Member Info for PUTUP

Part of the EU. Part of NATO. And loving it.

How ironic that Arma keeps asking what I think...

If there were true retail capitulation the stock would be a lot lower. In contrast, it is actually trading rather sensibly given the risks to receivables (worth 52p per share). (FWIW my model spits out 127p for end June fair value ex receivables. That's with full restoration of production for all of August and beyond. Admittedly the model has elements of conservativeness but they've been proven very sensible over the last three years.)

"present and past BODs have never been open about the extent of Kurdish shareholding. I have asked the Q at AGMs and via the so-called investor relations links, Nada, nichts, SFA."

Probably because such speculation is complete BS. Four individual people control 35% of the company and they're not Kurdish or Iraqi.

"Abadi confirmed that an agreement had been reached between Iraq and Turkey. Under this agreement, he added, a delegation from both countries would convene in Baghdad on November 19"

Hopefully they meant JUNE 19

For the first quarter I had Gross recoverable costs at around $20 million a month. That comprised, broadly, $5.3m of lifting costs, $15m of capex and $0.5m of direct G&A. NET those are $4.2, $12 and $0.4. Add another, say, $1m for corp overhead (might be off here). Total $17.6m net.

Now we have capex of $3.2m (midpoint of guidance). Plus $2.8m of operating and G&A (the balance of the $6m). So that's a 73% reduction in capex and a 50% reduction in opex 'n G&A. Capex is where the bulk of the cash conservation is coming from (as one would expect). Some of the opex 'n G&A will be due to variable costs, but most of the fixed component will be borne by sub contractors I'd expect. The bulk of corporate overhead will be salaries and rent and it's good that the executive team have taken a 20% deferment of salaries (although deferment is never as good as a proper haircut).

BB - from the announcement:

"Lowering net capital expenditures, operating costs and G&A to a monthly run rate of around $6 million net from July 2023"

Itsaponzi - I merely said it could be "several more months."

"Finally, there is acknowledgement that monthly cash burn is $ 6 M only rather than another pedantic misinformation that it was $20 m a month and there by creating panic as to the going concern status of GKP. This was blatant and pathetic. "

I think you're getting confused Titan. Long earlier mentions of circa $20 million were, I believe you'll find, (1) gross and (2) monthly for the 4Q '22 and 1Q '23 periods - when production was in full swing. That's about right +/- 5%. It's obvious that costs will be lower than that when the company has ceased production and is cutting costs to the best of its ability and the question was "just by how much?" As noted below, I'd been working lately on a figure of circa $8-10 million a month since the previous update of cash at $99 million on 26 April and was expecting cash would be approaching $80 million-ish now. Hence, I did find it surprising (and pleasant) that they'd spent a mere $6m in the 7 weeks since then. But, of course, cash burn isn't smooth on a daily/weekly basis and so I wouldn't mind betting - again as I note below - that the cutoff of 15 June is a little fortuitous. I note the guidance of $6 million a month is from July onwards. Who knows? Nonetheless, it is good to see the expected cash burn is lower than the figures I'd been assuming ($8-10 million, NOT $20 million). I think management are doing the right thing - and well - given circumstances.

We wait to see what happens as the clock keeps ticking. Foolhardy expectations that this would be resolved in mere weeks have been proven just that. It could easily be several more months before the pipeline reopens. FWIW I've now written off July production in my model which knocks another 2p per share off the valuation. IMO the current share price has fully discounted the receivables, but assumes, still, a resumption of production to pre-closure levels within a couple of weeks...

Personally I wouldn't place any faith in significant domestic sales via trucks. Not that it won't happen, but rather I wouldn't rely on it. Were it to happen I'd expect sales to be modest and not change the bigger picture much at all.

The reality is that management don't have much they can say about the export/pipeline reopening picture except that they have no indication yet that it isn't a short term/temporary issue. They also don't have much to say about the arrears situation except they keep trying to get paid.

So it all comes down to cash preservation. Personally, I was surprised they've managed to contain spending as much as they have (although I'm a little wary that they benefited from fortuitous timing in regards to 15 June - they had $99 million April 26 and now 15 June $93 million, a drop of a mere $6 million in 1.5 months...). $6m per month burn - capex, operating costs and G&A (all three) - is materially lower than the $8-10 million I'd been working on (and modelling the upper end of that). So without any receipts there's circa 15 months of liquidity and, let's say, another six to nine months before people begin to really panic and begin considering emergency processes. And perhaps management can get that burn rate lower still.

So we sit tight knowing management are doing a good job with respect to what's in their court and hope the geopolitical situation resolves itself within the next several months. In the interim, we can watch the day to day ebb and flow of Arma's stress levels. Have a good weekend all!

Glad you're up large then!

I'm up 2.5-3x on GKP but, yes, it's a sensibly-sized position for me. Hopefully they resume production and get paid their receivable balance promptly. Then I can see £2 a share or a bit more. Reduce the discount for KBT and I can see it a bit higher again.

And I'm very far from 'all-in'

I've done very well out of GKP so far

"I have huge balls"

Hopefully you've been achieving huge returns to compensate for the risk else what's the point?

Management doing a good job conserving cash / lowering costs. Keep up the good work!

"A well diversified portfolio of assets

In Aim?

Are you having a laugh 😂

Joey 🦘"

If all your assets are AIM listed I would have a laugh

"Ergo?"

You'd have to have massive balls to have your wealth concentrated in this play at the moment. Hopefully that's not the case and your holding is part of a well-diversified portfolio of assets.

"Asked b4, when will you sell?"

there's still a couple of months for this to come right but it could get really hairy. Pure binary outcome risks typically involve enormous volatility as things got to the wire.

" when that opens 170 will be a reasonable expectation"

IMO the market is still pricing in a reopening late June/very early July. Payment of arrears is the real catalyst.

My fair value as of end June assuming (amongst other things) a full resumption of production for July is around 180p including payment of arrears and 128p without.

"why should they ? "

Well, don't forget that they've already paid for the assets (almost all). GKP's share of the CRP was likely a mere $37 million as of the end of March. The license is still worth something but of course if we go bankrupt and can't perform then it would be forfeited.

I reckon $9-10 million a month. It would be good if the company provided and update on measures being undertaken to reduce cash burn and what that burn currently is. Cash is probably close to $80 million now.