Member Info for PUTUP

"Put Up. £3 seems reasonable by comparison with that same price last year when production was c45k barrels and the yield was around 20% especially if the risk profile decreases with Iraq’s agreement for exports on existing contract terms and production hits 55k + barrels progressing towards 80k. Plus we are owed more than 100 million."

The stock traded over £3 for just a couple of days around June 9th last year.

At that time Brent was $123 a barrel

The company has paid out 40p of dividends since. (That capital left the company and commensurately the company was worth less as a result. It's not coming back.)

While then the company hadn't reached the 55k milestone it was certainly in the price at that time

The company has also since then taken a hit to pricing with the shift to KBT price which shaved an average $9 off the price per barrel. That's a big hit.

Given how long it took the company to go from 40k to 55k (again just briefly) I wouldn't expect a swift move to 85k. Certainly I'm not prepared to pay for it anytime soon. '22/'21 production growth was 1.8%. Obviously '23 has been a disaster.

We will have to see but a LOT needs to go right for the company to be worth £3. I mentioned a YE price target of £2.21. That's made up of 54p of receivables (worth less if received over time), YE expected cash (ex rec.) 36p, 11p of CRP and the rest the present value of profit oil from 55k in perpetuity (long term $75 Brent). Raising the production assumption to 85k doesn't get you there.

Congratulations on your purchase Pincer. I don't think anyone here will argue that if the company (and sector generally) move forward on favourable terms through the issues they now face, you will make good money. But your expectations that "in 6 months time, the SP will be 3x or 4x" what is now or "£3+ come next March, plus the divi" are rather fanciful. There isn't any credible valuation methodology and set of fundamentals that will produce those figures. But, hey, pop a note in the diary and we can revisit on March 1, '24.

PS: 91p ain't so hot 😉

"Amount of Oil + cost of extraction + price of oil + future dividends + potential de-risking of historical issues"

😂😂😂😂

Would love to see the workings behind that valuation analysis.... Oh what? There aren't any?

Great post Morbid. Thanks. It shows just how much is out of whack at the moment and how much has to be resolved. A lot of commercial issues need to be sorted out.

With respect to the past due invoices, my personal view is that production has to restart, oil flow and sales happen before the KRG is in a position to pay for invoices. They have too much money locked up in Lebanon and so no money to pay except out of future sales. So expect the Kurdistan IOCs to concede a payment plan, say over the next two years. But none of this can happen until the IOCs have confirmation that their commercial contracts are valid and will be honoured by all parties.

So we are back to where we were in.... June:

- An expectation (but no confirmation) that things will return to 'normal' soon

- Wondering what the discount for KBT might be (I'm assuming $9 for now)

- Wondering when we might get paid for last September's production

Lots and lots to be sorted out. For now, it's nice to mark the holding up.

Been up for a long while

PS: Anyone in the US working European stocks has been up for hours too

Well, well, well... three holes in the ground.

Let's see how things unfold. My YE price target with oil flowing fully inn December is 168p ex receivables (222p if they're paid but we need oil flowing in order for the to be paid). Based on reaching 55k bopd average production. But we have a very long ways to get there first.

For now I tip my hat to TSSZ and his insider.

Zedy - aka Zedee - another Twit/X ramper

And the moment of truth is soon arriving for TSSZ and his "source"...

Here's to a happy Monday all.... Will it be a blowout party or yet again those words of great wisdom "patience is required" ?

From TSSZ:

"Mark down 2nd October in your diary, that's all i am saying"

"As far as I am concerned 2nd October is the pipeline ceremony"

"From my Iraqi and Turkish source"

Here's to a happy Monday all....

"If you expect your company's share price to grow, you may decide to exercise and hold."

If you expect the stock price to grow and have no intention of selling then there's no need to exercise the options. You get the upside anyway. There can be reasons to exercise and hold which are tax driven (in addition to the point belgrano makes) - the exercise crystallizes the employment income event (and shares are normally sold to offset the tax associated with that) and then the hold thereafter is a capital gain/loss event. We will have to see. IW only held 50k shares prior to the exercise. I haven't gone back through the grant and vesting cycle to see how he has behaved historically. The CLO dumped half his shares immediately. Certainly not something you'd do if you thought the pipeline was going to open on Monday morning as per TSSZ's inside source.

(To correct the terminology.) No shares "matured". Options "vested". Now he has exercised options (didn't sell them). There's nothing in the announcement which says he sold the shares underlying the options exercise (apart from the automatic selling for tax). In contrast, the CLO sold almost half his net new shares on the same day. However, one can INFER that IW's intention is likely to sell (else why exercise).

No surprises. What's interesting is just how few shares these guys hang onto. Compare the footnotes with the grants post sales for tax. The only reason to exercise is if you want to sell.

Three things to add Anfil:

I think your 75% should be 80% (if you want a rule of thumb).

Model the CRP on a Gross basis.

I'm commenting on the Twitter/X post which extrapolates a significant increase in production. Of course if the current limping along continues then the CRP is recovered more slowly.

"according to your calculations, how much "unused" CRP is left? "

You have to look at the balance o/s which is the un-received CRP and then look at what has already been invoiced but not yet received. There were $224 million GROSS of unrecovered costs as of June 30. Of that, I estimate about $153 million GROSS was invoiced but not yet received in the invoices for Sep '22 to Mar '23 production. So as of June 30, the balance available for invoicing was approx $71 million GROSS or $57 million NET to GKP. Since then we've added some recoverable costs for July, August and September and recovered (invoiced and received) some through local sales. So I have approximately (+/- a couple of $ million) $73 million GROSS or $58 million NET to GKP of un-invoiced CRP as of 30 Sep '23.

The idiot on X thinks the company can ramp up production and bring new wells online while keeping total cash expenditure at $6m a month (🧐) and then goes on to extrapolate that for 12 months of FCF (😂). He ignores the fact that costs will have to rise as production rises materially. And he ignores the fact that if costs are somehow suppressed and revenues ramp with a large rise in production then the remaining un-invoiced CRP is used up very rapidly. When all the recoverable costs have been invoiced, Cost Oil becomes Profit Oil. GKP's share of Profit Oil is determined by its share of the WI share in Profit Oil which is, in turn, determined by the R Factor. (Hint: it's not 36%.)

I very much doubt they could rejig an invoice for, say, January or February to say "we are going to invoice you for costs that we have already invoiced you for because you've not paid that invoice (and commensurately adjust the invoice for, say, Sep '22)." Maybe that shift to a lower share of gross field sales (due to lack of cost recovery) would provide the flexibility the KRG need to make a partial payment of invoices in arrears, but you don't get both.

In any event, extrapolating any 'model' that doesn't model cost recovery is either incredibly stupid or deliberately misleading. That guy's 'work' is such BS on so many fronts it really isn't funny.

For now, using the 36% 'rule of thumb' works. That's because 80% of that is Cost Recovery. But if you assume costs remain suppressed but sales ramp to 50k, even at $30 a barrel, the remaining un-invoiced CRP is invoiced within a couple of months. Remember, there isn't much CRP left to be invoiced. (A big chunk has been invoiced although not yet received - in the receivables.) GKP can't invoice for Cost Recovery beyond the balance remaining after invoicing. Once the CRP is down to current month costs the 36% collapses.

The idiot on X shows absolutely no understanding of the economics of GKP's business.

Ask him as well "what happens when cost recovery runs out in his model?"

LOL what a complete PoS propaganda err 'analysis'.

OMG. Are you serious?

One would be wise to calculate what 0.01% of GKP's shares outstanding is... (and what they would be worth at the current share price.)

Also, according to this source WorldQuant never got to -0.6% in the first place. https://fintel.io/ss/gb/gkp

But by all means have fun 'pressuring' an algorithm... 🧐

Only you can answer that. If this 'comes right' soon then here would be a good entry point. If it doesn't then disappointment will see the stock trade lower. That merely states the obvious. Personally, I won't add any more unless we see blood which likely requires the stock to trade down below previous lows. So into the 70s. (The stock has benefited very recently from highly speculative enthusiasm with next to no factual substance to back it up.) Management have done what is necessary to stabilise their liquidity but they're not in a position to create a resolution. Liquidity is stable but not improving massively and certainly selling at $30 forever (and not recovering the receivables) doesn't justify the current valuation. Even if volumes increase, operating costs will have to rise with them and there's no field investment going on which we know is necessary to maintain volumes.

The problem with the current situation is that it's entirely out of the company's control. It's a factious, political stand-off. While there are many reasons to reach compromises and return to normality, things are never that simple and when the groups involved have had long-running disputes things can remain ugly far longer than one would think. So many here (including GKP management) thought this would be a short-term event. They were proven wrong. So, unless you have close ties to EACH of Turkish, Kurdish and Iraqi politics its is a very difficult one to judge. For me, it's not worth putting more money at risk at these levels. If I don't see my buy levels because things have been resolved and the stock has moved materially higher, I will be very happy that I've gained with my existing position.