Member Info for Straycat

Using 2019 First Half Results and throwing them forward on the same basis;

55k bopd = annual sales $354m and $115m operating profit;
75k bopd = annual sales $480m and $155m operating profit;
85k bopd = annual sales $550m and $180m operating profit;
110k bopd = annual sales $720m and $240m operating profit.

Next year the anticipation is that we pump 40k bopd until Q3 when we move to 55k bopd. On that same basis then 2020 results look like-
Revenues $310m and $110m operating profit.

Obviously these figures are purely based on 2019 1st half outcomes and will vary according to real future experience including poo, and lifting costs which are assumed at an abnormal $3.9 pb per first half 2019.

But the detailed forecast assumptions really don’t matter. However you look at the numbers the Company has a phenomenal fundamental trading proposition.
It is unique.

We all (I include myself ) need to understand what we’ve got on our hands here.

If the total investment is in the region of $1.34bn over the next nine years, the ’on plan’ annual trade receipts over the same period amount to some $4.5bn or more. Truly remarkable cover.

This is only possible because of GKP’s set up.
It has no stockholding requirement;
It has one contracted customer;
It now enjoys seamless regular monthly payments from the MNR;
Its operating costs are tiny;
Its fixed costs are rigorously controlled. Sales currently stand at around $500k per employee;
Its profit is limited only by the p.o.o. and the size of the field.

So for as long as it manages its relationship with the KRG this capex plan will succeed, subject to operational obstacles.

And we are definitely not the only ones looking at this spectacular proposition.

This is a big Independent investment with massive profit and cash ramifications going forward. It will need careful and delicate financial management over an extended period.
The future cash flows suggest massive surplus cash generation……what’s the plan for that?
This proposition is potentially much bigger than the journey to 110k bopd.
And as such, it needs heavyweight financial oversight .
Billions of pounds are under consideration over the next period, and we’ve now started down that track.

Without first class financial backup the whole plan is at risk.

So where is he/she?

ALL IMO. DYOR.

Pensioner2 over on ADVFN reports at 8.19 a.m. 12/11/2019:-

‘I e-mailed IR to ask whether media speculation on a new CFO was true and, if so, would they be issuing an rns. The answer was:” The Company will issue an announcement on this matter at the appropriate time.”.....'

If this is true then ‘the appropriate time’ is surely coming fast down the tracks, because Sami:-

‘will leave the business by no later than 2 December 2019.’

Then what?

Two and a half weeks to go and nothing to report.

There’s got to be a reason for all this obfuscation.

slingsandarrows,

'-an issue that if you are going to berate the company about lack of progress and feedback to concentrate on.'

I'm not berating GKP, rather trying to capture the true potential of the field and, more importantly, who's going to end up developing it.

On another matter, thanks for the advice but since I'm the one posting, I'll decide what I post about and what I concentrate on.

Continued;
Or are we all just waiting?

ALL IMO. DYOR.

The full capex plan will take up to ten years to complete and will cost an estimated $1.34bn.
Critically it depends on :-
1) Full FPD approvals;
2) Phase 1 results appraisal and phase 2 sanction;
3) Sufficient available cash resources.

This year we’ll collect c.a. $200m in trade receipts.
This despite severe production disruptions due to maintenance, reworks, upgrades and plant installations, all on the way to 55k bopd by Q2 next year.
But if all we do for the next ten years is to continue to collect at $200m a year, receipts will still be more than enough to pay for the major production uplifts to 110k bopd.
$600m more than enough.
Of course it would also mean that $1.34bn had been wasted and no increases in production had been realised at all, (even though IN FACT we’re already up to 40k bopd).

So if we do perform according to plan, over the next ten years our cash receipts balloon through $300m per year to $500m as we achieve 75k bopd. Finally, at 110k bopd receipts would be staggering; in excess of $600m in 2027.
The extraordinarily low lifting costs mean that much of that cash falls down to the bottom line with 2027 projections at 110k bopd of Revenues at $800M-$900M developing profits well over $200m.
And we can argue the details and the assumptions made on these annual forecasts ad nauseam. No one can accurately forecast ten months out, let alone ten years. If it gives you any comfort do your own forecast.
But that’s not the point.
Any way you look at the proposition realistically, it’s a corporate dream coming true.

Whether we’re ‘sold’ or not it must be true that other and much larger interested parties will have run the same numbers and will have come to much the same conclusions purely on a forecast P&L Balance Sheet basis.

They will have also developed sophisticated projections encompassing the full potential of Shaikan at much higher output levels, very different cash resources, and much compressed time scales.

Wouldn’t you?

Yet JF has shown no real enthusiasm for making our case in the Markets. GKP have engaged in one Corporate Events Day and announced a new dividend policy.
That’s it.
Why hide this potentially tremendous success story from the public gaze?
The capex plans have been in train for years but have only been properly activated this year, though the cash build has been there for all to see.
Even now those plans are already behind schedule.

And he shows no enthusiasm at all for engaging in regular RNS updates on operational progress. Too often we are left to glean what we can from the RNS information GKP are required by law to provide.
Why all the reticence?
Why the obvious secrecy?
What’s really going on?

Less than three weeks ‘til Sami’s official departure and no replacement anywhere to be found.
Have a look at the Business Plan.
Look at the investment scale.
That needs heavyweight financial oversight.
Where is it?

Are we really going for organic growth?

Or

The range of remuneration options available to a new CFO……..

Sami’s 46 and he joined GKP in January 2015 at which point:-

‘In line with the Company’s Recruitment Remuneration Policy for Executive Directors, Mr Zouari has been granted 1,500,0000 market priced share options at an exercise price of 55.00 pence. One third of the share options will vest upon his appointment and two further installments of 500,000 option shares will vest upon the first and second anniversaries of his appointment respectively.’

Then on 13/12/2016 he was awarded 306,667 option shares under the Staff Retention Plan. The terms of the award were as follows:-

‘Options granted under the SRP take the form of a right to acquire Common Shares. The option exercise price is zero. No consideration is payable under this option.’
(Incidentally, under the same SRP, Nadim Zahawi was granted 226667 options on the same terms at the same time, i.e. at nil cost.)

Under the now defunct VCP Sami acquired 3,554,323 option shares. 306,667 were issued at no cost under SRP rules. 1,681,839 were issued at an average 30 day price of £1.693. Four weeks before the announcement of his departure he received a final award of 1,565,817 options at an average 30 day price of £2.563.

On 3/6/2019 he began the exit process of ‘stepping down’.

At a share price of £2.22, after four years of service Sami may have received a minimum:
a) £2,505,000 from his financial ‘golden hello’; and
b) £680,800 from his SRP award on 13/12/2016 at nil cost; and
c) An element of £886329 from his first tranche VCP award of 1,681,839 options by the end of this year; and
d) A future sum as yet undetermined, since 1,565,817 options were awarded just before his departure announcement at a strike rate of £2.563 which will not have yet been exercised.

And all the above assumes he is able to, and has, activated all of his available share awards.
But it’s just as likely he’s sat on them given his inside knowledge of Company Corporate and Operational progress.

So three weeks to go and not a new CFO in sight.

Why?

The candidates can’t be worried about the pay.

Are they worries about the future?

Is any real effort being made to replace Sami at all?

No wonder speculation runs rife.

Anyway, three weeks left to find out.......an RNS update would be of immense assistance but I won't hold my breath.

Yes, good luck BD.

Invstrat,

A couple of days ago there was an impromptu re run of the infamously non scientific Straw Poll asking as to whether this bb's posters wanted JF to stay or go.

Result so far:-

GO - 10
STAY - 2.

What does it prove........nothing.

JF was virtually unanimously reappointed as a Director by 99% of the voting shareholders at the AGM, and that's the only poll that counts.

But you've got to ask yourself what those IIs were voting for.

Was it his steely eyed determination to press on with GKP's ambitious plans for dynamic growth?

Was it his irrepressible public presence?

Was he being recognised for his work in presiding over the Restructure?

He's got to have something going for him.

After all the Remuneration Committee have seen fit to award him some 3.6m in nil cost option shares under that now defunct VCP alone.

And yet we're still having to resort to deduction to assess the current production run rates.

This from Half Year Results Announcement on 10/9/2019:-

‘Operational
Average production during August was 39,269 bopd, reflecting the positive results of the workover campaign and facilities debottlenecking at PF-1; gross production this month up to September 8 averaged 39,921 bopd.
Gross production for the first half of 2019 averaged 29,362 bopd. Average production rates during H1 2019 were necessarily affected by wells being offline for workovers and well maintenance in addition to the planned shutdown of PF-1 to install facilities as part of the 55,000 bopd expansion project.’

And this from a CCC. post on 26/9/2019 referencing an article by Mark Watson-Mitchell also on 26/9/2019:-

‘As operator of the Shaikan field it now has the capacity of producing some 40,000 barrels of oil per day and is aiming at pushing that figure up to 55,000 bopd in the second quarter of 2020.
For 2019 it is currently averaging around 32,000 bopd.’

As far as I can tell, that’s all we’ve had about production rates since the Operational And Corporate Update of 21/6/2019 where the position was summarised as:-
‘Average gross production of 29,993……bopd achieved to date in 2019 with production levels of 38,100 bopd attained prior to the PF-1 shutdown.
Full year production guidance remains unchanged, although due to changes in the drilling schedule average gross production in 2019 is currently expected to be at the lower end of the 32,000-38,000 bopd guidance.’

It’s now early November and we have no information on current bopd. performance.

However, taking these available numbers together, GKP has produced an average 38,700 bopd. In the seventy days to 8/9/2019.

And throwing this run rate forward to the year end, the average 2019 full year figure will be approx. 34,000 bopd.

Accepting this analysis as pure calculus, taking no account of any adverse conditions encountered on the ground during the run in, nevertheless such a performance would:-
1) Beat GKP’s own downbeat midyear forecasts of a possible 32,00 bopd. full year outcome;
2) Give a significant boost to Q4 2019 and Q1 2020 cash receipts;
3) Surprise analyst P&L predictions for 2019 which will undoubtedly be based on 32,000 bopd.;
4) Give an excellent springboard for the anticipated production uplifts planned during Q1/Q2 2020;
5) Go some way to repairing/re-enforcing GKP’s reputation as a growing, vibrant, ambitious Independent Operator with a great future.

Who needs a sale?

ALL IMO. DYOR.

Rhena,

The Straw Poll was originally conducted much earlier this year mid July), and I did include the option to 'recommend' JF should stay.
As unscientific as it was, the results were:-

GO - 11;
STAY - 8;
D/K - 3;
SPOILT - 2.

Completely lacking in any science whatsoever, but did reflect the stated mood of the board at that time.

On the matter of 'benefit of the doubt', maybe.

But it's a big ask.

Rhena,

I get your irritation. To a greater or lesser extent we’re all irritated.

And that’s all very well, but you can’t go referencing Dave Lewis’s resignation from Tesco as a justification for Sami’s silence on the matter of his own departure can you?
First of all Lewis was CEO, not CFO, and secondly Lewis amplified his reasons for leaving as him holding his post for a ‘finite‘ time, and it being ‘time to pass the baton on.’
Sami, by way of contrast, was absolutely silent on the matter of his ‘stepping down’.
Similarly I note you studiously avoid any assessment of the Board’s much vaunted dividend policy announcement in March and its application in practice.
Nor the way the Board applied themselves when awarding themselves the discretion to buy back all of the Common Shares allowed under Company law (Special Resolution 13(b)) when a few lines earlier they had asked for only enough latitude to enable buy back of up to a maximum 10% (Special Resolution 12).
And why not keep us informed as to the progress in recruiting SZ’s successor?
Why the need to buyback shares for ‘vesting staff option share plans’ months/ years before the need was in any way pressing?
I could go on, but the point is made.

Lucid communication, particularly in GKP’s case given its chequered history, is of paramount importance.
Yet most announcements leave unanswered questions which remain at issue long after the headlines have been absorbed.

The Board have been found wanting and, as CEO, JF should be held to account.

I’m tempted to revive that massively flawed Straw Poll.

WHOEVER THINKS JF SHOULD GO, PRESS ‘RECOMMEND’ BELOW.

Rhena,

The tenor of your post is not one defending GKP or the Board’s actions in their entirety, merely to offer another view of those highlighted by d0dger55.
But the problem is one of PI trust in the Board generally, and, in particular, a perceived lack of transparency when they make statements of any kind. And the examples are myriad.
This trust deficit is what fuels the endemic resentment always simmering under the surface here.
Incidentally, not sure JF is coming out of this debate too well…..
Probably the only thing that could salvage his legacy now would be the unveiling of a master plan which made all the obfuscation necessary, and only time will tell if that proves to be the case.
So for now he’ll have to suffer the brickbats, and so will those who support him.

Because unlike treasury shares, fully paid up bonus shares attract a dividend (even if they’re still held in Treasury under the general treasury share category) I reckon.

Maybe because the treasury shares are reclassified as fully paid up bonus shares for the purposes of calculating the dividend payment?

Why did GKP make their dividend a fixed sum payment?
In fact, anyone ever come across such a dividend calculation methodology before?
More usually the dividend is calculated ‘per share’. That way the investor knows what the payment will be, the only variable is how many common shares the investor holds (e.g. Genel).
The GKP way there is a second variable…how many common shares there are in circulation.
Is it possible that GKP chose this vehicle for dividend delivery because they weren’t sure how many shares would be in circulation come dividend calculation time?
If so it must be that GKP knew on 28/3/2019 when they announced the new dividend policy that they might wish to embark on a share buyback initiative later in the year.
And if they thought the buyback instrument might be necessary then why didn’t GKP announce it at the same time as the dividend policy?
It always made more strategic sense to launch the two in tandem for maximum impact.
The reason for the timing for Special Resolutions 12 &13 seeking the buyback authority was stated as being:-
‘in order that we can act quickly if necessary.’
What might they have been aware of in March that decided them to go for a fixed sum dividend payment later in the year?
Whatever it was, not eight weeks later Jaap Huijskes was singing a very different tune to Sami in his Chairman’s letter of 23/5/2019.
And the buyback initiative was born.
But when was it conceived, and why?
Is it possible that other discussions were already in train by March and the Board were hedging their bets by adopting a dividend calculation scheme which left them flexible to rapidly changing events?
Events that meant they might have to accelerate their buyback into treasury of sufficient Common Shares to cater for staff share option plans well ahead of time?

Otherwise, why not launch a dividend per share policy in March, as is the industry norm?


All explained away by a drab rainy day and an inquisitive poster who needs to get out more.

IMO. DYOR.

TM,

If GKP were right then your extrapolation is logically correct.

But by extension, that would also mean that all Common Shareholders have been LEGALLY SHORT CHANGED on their second tranche dividend payment by a total amount of just over $900k.
And, as you say ,going forward the more treasury shares GKP buy back, the more of the dividend ‘pot’ they attract in future, and the less per share the Common Shareholders will get.
(This assumes the dividend continues to be calculated as one divisible sum to be shared out, rather than as a dividend per share).
This would clearly be wrong. And GKP are clearly wrong if this is their position.

The general principle is that treasury shares are not eligible for dividend payments.

Ergo a corrective RNS is now overdue.

BUT, if those treasury shares have been reclassified as fully paid up bonus shares by GKP, then they DO attract a dividend and GKP have entirely complied with Company law.
Those shares could then be held by GKP in trust for the staff option beneficiaries.
And technically that IR response to ‘gruntie’ would be correct, because the dividend payment would be made to the trustees to be held on behalf of those staff beneficiaries until distribution on sale completion so, as IR states;
‘ they will not receive a dividend payment.’

Unfortunately we then have to deal with the matter of those staff options only vesting early under the special conditions of a ‘change of control’.

ALL IMO. DYOR.

Thanks BD.

Point 1,

I think TM's got that one.

Point1,

I don't know whether this is what you are referring to:-

Dear XXXX,
The calculation of dividend per share includes treasury shares as we need to base it on the entire issued share capital, however they will not receive a dividend payment.

Kind Regards

Investor Relations'

This from another query from 'grunties' as reported on II.

Note IR states 'THEY will not receive a dividend payment'.

Who are 'they'? The treasury shares? Or the treasury shareholders?
The language used (as ever when discussing GKP statements) is important.

To the best of my understanding an inanimate object can't 'receive' anything. By definition.

But shareholders can.

And if the shares are being held in trust for them prior to 'change of control' then technically they (the shareholders)would not receive a dividend.

If 'they' is a reference to the treasury shares themselves then I have no real idea what that statement means.
But it may mean that GKP thinks it is in compliance with company law while still including the treasury shares in the calculation.
And all this simply because GKP have elected not to pay themselves the dividend that they think the treasury shares attract.

Completely baffling and total b0llocks imo.

TM,

You've got the old double negative going on there TM, but I know what you mean.

The thing is, this whole conundrum of the treasury share inclusion in the dividend calculation is a real problem for us mere PIs.

But by not correcting nearly a month after the announcement, GKP must be pretty sure of their ground.
So much so that they are stoic in the face of repeated claims that an error has occurred, stating that they are:-

'satisfied that the calculation is correct. The calculation of the dividend per share includes the entire issued share capital, including treasury shares.'

This from IR in a response to a query from 'grunties' over on II.

And if, as a consequence, those shares are now de facto fully paid up bonus shares, well I reckon that's an indicator that a 'change of control' has occurred.

I can't make that facts fit any other conclusion right now.

Like I said previously, we need a corrective RNS to satisfy the matter.
And it hasn't happened yet.

And its absence only fuels the speculative flames.

IMO.