Member Info for PUTUP

Better than not thinking enough :)

And why would you be surprised that staff retention is an issue in the current circumstances, not just for the head honcho (Straycat on 14 May: "JH is worth every penny as far as I'm concerned. He's had some heavy lifting to do in a hostile environment.") but also for lower grade staff? All awards have performance conditions except for 444k:

"For lower grade staff only, awards are made on a time vested basis without performance conditions, and will vest one third/one third/one third over three years subject to certain conditions including continuation of employment. Of the 2,080,928 awards detailed above, 444,683 of these are time vested awards."

Personally I don't like nil-cost options. I'd rather grant a lot more with exercise prices at current market levels - if the stock hasn't appreciated they're worth zero even if vested. But it seems few others give a toss... except those that whine after the vote is cast.

haha, not a benefactor of the ltip at all. but with at least 20% (if not a hell of a lot more) of this stock held in retail hands it just shows the level of apathy when participating in corporate governance matters - unless everyone voted to approve. y'all (quite a handy abbreviation at times) don't bother to vote but then ***** about the result or its impact.

i copy below the 2023 award. why oh why were you expecting something materially different this year?

"performance conditions

vesting of the 2023 awards is subject to performance conditions which include the requirement for both absolute and relative total shareholder return (“tsr”) targets being met. tsr will be measured over the period of three years from the award date. in accordance with recent governance guidelines, the remuneration committee has the discretion to review vesting outcomes to ensure a fair reflection of performance.

awards

the following pdmrs have been granted 2023 awards under the ltip:

name

position

number of awards

jon harris

chief executive officer

515,351

ian weatherdon

chief financial officer

317,303

john hulme

chief operating officer

179,605

gabriel papineau-legris

chief commercial officer

149,132

alasdair robinson

chief legal officer

116,815

clare kinahan

chief hr officer

117,434

in addition to the above, 2023 awards over a total of 2,204,632 shares in aggregate have also been granted under the ltip to eligible employees who are not pdmrs."

How did you vote?

From mid May...

A further 3p off my YE fair value target. On top of the adjustment for ex div. Pushing out export restart to January next year will drop it further again. Assuming the receivables balance is recovered this year is also untenable... Stock is trading remarkably well all things considered...

2024 LTIP approved with greater than 99% votes in favour... Enough said.

To return capital to shareholders. Simples. And note that the buybacks have clearly been limited to at or below 150p...

Boll*cks

"That's beyond my pay grade."

Okay you said it...

Another way to think about it: your view (whatever that might be) of 'intrinsic value' (in aggregate, not per share) would adjust downward for the $10m that left the company. You'd then recompute the PER SHARE amount of this fair value view (there's nothing 'intrinsic' about an opinion) using this lower value and the lower share count. If your fair value estimate is different from the value computed when using the buyback price you get a revision (up or down) to YOUR per share estimate. (If the buyback was conducted at your fair value estimate there'd be no change.) But that only holds for your particular view of fair value. I'd likely get a different number. Management also. And individual key shareholders. And Roxi... And Belgrano...

There's no absolute correct intrinsic value. Just everyone's individual view of what that might be. The current valuation can be determined at any particular time but a group of people might have very differing views of 'intrinsic value' at any given time based on their varying views of expected events (or, in some cases sheer ability to do any analysis).

It can be YOUR view, and my view, that GKP was cheap at 139p (the average of the buyback so far) but the reality is that $10m (in this example when completed) has simply left the company. Assuming no other factors at play, it really is that simple.

If, for example, YOU think today's price (eg 150p) is at or closer to 'intrinsic value' and the company purchased $10m of stock back at a lower price (g 139p) you can easily work out the gain to YOU of the buyback so far. You bought a little more at 139p by not participating in the distribution. But of course that view of value will likely be transitory. Thing, facts and opinions, change. And, just as importantly, my view of intrinsic value might be different to yours. Our views might also be different from management's. We could all be proven wrong - or one or more of us right. But in all cases $10m simply left the company.

PS: Cannacord have clearly been told to work with a limit of 150p (cum div)... Management's view of fair value?

Intrinsic value falls by the amount of cash leaving the company

Remember that the amount that a contract would produce for a counterparty doesn't change per se just because you think the contract is now more (or less) "legitimate". For example, ratification/legitimisation by SOMO of the existing contract doesn't change the calculations presented below since they are the result of simply applying the terms of the contract.

What might change (the only thing that could change) is the rate at which you'd discount future expected cash flows to today because of the perceived lower business risk. In such a case, it is a good idea to have at least a ballpark idea of what it might mean to the value/stock price if you lowered your required rate of return. How else can you make a judgement call or evaluate "investor sentiment" in reaction to the news? Is a drop in RRoE by, say, a quarter worth 30p, 50p, 100p, a doubling of the stock price or some other order of magnitude?

(And, yes, I'm currently using a RRoE of 20% given the high level of risk and I do know how my estimate of value would change if I changed only the discount rate while keeping everything else constant...)

The big question... Receivables recovery - how and when.

Will the Contractor be allowed to invoice the cost recovery that has already been invoiced in the receivables and thereby recover a large portion of the receivables that way?

Just don't double count them

Place your bets

I certainly don't have as much as I'd like... (but maybe I'm greedy)

Starsalign - 24-25% is probably a rough rule of thumb but the full/proper calculation is easy enough so why not understand it and us it? A little effort might go a long way. You can see the big impact to free cash flow in your example. It more than halved. Run a couple more examples to satisfy yourself.

Belgrano - says the man who doesn't think exports will ever restart? 🧐

Straycat - sentiment often shifts in the face of facts. Any intelligent investor tries to understand fundamentals as a basis for trying to figure out how sentiment might change. Thank God you're not managing my money. 🫣

Good luck all investors prepared to do a little work

36% is the OUTPUT of a slightly more complicated calculation. It isn't difficult, but not as simplistic as gross field sales x 0.36. The computation has been explained here many times and there's a diagramme explaining it in various company presentations. You should familiarise yourself with this.

In your example, you get 36% when the Contractor can recover the maximum allowable cost recovery, ie 40% of field sales after the 10% royalty, due to there being plenty of historical costs not yet recovered. 48k x 28 x 30 x 0.9 x 0.4 = $14.5 million. When the CRP has normalised the Contractor can only recover the current month's costs, ie very roughly 6/0.8 = $7.5 million gross in your example (a bit less because not all of the $6m is recoverable). The difference, $7 million, then becomes Profit Oil (instead of Cost Oil) and the Contractor gets a lower percentage of this: 80% of the working interest share of Profit Oil. This is about 21.4%, depending on the R Factor. GKP gets 61.5/80 = 77% of this and then pays the CBC (20% of their profit oil). The net effect is GKP gets about 13% (0.77 x 21.4 x 0.8) of the $7m instead of 80%. So, the impact is minus $4.7 million or so net. In your example, GKP FCF for the month is now about $3.8 million (14.5-4.7-6) instead of $8.5 million (14.5-6). So, yeah, thinking about and having a solid go at modeling the CRP is important.

[Please do double check my computation (it's very late and I'm tired) once you have familiarised yourself with the computation of the split of revenues as per the diagramme presented in various company presentations as referenced above.]

Only idiots don't think a lot