Member Info for PUTUP

You haven't conceived the idea that dividends come straight off the share price. One pocket to the other.

If you keep expecting distributions of value to create value you will forever be disappointed.

I assume you passed on the buyback distribution (didn't sell pro rata into the buyback) and therefore increased your ownership at £1.40. Your decision.

Oh and the dividend didn't 'support the share price' either. Surprise surprise. Not.

"I'm not 'bidding the stock up'.

I am invested in a semi-serious way"

'nough said. When you get serious come back.

"You've no idea whether the renegotiated cost recovery plan will be 'more constrained' or more flexible. "

And neither do you and so how can you have great confidence in near-term growth? The bias is clearly towards 'more constrained'. Hopefully it is the same (my current base case). Uncertainty around this (and everything else) means I'm not going to pay today for growth. Luckily I am not being asked to.

Keep bidding the stock up. You're clearly not yet buying enough to make a difference... Talk is cheap.

Straycat you're venturing into muppet status.

"GKP's forward self-funding platform to 100k bopd" vs " forget the current cost recovery model"

Go ahead and pay TODAY for 100k bopd (at some point in the future). Please.

Growth, be it from 48k to 55k or 75k or 100k depends on cost recovery. The Field Development Plan is dependent on cost recovery. How much development can be 'afforded' by the operator (your so-called "self funding") depends on how much can be recovered and how quickly. This is currently the subject of major debate with SOMO. We will have to see the form in which that debate concludes. Until then, 100k is day dreaming. You expect cost recovery to be worse yet you expect the company to rapidly increase production on a 'self-funding' basis. Is that a "huh?" or a "duh!"?

Modelling 100k bopd production is easy. Yet only a muppet would pay for it today (or tomorrow). Thankfully, the current share price doesn't demand that we do. But by all means, dig deep Straycat, get on the bid and pay it up... Or is it a(another) case of short arms and deep pockets?

Only five months to wait to see if the KRG begin to repay their debt once their payment to the operator otherwise basically halves. Oh gee, $151/24 = $6.3m which is a little less than the drop in their monthly payment obligation even under 48k local sales once the CRP is normalised in December.

GKP historical production:

2019 33k

2020 37k

2021 43k

2022 44k

2023 22k

2024 41k exp.

Yeah, it's totally credible for them to jump rapidly to 100k with a "renegotiated" (more constrained) cost recovery envelope... 🧐🧐

Are Oil Prices Signalling Recession?

Oil prices have recently followed a path that resembles periods of considerable demand weakness and calendar spreads are already consistent with recession-like inventory builds ahead. That outcome is possible but not our base case. In addition, we expect OPEC+ to continue to play a balancing role.

Key Takeaways

The recent trajectory of oil prices has similarities to other periods with considerable demand weakness

Similarly, calendar spreads are already consistent with recession-like inventory builds ahead, discounting a significant change from recent stock draws

Such outcome is possible - product stocks, refining margins, and calendar spreads signal demand softness - but it remains too early to make this our base case

Also, OPEC+'s announcement to delay the start of its planned output increase signals that the producers' group remains focussed on balancing the market

We still estimate a surplus in 2025 but slightly smaller than before. Unless demand weakens more, we estimate Brent likely remains anchored around the mid-$70s.

******

My comments. Brent finally touched down at long run (dating back to 2021) support last week. It's good to see it bounce off this support this week.

Personally, I expect the arrears to be repaid over the next two years. For now, I model 24 months of equal payments starting in January 2025. Discounting that at 20% yields a value of 41p per share (vs 51p face value). It may well be repaid much faster on export reopening.

100k production is likely many years away and will depend heavily on the cost recovery negotiations currently on-going with SOMO regarding contract terms. (The KRG's debt obligation is quite separate and can be negotiated separately.) For now I'm not prepared to pay in advance for production growth (particularly given the company's abysmal track record).

My YE fair value for 48k production, following adjustment for the strong rally in sterling, ex div, the 26k stoppage scheduled for Nov, lowering terminal Brent assumption to $65 in perp, and lower domestic sales prices until end of year, is now 152p per share (with discounted receivables). That assumes also, amongst other things, a 20% discount rate, export restart in January and Brent less $32.2 as a realised sale price. Discount that to end September yields 145p per share. So the stock is still trading at a significant discount.

(Agree with Rog re share of portfolio vs share of interest.)

So sad. Martin was a super nice guy. I first worked with him in about 2009 or so. Rather conservative but sensible and measured, and highly experienced.

"15 years" says a lot and nothing good

Straight talk isn't talking down...

Straycat, there was nothing great about the results above that which we already knew - management are doing their best to bumble along in very challenging circumstances. I'd expect nothing less. That's a par at best. So nothing positive in the results - positive meaning something good over and above that already known. Arguably the slip in pricing was an unexpected negative.

Local sales aren't why we are invested and the current stock price expects a lot better. A job well done is a full return to exports, key contract terms sanctity, recovery of receivables and a return to growth. This is why management are being paid for, nothing less. I'll congratulate them when the job is done.

Yes, I was expecting, and continue to expect, further buybacks. The company is not making an adequate return on its invested capital and needs to return capital to shareholders. The best way to do that is by distributing to those who want to sell at these levels. I do get it but you needn't believe me.

Well, they were disappointing. Nothing unexpected except the lack of buyback. Nothing concrete on contract discussions/pipeline reopening - as expected. Ho hum we keep waiting.

(Jxp101 doesn't understand where the cash came from to power historical dividends.)

Treasury shares are NOT in circulation. If the EBT is empty and no shares are held in treasury the company simply has to issue new shares to meet its obligations under shareholder approved compensation plans. If you don't like the stock compensation schemes you should have voted against them at the AGM.

RSI eased back closer to neutral. 63 was an easy tactical sell.

"Maybe an increase to $28 for oil sold"

They were getting $28 in June. $28 would be status quo.

No dividend

Buyback expressed as a dollar amount - at least $10 million. Don't give a toss if for cancellation or not. (They SHOULD replenish the EBT.)

Nothing material re ITP restart, contract discussions

Buyback inbound = tactical buy

One of many…

But far better for exports to restart and claw back the receivables under a payment plan.

“RE: Cost Recovery Pool16 Aug 2024 22:07

I fully understand that but just wondering why $224m figure is provided instead of $71m?”

Because it hasn’t been received. In same token, the R Factor is calculated based on costs incurred and (only) revenues received.

No.

To get to the non-billed amount, deduct the GROSS amount of cost recovery in the GROSS receivables ($153 million).

So the starting point for 2024 is this figure ($71 million). 80% is GKP ($57 million). 20% is MOL.

I don't follow Genel too closely. Maybe they don't disclose it in their half year results. I haven't looked at their FY results. (The Operator in our case is GKP and MOL. They share the cost pool according to their interest in cost expenditure/recovery - 80:20. Given Genel has a working interest in their Iraqi field they are almost certainly an operator even if not the lead operator. Wouldn't be hard to check.)

"draw excel spreadsheets showing how it may be paid off based on numerous assumptions?"

I'm sure starsalign noticed the disclosure at the end of Note 11 to Genel's half year financial results... Very worthwhile doing something similar for GKP.