Member Info for Straycat

Really?
You think?

Jesus, PUTUP, what do you take the bb contributors for?
They get it. Sometimes in spades!!!
Increased volumes are the equivalent of oxygen for future growth.
And GKP are struggling to demonstrate they can deliver.
As I have already suggested in many recent posts.

We should be pushing for more detail on the 2022 capex costs and their impact (or lack of it) on 2022 volumes and why.
Transparency ref. production forecasts is now an imperative and it's the one thing we're not getting.
Not surprised though...if the news were positive we'd already know.
It looks to me like there are problems.
However, the upside is that increased capex to attempt to resolve any problems are going to assist shareholder returns.
But I'm pretty sure that's not much of a strategy...just a way of milking the business for now.

Btw, Thank God Jaap's going, finally.
We'll never know what he'll earn as a Golden Goodbye.
Or what his earnings were in his tenure as Chairman.
I'm pretty sure I don't want to know...ignorance is bliss.
Otherwise I'd be violently sick.

Oh really?
You just twist and turn as your position is scrutinised.
So are you now accepting that cash is King?
And we don't need outside influence?
That's definitely not been your position so far!
You've been advocating a more leveraged position to enable more re-distributions...

Private equity?
Is that what you're now proposing?
Really?
So on the current marcap that would imply a twenty five percent shareholding just to arrive at a $110m injection/investment.
Maybe with a premium involved; $150m? 30%? Who knows? Who cares/
It's not enough.
And a new investor lending money to GKP with a stake in the business when, fundamentally, GKP don't need it?
You think Lansdowne and Garett Soden might have a view on that?
With that new shareholder stipulating how it's run, with new NEDs reporting back on their performance agenda?
Ridiculous proposition.
Why would GKP even countenance that?
GKP can do it without any outside help/interference.
And on current PSC terms.
This is a time for serious investment decisions, not deflection.
Once again, and critically, it depends on Field performance and whether or not the Field is up to the task.
Because if it is, then GKP are in good shape without outside interference.
If not then GKP have a problem...

I don't understand why you don't get this.

GKP has always been a risk investment and will continue to be so.
The fact that GKP are making serious profits right now is irrelevant to future investors...they haven't participated in that success.
They only care about the next phase and I'm betting that new equity isn't top of their list of priorities, given the robust state of GKP's finances.
What they care about is how GKP use this moment to develop their investment position, given that if they continue to invest in the future of the Field, in effect they're not paying for it the KRG are...just a cash flow thing and possible delays in payments.
I reckon we should row our own boat...

You still don't get the relationship between debt, risk and how's funded do you...

TM,
Got it.

Your note has NOTHING to do with what prospective Lenders would require as a bare minimum in terms of lending criteria!!
In fact you accentuate GKP's borrowing issue.
And the any Lender's concerns.
This is not a First World Lending issue and in that sense you're quite right.
Lenders will be so much more suspicious.
In which case they will seek additional security for the lending, probably everything that GKP can offer..your argument even offers up the prospect of Lenders asking for Director Personal Guarantees!!!
Do you think JH would offer up his house by way of a personal guarantee on his professional judgment?
Any prospective Lender will get whatever it can take, in terms of security, for such a risky investment.
I repeat, this is not a fixed term loan for a limited period and a limited amount.
This is a funding arrangement across several years and multiple imponderables...get real.

'They don't need that much - from whatever source...'

Yes they do.
As a borrower, GKP would have to revisit the history of their relationship with the KRG and the historic payment record; the unilateral changes to payment terms over recent years; and the uncertainty re FDP approvals, including actual Field production progress; and oil price fluctuations.
Any potential lender will do the same risk analysis for funding.
This is not like the previous arrangement which was a fixed term loan at a premium 10% for five years.
This is a loan specifically arranged to fund the whole FDP to 95k bopd over four to five years.
So it really doesn't matter whether the facility is for $150m, $200m or $300m, revolving.
This is a funding programme for the next five years (or more) depending on progress in the field and oil prices.
So it's much more complicated and nuanced.
As a lender I would discount the book debt by at least 30%, probably more. And then charge it.
Also, and obviously, I would capture the accumulated cash and ongoing receipts under the same charge.
But my opening gambit would be to base the revolving facility on a fixed and floating charge on all the assets of the business, including the fixed assets.
I would also seek penalty charges on repayment defaults.

Whatever the settled arrangement, GKP would be strapped in a way that denies its financial independence.
And that is the simple truth of GKP's position if it seeks support from financial institutions to promote its plans for growth.

And why would any of that be necessary? When we can retain control of our own destiny without reference to outside interference by the self funding proposition that the Board clearly supports?

Just to suit an underweight argument about the business being under-leveraged?
And continued shareholder dividend re-distributions at current levels?

P, your argument is fundamentally flawed.
A.K.A. BS.

P,
All of that's right; and that's my argument as you are well aware.
Because if the future is about struggling with the effort to 55k bopd, given that capex this year has been adjusted from $80m to $120m (without any detailed explanation) then we need to know.
Equally, if it's going to cost more to get to 90k bopd, then we need to know that too.
Put simply, we need to know what their plan is for dealing with that Field management continuum.
I didn't buy this share for dividend support.
Don't get me wrong, I've benefited massively.
But investors like me (and I recognise I might be in a minority) want so much more.
Specifically:-
1) confidence that the Field can produce to so many previous expectations/predictions ;
2) And that the costs are still manageable within the self-funding premise.

You and I disagree about third party short term funding, because a $250m-$300m revolving facility would come at too high a price for me...charges on the assets of the business and the consequential loss of independence.
For now I'm concerned about what JH will reveal on 15/12...more importantly what he'll conceal.
Hopefully transparency will out.
But not in my experience.

And in that post, you've just made my point for me, not that it was necessary.
Marginal production improvements are meaningless in the medium to long term unless they are proven as symptomatic of real Field development potential.
And that's what serious investors now want more information on; what's the Field really capable of?
Otherwise why are we here, unless it's just for short term dividends?
That is definitely not a long term Board strategy.
Or at least it shouldn't be.
Transparency P, transparency.
We won't get it though...

'(I have 47.5k penciled in - a big uplift on the last reported figures which was ((s/b were!!)) 44.8k for August.)'

47.5k for what period?
Is that an new annualised figure for the whole of 2022?
If not, then what is the material difference between those figures in performance terms?
And, more importantly, how will that affect market perceptions of the future for GKP?
All that affects is this year's P&L performance marginally. And maybe next year's numbers too, assuming an oil price similar to this year's outlook.
It has absolutely NO RELEVANCE to next year's Field expectations. And ergo has no impact on new investment decisions.
You're missing the point.
What is critical, is an understanding of what future Field capability is, given the hundreds of millions of dollars that have now been spent exploring that potential.
More transparency on the real potential of the Field is what will move the market and the share price, one way or another.
That and an update on FDP negotiations.
Not a small improvement of production output since August...

I’ve already made so much money investing in this share that I can afford an impartial view.
Serious investors now need to know more about the future of this business going forward, in strategic terms.
We know they’ve collapsed their debt reliance by repaying the unnecessary $100m bond early.
We know they’ve paid back a huge slice of their net assets to shareholders in the last twelve months by way of dividends.
We also know that they’re struggling for volume uplifts in production.
But what we don’t know is what’s on the horizon.
Is the Field in some way compromised?
We’re spending $120m this year on capex, nearly 50% more than was estimated only a few months ago and the projected volume increases are, to say the least, questionable.
Are future significant production increases now an issue?
Or is the future of the business to be determined by reference to ongoing dividend policy and oil prices alone?
Alternatively, are we, in production terms, now Gung-Ho and the future is now to be determined by investment in an approved FDP supported by major shareholder support?
We simply don’t know.
My point is that it’s time for more transparency…shareholders deserve nothing less.
And LTHs particularly. (I don’t include myself in that category).
My question is simply this; will we get that transparency later this month?

The next Operational Update will be Thursday 15/12/2022.
‘Cometh the hour, cometh the man’.
This is JH’s moment of truth.
Shareholders need to know at least three things:-

1) Current Field performance;
2) Expected future Field performance, with time scales, given the $120m investment this year;
3) A realistic assessment of the current position in relation to FDP approval.
Platitudes about cash accumulations and re-distributions to shareholders will form part of the narrative.
But serious shareholders now need to know about what the Field is capable of, on the best current geological analysis.
An update on the cost of that development to 95k bopd would be helpful too. Unlikely though. Let’s hope I’m wrong.
As for any better understanding of the state of negotiations with regard to FDP approval; well RNS history tells its own story…again, let’s hope I’m wrong.
Sure we’ll get some more dividends; why not. It’s a crowd pleaser.
But the real deal lies in the Field’s ability to perform to expectations, and after so many previous predictions of massive unexplored potential.
‘Cometh the hour, cometh the man’.
Well we’ll see if he is the Man...will he at least be honest with us?
In my experience, Corporate doesn’t work that way usually.

Dubious Straycat.

Still refuse to answer the debt equation; why?

‘If GKP is refunded capex on a three-month payment schedule they don’t need anything like that amount of capital.’
You seen KRG’s payment history?

‘If they choose to keep investing when they’re not getting paid then obviously they need greater capital.’
You seen KRG’s payment history?

You still haven’t/can’t explain the borrowing criteria for ‘short-term’ loan finance, particularly at what level, and at what loan security cost.
Because there would be a cost. Almost certainly GKP’s financial independence.

I as I see it, there’s no need.
We can do it ourselves, without outside interference in our autonomy, so hard fought for…

‘They don’t need $900m, not even close.’

That’s GKP’s current estimate. Not mine.

Anyway, please explain how the FDP is to be partially funded by short-term debt, which has been your long-term mantra?
While still providing ‘appropriate’ shareholder returns and yet giving lenders legal comfort?
More particularly without any lender security?
Just think about it for a second, asking for that financial leg-up, prior or post FDP approval.

GKP to Lender:-
I want some back-up support money even though I’ve got a self-funding investment proposition to 95k bopd over the next four years. Oh yes, and I’ve also got $300m in the bank or in debtors;

Lender to GKP:-
How much do you need? And if it’s self -funding, why do you need me at all?;

GKP to Lender:-
A revolving $250m facility. The thing is, I’ve got/nearly got KRG approvals to 95k bopd, but there’s a bit of an historic payment issue and I want some financial back-up just in case;

Lender to GKP:- What payment issues? (then KRG’s repayment history)…

Lender to GKP:- So you want a revolving debt facility to cover any holes in payments from the KRG?

GKP to Lender:- That’s about right. It’s only a back-stop, so don’t worry, it’ll probably never happen now the oil price is where it is. Oh yes, and also, under the PSC the KRG end up paying for the investment, although that only happens if they honour their debts in a timely fashion, and before we go bust. Just a cash-flow thing?

Lender to GKP (maybe):- Yes we’ll lend you a facility that revolves around $250m but we’ll need to secure it against you’re current assets, and we’ll probably need further securities given the payment risk that you’ve already outlined.
Like all of your assets.

Meanwhile GKP can go their own way without any external interference. It just requires shareholders to go the distance.
And I’m one of them.

Explain yourself P.

Right.
Well slings, I wouldn’t normally respond to such an inane post, and yet here I am.
Let’s deal with PUTUP, once and for all.
His vision of GKP’s future requires further re-distributions of GKP equity to shareholders, funded by short term investor funding for any FDP.
He’s unsure about how this $900m revolving fund will be structured but, nevertheless, believes that existing/new investors will be prepared (in terms) to provide serious investment on a short-term basis without security. Or with acceptable security.
This in an environment when ongoing payments from the KRG are still an issue.
Ask him about it. I have. Unfortunately, it’s lost on some on this bb.
He doesn’t know how his funding model would work.
And nor do I. Because it wouldn’t.
As an investor, why would you ‘put up’ new money (see what I did there?) without asset security when the Board are still committed to servicing on-going shareholder dividend expectations?
The proposition would be that lenders pile money into GKP development while the Board continue to reward their shareholders during the development phase. I mean, please!!
At the very least as a lender, you’d want book debt and cash at bank security (current assets for the uninitiated). And with a revolving element, any investor would seek full asset security imo. Which means they’d have a view on any shareholder re-distributions during the four year development phase.
Meanwhile, we still have a self-funding proposition that has never looked stronger, without any charges on our assets. Nor any external intereference.
PUTUP’s been planted here to manage expectations and he’s using numbers and technical language to scare you into submission. And he’s good at it. With a support back-up.
Grow up and understand what’s really going on.

There is nothing to comment on here right now; until OpUps on production and investment developments we're all watching the oil price.
JH can do no more than look after our best short term interests. And he is.
On an amusing sideline, I read a blog relating to another share price I have the misfortune of being involved in.
It reminded me of PUTUP:-
'Sad fat old man, sitting in soiled clothes posting on here while masturbating. Living in the house he he inherited from his parents...'
Clearly unlikely, but still a vivid image...and gratuitously insulting to P. What's not to like?

We're still here and I still believe in the FDP broadly self-funding future.

But, as ever, it's beyond JH's control.

At a superficial level the decision to redeem the debt early made sense. I even applauded it. Still do.
But underlying motive is crucial when you’re reading the GKP runes.
And to get to that decision to redeem, the Board must have assessed the financial implications of giving up unsecured debt and leaving GKP without any financial underpinning, apart from a reliance on the KRG to keep their word. The price of oil futures and future production performance will inevitably have played a part as well.
Can you imagine the multi-various DCFs and other modelling presented?
I bet Jaap wet his pants!!
And that, in turn, must have revolved around judgments on the likelihood of FDP approval over the next twelve months.
They chose to pay down the debt early.
But it’s starting to look like a defensive play to me. Because no accountant can determine the price of oil over the next three years.
It seems to me they took that decision to ensure that Company assets and shareholder interests were preserved to the best of the Board’s ability.
And the question posed is, why was there that need? FDP concerns? Production concerns? Geopolitical posturing?
My worry is that they don’t actually have a clue what the future holds…ergo they’ll defend GKP’s position ‘til they have more information on which to base strategic decisions.
Meanwhile keep shelling out the dividends while they can.
Not a great long-term look though.
Hopefully the imminent OpUp will offer clarification.
Because it’s needed.

The solution can only be in material production uplifts. And the Board must know this. That is the only thing that will drive new and significant investment impetus.

‘Only a fool waits until a debt is actually due to restructure it’

I note that GKP took that advice and restructured their debt twelve months before the due date. By way of early redemption.
As far as I’m aware, no specific reasons were identified for the decision to call in the debt.
Apart from in his 24/6 2022 OpUp, when JH stated the Board’s:-
‘Intention to call $100m bond after the step down in July 2022 of the call premium from 4% to 2% of principal’
This suggests that the decision was purely a financial one, based on the change in redemption terms in July, coupled with the cash resources of the Company at the time.
But what was on the Board’s mind? What actually pre-empted that decision?
Was it:-
1) Simply that in doing so GKP would save $11m in interest payments for the remainder of the term and they could afford to do it?; or
2) That it was decided that there would be no further need for that unsecured financial back-up facility (which was in fact worth $200m if required)?; or
3) That they could always get future financial back-up if it were needed?; or
4) A combination of the above?

If they thought that there would be no further need for the facility then there are only three realistic possibilities (excluding sale grooming):-
(a) They have blind faith in the self-funding proposition to 75k bopd and beyond, whatever market prevailing conditions; or
(b) They’ve lost faith in FDP approval in the short term; or
(c) The field doesn’t have the much anticipated potential for development because of technical difficulties.

If they thought they could get future financial support when required, well that would inevitably depend on a whole load of future external factors, Like the oil price. Like the rapidly rising cost of borrowing (particularly if unsecured). Like investor appetite for risk. And so many more.

GKP have only limited influence once you step outside of any ability to effect production increases.
Which is why we need more transparency about field investment.
In his 24/6 OpUp, JH stated that capex guidance ‘remained unchanged’ at $85-$95m for the year. Eight weeks later it had suddenly morphed into $110-$120m (per the H/Y results on 1/9). A 25% increase in two months.
Why the sudden change? What happened in the interim?
I feel like we should know more about this change in investment emphasis.
SH-16 I get. However, is it to take GKP to an annualised 55k bopd this year? Or is it to stabilise existing flow rates?
And investment in water handling facilities doesn’t do it unless we know why that investment is a ‘now need’. And this year.
If it’s because of field preparation to FDP approval then that’s fine; but then where’s any indication of that approval?
If, however, it’s to shore up existing performance then we have a right to know that too.

And all this matters because without material production advances, GKP is a very different investment proposition going forward.

Corrupted news, corrupted views. Your stock-in-trade.
Retreat?
Speak to your mentor; he's learning the hard way. Humiliation? Putin? Surely not?
Well actually yes. Total.