Member Info for PUTUP

In any event they're fast coming up on the close period relating to the announcement of YE results so I wouldn't don't expect anything too soon

If GKP were truly confident of the future (and resolution of their issues in the near term) they'd announce a buyback now for up to 10 (or even 15) per cent of shares outstanding. They could even kick start it with a policy more aggressive than a VWAP trade order. It would still take quite some time to execute fully. Keep cash on hand over $50 million minimum and now, having normalised payables, deploy the excess and any monthly free cash flow into buying back and cancelling shares i.e. distributing cash to shareholders. Now that would be quite a sentiment turner and be the best way for management/board to express strong confidence. Have they got the confidence?

Damn. Made the mistake of turning off my filters.

"Warren Buffet, Phil Oakley, Terry Smith and most CEOs" - tee up the meeting and I will happily discuss it with any of them. At least they think for themselves. Nobull still thinks the company owns its shares after they've been bought and cancelled.

"Stable" within an 85p to 130p ish range. Personally, I don't expect any dividends this year. Small chance of a buyback in 2H.

Key shareholders wanted the change

Welcome back to the swamp. "The water's just fine..." Better to be a new entrant at this level than a holder from £3 down. How much did you buy?

Retail churn - hype in, disappointment out.

"So I am furious because the cash balance has dropped by $3 m since the previous update just over a month ago"

Why? A simple glance at the balance sheet showed there was a huge blowout in payables as the company stopped paying people. I noted this several times very early on. This needed reversing. What's more, the company then told you such several times. FWIW I think this normalisation is largely complete, but I could be wrong - we need updated disclosure.

Oh no, the zombie is back. Nobull still doesn't get it. (I have him in the filter bin. One of only two.) Any excess liquidity should go into a buyback. The problem is, there isn't any. I wouldn't distribute any of the $82, but I'd distribute all the extra liquidity generated post WC normalisation when and if it arrives. Maybe one day...

Absolutely not defeatist. Realist.

One year performance:

GKP -49%

S&P500 (one of the broadest and most liquid indices available +17%

If you don't recognise the fact that this has been an absolute dog over the last year you're delusional. I'm long yet fully recognise it has been an absolutely horrible hold. A stupid call.

By all means double down here (hopefully enough to make a difference) but recognise reality. I might buy some more if we see the 80s again (which is easily possible). We'll both be buying more of a dog in the hope it gets it bite back.

You think JH has any influence over when exports will restart? The only answer is he doesn't have any whatsoever. If he does, he's failing miserably.

So, yes, I HOPE exports will restart by April. But it could easily be another year later. Remember, it was originally "just going to be a matter of a couple of weeks"... Maybe soon this dog of a stock will get some bite, or maybe not.

Nothing but hope

Correct BB. If, for any reason, the contract can't be agreed we don't have the ability to monetize the fixed assets. (In the same way we don't own the resource in the ground.)

The ONLY significant assets we have are the cash in the bank, our entitlement to invoiced Receivables (you could argue that a big chunk of these are backed by fixed assets as a lot is cost recovery), an argument over the residual CRP (currently about $49m GKP share, 17p per share) and the Contract to extract on behalf of the resource owner for a small fee per barrel.

Looking forward, it's all about the Contract and the Receivables balance and we wait to see how each of them will play out.

I'm still betting our current contract prevails (albeit perhaps in RSC form) and my valuation work is based on validation of that contract - I'm not yet expecting anything to be better than we currently have and hope there's nothing worse. Unfortunately, to date there's been just one meeting involving the IOCs and little, if any, actual contract discussion. There is, though, now a much better understanding of the developmental nature of the field and hence field capital expenditure requirements and cost recovery payments. Hopefully, that will lead to swift ratification of contracts and resumption of oil exports (I'm factoring in a restart in April). Then comes the slog - and it will be a slog - to get back to where we were in March of last year. Hopefully, field sales allow the KRG to pay us back some of the receivables and, maybe, by the end of the year we can think about moving beyond 50/55k by starting new drilling activity.

Meanwhile GKP isn't earning its cost of capital (and that cost is exceptionally high due to facked up nature of this business in Kurd).

It's not the first time you've got hung up on accounting versus reality.

I'm saying focusing on the book value of assets is foolish/illusory

Not when the contract ends. The fixed asset register, an accounting concept, is a reflection of cost less depreciation. The CRP is a reflection of costs less recovery. Costs are being recovered at a rate faster than accounting depreciation. The assets turn over to Iraq when the contract ends. No contract, no assets.

"As I write, the sp is sitting @104p. That values GKP @ a paltry £230m. The Fixed Asset register alone is valued @ £463m."

The fixed asset register is illusory. They don't own the assets without a contract. Their only 'fixed asset' is the CRP balance. Iraq has paid them back for everything else. (PS: FD market cap is £240m.)

"And they have a self-funding plan to 100k bopd."

That's what we are waiting to see. The ability to "self-fund" growth depends on their ability to recover costs which depends on their contract.

28p cash

31p from this year's cash generation assuming restart in April (a big chunk being the remaining CRP balance)

52p receivables

190p for 100k no growth in perp (87p for 50k)

3 quid total (YE2024)

Obviously assuming no growth is 'harsh'. (If the company isn't growing free cash flow at least as much as the discount rate being applied it's worth less in the future than today.) But the company hasn't achieved any for years. So I use a conservative model with the view of incrementally increasing the terminal assumption (everything past one year out) when it looks like they're making progress. And, obviously, on the other side, they can't jump instantaneously to 100k. So the numbers provide only very broad 'sensibility markers.' Plus, only a couple of times has the share price been expensive vs this conservative model so it's always been more of a 'floor' valuation.

Apologies BSMonitor and all

"Basically, an instantaneous jump from 50k to 100k is worth about the same as the receivables - and it can't occur instantaneously."

Actually this is wrong - obviously. My mistake. If I think the receivables are worth just over half 50k in perp then an instantaneous doubling of prod in perp is a bit under double the receivables.

Sorry my bad.

But, given the cash in hand, receivables and the residual CRP to be recovered (hopefully this year) recognise that doubling production from 50 to 100 doesn't double value.

Hopefully they get everything resolved and going soon. While GKP is covering its cash operating costs they're not covering their cost of capital. Each and every day eats away at value. And even when production, resumes they need to grow more than their cost of capital to create value.

Nothing works without regular and reliable payments...

The overdue receivables (51p per FD share) are worth more than half what 50k production in perpetuity is worth (assuming $70 Brent average in perp less $32 discount, 20% discount rate). They are the biggest variable in short term company worth. Whether the company recovers 50k or 55k or can grow to 80k is almost rounding error by comparison. Basically, an instantaneous jump from 50k to 100k is worth about the same as the receivables - and it can't occur instantaneously. I'd bet the topic of the receivables has barely come up so far and SOMO will be saying it's a KRG problem only. Best pray for the relaxation of capital controls in Lebanon...

Development of the field drives costs which drive cost oil. The size of the recovery envelope, assuming a desire by the operator to enforce capital discipline upon the FDP discussions, is one side of the FDP debate. The other side is the desire by the resource owner to extract more sooner (which requires more investment sooner rather than later).

The point is, the discussions to date have centered on understanding field dynamics and less on the contract terms per se. It's why I continue to model the current PSC as it likely forms a very good basis for final terms (albeit in RSC form which is merely cosmetic in practical terms). Recognition of the validity of the existing PSC key terms is unlikely to be a big deal if those key terms don't change. As I have said before, I'm most worried about the royalty and the not the cost recovery elements. The level of the cost recovery payments is driven more by FDP discussions given the predominance of capex. Don't want to pay big cost oil amounts? Then don't spend so much on field development capex and be satisfied with limited, if any, production growth.