Member Info for PUTUP

"March gross sales $39.7m x 36% (max recovery) = $14.3m

as opposed to $13.2 + $4m = $17.2m

I'm probably missing something but that's a large discrepancy?"

No, you are right. Sorry. (If I boost the CRP for the cost oil in the arrears, I get $14.2 Net to GKP.) I had eyeballed things on a gross basis (not net) previously and kept that number in mind and the changes I made to lower 1Q volumes following the results meant a higher CRP going into March than I had previously - a delta of just over $2m - and a commensurately lower recovery of gross arrears. Now, and on a net basis, it’s only $1m. (That, plus the higher sales price assumption, is why, even though I lowered volumes, the net receipt (excl arrears) had jumped up from the figure I listed on 13 March ($11.9m).) Thanks for pointing that out - even less reason to change my value assumption regarding arrears recovery only starting in April. :-)

"Surely some benefit for the exported crude now being legal and above board is my thinking, bold as it may be."

I don't think prior buyers over the years have considered the oil to have been illegally sold. Of course, we can hope that the sales process is more transparent with less "fees" taken out along the way. But who the fook knows if that will happen? There's still lots of uncertainty about future sales and I don't think even management have an idea yet of just how much will be exported (versus sold locally) and at what price exports will be sold at relative to a benchmark like Brent.

Invstrat, I think you're dreaming if you expect interest to be paid. Unfortunately.

I guess the level of 'sobering' depends on how drunk you are.

The heavy nature of GKP's crude hasn't changed and so assuming the KBT discount disappears would be a very bold assumption at this stage. KBT likely either stays at a discount (subject to market forces) or less heavy crude is exported (so as to maintain a higher API of the export blend) - the latter being Broadford Bay's very valid worry/warning. Absent any news I'm assuming - with fingers crossed - a return to the pre-closure situation (100% exports and a $9 KBT discount). Even this is likely aggressive. More likely, exports will ramp up over time rather than there being the straight switch of 100% I currently assume.

Yes, it excludes areas recovery which I account for separately. Those statements assume the ability to re-invoice previously invoiced costs as we have discussed often. The problem with bundling the two is one can erroneously perceive the 'higher entitlement' to be normal and on-going. Obviously, that is not the case with the arrears recovery being a one-off event. FWIW I am assuming the arrears - the full arrears and not just the cost oil component - are recovered at a rate of $6.3 million a month ($151.1 million divided by 24 months) from April. That won't be far off a 're-invoicing' scenario. I reckon about $4 million of the arrears will have been recovered in March under local sales. (There hasn't yet been any point to change the model for this small adjustment.) So as a back of the envelope adjustment one might at $4 million to March and $6 million to April for an 'including arrears' comparison. Still potentially sobering.

Some renewed aggressive accumulation off-book today. Nice.

"Massive favour but would you mind showing your full workings for either of those months please?"

Starsalign, here you go. Note, I have lowered the production assumption for March following the year end update but raised the sale price assumption by $1 and hence the numbers below differ from my post on 13 March. This is this month's expected receipt from local sales BEFORE recovery of any of the arrears (via re-invoicing previously invoiced cost oil or otherwise). For costs, I am assuming $4.20 per barrel lifting costs for 2025 (vs $4.40 for 2024), gross capex of $40 million (slightly above guidance) and direct Shaikan G&A of $5 million gross. Each of these is spread evenly over the year but, of course, capex is likely to be more 'lumpy' from one month to the next.

(Hopefully the formatting doesn't go haywire.)

Month Mar

Sale price average for month 28 (100% local sales)

Days in month 31

Production bopd 45,700

Gross Field Sales 39.7

Royalty 4.0

Net Sales 35.7

Total Profit Oil 23.0

Contractor CRP beg bal + month's costs 12.7

Contractor cost recovery 12.7

(1) GKP Cost Recovery 10.2

KRG Profit Oil pre WI share 16.9 KRG also has % share of WI Profit Oil

Working Interest Profit Oil 6.1

Contractor profit oil 4.9

(2) GKP Profit Oil 3.7

(3) GKP CBC 0.7

Contractor receipt 16.8 Net of the CBC withheld

GKP Net receipt 13.2 (1)+(2)-(3)

% Cost Recovery 77.3%

For April, I now assume an even lower production figure than March but for the purposes of this comparison I have raised the bopd assumption to match March. I assume 100% export sales with Brent at $70 and the discount existing poor to pipeline closure = $23.20 plus $9 for KBT discount. Again, this is before any arrears recovery. Obviously April is a shorter month by 1 day.

Month Apr

Brent average for month 70.00

Discount 32.2 Incl. increment for KBT

Days in month 30

Production bopd 45,700

Gross Field Sales 51.8

Royalty 5.2

Net Sales 46.6

Total Profit Oil 37.1

Contractor CRP beg bal + month's costs 9.5

Contractor cost recovery 9.5

(1) GKP Cost Recovery 7.6

KRG Profit Oil pre WI share 27.3 KRG also has % share of WI Profit Oil

Working Interest Profit Oil 9.8

Contractor profit oil 7.8

(2) GKP Profit Oil 6.0

(3) GKP CBC 1.2

Contractor receipt 16.1 Net of the CBC withheld

GKP Net receipt 12.4 (1)+(2)-(3)

% Cost Recovery 61.2%

"****eye maybe, but i was buying these in 22 around the £2 mark with the pipeline open and divs being paid out. it would be good to see the 5 years high again, but lets see."

Morbox, don't forget that during the same week GKP hit 5 year highs Brent traded between $107 and $137 a barrel, there was no KBT discount (average $9) and the company still had a large off-balance sheet asset called the CRP which has now been recovered and paid out except for the portion in the receivables balance. But let's not let reality get in the way of dreaming...

Have a good weekend all - except those that can't work out the company's monthly dues for oil produced and sold.

Lots of green lines today. The muppets must be getting flustered. Carry on.

Ah sorry. I had only seen the drip "buy as you earn" purchase. You are most likely correct.

Not voluntary

Why I already model recovery of the full amount.

(Straycat is probably still prepared to forego it...)

We will have to wait for clarity. As we have both agreed (or I with you), recovery of the receivables cost oil via re-addition to the CRP is possible with local sales. I reckon they are already recovering some in March with local sales. If this continues in an export scenario with SOMO it would be great. My valuation already includes receiving $57 million of the receivables (net) this year, with the balance recovered over the next 15 months. If that balance could be recovered sooner it would help valuation by a couple of pence per share.

I should note that in light of this disclosure:

"The outlook for the Company’s net entitlement assumes receipt of the cost oil portion of the outstanding October 2022 to March 2023 receivable balance due from the KRG to the Shaikan Contractor, which comprises $150.5 million of the total unrecovered cost oil of $162.9 million as at 31 December 2024 (or on a net basis to GKP, $120.4 million of the unrecovered cost oil of $130.3 million)."

I need to adjust the $153 million figure I mentioned below (to $150.5). I'm not sure why I have this slight difference but it is immaterial.

The disclosure continues:

"Recovery of the receivable cost oil is expected to begin in the first half of 2025 with regular payment from either local or export sales. Recovery will in turn lead to a corresponding reduction in the receivable balance due from the KRG, with $30.7 million of profit oil (net to GKP after CBP deduction) expected to be fully repaid by the KRG as part of a repayment mechanism."

Now it is very interesting that they mention only the Profit Oil less CBC component being subject to a payment plan. Recovery of the cost oil in the arrears via re-addition to the CRP would lead to faster recovery than I currently model. This would be good news Starsalign.

Average of 200.93

CRP tracking broadly as expected.

"As at 31 December 2024, there was $162.9 million of unrecovered cost oil for the Shaikan Contractor ($130.3 million net to GKP), subject to potential cost audit by the KRG."

Back out the $153 million of gross cost recovery in the receivables and you get $10.0 million as of December 31 versus my model of $9.4 million. Not bad.

"The R-factor, calculated as cumulative Contractor revenue receipts of $2,417 million divided by cumulative Contractor costs of $1,963 million, was 1.23, resulting in a share in the profit oil for the Contractor of 26.5%."

My model had $2415 and $1963 - and therefore the same R Factor.

Absolutely no surprises the company had to make this statement:

"Should exports restart, increases in realised price, cash receipt of payments for international sales and the potential implementation by the KRG of a repayment mechanism for past overdue invoices would accelerate the depletion of the Cost Pool upon receipt of payment. This would shorten the period that the Company’s net entitlement is expected to remain around 36% provided that investment in the Shaikan Field does not increase."

I've been saying this for some time now.

So rather boring results. No surprises except the slightly lower than expected dividend and the fact that production is running lower than I expected. (I have average production for 1Q of 47.3k.) Not at all surprised the buyback has been dropped in light of "the strength of the Company’s share price." No changes to guidance (note the emphasis on water handling) and Q4 shut in. Ho hum.

Roughly 10%

Starsalign, latest tranche sold. Thanks fellas.

Did the IOCs attend?

"Or we can leave it in the CRP if that's better for you?"

That would pay $122 million back to GKP faster than I'm currently modelling (the total owed split evenly over two years, monthly payments). But there'd still need to be a plan for the other $30 million (profit oil less CBC).

£2 was hit before your post...

Not long to wait to hear from management. Will there be another cum div clamour or more of a fizzle this time? Trading volumes are anaemic. It's like watching paint dry.

If the company had anything to say on the arrears they'd have already said it given the importance of that information. So unless there's a breakthrough in negotiations over the next couple of days we can expect the same ol':

"While Iraqi Parliament approval of the amendment could be an important step towards the resumption of exports, a number of key details remain outstanding regarding payment surety for future oil exports, the repayment of outstanding receivables and the preservation of current contract economics

Gulf Keystone remains ready to engage with the Government of Iraq and Kurdistan Regional Government to clarify key terms and finalise written agreements prior to resuming oil exports"

What 'might' be more interesting is the outlook (yes, there's no point looking out the wrong car window) for capex and whether guidance there is changed. The current guidance of $25-30 million net (c$31-38 million gross) is only slowing the rate of decline in production capacity to "6-10% per year." Will management have confidence to revise capex higher? I don't think so. Not yet. Not without agreement on arrears recovery and a ratified FDP, although I have been modeling $40 million gross for 2025. So again I expect a rehash of previous statements.

One thing I am keen to see is the CRP and R-Factor levels as of 31 December. Adjusted for the costs in the receivables I model the former to be down to c$9m at year end and now completely normalised to about zero. It's clear, given all the discussion on the arrears, that SOMO will not simply allow the IOCs to re-invoice with future production those costs previously invoiced to the KRG (even though the KRG has potentially allowed such in the case of local sales this last month) and that a payment plan needs to be agreed. If pushed to invest more I fully expect the IOCs is reply that they will reinvest the arrears when recovered.