Member Info for theoryman

@Straycat, thanks for the TLAs, AKA Three Letter Acronyms.

IMO the agreement to swap to KBT based discount for Shaikan will be introduced - either by agreement or imposed.

Based on what we did know and IMO based on how things have changes since Feb wrt KBT, the receipts for Sept to Dec will be (positive + neutral) compared to (degrees of disappointment) in a ratio of roughly 1:2.

HKN announced that they have agreed to the change in pricing mechanism. They correctly state that Sarstang is a higher API than KBT and has a lower %S content, hence they will receive a premium to KBT.

Rather unhelpfully, and maybe worryingly, they haven’t given detail as far as I could find showing how that would have affected receipts if it had been in place previously. I will go back again and have another look. If it was a good deal why not shout it out loud from the mountain top?

Time will tell if the outcome is positive, neutral or negative but as ever I am prepared to be disappointed, the positive outcome comes as less expected bonus.

Just found the following from a Reuters report in 2017.

“Most of the Kurdish KBT oil exports to Asia are masked as other grades to avoid recriminations from Baghdad which is locked in a dispute with the semi-autonomous region of Kurdistan over oil revenue split.”

Some, maybe even all buyers might ask for KBT, pay for KBT, receive KBT but get invoiced for another blend.

IMO those prices received at market for KBT get checked and those numbers are available in a delayed form to a select audience.

When Shaikan was a stand-alone product it made sense to calculate the discounts for API and Sulphur by using well researched formulae based on the Brent standard.

Now Shaikan is part of KBT it makes sense to calculate its discounts compared to KBT, hopefully the different formulae are well established.

I set out wanting to remove some of the uncertainty created by the shift to a different pricing mechanism - as ever when it comes to Kurdistan I should have realised I was wasting my time.

Hi, Straycat, hope you had a good Christmas and all the best for the New Year.

Hi, Straycat, hope you have a good Christmas and all the best for the New Year.

In Dec ‘21 they wrote, “The Board has carefully considered the issues and has addressed them, to the extent possible or necessary”

In Dec ‘22 they wrote, “The Board has carefully considered all feedback and has addressed issues, to the extent possible or necessary.”

So the issues are either impossible to solve in their opinion or solvable - the “impossible” go in the bin.

The solvable ones are divide up into those which are deemed necessary by them and those which are unnecessary - the “unnecessary” go in the bin.

The ones which are deemed necessary are solved but only to the extent they see as needed - the extra bits others might include go in the bin.

I wonder how many of your concerns ended up in that bin - you have posted a few with reasons.

If any of my concerns had ended up in the bin this year, maybe just like they were last year, this time I would go on the attack.

Who made the decision, why was it made etc..?

“And getting nothing of any substance.” would not be an acceptable outcome.

In the context of “trouble at t’mill’ will be interesting see where changes, if any, are subsequently needed within the structure/departments - manager, overlooker, underlooker…

Apart from the reference to the Proxy organisers, seems remarkably similar to the update on the 80% issue in Dec ‘21.

The guidelines only require them to “explain” their action plan - pity it doesn’t require them to list the topics addressed, strategies considered, outcomes.

Explanation IMO seems to be that they have consulted, then decided if the requested changes are possible, and only worked on a selection of those that they believed need acting upon.

Now if things are going really well they might get away with that.

On the other hand…

Excuse me, why are you ignoring changes we think need doing?

Who has decided which changes are possible and which are impossible?

With the latter decisions, are they constrained by the competence of those involved or reality?

I cannot find any recent data for KBT realised prices on a daily, weekly or monthly basis and I need it to do some analysis.

I can find this data for a lot of other blends including some very obscure ones. I have even found one site where they have added a note explaining that whilst they have it for Kirkuk, they don’t for KBT which passes through the same port but they don’t say why.

On the other hand there are some charts on Twitter that display data from before April, so the individual data points must be available somewhere.

Any ideas?

Anyone else given a thought to the consequences of swapping to payment based on KBT and how that could have a direct effect on FCF?

(Brent-22) versus (KBT-x) where x will be based on the discount to KBT resulting from Shaikan quality and costs to MNR e.g. pipeline

KBT is much more volatile than Brent. For instance the discount increased by a minimum of $5 per barrel as a result of the disputed FSC ruling. When Russia dumped heavily discounted Urals on the market, the MNR had to drop its price for KBT in order to get it shifted.

It makes perfect sense for the MNR to want to base the payments on KBT because that’s what they get paid for.

What benefits if any will it bring the company?

What data will be used, 2022 was hardly a typical year?

Would love to be a fly on the wall when the two parties meet to discuss all aspects and then GKP get told what they have to accept :)

The only places I can find “imminent” occur in the headline and the link. Really annoying that, started reading it full of hope and ended up disappointed.yet again :(

It does clarify what is meant by within six months though, “ within a period of 6 months from the life of the formation of the government.”

#A, I think you need to reread the post.

The dividend yield is a company based number. The yield from the dividend is investor specific.

At no stage did @PUTUP say that dividends are meaningless.

On another point, just read a reference you made to the company’s assets and billion dollars.

What assets are you valuing and at what stage of the PSC do you have ownership reverting back to the Government?

At the moment we ought to be using ( Brent-quality discount to Brent -political risk discount - distressed seller discount - transport costs).

Instead we have been using the much simpler (Brent-$22 ish) where the 22 is nearly all fixed with a bit of wobble for extra transport cost linked to variable Brent. During recent history, 22 plus or minus 1 has been a close enough working figure.

Once the basis is KBT, the political risk and distressed seller discounts disappear because they are built in but a quality discount still needs to be applied, as does transport.

So IMO it might look simpler at (KBT- quality discount to KBT - transport) but the price of KBT is a lot more volatile than Brent.

It’s hard enough trying to model projections based on Brent, using KBT steps up the uncertainty by several notches.

@PUTUP, you wrote. “ (BTW I could be wrong but I'm not expecting any update until the New Year...)” - think you could well be wrong.

From the Montfort Communication site.

“Under the revised UK Corporate Governance Code, falling below 80% at an AGM vote obliges the company to explain its action plan on the issue; provide an update within six months; and include it in its annual report. “

ValueS posted his thoughts a bit earlier - I think this is confirmation.

Accidental during the updating of the info on the company site?

Deliberate? Contained an error? Linked to yet another change in the contracted deep delver?

It’s not exactly the subtlest move if there is any deeper significance and the market hasn’t exactly burst into life.

@Straycat, earlier this month you posted, “ The next Operational Update will be Thursday 15/12/2022.” Was that just an opinion based on the previous two years or was it based on information from a company source?

How about adding the paragraph above? Does it set out the T&Cs under which the negotiations will take place?

“ Al-Faris indicated that the regional government will have to negotiate with the supreme committee to reach a draft oil and gas law after the Federal Court ruled earlier that the oil and gas law in Kurdistan is unconstitutional.

Al-Faris revealed that the law will regulate the relation between the federal government and the oil producing governorates.

Al-Faris affirmed that the law will guarantee the rights of oil producing governorates including Basra governorate.”

How “chunkable” is the expansion project between the start and the finish?

One key idea underpinning a possible funding strategy, is that the cash spent on each chunk can quickly be reclaimed through the Cost Oil from the new TOTAL production and then reused on the next stage.

Wells plus connecting pipelines can be added in discrete chunks.

What about PF-3 though?

You have to build the whole of the pipeline system connecting it to the export one in a single go otherwise it won’t work :)

What about the processing plant at PF-3? If the original maximum intended throughput is MAX kbopd, can you build discrete units of say MAX/4 as and when they are required or has it all got to be built in one go?

Might well lead to extra costs by going up in stages but on the surface, if it is possible, it then it appears to me that it does open up the opportunity to self fund. It also allows them to adapt the original strategy if needed, as more info about the field is gleaned from each additional well.

“ In fact you accentuate GKP's borrowing issue.”

That was the intention of me pointing out that the company might not have any fixed assets that would remain fixed and therefore could be borrowed against.

@Straycat, under the terms of the PSC, what fixed assets could be deemed to belong to the company now AND not be eventually transferable to the Government at some future point? A point any lender might want to consider:)

Started to look at FDPs in terms of their predictive nature. Found a general reference to the results of an industry survey.

In terms of the assessments of productivity from future wells and the final recovery rate from the fields, they have limitations as far as investors are concerned.

IMHO they are best viewed as being targeted at industry based personnel who need them but are aware of their restricted usefulness.

That of course won’t stop the participants in the market reacting depending on whether they like or dislike the contents.

Is anyone aware of industry based analysis having been done wrt previous FDPs?

For a large sample of historical FDPs, what actually happened with each field, how predictive were the numbers actually achieved compared to those within the respective FDP?

How useful under different combinations of complexity and uncertainty did they turn out to be for investors?

Deliberately haven’t provided sources of data or calculations to encourage others to have a look - I could be looking at this in completely the wrong way.

I estimate that for the last three months 2/9/22 to 2/12/22 the release from the SPR has been less than 1% of the rest of global production.

So if I am correct, is the market for oil that unstable, that less than 1% change on the supply side can be used to manipulate it by such a large % in terms of price?

@BB, you wrote, “ So, now only 6,125,500bbl to be produced, in 3 months (90 days) to achieve targeted annual output of 47,000bopd.”

Shouldn’t that be over 4 months since for December you only removed the extra production from the target due to the new well and not December’s total production?