Member Info for PUTUP

"We've got approx $100m in cash"

Zesty, don't forget to subtract the $25 million for the dividend payment next week. Current cash ex div will be closer to $85 million. Management target retaining $80-85 million as a minimum cash balance.

If payment terms shift from 'in advance' to one month post (invoice October, for example, in early November and receive payment - hopefully - early December) it will push out cash accumulation. Not a biggie once it normalises through a full cycle, but it will likely impact how much cash the company has when they think about the next dividend announcement in March 26.

I had previously said I expected a $35 million dividend announcement in March but I now think that is too high (and that's without even trying to factor in the much lower than expected realised prices for oil sold).

And on into 2027 (even at $16)

Agreed re invoicing with re-invoicing. The question is what that realised price is (my $23.20 + $6 KBT discount to $65 Brent for 4Q looks way too high now) and what happens when that invoice exceeds $16 or $14 whichever it might be... Do you get the extra at "reconciliation" or is there a fight because a lot of it is actually arrears recovery? We will have to see. At any rate the time value of recovery of arrears is rounding error re the current share price. Eyes should be focused on 2027 and whether we order drilling rigs now in order to get growth that year. Else there's little to look forward to.

"I'm assuming that's what the reconciliation is about"

It all depends on what "full PSC entitlement" means - whether that is entitlement pre or post arrears Cost Oil. Our PSC entitlement ex arrears is more like $12.50 a barrel (rather than $16). It's disappointing that there is still no comment made as to how the arrears will be recovered but I guess that will be thrashed out over the next month (hopefully).

In short, lots more detail required.

Stock trading pattern looks good. Building for the next leg up towards the 140s.

No one ever cried banking profits Rog. Very happy it is higher this morning. Good luck to those buying at these levels.

"I'm assuming the $30 realised price doesn't refer to our actual invoices but the temp fixed $14pb"

Dunno. I had been assuming a realised price of $36 for 4Q !

"Have you sold today?"

Not yet. Missed the first hour and a half of trading.

Ugh. $30 a barrel is a LOT lower realised sale price than I had forecast for Oct-Dec...

Maybe one of the 11 muppets/d*ckheads in my filter bin will answer you? 🤪

There's still no clear disclosure regarding what the $16 will cover and how, for example, GKP's CBC will be treated. (Is CBC to be paid from our share of the $16 or do we get $16 net of CBC?) To figure out the CBC you need to know how much of the $16 will be considered Profit Oil versus Cost Oil and that, in turn, depends on how you assume the 're-invoicing' is being done. (1)

In the absence of further information, just make a somewhat sensible rough assumption and refine later when/if you can. Any inaccuracy will be rounding error versus assumptions around volume and price. Likely easiest: 30 day month, 40k bopd, $16 per barrel, $19.2m, split 80/20 and recognise that some of the 80 is paid away as CBC and so slightly overstated, +/-, good enough for now and all that.

It looks like a $16 per barrel cap on Contractor payment if Gross of CBC (less impact if Net) would reduce my current expectations of 2H free cash flow by roughly $4m - about 10% - but I need to take a closer look. (I'm using higher volumes than your 40k.) That still leaves roughly half of 2H 2025 cash generation coming from one-off arrears recovery (under this arrears recovery scenario) as opposed to from current operations.

(1) Has GKP just been treating the CRP as not diminished by the previous un-paid arrears? If, yes, then this cost recovery will, as discussed previously, be crowding out what would be higher Profit Oil - the CRP/costs-in-the-arrears balance will be whittled down faster but at the expense of missing out on more Profit Oil. A more 'correct' approach IMO would be to treat the CRP as having been emptied by the invoices in arrears and calculate the invoice on this basis, capture the extra Profit Oil, only then work out the difference between this and the 35.8% or $16 or whatever and treat this difference as a payment of arrears. I suspect, however, the former is an easier 'sell' and management are just happy to recover what they can and not worry about the lost incremental profit oil.

Does anyone know where DNO sits with respect to their Cost Recovery Pool? The only balance in GKP's CRP is the cost balance in the arrears. Everything else has 'normalised'. (Perversely, company cash flows would be much clearer were it not of the arrears.) Perhaps, unlike GKP, DNO can't squeak through the bulk of their arrears through re-billing of costs in arrears within the $16 per barrel provisional payment without delaying recovery of other costs or their current run rate of capex 'n costs doesn't provide adequate headroom for arrears recovery within the $16 (especially given intended plans to restart drilling). Would be interesting to know... (DNO are lucky in that their realised local price is much closer to the likely export price, Brent less likely discounts, than is GKP's. The pain of taking a tougher line for now is likely trivial.)

PS: I wouldn't expect any divi until the FY results next year, in line with he company's stated distribution strategy, unless the arrears are received in a big lump sum before then (which I do not expect)

"the SP was here" and then it dipped sharply into the 170s after the KRG introduced the additional KBT discount. Then came the shut-in. Just to clarify the timeline...

"202 Monday / 206 Tuesday wasn’t the top of the market as it appeared to be at the time"

As a trader, you will understand the old adage of "never try to execute at absolute peaks and troughs as liquidity is thinnest there." Good luck Rog. I still own a lot but am tempted to sell more. The ducks are certainly quacking loudly and there's another adage which is the opposite of buying when there's blood one the streets...

The last close before the shut in was 173.40

"But was £3 June'22"

As oil spiked to a high of $137 a barrel. If only oil was still that high.

Yep. Just recognise that they are a continuation of the return of capital previously stuck in the CRP. Were they all coming from our share of profit oil it would be different. And, of course, you can discount those capital returns and collect them upfront. FWIW I expect a $35 million dividend with the FY results. The capital GKP has ‘invested’ in the arrears isn’t earning the company’s cost of capital. Far from it.

Anyway. We each place our bets. I still own a lot.

Well it's done. I haven't seen the terms of the new notes...

Ha! Mushroom gummies more likely...

"For instance PUTUP sold 20% @ 200 or so, no doubt based upon he / she’s historical technically based ( too clever for me) ‘fair value’ assessment being surpassed. As opposed to my personal judgement based decisions. Now we’ll soon see if he / she’s right or wrong for selling just Before the new facts are revealed. Personally I believe that he/she was too impatient. ie. Wrong. But I could be wrong because share trading isn’t something that can have the benefit of hindsight."

I sold more at 206 yesterday Rog - just for transparency; total of a third of what was my remaining position. So far. Happy to reduce risk and bank profits at 4x.

IMO the current stock price now asks that we pay - up front - for too much possible future growth, way beyond current production levels (or previous peaks), or be way more bullish on oil prices (well beyond what professionals who cover the oil market for a living think). My RRoR on something like GKP is circa 15% (someone else might be happy with lower returns). Currently, I use a long-term oil price assumption of $60 Brent. That's the level Morgan Stanley expect for 2026 (average level with dips into the 50s and only restocking keeping the average around 60). As previously stated, I assume, for now, Shaikan oil will be sold at the previous $23.20 discount and a $6 KBT discount. When I impute what, for example, 206p says about the implied level of average production from 2026 into perpetuity I get circa 75k bopd. For me that's too rich. I think 2026 will be another year of constrained production (lack of investment while arrears are recovered, PF2 work over, water handling not yet on-stream) and that only in 2027 might we again reach 50+ bopd. 75k is a long way off. Of course, my realised prices assumption might be wrong. The biggest immediate upside I see in fair value for GKP would come from lower discounts to Brent. But we do not have any visibility on this yet (nor do we yet have confidence that 100% of production will be exported vs held for local consumption). Could Brent rocket higher? Maybe, but I don't have a view that would contradict that of professionals who monitor the market with far better expertise and access to information than I do. In short, I believe one has to be VERY bullish on production volumes or realised prices or both (or happy with much lower returns) to not be trimming above 200p. Time will tell if I am right but it never hurts to bank profits. Happy to take a third (or more) off the table and wait 'n see. As always, this is my view and each and every person here should do their own research and make their own decisions.

From, for example, the 2024 Full Year Results RNS:

"During past PSC negotiations with the Ministry of Natural Resources (“MNR”), it was tentatively agreed that the Shaikan Contractor would provide the KRG a 20% carried working interest in the PSC. This would result in a reduction of GKP’s working interest from 80% to 61.5%. To compensate for such decrease, capacity building payments expense would be reduced to 20% of profit petroleum. While the PSC has not been formally amended, it was agreed that GKP would invoice the KRG for oil sales based on the proposed revised terms from October 2017. The financial statements reflect the proposed revised working interest of 61.5%. Relative to the PSC terms, the proposed revised invoicing terms result in a decrease in both revenue and cost of sales and on a net basis are slightly positive for the Group.

As part of earlier PSC negotiations, on 16 March 2016, GKP signed a bilateral agreement with the MNR (the “Bilateral Agreement”). The Bilateral Agreement included a reduction in the Group’s capacity building payment from 40% to 30% of profit petroleum. Subsequent to signing the Bilateral Agreement, further negotiations resulted in the capacity building payment rate being reduced from 30% to 20%, which has formed the basis for all oil sales invoices to date as noted above. Since PSC negotiations have not been finalised, GKP has included a non-cash payable for the difference between the capacity building rate of 20% and 30%, which is recognised in cost of sales and other payables. See note 14 for further details.

The Group expects to confirm with the MNR whether to proceed with a formal amendment to the PSC to reflect current invoice terms."

So, from a working interest in profit oil split of 80/20 to 61.5/18.5/20 (GKP/MOL/KRG) in return for a reduction in the CBC (accounts book 30% with offsetting accrual but cash deduction 20% - see footnotes). Now the working interest in profit oil is different from the working interest in cost oil etc.

With updated R Factor and working interest in profit oil.

Note the chart is a little misleading. Where they have the split between "Contractor" and "KRG" under Profit Oil, using "Contractor" here is misleading. The KRG now participates in this slice of the money flow. "Contractor" there is actually 61.5% GKP, 18.5% MOL, 20% KRG. Nonetheless, this has been explained well by management in their annual reports. The Working Interest in Profit Oil, determined by the R Factor and currently c26%, is split 61.5/18.5/20. So the KRG gets 20% of 26% and 74% of Profit Oil.

BB, I model the company's current arrangement with the KRG as outlined neatly for shareholders in their presentation materials: pg 18 of document linked to below.

https://wp-gulfkeystone-2020.s3.eu-west-2.amazonaws.com/media/2025/03/GKP-FY-24-results-presentation-vfff.pdf

Yes everything depends on the assumptions one makes (and a plan beats no plan). I assumed:

$65 Brent with $23.20 + $6 discount

Of course, volume is important also because the capex and direct Shaikan G&A get spread over more barrels (as opposed to lifting costs which I model on a per barrel basis). I used my December 2025 for the example posted. I assume production of 44k bopd for that month. For modelling purposes, I smooth an annual capex assumption evenly across the year: $41 million gross for 2025 which is the about the mid-point of guidance. Guidance $30-35 million NET = $37.5-44 GROSS. I assume $5m gross Direct Shaikan G&A for the year. $4.20 opex per barrel. All this tracked cash to within $1m to 27 August so happy with the assumptions for now. Obviously I will update as new disclosure becomes available.