Member Info for PUTUP

We are talking local sales via trucking

Anfil, yes I have pro formered cash for $7 million of the $8 being a payable. (I'm not yet adjusting for "accrued expenditures and only adjust for the steep increase in trade payables from YE to 1H.)

Your cash flow calculation is very aggressive. I'm not sure it will be "easy" to get to 35k (for now I assume 25k for Sep and Oct), bpd but assuming they do GKP is entitled to a net $11.7 million after CBC. (80% of that is cost recovery rather than 'profit oil less CBC'.) Remember the PSC still applies - GKP isn't selling and keeping all the proceeds without owing (payables increase further) anything to MOL and the KRG (even if short term they may try to hold its back). There isn't yet any agreement that monies owed to the KRG from local sales can be used to offset receivables owed by the KRG. It would be ambitious to assume such an agreement will be concluded when the KRG is desperate for funds. Until such time as an RNS confirms such an agreement I'm not going to assume it.

Subtract the $6min cash costs from that. Then whittle down payables from the remainder. So quite a bit less free cash flow generation than your numbers below.

" all that matters at this point is GKP can survive indefinitely,"

But at what valuation? Everything needs to be considered relative to what's factored into the current share price. The good news is that a lot is discounted already, but not an indefinite limping along.

Free cash flow or monthly receipt? For example, 25k at $30 per barrel generates about $8.4m of net receipt, but you need to subtract off the circa $6m of cash outgoings. The balance is then available to normalize payables and after that add to cash on hand.

Not sure why anyone would pay $50 per barrel locally. When exporting via the pipeline we were getting, post the move to KBT pricing, Brent less 23 - an average 9 for KBT quality. So even if we were exporting today we could only expect about $56 a barrel. (+/- depending on KBT discount.) So me thinks $50 locally is la la land thinking.

"If the company is nationalized Iraq will have to pay us a pretty penny to acquire the company"

They've already paid for the assets and historical costs. What do you think the PSC is worth if Iraq heads down that route? It's not a good place...

"@PUTUP, the keeping back money idea comes from time 34:00 onwards in the investor presentation."

Thanks Theoryman. So my point about the cash figure is even more appropriate. Almost another $8m of it is a payable.

I can't say I'm relaxed. There were smarter decisions to have been made in June last year and since. And I believe the current environment to be dramatically more risky than the period in which I compiled most of my position (May-Dec 2020 and reinvestment of dividends, except the last one, during 2021.) But I have the fortune of current levels still being above cost and have banked 1.4x my investment cost in dividends. So I'm ok to sit things out for awhile yet. If the stock falls below 80p I might add a little.

No kidding. And that's what management have been doing, despite the little credit they seem to get for it here. (The 20% deferment that some trumpet here as 'good new news', for example, was announced way back in June!) Management are all-in as they know full well the survival of the company is at stake. For now they've done everything that doesn't impair the speed of restart.

My point is that given the squeezing that's happened and the pressure that has been built (amongst payables for example), one can expect most, if not all, cash flow generated from local sales being directed to an easing of that pressure rather than a building of cash on hand. Management have told you as much in their latest release.

"So GKP are keeping all the monies collected currently"

I wouldn't read the "$8 million related to buyer advance payments collected by GKP" as GKP collecting the gross sales proceeds and hanging on to them but rather this is their share of sales made in advance.

"From the RNS:

"Cash balance of $82.1 million at 30 August 2023 with no debt

o Includes GKP's entitlement for local crude sales and $8 million related to buyer advance payments collected by GKP" "

So it's interesting... Yes cash was $82 million but that's with $8 million collected in advance and (at least as of June 30) payables sweated at least to the tune of $21 million. Cash normalised for those two: $53 million. Expect any receipts from local sales to merely allow some normalisation of the payables/advance payments rather than building cash on hand.

"Only essential maintenance to 40k/50k bopd should be considered right now. "

That's already the case. Except some capex was committed to well before the pipeline was shut. Any further cuts impair speed of restart. They're already not paying suppliers (to the best of their ability) as evidenced by the increase in payables.

Ho hum boys. Wait for some proper news.

The UK (and particularly everything outside the M25) has been irrelevant for quite some time but that's a whole different story and a subject that shouldn't be debated here. GKP has nothing to do with the UK except its listing (which requires a quote in pence) . Yeah we're both muppets for not having acted more strongly on our views. I sold some at each of the points I mentioned but not nearly enough. Hopefully we learn from our mistakes. Our decision to hold on will be judged on a daily basis. Each day we have a choice to hold, sell or buy some more.

Only because you thought of the dividend as a yield. It wasn't. You were being given your capital back.

The balance of trades payable rose significantly in the first half - by $21 million. A great way to preserve cash is to not pay people you owe. It's no wonder they're making statements like "Gross sales averaged around 23,100 bopd for the period from 19 to 29 August, which at current realised prices are sufficient for us to cover our targeted monthly net capex, operating costs and other G&A run rate as well as provide increased flexibility to manage our accounts payable." Emphasis on the last few words. They'll be under a lot of pressure to run this balance down... It would be foolish to expect cash on hand to rise significantly, even with local sales greater than cash costs, until this has normalized.

BTW I'm not surprised to see the language "GKP may also consider additional sources of liquidity as necessary, including external financing". They simply have to have that out there. Hopefully it doesn't come to that however.

Coulda woulda shoulda. Even more so above £3 or above £2 when Genel announced the impact of the move to KBT pricing.

Yeah Kheldar you need to take another look at your numbers. Anfil, I ran a higher volume assumption (my current expectation for the average of September) but the calculation is rather straightforward. Remember also that some costs are variable and have to rise as production increases. Under the scenario I ran, cost recovery is $6.5m which is why I wrote it covers cash costs +/-. Then there's profit oil less CBC. (If you really want to take thee $0.5m and add it to PO-CBC then do so but it's neither here nor there.) So they're covering their heavily constrained costs with a little room to spare (and it's good that they have identified additional measures should they be absolutely necessary although not incurring these would delay restart) and wait with hope to a resolution of export sales and hopefully recovery of receivables. JH and team are doing a good job considering the circumstances - and contrary to the views of some here they've been doing well since this crisis began. But we need a favorable resolution regarding exports and receivables (the money for which is tied up in a Lebanese bank and can't be remitted offshore).

It's all very simple. (a) Either we return to exports or we don't. (b) Either we collect the receivables owed or we don't. Nothing much else matters.

Local sales provide time for the first two to play out, that's it. The current share price isn't justified simply by local sales at $30 a barrel*. There's still an expectation of a return to normal export sales albeit it is heavily discounted (and rightly so).

It really is that binary.

* At 25k production and $30 per barrel GKP covers cash costs (+/- screwed down as they are) and makes about $1.6m in profit oil less CBC a month ($2.18 per barrel) but that's with next to no investment in the field to be able to maintain that production level.

"Can anyone enlighten me with regards to the % cut taken by the KRG on the local sales and how they could continue to take that cut long term without paying some of the money that they owe GKP etc. "

The PSC is the PSC whether the oil is sold locally or exported. Just put a sale price of $30 in the formula.

Doesn't surprise me either. As I've said before, you have a situation where the stock is either worth a lot more than it is today or a lot less (cash per share). It's not about whether production or pricing is a little more or less than expected etc. It's about whether the company has a business plan or not. In those types of situations one can expect rather extreme share price volatility. We're not out of the woods yet. Quite obviously, the share price doesn't reflect a return to normality but neither does it reflect the much lower value if one were to assume local sales only from here on in. Things remain very hairy.

"Patience still required"

Understatement of the century

So basically pretty much as expected. Local sales at $30 a barrel. 23k by end of August. I've been modeling 25k for September. Covering costs and still waiting for some sort of resolution for which they have no further clarity.

Basically no news. Yawn.

Figures below are Gross (for the Contractor not just GKP's share).