Member Info for PUTUP

"my EOY terminal value calculation (= 88p per share"

My YE fair value estimate (pre dividend) of 195p (including receivables un-discounted) is comprised of (p per share):

June cash (adj for buyback): 34p

Receivables: 53p

FCF generated in 2H: 20p (and this assumes a return to exports)

48k exported prod in perpetuity, $70 Brent and other assumptions mentioned below: 88p

(exchange rate used: 1.2673)

But by all means feel free to quibble as to whether it's 3x or even 2x (or somewhere in between). But note, also, the full words I used: "absent a MASSIVE increase (think 3x) in production and/or realised prices..."

To say that we'd be at £3.50 were it not for the halt in exports is nuts. It would take a lot more than that (including full recovery of receivables).

PS: For kicks, let's examine the last few years of production:

2020: 36, 625

2021: 43,440 (a decent performance re production growth)

2022: 44,202 (abysmal)

2023: 21,891 (completely shocking)

2024 is on track for something below 41k. (still abysmal)

Hell, I'm likely being generous assuming 48k, the maximum currently-estimated field production capability, in my EOY terminal value calculation (= 88p per share for 48k at $70 per barrel Brent, full contract sanctity at existing terms and a discount to Brent of $32.30 ($23.20 plus $9 for KBT), 20% CoE).

Productivity isn't the same as production

Your post deserves a solid response.

"I believe GKP can do very well without Baghdad."

Respectfully, I think you're nuts.

"Buybacks are slowly adding value"

Buybacks DISTRIBUTE value; they don't create it. But they can provide a temporary underpinning of the share price. They will never override fundamentals for long.

"Can see this slowly rising to about 160,"

An 8% gain from here to 160p doesn't constitute a 'Strong Buy' in my opinion. More importantly, the current price and certainly further rises from here are predicated on a return to exports.

"Its why we are at £ 1.50 a pop and not £3.50. "

£3.50 is la la land absent a MASSIVE increase (think 3x) in production and/or realised prices which in turn requires a return to exports and being paid (arrears and future sales). Again, if you don't see exports ever restarting you'll never get the conditions required for a substantially higher share price.

"Can see local prices paid continuing to rise"

Perhaps. But were we exporting today the realised price per barrel would be almost double the local sales price (even with the KBT discount).

"However we might soon see some of our owed income before long as the KRG is doing much better now, and can afford to start paying their debts.'

The receivables are indeed a huge swing variable. Circa 52p per share and mostly cost oil recovery. But I believe they need a return to exports and the proceeds from future production in order to pay. But even full payment would likely not compensate for no return to exports and, instead, declining local sales. (See below.)

"By gently "milking the cow", GKP could do very well indeed. "

I think you'd do well to crunch the numbers on what the free cash flow for 2025 and beyond would look like with just local sales and minimal field investment. When you do so remember a couple of things. First, as I'm sure you are aware, field production capacity will naturally decline without investment. Secondly, monthly receipts basically halve when the CRP ex receivables normalises (I estimate this happens by the end of this year. Free cash flow then falls below $3m a month.)

The current share price expects (prices in) a LOT better scenario than local sales only and no return to exports.

Good luck!

"I do not believe our export pipeline will actually ever flow."

How on earth do you reconcile this statement with your stock rating?

I see Qube never really went away

"Has anyone checked if this is legal, year after year after year - without any of us being able to vote on them ? "

You just did!

PS: it's Canaccord's turn now

"Future dividends in effect don't get issued to treasury stock, increasing amount paid to shareholders."

Now there's some funny logic. We get more per share if they didn't have another 10 million on issue as well.

"However a 3 week shutdown will cause a 20k drop in a few months"

26k

(one of the reasons my YE fair value estimate has fallen to 195p with receivables, 142p without)

(Although I do wonder if the production loss can be met with sales from storage and hence not affect sales 1:1. )

CRP (ex receivables) slowly being whittled down to zero

" They still exist. "

Technically, yes. But they're not in circulation (and hence are not counted). Yes, they do save the company from having to go through the process of issuing new ones when they are obligated to do so pursuant to other contracts such as the LTIP. When they are transferred they become in circulation again. The terms of the LTIP (or DBP) determine this.

Oh I understand it very well

"therefore they are available for future employee benefit without those employees performing. "

The terms of the compensation schemes determine how employees benefit - not whether there is stock in treasury or not. If there are no shares in treasury they simply issue new ones to meet their obligations under these schemes as they did in April this year. The board cannot grant employee stock benefits outside of the currently approved schemes. If you want to b*tch about or are concerned about employees being granted additional stock, complain about the recently approved scheme and not about whether stock may or may not be held in treasury.

The 40% reduction in buyback volume says a lot about current thinking

(Your concern regarding treasury is so misguided)

MrCareful since no one has answered your question, they have to complete the current one before announcing another. (More directly, only the current one has been announced.)

So the EBT is very small relative to outstanding awards of nil cost options. I'm not sure how many of these have lapsed in 2024 (i.e. didn't vest due to performance conditions not having been met). Expect another award shortly (for 2024) given the recent approval of the LTIP.

Not completely clear but there were 200k at the end of last year. There have been two exercises of vested options this year by persons discharging managerial responsibilities.

It makes total sense that they hold some in treasury or at a minimum in the EBT to meet future exercise of vested options. (There are almost 8 million granted, but not necessarily vested, even before the 2024 awards which are coming up soon.)

Don't complain about repurchased shares held in treasury. Shareholders very recently approved the 2024 LTIP plan by 99.17%. Democracy.

Notice that the number of shares in circulation hasn't changed as a result of the exercise of 41k options by Gabriel. So the exercise was likely met by delivery of shares from the EBT (given, at that time, no stock was held in treasury).

One more left

Itsaponzi, you are nuts off you think the Kurds will ever again be able to export oil via any means (outside of currently "tolerated" smuggling - tolerated for now...). The whole point of the current standoff is Iraq (re)gaining sovereignty over oil production from the Kurdish region. Waiting until Sep 2025 doesn't solve anything at all.

The below is of course wrong...

That would support the view that each fork is worth more. But it omits the fact that the pie DID get smaller - money left the company (sellers of shares received it). The fewer forks remaining lift a smaller pie.