Is GKP shaping up to sell?25 Aug 2022 11:16
Recent GKP behaviour has stimulated much discussion about future options for the Company.
Let’s look at the facts:-
1) GKP have redistributed $190m in dividends this year already;
2) GKP have paid off their long term loan ($100m + accrued interest) a year early;
3) JH has indicated that FDP approvals are now a matter of timing rather than negotiation:-
‘While timing of FDP approval remains uncertain we continue to progress towards sanction with the MNR. The Company is preparing to resume drilling to ramp-up production from the Jurassic reservoir and will update capital expenditure guidance in due course ‘;
4) Further distributions have been indicated:
‘Assuming timely payment of invoices and strong oil prices, we expect continuous robust cash flow generation in 2022 providing flexibility to consider further shareholder distributions and an increase in capital expenditure to resume drilling’;
5) The appointment of FTI Consulting. How significant is this?
‘They DO NOT advise the company with regard to the M&A process itself.’
Well technically that’s correct.
However, they are repeatedly recruited by M&A specialists who DO ADVISE companies on these matters.
To the point where FCI Consulting in general and Ben Brewerton in particular even actively promote that aspect of their services on their website.
And they continually highlight their successes in this field.
As for Ben Brewerton, well according to his c.v. he’s been working with M&A specialists for many years and clearly regards it as an integral part of his skill-set.
All of GKP’s recent actions can be rationalised by reference to good and orderly asset management in the face of the particular challenges and opportunities facing the Company this year.
But equally, they are capable of other interpretations.
This year GKP have collapsed their debt (including full recovery of delinquent debt), distributed $190m to their shareholders by way of dividends and JH is on record with a commitment to further distributions this year (future oil price and payments notwithstanding). He has also indicated that FDP approval is now a matter of timing AND that they are ‘preparing to resume drilling to ramp-up production from the Jurassic reservoir’. Oh yes and they’ve binned their PR agency of many year’s standing in favour of another Agency who, by their own volition, specialise in M&A communications support. Just go look at Ben Brewerton’s profile within FTI.
Finally, JH has paid out most of his first half receipts and much more than his full first half profits ( F/C $110m-$120m) in 2022 dividend payments already.
Very aggressive stuff. The only question is why?
If I was looking to sell my business, I’d make it look as attractive as I could. A lean, mean, profit making machine.
And this is something I know a lot about.
There will be push-back against the attempt to open up this debate. So what? This is what this bb is for.
Let’s at least talk about it.
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