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Hi All need to dig into the financials a bit more - but on the face of it - I think this is very positive for TGA. The main problem with TGA is its current EBITDA is valued at x1. It needs to diversify to lift its multiplier. Assuming after the deal the SA earnings are valued at just 1.5x then the it will have had a material impact on the share price.
This whole should be greater than the sum of parts
I imagine its just a squeeze as part of setting the new benchmark price of oil. KRG have always delayed payment when they want to negotiate something . A real pain in the **** bunch of clowns
to be honest to my mind, the dividends and their stability and the income that flows from them is the only way I could value this this company. And even then within a framework of " is the 15mill policy cheap and likely to be exceeded." I.e how much income am i buying per quid, how quickly will my capical be returned in dividends
How one would discount a single buyer, the Iraqi government, Iran and Syria, late payment amongst a number of factors and then feel so certain of value I have no idea. I've never really used NPV calculations as think they are pretty useless, except to illustrate, have always preferred money-on-money and payback
Sorry for being flippant - but not particularly interested in writing answers to someone else's test - if someone on here said they were going to buy GKP because they work as a car salesman and Jon Harris just bought a fleet of Ferraris - well for that person its a valid reason to buy the shares. In the same way a momentum guy would have sold at +3. we're all trying to make our own way so its strange to expect everyone to view all opportunities in exactly the same way as you do. I'm glad and happy for you that whatever model you have got tells you to invest at this level, but its not really what I'm looking for. From my personal experience. I like to buy management and make sure there are clear market pressures on that management to respond to. My math stops at checking if I think they have the bandwidth to respond to those pressures which I think here they do here in the FCF. If you want to value the some of parts go for it - but its not necessary to ask me to do it for you and not at all something that I am interested in doing when looking at a company as a going concern.
That's not at all what I look for at all to be honest. I like to find good management and then see what pressures are being applied to them to keep their jobs against the market conditions. I've never bought a public or private company where I have thought the management are not good even when I can buy a company very cheap. Hence my interest in GENL 25's and the clear gap to fill.
However, I'm not a totally qualitative guy. lots of variables so it a weird question asked in a weird way and not one i see any real benefit in working out. I like FCF, I think GKP can for the mid term future clear between $7.5m and $10m FCF a month. Assuming ~50 K bpd. Brent at $100 (I actually think oil is going way higher) but Ive assumed $100. Working interest at 20%. Overheads up at ~11m the same and opex capex 1:1 Thus I think FCF should be comfortably in excess of their 25m div policy and way that is still way behind the coupon for bonds available for Kurdistan oilers . I'm therefore expecting the dividends to be higher than the 25m per year if mgmt want to keep their jobs. Not really a model guy to be honest that's not really how I look at companies at all and consequently have no idea what that vale of "profit oil per share" means and why you would want to look at anything in isolation but each to their own. Next time I buy smiths I will try to remember to make sure to calculate newspaper margin per share
re paying capital being defensive - lets imagine a world in which GKP management haven't paid 215m of divis in the year and didn't pay back the 100m bond. GKP would be sitting on + $315m cash + what they have now vs a mkt cap of £450m, (although my the mkt would have moved up but i doubt it) . In this scenario I cant imagine there wouldn't be some corporate changes - but its all theoretical so not relevant.
No idea on cost pool but mgmt. have committed to a 5.8% yield on todays market cap. They met that with one dividend so I expect there is upside well above this. I note Genels coupon on its 25's is 9.25%...... Buying the income to my mind still looks very cheap here and perhaps there may be some capital growth with it
SQZ batted the low ball offer away. Half their production was coming of hedges in August 22 with the rest in Sept 22 so it was a cheeky try by Kistos as SQZ is about 3x the size. There is major frustration amongst shareholders of the 5% yield and no buy back program,. Mgmt are now are saying they want to buy something in the North sea. Fine but as a shareholder I'd personally see them return the cash to shareholders given they were not expecting to get it and given the banana republic status of the tax system in the north sea,
Kistos made a cheap offer for them which valued mainly there cash, which was rejected. Lol you cant be a management team sitting on super normal levels of cash and not do anything with it and then expect someone else to no look at you and think "Maybe i can pick up the company cheap by offering a return to their shareholders, paid for with their own cash" . Its like finance 101 to not put yourself in this position
Sorry to hear you think that but as a finance director with 10 years of experience there is no way you want to keep excess cash on your balance sheet as it paints a target on your back This is not in anyway a controversial opinion. Excess cash can only be used for three things (1) "investment" i,e actual or wasted (2) returning to shareholders (3) paying down debt. If your not doing one of those three your finance function is not doing what it should be doing. The fact that they are paying out excess cash tells me (1) they don't have investment )(2) they don't want to be picked up
Paying out excess cash is extremely defensive when trying not to be acquired. You cant leave a load of cash on your balance sheet or (1) people get you to pay for yourself with your own cash (2) 3rd party comes in and says "current management are rubbish return cash to shareholders" - Obvious recent example SQZ who were sitting on to much cash
Couldn't agree more, although I'd expect the fiscal breakeven even is only really important in terms of Saudi and Russia . There's clear multi year massive under investment in oil supply, currently flattered by the SPR wont hold for ever. The classic quote remains relavent "The problem of oil, it might be tersely said, is that there is always too much or too little."
If I recall the dividend policy is 25mill a year usd so about 4.7% at current market cap. The mkt cap therfores seems about right against peers if we assume no special dividend and a flat oil price etc. Upside over and above the 4.7% dividend policy yield indicates gkp may be to cheap. I note this current divi delivers 4% of that 4.7% yield
Just running the numbers on the back date of 1.5m barrels to 2020. If we say average price was $65 and average cost was $29 from the RNS I'm getting around $54m in adjustment payment
So net -7m out the door for 40m EBITDA....... or rather -7m out for 20m cash in Year 1
This is an excellent deal " It is anticipated that, due to an effective date of 1 January 2020, any closing adjustment will significantly offset the initial headline cash consideration and US$41 million decommissioning payment." So as I am led to understand it - its dated back to Jan 20 which means I expect its cash neutral on the deal