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Yes indeed,........that was a smiley face at the end of my previous post.

Let's just go the whole hog and add on the $75.6m for arrears receivables......now you're talking :-)

Presume $75 Brent and full receivables being paid over 24 months makes your FCF figures a bit more palatable?

Good luck with convincing KRG to make those payments with SOMO in control of revenues and the possibility of a monthly budget from ICG that's going to allow repayment of massive debts to all IOC's

$65 Brent oil price - not sure if that assumption is pessimistic or realistic but time will tell.

My cost recovery assumptions are of course based on what was said very clearly by the CFO during the half year results Q and A and backed up by the CEO

Straycat - in the half year results video presentation we were told very clearly that if local sales persist we should expect the 36% entitlement to carry on for years to come as long as the cost recovery pool allows and it stands at $180m gross currently. Also $8m is the monthly figure for outgoings currently as they've upped it from $6m to maximise production.

I'd say that is verification that the receivables are going to be reclaimed via the monthly entitlement should local sales persist and SOMO do not disallow KRG from managing the selling of crude oil produced in the region.

F

What has to happen to achieve your 150p ye fair value estimate? Export pipeline open and same terms with receivable payment plan in place via SOMO?

Think you might as well just knock off the 20p and call it 130p

SOMO preventing KRG local sales is about as likely as the pipeline suffering an earthquake or sabotage IMO. The risks are always fairly high but we know that.

Plan B - keep production and Shaikan crude price as high as possible for local sales and multiply by 36%, all paid for up front. You know it makes sense.

I'm starting to favour plodding along with local sales and 36% entitlement for the next couple of years as opposed to pipeline open and no cost recovery arrears being included as they're still debating who pays.

CFO clearly stated that if local sales persist the 36% entitlement will continue for years to come as there's $188m in the CRP.

No mention of subtracting the receivables in real life situation rather than accountancy world.

Obviously the plug could be pulled on local sales but then again if the pipeline open there are risks attached too.

To me, a slow down on cost recovery results in a lesser monthly payment and as has been discussed in the last few posts GKP are already facing very fine margins on the overall operation and don't really have much wiggle room regarding modifications for the worse.

So back to my original point, it's hard to see how worse terms can be accepted with regard to modification of the PSC?

GKP will end up working for nothing and living in hope of $100 Brent.

Yes I'm including cost recovery arrears in those calculations.

Without cost recovery it gets even harder to see how the new proposed contracts can offer less than the existing PSC and make it viable proposition.

Export pipeline open and $70 Brent would be income of APPROX $13.5m per month but $7m or $8m of that is costs so for me it's very hard to see how worse terms can be accepted

Doubt very much if less lucrative contracts are on offer down south as nobody would take on the work.

Sorry just going back to my previous post (before I get into trouble) with Brent being down at $71 per barrel the difference between income generated via local sales and exports are reduced.

Maybe only $20m per month via exports as opposed to $14m for local sales.

"the recently awarded RSCs are NOTHING like the PSCs as we know them in KRI"

Are you suggesting that the (possible) revamped contract offered by SOMO to GKP is going to offer terms that would generate less income on a monthly basis than is being achieved via local sales ATM?

Local Sales - 48k x $27 x 30 days x 36% = $14m per month (or approx $10m if costs recovery neutral)

Pipe open exports would VERY APPROX double the above income figures so the compromise is possibly somewhere in the middle at worst but maybe that's over optimistic or unrealistic?

Presumably anything new has to be the same or very similar to the recent revenue sharing contracts offered by the ICG

Anyone have any idea or info on these new style contracts as my gut feeling is that they're fairly similar to our current PSC otherwise there would be no takers.

Can't imagine even the ICG would be proposing poorer terms than they've just offered IOC's down south.

These reports seem to be popping up quite regularly but being treated like the boy who cried wolf by the market unfortunately. Better than no news at all I suppose but I'm thinking the SP will tell us when something positive about to happen regarding exports.

Personally I believe the cost recovery plan will end up almost exactly the same as it is now after all these months of negotiation. Both sides will believe they've won and nothing much will have changed.

"if we stay in the local market environment we have a number of years with that entitlement" (36%)

Https://youtu.be/bGrmdFz-ueE

23 min 40 secs into this webcast the CFO gives a clear answer on cost recovery, hope we can take that as genuine as things stand.

So if there is no automatic renewal or extension, is that deemed to be good or bad for GKP, can't make my mind up personally.