Member Info for Straycat

BD,

The geopolitics surrounding the region are clearly critical to GKP’s future performance whether that be as an independent, or as part of a larger entity.
In fact my understanding of these matters has been greatly enhanced by reading posts from the likes of yourself, surreyscot and CCC..

But on the matter of the potential sale by Scheme of Arrangement, what makes you so sure that:
1) There’s a Scheme of Arrangement in place at all;
2) The required 75% majority shareholding in favour of such a scheme has been achieved?

Late last week I invited C0ckeye to share his views on the KRG in relation to any potential sale of GKP.

His response was best characterised thus:-

‘These ruling families have no interest in aiding the Kurdish Iraqi people so simply if the Golden Goose is healthy and she continues to lay and lay, why would they possibly take her to market?’

This opinion clearly has traction. I note Invstrat has expressed his frustration with the KRG regularly, as have ANGINA and several others, some for the same reasons, and some for other reasons entirely. But all on the same theme.

And when you stress test them, these views are often wholly consistent with the available facts, circumstantial evidence and recent actions, as far as I can tell.

These are simply different interpretations of the same data.

Now the idea that KRG avarice and self-interest might compromise the development of Shaikan and/or the performance of GKP is complete anathema to me.

But that’s totally irrelevant.

I can’t just dismiss C0ckeye’s views on the basis that I don’t like them.

So what’s left?

Well, how about taking a view which is fact based and weighed the balance of probabilities?

Is it more or less likely that GKP is sold or will be sold on the balance of probabilities?
Or is it more likely that the KRG will influence Company performance and expectations to suit their own agenda?
Or will GKP be allowed to develop organically to 100k bopd and beyond, perpetually managing shareholder and regional financial and political aspirations along the way?
And any/all the other possible outcomes that might be evaluated.

This bb is more than capable of evaluating those assessments if it has a mind to.

Mange Tout C0ckeye, Mange Tout.

C0ckeye,

Yes. I already do.

C0ckeye,

I got so carried away with bb social justice and posting integrity that I completely ignored your question re timing.

The simple answer is I don't know.

But IF it is sold then the announcement can't be far off IMO.

C0ckeye,

My point to CCC. was simply that it's not enough to dismiss any dialogue on T/O as 'ludicrous' without at least giving some justification.....otherwise all you're left with is Mob Rule.

And CCC. didn't offer the share price as a reason. She offered no reason at all. Just general abuse.

On the matter of sleuth work, whether or not 'the City' are investigating is a matter of no consequence to us PIs because if they are interested enough then they're certainly not sharing their findings with us.

Please understand that I am NOT YET CONVINCED that we are sold. I am simply analysing the facts as they present and ascribing possible outcomes accordingly.
I'm waiting to be factually contradicted across the reach of my analysis.....as and when I am then I will gladly give ground.

I know your experience of this share is different to mine and I fully respect your doubts and concerns.

But this is a search for the truth and GKP are not helping. My money's at stake so I am keenly interested in finding out, piecing together factual based analysis and presenting it to the Board for scrutiny and reasoned discussion.

Aren't you interested in that too?

GKP’s use of language, their word choices, their phraseology all combine to make their announcements sometimes very difficult to decipher and interpret.
So the clarity when Jaap Huijskes sought shareholder approval to initiate GKP’s proposed buy back initiative came as a real surprise.
Given that his stated ambition was to buy and hold Common Shares in treasury to cover staff option share plan awards, his choice of language was remarkably concise.
He could have explained why the Company felt the need to commence the buy back at this time, so far ahead of option share plan due dates, but he didn’t.
He could have itemised the number of shares in question but he didn’t.
He could have explained that the requested authorisations would in fact be for a number of Common Shares limited only by Companies Acts definitions(because that’s what Resolution 13(b) does), but he didn’t.
Instead he said simply that the Company would only hold the treasury shares:-
‘to satisfy the vesting of staff share option plans…’
He did not announce that GKP would hold those shares in treasury in advance of their vesting dates so that they would be available when/if they vested.
They were specifically bought TO SATISFY THE VESTING of those plans.
As if the plan shares had already vested and GKP were now in the business of accumulating the shares to satisfy the awards prior to distribution.

As to timing, his only reference to this was when he stated that:-
‘it is prudent to ask shareholders at this juncture IN ORDER THAT WE CAN ACT QUICKLY IF NECESSARY.’ (my capitals).

What sudden event might happen which was so dramatic as to require the Board to ‘act quickly’ and buy back shares to vest staff share options in this way, so far ahead of time?

And why did Huijskes state in proposed Resolution 12 that;_
‘the maximum aggregate number of Common Shares hereby authorised to be purchased is 29,210,524 (representing approximately 10%of the aggregate issued share capital excluding, subject to the passing of the Resolution, Treasury shares of the Company).

And then in the very next proposed Resolution13(b) vary that Resolution 12 buy back limit with this change to Byelaw 4:-
‘4.The Board may, at its discretion and without the sanction of a Resolution (i) authorise the purchase by the Company of its own shares for cancellation or acquire them as Treasury shares in accordance with the Companies Acts on such terms as the Board shall think fit and (ii) exercise all the powers of the Company to purchase or acquire all or any part of its own shares in accordance with the Companies Acts.’

In doing this he was giving the Board an unfettered discretion to buy back its own shares up to limits stipulated by Company law. The only other limit now is GKP’s cash resource.

And don’t forget that $200m unsecured loan facility agreed last year.

Anyone think the above activity is purely coincidental, one event on the other?

Or is something else going on?

CCC.,

Okay.

Now all you’ve got to do is explain why it’s ludicrous...that’s all.

Otherwise you have no grounds to object, have you?

C0ckeye,

I'll only do it if you promise not to slap me round the back of the head again!!!

Let me take in two stages.

'and those shares have to have been vested to have been fully paid up...'

This is in the nature of fully paid up bonus shares. They are treated as being entitled at full value. In this case this applies notwithstanding the fact that the nil cost staff option awards are not yet due, and won't be for some time under the various staff option plan rules. I have made reference to the relevant VCP and LTIP rules in previous posts.

'vesting can only take place under option plan rules on a 'change of control'.

This again is a reference to the GKP contractual arrangements for the award of nil cost staff options. GKP specifically anticipates a 'change of control' on launch of their award schemes and how the options will vest early.
Nothing surprising about that....they'd want to protect their valued staff against events GKP might foresee.

Neither of these two points are directly covered by Bermudan Company Law. What GKP have done is to excercise their contractual rights and duties under those laws because its had to, otherwise the staff options would be lost in any sale.

I know I'm not doing a great job of explaining myself, but in my defence this is not straightforward, so my apologies.

All IMO. DYOR.

TM,

I believe rationalisation of this matter is a pivotal issue in our better understanding of GKP’s current behaviour and future planning.

Let’s take your proposition that –
‘the shares held in treasury at the moment are not bonus shares in that sense…..’

For your interpretation of bonus shares to be correct you would then be relying on GKP having made a mistake when they included treasury shares in the second tranche dividend calculation.

And GKP have repeatedly refuted that claim ever since the announcement on 4/10/2019 and in the face of multiple challenges to their position.

Nearly a month on and no correction has been forthcoming.

What they haven’t done is to explain why they are not in contravention of Company Law, again in the face of repeated requests, not least from me.

But we can work it out.

Under Sections 42B (11) and (12) of the Bermuda Company Act 1981 (as amended):-

(11) No dividend shall be paid to the company in respect of shares held by the company as treasury shares’
But then immediately under this general principle two specific exceptions are created:-
(12) Nothing in this section shall prevent a company from:-
(a) making an allotment of treasury shares as fully paid up bonus shares in respect of shares held by the company as treasury shares; or
(b) paying any amount payable on the redemption of shares held by the company as treasury (if they are redeemable shares)

I read this to mean that GKP can allot those treasury shares as fully paid up bonus shares, thereby ascribing a value to them in advance of the staff option plan rules.

We then see that GKP’s actions make perfect sense.

If they activate the treasury shares and allot them as fully paid up bonus shares they are in fact expressing them as earned even though they are not yet due for redemption.

In doing so they are also triggering the requirement that they are calculated in the dividend calculation.

I ask you to look again at the Act particularly in the context of explaining GKP’s inclusion of those ‘treasury’ shares in the dividend calculation.

This is one of those occasions where it will all boil down to whether GKP issue a correction or not.

If they do you’re more likely to be right.
If they don’t then my argument gains yet more credence.

All IMO. DYOR.

BD,

EUREKA!!!!!

Don't know about the sale date and don't care.

Just happy someone else gets the significance of including those 'treasury shares' in the dividend calculation. They're reclassified and allocated as fully paid up bonus shares while still remaining in treasury.

There'll be no corrective RNS because what GKP have done is wholly consistent with Bermudan Company Law.

Fully paid up bonus shares automatically attract a dividend under Bermudan Company Law.

And those shares must have vested for them to be fully paid up, and vesting can only occur under option plan rules on a 'change of control'.

All IMO. DYOR.

Twelve months ago this bb really wasn't worth reading.

The content was no better or different than that drivel written over on Advfn.

Nowadays it's a must read if you're a PI in GKP, whatever your outlook.

Armasmaximilian,

Pushed back to Q2.

C0ckeye,

I've read your posts on that stuff and along with a couple of other posters like ANGINA and Invstrat it makes for interesting (if slightly depressing) reading.
What's your take on the KRG position with regard to sale?
Clearly they are influential, but explain why they might shy clear of an outright sale on the right terms.

BD, Did you buy those MOL shares?

I forgot!

really running GKP and why.

Senior Consultant @ Norton Rose Fulbright LLP:

________________________________________
Biography
Kimberley is an upstream energy lawyer based in London, focussing her practice on corporate and commercial transactions in the oil and gas sector.
Kimberley’s experience is across a broad range of transactions including share and asset acquisitions and disposals, farmins / farmouts, mergers, joint ventures and the buying and selling of royalties and production payments, throughout Europe, Africa and the Middle East. She also works with energy companies helping them navigate unfamiliar legal landscapes as part of new country entry transactions, and this work is enhanced by her experience drafting petroleum legislation in various African jurisdictions and drafting and negotiating host government contracts.
In Legal 500 EMEA, 2013, Kimberley was lauded as “garnering praise for her expertise in UKCS licences and joint ventures”. She has also been ranked as a “Super Lawyer” for Energy & Natural Resources in London Super Lawyers 2013; endorsed as a “leading Lawyer” in Projects, Energy, Oil & Gas (Upstream) and East Africa – IFLR 1000/s Sub-Saharan Africa Energy and Infrastructure Fund, 2013, and included as an expert in Energy and Natural Resources in the “Expert Guide” series, 2013, and Women in Business Law, 2014. She is also on the Steering Committee for the Women’s Oil Council.”
Appointed Non Executive Director 25/9/2018.
Jaap Huijskes on her appointment:
‘We are pleased to welcome Kimberley to the Board of Gulf Keystone Petroleum. She is a highly respected legal practitioner who has been counselling Boards for the past two decades. We very much look forward to Kimberley’s contribution, in particular in this exciting phase of investment and of markedly increasing production from Shaikan.’

Well Kimberley, what have you done for us lately?

All this at the very least;

1) Behaved as legal oversight for the renewal of the crude oil sales agreement effective 1/1/2019 – 31/12/2020;
2) Presided over the FPD representation in all its legal aspects;
3) Overseen all legal matters relating to RNSs
4) Monitored all legal aspects of closing down the VCP;
5) Put in place the legal parameters for the new dividend initiative and activation;
6) Put in place the legal parameters for the share buy back Resolutions and activations;
7) Put legal definition on Sami’s departure package;
8) Legally determined the contractual terms for outsourcing all capex work;
9) Other?

Not bad for a part timer.
And who knows, her coup de grasse may yet be still to come….

Incidentally, in my experience it's unusual for the Main Board of a production based Public company to be comprised almost exclusively of non execs.
The only Executive Director on GKP Main Board is Jon boy now that Sami's gone.
Normally the non execs seek operational guidance from more than one Board Executive and appoint accordingly.
I believe that speaks volumes about who's

Excellent.
Keep on keeping on big boy.

Old Man Straycat was ex military and he had a very unpleasant habit of slapping the back of my head if he thought I was getting ahead of myself.
You didn't know him by any chance did you C0ckeye?