Member Info for Straycat

'Also for you and the other asleep narrative believers, such as Straycat...'

I don't even know what an 'asleep narrative believer' is.
Anyway, just leave me out of this, you myopic one-eyed freak!
Anyone who references Martine McCutcheon's brother to support his Covid rant is someone I need to get away from, and at pace.
As for your 'perspective' on Putin's dismal, ill-judged and failing intervention in Ukraine, well I can only assume you've been collaborating with other serious and knowledgeable advisors. Mickey Mouse? Dick Dastardly? Muttley?
What Sermon from Bart Simpson's Mount provoked you to your most recent Putinesque rant?

Good effort Indrid...ridiculed his Russia Today inspired nonsense and obfuscation. Well done.

The Board need to concentrate their efforts on production uplifts. Certainly to 55k bopd.
And spend whatever is required to do it within the confines of their cashflow.
For so many reasons related to the PSC formula.
It's certainly affordable, given continued payments in a timely fashion.
The one thing we're not short of is self-funding.
What's not affordable is an sp slowly drifting towards Brent Crude price dependence.
Who wants to stay invested in a Company where the share price and dividends are dictated by events totally out of their control?
Particularly when the Board have it within their means to change events. Or at least tell investors what the problems/opportunities really are.
Meanwhile the shareholders get ambivalent messaging. We still don't really know what's holding up increased production.
Information on production progress/problems is now a serious issue.
Are we investing to develop water handling facilities that will take production up to 55k?
In which case there's a problem in the field that will need capex investment re-calibration...
Or is it to provide an initial platform to 95k bopd?
Or both?
What will SH-16 produce? The bb advice is that it may enhance production by up to 5k bopd. If so then production might limp to 50k bopd with an increased 2nd half capex of $20m to get there.
Not good.
I don't know. And I think I have a right to know. We all do.
Otherwise I'll be voting with my feet. And I probably won't be on my own.

Not that anyone should worry about a seismic movement in the sp as a consequence!!

Famously in the 2019 March webcast ref. FY 2018 results, Jon Ferrier stated that following GKP's 2018 record performance he wanted the Company to become 'a boring old oil company'.
Well, given the announcement of his corporate 'retirement'in late 2020, his ambition has nevertheless come true.
I've just made serious money over the last six trading days investing in GKP and BP.
And I'm definitely not a trader.
But they both track the oil price.
The difference between the two is that GKP has the possibility of doubling its production organically within the next four years.
BP doesn't.
What GKP needs right now is some material increased production.
55k bopd as a bare minimum.
FDP approval as well.
Otherwise the GKP share price is simply going to be driven by the price of Brent Crude with blips depending on future shareholder re-distributions and re-investments in ongoing productivity...really boring.
Not what I'm here for. This has never been a dividend share for me.
Not complaining though. But dividends at 2022 levels cannot continue through 2023 given current production rates.
GKP needs to up its production performance.
Sooner rather than later.

The game changer is material increased production.

I hate to get macro because it's fraught with difficulty.
But the BoE are almost certainly going to have to put interest rates up again and soon. Probably before the next scheduled MPC meeting in November.
I don't see what choice they've got given recent Fed rate actions and future indications. They protect the dollar at all costs.
And that suggests a beckoning recession (BoE think that technically we're there already).
And in all advanced economies.
So unless oil prices are affected by world events, I'm just keeping my powder dry for now.
Think I'll go micro again, it's easier...

P,
I'm thinking of re-engaging...don't worry, I can afford it.
Just waiting and considering.
Starting to look cheap again.
Do I sound like Opu?
And don't lie to me!!

Look at why Huijskes deployed the VCP, notionally to reward service and performance for senior executives while actually grooming the support of JF and SZ exclusively.
They were the only Executive Directors who IN FACT benefited from the now defunct scheme. Which made them millions, way after their demise and has only just ended.
Look at the debacle that was the 2019 share buyback rationale and who drove the need for that buyback; more importantly, what Huijskes's declared rationale was.
And the result.
And why Hiujskes can't get 80% support from AGM shareholders who vote and hasn't been able to ever since 2020.
And why JF 'retired' almost immediately after the 2020 AGM.
And why Garret Soden is now the only non-independent NED.
He's there to protect the largest shareholder's interest on Board decisions/discussions.

For God's sake, DYOR...seriously.

Or don't get involved unless you're just a trader.

PUTUP:-
‘He holds him with his glittering eye-
The Wedding Guest stood still,
And listens like a three years child:
The Mariner hath his will.’
STC.

If only it were so simple with Opu.
But the truth is she has every right to her opinion even if it’s not evidentially based.
It’s the constant ramping I can’t get to grips with.

Have a good weekend Opu.
I'll just have to get used to it...

From ‘The Sound Of Music’.
Lyrics to ‘Maria’:-

How do you solve a problem like Opulentia?
How do you catch a cloud and pin it down?
How do you find a word that means Opulentia?
A flibbertigibbet?
A will-o’-the-wisp?
A CLOWN!!!!!
Many a thing you know you’d like to tell her
Many a thing she ought to understand
But how do you make her stay?
And listen to what you say?
How do you keep a wave upon the sand?
Oh how do you solve a problem like Opulentia?

How do you hold a moonbeam in your hand?

You’re my moonbeam Opu…

s/b costs and extrapolation. Apologies.

'We need production to create it.'

Yes, that's obviously right.
But on my analysis that's not happening in any material way.
In fact the capex costs of well maintenance and additional production appear to be escalating.
ValueS suggested that natural field bopd erosion might be up to 6% per year.
That makes sense to me but, if true, should be factored into any capex equation.
Water handling facilities investments are a matter of particular interest (see previous posts).
GKP have abandoned previous commitments to 55k bopd during 2022 and are now resting on increased capex guidance to get to an annualised 50k bopd.
That's got to beg questions about the ongoing costs of extrapolation given the 20% uplift in capex guidance within 6 months.
And, as a consequence, the ability of the Board to see the project through if they're not entirely in control of costs at this early stage...

Despite several previous RNS assertions of imminent 55k bopd achievement, by the FYR results in March JH was stating the following:-
‘Looking ahead to the remainder of 2022, we remain focused on achieving gross annual production of 44,000-50,000 bopd by bringing SH-15 online in Q2 2022 and optimising production with well interventions and workovers.’; then
'2022 net capital expenditure guidance of $85-95 million; Includes completion of SH-15 drilling, well interventions and workovers, and activity that enables us to expedite the FDP following approval.’
And that only took us into a 10% range of 50k.
No reference to drilling SH-16 at that time. Nor any reference to water handling facilities. Just some vague language without any real meaning, ‘…and activity that enables us to expedite the FDP following approval’.
But that seems to have been the capex guidance problem. Water handling facilities and the decision to drill SH-16.
Because in the most recent Half Year update:-
‘Looking ahead to the rest of the year, we are focused on progressing to FDP approval and achieving our production and opex guidance as we continue to optimise production from the field while maintaining a rigorous focus on costs. We have raised our 2022 capex guidance to $110-$120 million as we have added the drilling of SH-16 and are progressing initial procurement activities for the installation of water handling facilities, which will enable us to unlock increased production from our wells in the future.’
Bearing in mind that the current advice is:-
‘2022 year to date current average gross production increased by 3.6% to c.45,000 bopd as compared to the FY 2021 average of 43,440 bopd’

In summary, it looks like we’ve moved the capex need by ca. $25m to get to 50k bopd including the additional capex for drilling SH-16. And framed it as a stepping stone capex increase enabling future field development on the back of FDP approval. With water handling facilities being the pivot.
‘…and are progressing initial procurement activities for the installation of water handling facilities which will enable us to unlock increased production from our wells in the future’. No reference to time frames or forecast volume production increases.'
Supposing FDP approval isn’t forthcoming?
And/or the field development is significantly more expensive than that which was anticipated?

I’d like more detailed information on what the inflated capex is being spent on and critically, why.

Otherwise GKP runs the risk of looking like a Company having a problem in developing the field in a timely fashion and on capex guidance. With or without FDP approval.

Which is a massive issue in terms of future investment motive.

TM,
Thanks for that.
I too note that the GKP archives have been 'cleansed'.
And I do not print off all GKP website communication!!

BB,

I'm interested in a more detailed understanding of GKP's developing capex needs and I'm trying to establish which elements of capex are for ongoing development to 50k bopd and which relate to the FDP. And it seems there may be an overlap.
I'll post more on this later.

BB,
The last question, the one you answered first, was rhetorical.
So SH-16 = 4.5K additional bopd you reckon? At up to $30m capex? Okay, thanks for that.
And you reckon the water handling facilities are mainly due to dragging capacity up to 55k bopd? Okay.
So you're suggetsing an overlap of, say, $15m.
Is that your view?

TM,
When did that happen? Do you know? .

Does anyone have reliable info' on production by well?
For example, as far as I can tell, there is nothing on the potential daily production capacity of SH-16.
The issue here is one about transparency and what the revised capex guidance to $120m this year is actually for.
The RNS output is vague/non-specific on this point.
Most recently from JH:-
'We have raised our 2022 guidance to $110-$120 million as we have added the drilling of SH-16 and are progressing initial procurement activities for the installation of water handling facilities, which will enable us to unlock additional production from our wells in the future.'

What does that investment in water handling facilities refer to? Is it to unlock 55k bopd? Or is it an investment in the next FDP phase to 95k bopd.? Or is it an amalgam?

Because there's a whole world of difference between those two investment decisions . One is to take us to where we should have already been by now. Which means that the field is not performing in accordance with various previous forecasts and cannot, without more capex, get there. The other is a re-affirmation of previous predictions and an investment in the future because there is real confidence in impending FDP approval.
And if it's one bleeding into the other, then why not let us know?

One thing's for sure; we need to develop existing production facilities now, up to 55k bopd.
And all I want to know is how GKP are spending their excess cash. If we can be advised on good news (like shareholder re-distributions) then why can't we be advised in more detail on possible headwinds?

Following Bugsy911's post,

To all LTHs; I'm fascinated.

Back in the day, how did Kozel phrase GKP's production future to shareholders, bearing in mind he was priming it for sale (as far as I can glean)?
Really hope I haven't opened Pandora's box!!

Oleo,

Per 2021 FYR following a re-submission of the FDP in November 2021:-
‘Submitted draft of FDP to Ministry of Natural Resources in November 2021 comprising plan to increase Phase 1 gross production plateau to between 85,000-95,000 bopd…’; then
‘Total Gross Capex currently estimated to be $800-$925m’...
I refer you to the relevant RNS and subsequent time frames for the work to be undertaken.
DYOR.

From the most recent GKP Powerpoint contribution to the Pareto Conference 14/9/2022, apropos future investments in the Field:-
‘Continuing strong cash flow provides flexibility to consider further distributions and increased capex while preserving liquidity’;
And then:-
With progress towards implementing FDP, firm up future investment and review dividend policy.’

The key phrase here is REVIEW DIVIDEND POLICY.
The proposition being posited that GKP can continue its current trajectory of shareholder returns for the next two to three years as well as fund a $900m investment programme is financially illiterate.
And the idea that if GKP sought outside loan capital it could then use that loan to help fund shareholder dividends is plain absurd.
As shareholders we’re going to have to get used to the idea that this dividend bonanza cannot last much longer, whatever direction the Company takes.
Why?
Because the CRP will be fully exhausted within six to nine months without significant further capex injections. And fundamentally that depends on FDP approval. So we won’t have the cash to pay out next year.
And if FDP approval is granted then resources will have to diverted to the Field Development Plan. Obviously.
If GKP self-funds that capex then its primary concern will be to target that $900m investment requirement over the next four years.
That’s not to say there won’t be further shareholder re-distributions; just not at current levels.
And if GKP looks for outside loan support, (whether its short term and revolving, or longer term and fixed, or both) there is no chance that any lender is going to allow that money to be used to reward existing shareholders by way of dividends rather than invest in the future production potential of the Field.

I’m sorry for any shareholders that can’t see this.

2022 was always going to be a BIG year for GKP.

'even Warren Buffet says its always a good idea to use other peoples money to expand a business,'

With no borrowing, that's exactly what we're doing.
We're using the KRG's money to develop the business (or we would if they'd let us!!).
That's what the PSC is all about. It rewards re-investment.
And offers the opportunity of debt free finance.
The only issue is the opportunity cost of that re-investment using cash balances.
And how best to utilise Company assets.

On balance, I prefer self-funding on FDP approval.

Simply because:-
1) GKP would remain debt free and independent;
2) There would be no legal charges levied on the business for whatever facilities that were negotiated for financial support. You've got to remember that it's a four year, $900m investment. No lender is going to offer any part of that strategic financial support without levying a significant legal charge on part of/all of GKP's assets.
3) Also on all sensible current forward projections, it looks eminently do-able.

As to the cost of that approach i.e. the perceived cost of equity, well I reckon I'm happy with a 15% return, which is what external financing would cost as a minimum in today's interest rate climate imo.
Particularly when you've only got one customer and they have a history of payment delinquency.

In the end, it all depends on why you're invested. Clearly FDP approval would be a game changer however it was financed.
But I quite like the idea of GKP being in control of its own destiny.

If the oil price changes dramatically, or if Field production issues become problematic then GKP can modify its approach accordingly.

But for now, let's row our own boat...