up the loss" in the devaluation of their currency. Domestic liabilities (including salaries, pensions etc) are denominated in dinar. Oil is a dollar revenue source. So debts and payment liabilities were devalued while assets and revenue streams stayed the same. They're "up" not down. The guy who is down is any man in the street who needs to convert his dinar to buy foreign goods. (Just like muppets holding a lot of sterling since the referendum.) If anything they need less from the IOC post devaluation than they did before.

Don’t expect miracles from the new guy come January . This play comes with extraordinary risk. Place your bets accordingly. As for earlier investors, they got it wrong. It’s that simple. Truth hurts sometimes. The only relevant question is whether it makes sense to be invested now. I think it does. I added at 105 the other day.

Shareholders prior to the restructuring are lucky to have anything at all. You were tossed a bone and likely one you you didn’t deserve. You took the risks. And lost. Now new LTH have to listen to the bleaters’ pipe dreams of recovering their old money. It gets old fast. Likely it would have been better to have cleaned the decks completely. Be thankful, enjoy your Christmas and hope for a Brexit trade deal even if any deal will be on Europe’s terms. The biggest near term risk to this dollar based company’s valuation is the GBP exchange rate.

“Bought big”

Always a relative concept...

JF deserves a little more praise. He and his team have done a great job in an extraordinary year. 55k bpd basically in the bag, good progress on debottlenecking PF-1 which is basically the main hurdle to 55k production, good cost control and capex stewardship in what’s been not just a difficult year for any company but an incredibly challenging one for oil. Well done.

Yawn

Good to see 102/3 support held in long expected correction. If that breaks there's nothing until the mid 80s. But we're not in this for the short term are we boys?

"we seem to have a lot of European Directors, I would like to see the Job going to someone from Asia or Middle East "

If that's the case I suspect you will be disappointed

Weak (relative to last order book trade) closing auction each day suggests the bid is nothing but retail. It will be interesting to see how long it lasts. It was quite different when the stock pulled out of the mid 70s in mid November. Retail funds flows are used as a contrarian indicator by equity strategists. For now I'm happy to keep marking my gains to market.

"First target £1 achieved
2nd target £1.50+ upon MNR/KRG repayment plan agreement
3rd target £2 upon appointment of CEO JF replacement
4th target £2.50-£3ish reinstatement of dividend and/or buyback
5th target £3.50 restart of 55k bopd upgrade
6th target £4.75 ish upon delivery of 55k bopd"

Pretty heady expectations for each increment and conveniently stepped. IMO, new CEO will come well before the MNR/KRG pay a dime of back dues. Buyback will come before dividend (and before KRG pay back anything) but not before new CEO. Further PF-1 de-bottlenecking required for production to rise materially. They could likely be doing more now were it not for this. Current oil price has a LOT of good news baked in. I don't expect Brent to clear $55 but your view may differ. Shame we don't produce Brent quality.