Member Info for PUTUP

ValueS

""at the end of the year we are still owed CRP - somewhere in the region of 13p per share assuming a full return to normality in the 4Q and ignoring receivables."

I can't agree with the above because the CRP by definition is the sum of costs that are yet to be paid back, and since the receivables are unpaid invoices which is made up largely from CO stream, then that part of the CRP should remain in the CRP until they are paid. So, if say $120 m out of the $151m unpaid invoices come from the CRP, then that sum is still in the CRP! And it represens about 80% of the estimated (51p ?) per FD share. "

Yes, that's correct. I simply break out the receivables because it is a known figure. (And we wouldn't want to double count.) So the CRP balance is the amount of CRP in the receivables and any balance beyond that. (Obviously.) The fact that we haven't been paid and the pipeline has been shut has put paid to a zero CRP balance end of year (alongside a lot of other things). That much is obvious. It is a symptom of the issues the company faces and, hopefully, it will overcome. And now the beach beckons...

Straycat you really are clueless. I work for me and me only. Have a wonderful day. I'm off to the beach.

Nah. I just do the work.

Finance. Not American.

I covered that already below...

Ah Straycat, your poetic excellence knows no bounds. A basic sum of value:

Cash as of Aug 8: 27p per FD share

FCF created in Aug: 0 (or somewhat negative)

FCF created in Sep: likely zero, possibly a small positive, but, in any case, likely immaterial

4Q of '23: some where between zero and that which we make if we get back to 55k for all of the 4Q so: 0-16p (the bulk of this is from cost recovery)

So that's free cash flow per share between now and the end of the year. A 0 to circa 16p per share swing. Almost irrelevant in the grand scheme of things and, as you say, one might simply forget everything performance related that one might expect for the year.

(For completeness, at the end of the year we are still owed CRP - somewhere in the region of 13p per share assuming a full return to normality in the 4Q and ignoring receivables. Ok, you want to ignore this - fine.)

It really comes down to two things:

(A) Will we get paid for the $151 million in receivables we are due? This IS material. 51p per FD share. The receivables DO matter. A lot.

(B) Do we have a future business at all? If we ignore the CRP balance as you requested, we have just the value of the Profit Oil stream. I value 55k in perpetuity at somewhere between 80p and £1 per FD share (and more like the lower end). If you are really prepared to pay now for 85k you might scale that accordingly (but certainly the investment required to get to 85k crashes the free cash flow generation until you get there).

Unsurprisingly, it's all very binary. Will the GKP business model (as per the current PSC) survive and will we ever get paid for the receivables? Markets hate all or nothing scenarios.

Given A and B are inextricably tied (ie they can be summed together) you can even estimate the probability the market places currently on a good (things are resolved before 4Q) versus bad outcome (worth only current cash). Perhaps unsurprisingly, that probability currently works out to be about 50:50.

To say "we're in shape for the long haul" beggars belief in the face of current circumstances. On the contrary, everything is at risk. I'm long and I hope I'm not wrong. Place your bets, but it could go either way.

Giddy up.

Ha! What American heritage is that? I have none.

I believe/hope that oil will flow - else I would have sold out (in contrast to recent, albeit small, buying which is already underwater). It's not a certainty, however, and certainly not as to when. Each month direct costs aren't recovered means we are owed more and more by the KRG. The current situation doesn't self-finance anything... The stock is cheap - only if you believe we are back to 55k production and pre-closure sales mechanisms before year end. Until then it's all a yawn.

"Enough to sustain the business model for now."

There's a massive difference in "sustaining the business" temporarily and "sustain(ing) the business model". The latter isn't happening with these local sales. They have yet to cover costs in a massively restricted cost environment let alone generate free cash flow enough to justify the current valuation. We still require proper solutions to the various challenges facing the company. I agree with the rest of your post except to say, yes, the problem is being paid, but also what volume and what price. Nothing new there and the clouds have far from lifted. We just have a little more breathing room than before. The rampers are grasping at straws. The realists patiently wait for proper news and demonstrative progress.

Old news

"85kbopd !!"

LOL

What production level do you think justifies £5 a share?

My interest in looking at HKN was merely to see what oil is being sold at in the local market. I see from their release that Brent quality oil is currently being sold at less than $40 per barrel and I note that Shaman oil is of lesser quality. I conclude, therefore, that GKP will realize a lower sale price than HKN. I wouldn't be assuming $40 per barrel.

That said: GKP vs HKN

royalty - same

cost oil max 40% versus 43%

profit oil max 30% versus 35% (R factor determined and currently c27%)

CBC both at 20%

*A more complete quote from the HKN press release

A more complete quote from the same press release:

"HKN is currently limited to the local sales market in Kurdistan at a net-back price below $40/barrel (Sarsang oil quality is roughly equivalent to Brent crude quality).

• During the 2nd quarter, HKN sold an average of 13.7k bopd at an average net back price of $41.47/bbl, generating revenue and cash payments of $19.9 million, net to HKN.

• The domestic market for crude oil sales is inconsistent, varying week-to-week. As such, future local market sales (volumes and prices) are unpredictable."

Note the statement regarding quality. Well know more at the end of the month - hopefully - but for now I will stick with $30 per barrel.

https://www.hknenergy.com/wp-content/uploads/2023/08/HKN-Energy-Update_Aug-2023-v2.pdf

"Remind me again on their entitlement per $ barrel to local refineries!!

I haven't seen that figure ??"

GKP get their cut according to the PSC regardless of how the oil is sold

PS: you can change the sale price assumption to $40 local sale price (net of transportation) easily and see what the result is...

"and also MOL pay 20% of the cost .."

$6m per month is GKP's (net) run rate of cash burn. But, yes, as I said earlier, hopefully volumes can increase so that cash outgoings are fully covered.

From the recent RNS

"with advance payments received in accordance with production sharing contract entitlements"

Perhaps you need to learn to read?

The company doesn't own the oil. The company is requesting payment of its share in advance for obvious reasons. That's how their share is calculated. Assume a lower share if you must. It would be foolish to assume they get a greater one.

Seth should learn to do some maths.

Let's assume local sales are realizing, for example, $30 per barrel net. Production of 11,700 bpd for August. Plug these assumptions into the PSC:

Gross Field Sales 10.9

Royalty 1.1

Net Sales 9.8

Total Profit Oil 5.9

Contractor cost recovery 3.9

GKP Cost Recovery 3.1

KRG Profit Oil 4.3

Working Interest Profit Oil 1.6

Contractor profit oil 1.3

GKP Profit Oil 1.0

GKP CBC 0.2

Contractor receipt 5.0

GKP Net receipt 3.9

Versus net capex, operating costs and G&A of $6m per month.

While the limited current local sales help provide some breathing room the company is still cash flow negative (on the above two assumptions - adjust them and recalculate as you wish). But right now every little helps and hopefully local sales volumes can be increased to at least place the company in a cash flow neutral situation.

"they deliberately dropped the share price knowing that the news about dana and the positive rns were coming out. this world is full of snakes not just in the middle east. got to be a warrior in a world full of evil"

what a load of *******s. had it not been for the panic yesterday i'm sure that the company felt no need to release the rns versus waiting for the update at the end of the month. well done gkp ir.

it's good to see that local sales are providing some extra breathing room. nothing new re belief in psc. we continue to wait for a proper resolution to all the disputes (and, hopefully, payments of arrears and some clarity regarding the price at which shaikan oil will be sold at). ho hum.

Markets hate binary situations. As I said a long while ago, it can get very hairy when investors face a very binary "all ok" vs "all bad" outcome. Well, it's getting hairy now.

You only get wiped out by a rights issue if you don't participate