Member Info for PUTUP

What a pity Unwin has short arms and deep pockets. He needs others to do his 'bidding' and so touts enormous expectations, offers little (if any) content of value, is consistently rude and consistently wrong.

Rog is sensible with his rating. Holding for circa 20% returns (my expectations, not sure about his) isn't being a detractor. If you're prepared to accept lower returns for the self-evident risk here by all means bid it up.

Take your trousers off Unwin - you'll find it easier to reach the change in the bottom of your pockets. (You can get Jens to help you.) If there's anything there...

Martijn Rats, CFA – Morgan Stanley

January 5, 2025 8:30 PM GMT

We still estimate the oil market in a modest surplus in 2025, although significantly smaller than before the December OPEC+ meeting. This likely anchors Brent around $70/bbl, but not lower than that.

Key takeaways

In the end, the oil market was broadly balanced in 2024, with aggregate crude oil and refined products inventories practically unchanged from start to end. With demand likely to grow 1.0 mb/d in 2025, and OPEC and non-OPEC supply by 0.3 and 1.4 mb/d respectively, the balance weakens into a 0.7 mb/d surplus. In isolation, this would likely lead to inventory builds, less backwardation in the forward curve and downwards pressure on Brent prices, likely to $70/bbl. However, below that, the probability of further OPEC cuts rises considerably. Also, geopolitics or another non-OPEC supply shortfall could provide upside riskOn the other hand, tariffs and/or further sluggishness in the oil-intensive part of the global economy, could lead to lower prices than forecast.

Sector - European Banks Outlook 2025 published this morning (see link) updated KBW forecasts for UK motor finance redress liability, incorporating the wider scope of the Court of Appeal Hopcraft judgement. Detailed analysis is included in the UK note "Life is so unfair ..." (see link) suggesting a total sector liability of c.£28bn. In that context we estimated motor finance redress liability for VANQ at £29m (from zero) - equivalent to c.10p a share. This is lower than might be expected for a bank with motor finance at c.36% of loans, but reflects >80% sold by motor dealers accessing independent financial advisers rather than being paid directly by VANQ.

VANQ (O, TP80p from 90p) - We spread the £29m charge over FY25-26e and now expect the bank to achieve profitability in FY26e (from FY25e) and forecast a first dividend in FY27e (from FY26e). However, the shares trade on PE26e 2.0x and PTBV25e 0.3x which feels very undemanding for a business that we believe has a unique customer offering in an underserved segment of the market and which we estimate can deliver a mid-teens ROTE by FY27 (management target FY26). Reiterated Outperform, target price down to 80p (from 90p).

Nah. I’m actually hanging out at Ardross Castle in Scotland. Chilly but lovely.

Happy New Year to all those sensible shareholders with realistic expectations.

“ trade short term as you see fit”

Personally, given the recent run without fundamentals in support and very extended RSI, were I to be a trader short term I’d be trimming today.

Ah Jens you really should be in the muppet bin with Straycat and the others.

Slig, I meant that it’s likely to be an extra tailwind.

The stock finally met my ‘24 year end target in the last remnants of the year and early ‘25. My preliminary target for YE ‘25 (to be refined post management’s update re guidance later this month) is currently 185p on a cum dividend basis. I expect considerably more than 40p in dividends in ‘25 and would adjust the year end target accordingly. Right now there’s a lot embedded in the current price. Hold long term (trade short term as you see fit).

(Oh and yes he traded back in having taken the rapid 10-12% gain on the turn.)

A very weak pound will help an oil producer’s stock price quoted in pence

No. Limited to a percentage of volume and targeting the volume-weighted average price for the day. All below the hard limit. (In other words, it would be more than possible for the stock to trade below the limit.) All speculation, of course, but that is how I would have advised execution. Maybe we will never see it executed.

I'd expect any buyback to be VWAP limited below the absolute limit.

We will have to wait and se what the final terms are. But I would note that the "Profit Oil" of our current contract isn't profit either. Rather is a sharing of production/revenues (in practical terms, just revenues) post the allowed cost recovery. Your have to deduct a few more line items before getting to 'profit'.

"My interpretation is the courts deemed there's a legal agreement between Turkey and ICG for use of pipeline in the Turkey region but that agreement expires come Sept 2025."

Then there is, quite separately, the dispute - and now agreement - between the ICG and the KRG that the sale of oil (including that from Kurdistan) will be managed by SOMO with funds flowing into the ICG coffers in return for budget allocations for KRG costs. The pipeline agreement might very well be coming up for renegotiation, but that has nothing to do with whether the KRG has the right to independently sell its oil (as has been done in the past). Good luck assuming the KRG to be allowed to go it alone in September independently of the ICG.

(It's worth highlighting that the difference between export restart in April via SOMO and export restart in September independently - even if that were possible - is rather trivial. In both cases exports restart and the timing difference is minor. What matters is the months and years following.)

"Can't you all see that kurdistan oil will never go through Iraq’s account...

We will get to say May and then you we will be saying what I have said in the beginning."

No I won't.

There's nothing special about September. The KRG can never legitimately export oil except "through Iraq's account." The current local sales environment is by the grace of SOMO. There are just three principal possible outcomes:

1. limping along in the status quo for as long as SOMO tolerates it (or SOMO takes control of local sales and we continue to limp along without exports)

2. export restart (perhaps in combination with some oil still being sold locally to local refineries) at some point

3. shut down of local sales by SOMO (and no export restart)

Scenario 1 on an indefinite basis would mean GKP is heavily overvalued at current prices. This is not my expectation as made clear below.

Scenario 2 is the base case and one which is largely impounded in the current stock price. It is also the scenario all parties are working towards even if it isn't happening as quickly as we'd like.

Scenario 3 is nuclear and if that occurred GKP would be f*cked.

The KRG don't get to go it alone in September.

GKP continues to have far too much capital deployed in unproductive assets (cash on hand and receivables in arrears).

How big a dividend might we expect to be announced in March 2025?

As you all know, I had been assuming export restart in January 2025 (and had a year-end 24 fair value target of around £1.54 a share which was almost met but only for one day). Now that looks unlikely (and it's no surprise the stock has peeled back a bit as a result) and I have now pushed out my assumption to the second quarter 2025. So I assume continuing local sales for the first 3 months of 2025 at current prices and c48k volumes.

As a result, I expect a cash balance as of the end of March 25 of around $115-120 million or so (vs $95 million as of 10 December). That assumes no further cash is deployed in the buyback (reduce that figure by any that is) and it also includes a small amount of receivable recovery in March. (Receivable recovery should accelerate thereafter.)

With - hopefully - a brighter outlook in front of them (greater possibility of export resumption and on the cusp of greater receivable recovery) management should return a big chunk of cash to shareholders. I'd push for a dividend of $50 million or more. Unfortunately I suspect management will be too conservative and prefer to hoard cash at shareholder expense... Perhaps $30-40 million is a more sensible, albeit disappointing, expectation.

Ultimately I continue to expect, however, management to pay out more cash in 2025 than that generated in 2025 by CONTINUING operations thereby slowly lowering the base of capital deployed and improving returns thereon.

Is that all you've got C*ckeye? Sticks and stones...

Being invested in GKP and laughing at stupidity here are not mutually exclusive. Some would rather apply a nostalgic look in the rearview mirror than apply critical thinking to the future.

🤣🫣 Good luck!

Good luck Jens. Hopefully you find the cash to put more to work in GKP and help bid it up there.

???

Regular payment and greater upside is worth a payment delay. W don't yet have any idea what that might be. It does, of course, tie up capital.

But right now the company's capital is "invested" 🤣 in cash and the receivables.... each returning f all.

An extra $2 million per month (it's a bit more but let's not split hairs) is a lot for this company especially when it falls straight to the bottom line. (Remember, you can't position this delta against the inflated receipts of days past.)

And then beyond that there's the fact that export restart is a pre-cursor to faster receivables recovery, lower risk (and lower discount rate)as Rog highlights and, eventually, growth. If I thought exports wren't going to start in the somewhat near future I'd dump this like a hot potato.

Whatever. The important thing is the impact on the company's ability to generate cash. A return to exports (even at current Brent and the historical, post KBT, deep discount to it) has a VERY material impact on this. Each person here can (and needs to) decide how much of that is already embedded in the current stock price...