Member Info for PUTUP

"Yes, this has been going on for weeks. Anytime it gets near 100 it gets shorted back down."

Yada yada

"Oil price is motoring along nicely. "

LOL!!!. Flat for over a month is "motoring along" for you. What adverb will you use if ever it goes up?

You don't think the company is quietly working the approved buyback at VWAP with a limit to not push the stock into triple digits? I'd bet money that this is the only reason the stock isn't below 90p.

"Happy to have TK back on the condition that he uses all his money to buy GKP shares."

Good luck with that

A lot of flatulence

Reality
Accounting

Smart people pro forma the latter to get the former.

A company can increase share count with the stroke of an accountant's pen. Issue 50 million shares into treasury. Done. It doesn't increase equity value.

"5) And howsoever you calculate that loss, wherever you put it in the accounts, one way or another the net worth of GKP is reduced by that decision to cancel."

The value of the company was NOT affected - at all - by the decision to cancel the treasury stock. The value of the company was reduced when cash was returned to shareholders at the time stock was bought. Some shareholders did well from taking cash out of the company, others not so.

I give up trying to teach you anything. Best of luck to you. Expect more shares to be bought into treasury soon enough...and then, possibly, cancelled at some point (or perhaps not).

"GKP now say they only need a few of these shares and they are cancelling the bulk of them. The effect, as you would know, is to increase the physical assets per share by something approaching 10%. So the Reserves and Resources figure, per share, increases by a fair amount."

I should address this point much more directly. Any sensible person would conduct ANY 'per share' computation based on fully-diluted shares in issue net of treasury stock. The jump in assets per share occurs not when the stock is finally cancelled but pro forma when the stock is bought.

Previous post addressed Straycat.

Now a reply to surreyscot (whose views I generally find more sensible). The authority to buy back shares was effected because the key shareholders saw returning capital to those shareholders who desired to sell, and hence increasing the ownership of those that didn't, to be sensible. The key shareholders, rightly or wrongly, saw value in increasing their stakes at those levels and were pushing (and continue to push) the company to use its excess liquidity in this fashion. Once again, if all shareholders participated in the stock buyback pro rata the effect is no different in net effect than a special dividend. Now, clearly with the benefit of hindsight, those who decided to sell into the buyback were smarter than those who did not. But perhaps those that liked the company at, say, GBP2.20 simply like the company even more at 92p and will be very happen for the buybacks to continue at these lower levels. Personally I looked at the company when the stock was above two quid and passed. At these levels it is considerably more attractive. At these levels I very much want the company to use any excess liquidity to buy back its stock.

Management compensation is another issue and I fully recognize the frustration here. However claims that the next CEO should not get options but rather buy shares out of his/her own pocket are very misguided to say the least. They can do that any day of the week without taking on the job. Candidates will need to be rewarded with compensation mechanisms linked to performance and stock price performance. Hence my earlier claim re at the money options (rather than zero cost options) and performance vesting.

As for Ferrier being removed, rarely does one 'remove' a CEO without having first done a lot of work identifying a replacement. JF clearly jumped before (potentially) being removed but he wasn't removed. There is, currently, no replacement identified let alone secured, although I fully expect the board to be moving as quickly as they can (and in consultation with key shareholders) to find one. In the interim, don't expect too much to happen.

I have no view on "the current merger “rumour”with Genel idea" but again don't expect anything to happen without there being a new CEO appointed first.

Good God, there's no helping you. The $50m went to shareholders. You chose not to receive your slice instead opting for a higher ownership stake at the price the stock was bought at. The share count in issue is lower the moment they're bought by the company. If you don't understand this you really shouldn't be investing in the stock market. Staggering.

In the first scenario the company buys back shares from every stock holder in proportion to their percentage ownership. $50m leaves the company and goes to shareholders. The equity value of the company falls by $50m. The share count used to compute equity value falls to reflect the number of shares bought back - they are no longer 'in issue' (even if they sit on the books accounted for as treasury stock). Here all the shareholders have sold in proportion to their ownership, therefore their percentage ownership position remains the same and the $50m is received proportional to ownership - just like a special dividend. The only difference is that instead of a 'ex-div' price adjustment occurring to reflect the reduction in equity value there is a share count adjustment (while, ceteris paribus) price remains the same.

Now let's looks at open market purchases. If everyone sold in the market to the company's bid proportional to their ownership then we have the same result as a compulsory pro-rata tender offer. When some don't sell and others do we have a situation where some shareholders effectively decline the 'return of capital (similar to a special dividend)' in return for investing more while those that do sell take a disproportional share of the return of capital (similar to a special dividend) in return for a lower ownership position.

So when a company is effecting a return of capital to shareholders via an o-en market stock buyback and you aren't selling into that buyback YOU are making the decision to increase your proportional ownership of the company - you hold the same number of shares versus a lower share count for shares in issue.

The only reason for shareholders to fear treasury stock is that management can often place them - effectively 're-issue' them - without shareholder approval. There has been basically zero chance of that risk here.

Now what about vested, in-the-money stock options (and for that matter any securities which, given the current stock price, oblige the company to deliver stock)? These are added to 'shares in issue' (ex treasury stock) to compute (fully diluted) equity value. Whether they are backed by treasury stock or require new shares to be issued is rather by-the-by.

Once you understand that treasury stock have no value - remember I can't create value by simply creating treasury stock - you'll worry a lot less about. Only worry if they may be placed in a situation which you would disapprove of and which if they were to otherwise be new issued shares you'd have the chance to vote against the corporate action. Rest easy, treasury stock is nothing but accounting.

[And if you protest 'but dividends are paid to the treasury shares', again rest easy knowing that those, at worst, dividends merely round-trip back into the company's cash account and such is fully taken into account when deciding the size of the dividend in the first place.]

"1) They’ve used an asset ($50m cash) to buy another asset (common shares, some 19m of them).
2) As long as those shares remain in treasury there is no change to the net assets of the Company apart from the valuations placed on those treasury shares at year end, which will result in either a profit or a loss on those shares dependent on sp performance.
3) As soon as they issue any of them (under employee nil cost option schemes for example) then the net assets of the Company are reduced accordingly because GKP have given awarded an asset at nil cost to the employee, namely treasury shares.
4) Similarly, if the Board decides to cancel 18m treasury shares, their value is lost to the Balance Sheet forever. They no longer have any value because they are no more. In this case I estimate that cancellation cost/loss at c.$45m. i.e. the Company has made investments in an asset (common shares) which no longer exist, no longer have any value.
5) And howsoever you calculate that loss, wherever you put it in the accounts, one way or another the net worth of GKP is reduced by that decision to cancel."

Straycat

I don't know how much of your net wealth is invested in the stock market but it's rather scary that you (and a few others here) don't understand these concepts correctly. Let's walk through two basic scenarios in the hope it leads to greater understanding.

First, let's consider the simple case of a company that issues/creates $50m of shares and holds them in treasury. Has there been value creation? No. Have the assets of the company gone up? No. Has the equity value of the company gone up? No. Has the enterprise value of the company gone up? No. It's merely an accounting exercise. The treasury shares are ignored for the purposes of calculating equity value.

Now consider a company with, for example, $50m of excess liquidity/cash. It decides to return this capital to shareholders. Management can do this a number of ways including:

1. A special dividend
2. A stock buyback

In BOTH scenarios the cash leaves the company and goes to shareholders. In the first case, the number of shares "in issue" used for calculating the equity value of the company stays constant. There is a price adjustment, the shares go ex-dividend, to compensate for the $50m reduction in the equity value of the company. In the other case, ceteris paribus, the price stays the same but there is a reduction in share count for computing equity value to make up for the $50m that has left the company. The shares are sitting in treasury 'as an accounting issue' just as in my first example.

Now let's take the second scenario a little further. There are a number of ways to execute a stock buyback. Let's consider two options:

(a) a compulsory, pro rata tender
(b) open market purchases (however conducted)

tbc in next post

d0dger55 Better to remain quiet than to shout your ignorance. According to your logic a company can increase its equity value merely by issuing shares to itself. Woohoo! We don't need any employees other than the company secretary.

Straycat you have zero understanding of the impact of stock buybacks. Period.

"This is in part due to the fact that GKP paid out $49.1m in dividends, effectively wiping out 2019 profits and degrading the Balance Sheet in the process.

And in 2020 the Company has given itself another mountain to climb.
There are currently 19,059,064 shares sat in Treasury. At the AGM it was announced that the Company has now resolved to cancel all but 1m of these.
I estimate the cost of this cancellation exercise at c.$45m given that the year end vwap was $2.86 on 10.5m shares(including the 82k nil cost options vested in the year), and a further c.9.4m which were purchased in 2020 @ a $ converted vwap of $2.32.
All off the bottom line."

Straycat you seem to have an agenda to talk down interest in the stock with this BS.

The company had excess liquidity and returned capital to shareholders. Some days you want dividends and on other days you b*tch when they pay them. Which is it?

Stock buybacks return capital to shareholders. Ignoring taxes for the moment, they're the same as dividends. You could have sold into the buyback program and received a return of capital (just like a dividend). If everyone sells into the stock buyback program pro rata with their holdings then its identical to a dividend (with the caveat that replicating sales that perfectly match the company's buys has some minor performance error). If you did not, YOU - no one else - made the decision to BUY more ownership in the company at those prices. YOU (and others like you) lost money on that decision, not the company.

EDIT: I meant "The point is GKP isn't paying MNR"

"(1) All of the crude oil produced by Gulf Keystone was sold by the KRG. All proceeds of sale were received by or on behalf of the KRG, out of which the KRG then made payment for cost oil and profit oil in accordance with the Shaikan PSC to Gulf Keystone, in exchange for the crude oil delivered to the KRG. Under these arrangements, payments were made by or on behalf of the KRG to Gulf Keystone, rather than by Gulf Keystone to the KRG. However, for the purposes of the reporting requirements under the UK Regulations, we are required to characterise the value of the KRG's production entitlements under the Shaikan PSC (for which the KRG receives payment directly from the market) as a payment to the KRG."

The point is GKP is paying MNR but MNR retains its fees and then pays GKP. There isn't a mechanism whereby GKP gets paid and MNR doesn't because KRG sells the oil.

"Today’s RNS spells out payments we made to MNR - why on earth are we paying our massive debitor ANYTHING ?"

Probably because they are deductions before WE get paid, as per the agreement.

"should be restricted to share awards at £5 and £10 but he can purchase as many as he wishes from his own pocket, we must stop rewarding failure, when the shareholder is rewarded then reward the CEO also."

Good luck finding someone to take that job. We all need management with skin in the game from today's price. At the money strikes with performance vesting. YOU decided not to sell at higher prices.

polarityMan I can't for the life of me figure out why you are interested in this stock

"Bang on polarityMan we all know we are are sitting on a massive amount of oil and have been for years, but the share price is a fraction of what it was in 2012 we should of been sold then!"

Coulda, woulda, shoulda. The better question to focus on is what to do now. No pity for those that invested at too high a price. Mark your position to market and don't look back.