Member Info for theoryman

“No wonder so much effort has gone into making you believe GKP and Shaikan are worthless”.

Waste of time anyone trying to show they are worthless, probably better to focus on looking at whether they are worth less than that $8 per barrel of Resources.

Compare Shaikan oil with “The Bacalhau oil field contains light oil with minimal contaminants.”

Those two specific components of the Bacalhau oil meet the strategic needs of those Majors but there will still be a market for the products that can be derived from the much heavier sourer alternatives such as Shaikan.

Even at $70 per barrel, working through the Shaikan PSC and Oil Agreement, the Contractors are still getting less than $5 of Profit Oil per barrel for their share of the total production from the field.

Under normal circumstances profit can only be derived from Profit Oil, after it has also covered the non-recoverable costs that cannot be reclaimed through Cost Oil in the future.

Once the distorting effect of the DfE wears off, what would be a reasonable offer?

@Bravedog, when h1970 posted “ Starting from a base market capitalisation of US$300m, total returns to Shareholders must exceed...” I assumed he was using the correct starting value for this particular scheme - there seem to be so many :)

300 compounded at 10% versus 350 at 8%, without using a calculator estimate how many steps before they flip in terms of magnitude? It took longer than I thought.

h1970, you have obviously done the calculations in the way you think they should be done and come to a conclusion that differs from the remuneration committee.

From all the detailed steps you took, could you just extract the following info so that we can all see what you have?

Year 0
Starting value in million$ 300
Unvested pot 100%
Vested 0%

Year 1
New target value in million$
Actual value on key date
What % is vested as a result of this stage
Running total vested % so far
Unvested pot % at this stage

Year 2
New target value in million$
Actual value on key date
What % is vested as a result of this stage
Running total vested % so far
Unvested pot % at this stage

And so on... thanking you in anticipation, I will be very interested to see what you have.

Opulentia, as has been shown, both methods offer options.

Anyone who owned 1% of the company owned 1.09% of it after the buybacks.

If the choose to do nothing they get an increased % holding for zero cost but it will cost them to sell shares to extract any cash by returning to the 1% holding.

With the dividend you are given the cash and it costs you nothing to extract it and keep the 1% holding. If however they want to increase their % by re-investing the cash it will cost them to buy shares.

slig, this is how I see it, makes sense to me but I could be way off!

The company returned cash to the investors by buying back shares in the market. The effect on the share price is decided by the market, not the company. The company’s task is to complete the process, not monitor the outcome.

The numbers have been affected by the company having to acquire shares to meet the needs of various schemes - ignored as it gets in the way of the underlying principle.

At the end the 229 million shares were reduced to 210 million, so 229/210 gives 1.09 which represents the factor to be applied from then on to your holding and any future distribution if you didn’t sell into it.

Your % holding has increased by a factor of 1.09

Any future $25 million dividend results in your cash return being 1.09 times higher than it would have been without the buyback.

If the company is valued by a suitor at $x billion, then your shares are worth 1.09 times what they would have been without the buyback.

Think of a buyback as concentrating any future returns for those who do not sell into it.

What if there is another buyback? Suppose they manage to buy back the same number of shares for the same outlay. There is a compounding effect as a result of the 19 million shares coming off the 210, resulting in only 191 million being left.

So 229/191 gives a factor of almost 1.2 compare to where the processes started.

At the end of both ways the company has returned value to its shareholders by using some of its cash and as a result it is worth less.

In both cases the investor has a choice, do you want cash or to increase your % holding in the company?

With the dividend you are given the cash and have to decided whether to keep it or re-invest it to increase your % holding.

With the buyback you automatically get an increased % holding but no cash. If you want the cash you have to sell shares and reduce your % holding.

Maybe the problem lies deep within the subconscious of the LTH - they have held on to their shares for so long that selling any for any reason doesn’t seem to be an option? In other words they are happy with the choice of buying more shares if they want to but selling is not a choice on their menu, so buyback seems to them as offering no choice.

Another issue might be that selling shares to extract cash would appear to be being negative about the long term but not re-investing the dividend and keeping the cash is just the same. At the end you end up with cash but a smaller % holding than you could have had with the alternative action.

So here is the conflicting information as shown by the charts - it’s the conflict that creates opportunities to go Long or Short or do nothing.

Now contrary to popular opinion all gaps get don’t get filled, most do but not all - time taken varies from less than a second, to minutes, to hours, to days, to weeks, to years, to never.

The gap down on Thursday that dropped through the 165p support zone looked like a breakout gap. The fact that that same level then acted as resistance, when an attempt to close the gap was made, added weight to the argument.

On the other hand for technical reasons there is a very important level just below where the latest lowest Low was - the 157p level. A similar level appeared in the 120s, which was previously resistance flipped and acted as support and thus avoided overlap.

This level will be used by traders who buy as the price gets close but they will sell ASAP if the price drops through and hits their stop loss. If the latter happens it will fuel the move down thus reinforcing the breakout gap, maybe adding a runaway gap.

It bounced before 157p, the gap got closed, so either it was a routine one OR it was an exhaustion one.

IF it was an exhaustion one then there is the possibility that the whole of the drop from 199p is over and this bounce will take us above 199p.

Peabody, I’ll post my thoughts in two chunks. This bit contains a summary of how I think and some background info on gaps. The other will focus on applying it to GKP in this particular situation.

It’s not about feeling positive or negative, it’s about assessing alternatives. Looking at the value on offer in terms of potential reward, financial risk and the chance of success given your interpretation the evidence available at the time.

I literally have no idea which of my individual trades will make money when I press the button, all that matters is that the total return from whole bundle is positive. It’s not even about how many winners and losers I get, it’s solely about the total winnings compared to the total losses.

So why would anyone get any sort of emotional attachment to something over which they have no control?

There are basically four types of gaps.

Routine - they happen all day every day, get filled quickly.

Breakout - price was trapped in a range, price gaps out of the range.

Runaway - clear trend already in existence, gap occurs in same direction as trend.

Exhaustion - the investors with the worst timing imaginable in this particular case join a trend just as it is coming to an end, as the “smart/informed” investors who jumped on much earlier make an exit. I hope no-one is delusional enough to think that they have never done that ;-)

From Thursday:-

“ May 20th, price made an even lower intraday Low without crossing down through 157p and then the RNS arrived - moved back up through today’s opening price but didn’t close yesterday’s opening gap down.

That opening gap down that cut through the 165p support zone, which then acted as resistance when an attempt was made to close the gap. The Close price was below that 165p support zone for the first time since Feb.

Interesting times.”

On Friday, no breach of 157p and gap closed.

IF that gap was an exhaustion gap at the end of the move down from 199p, as opposed to a routine one, then ...

kaaran, the previous life expectancy of these agreements has been two months or less, so sticking to an agreement for the three months you mention would be a major step forward ;-)

Will be interesting to see how the KRG deal with the IOCs’ reaction to the cut from 50% to 20% in the debt repayment schedule.

I have long been a proponent of the IOCs getting together and agreeing a plan of action, problem is do they any of them have the stomach for dealing with these issues.

Just checked the the original if the 43.4kbopd, it came from the presentation of the full year results. As such it was only valid until the 29th March, so might not be the correct figure for the whole month. If the well work carried over into the start of March then the last couple of days of full production could shift the average closer to my figure.

I also wrote, “April 12th, price hit intraday Low of 159.2p and then the RNS was released, price moved away from avoiding overlap at 157p.”

Meant to write, “ April 12th, price hit intraday Low of 159.2p and then the RNS was released, price moved up away from 157p avoiding overlap.”

Big day today in terms of price action IMO, how much confidence has the arrival of this last payment given the market that there will be no more future breaches of these payment agreements?

Thanks, 0.4 out in 43.7, so payment model still working to within the target range.

Working back from both figures in the RNS gives average of 43.7kbopd for March, will be interesting to see what the official figure is in next presentation.

April 12th, price hit intraday Low of 159.2p and then the RNS was released, price moved away from avoiding overlap at 157p.

May 20th, price made an even lower intraday Low without crossing down through 157p and then the RNS arrived - moved back up through today’s opening price but didn’t close yesterday’s opening gap down.

That opening gap down that cut through the 165p support zone, which then acted as resistance when an attempt was made to close the gap. The Close price was below that 165p support zone for the first time since Feb.

Interesting times.

1 The confirmation of the Special Dividend reflects how positive the Board view the finances - whether an investor shares that positivity is a personal matter, as is also the choice between taking the cash or reinvesting it.

2 The payment regime has drifted from within 15 days, to within 30 days to over 40 days. So the shift to within 60 days is not unexpected! Treat it as being neutral but it will go negative if they fail to stick to it - there is previous history :)

3 The reduction of the rate of repayment of the debt looks minimal on the surface but IMO it flags up just how desperate the KRG’s finances are. These are not large sums of money on a monthly basis but they cannot find them even with oil over $65 per barrel.

FH1, I have not given anyone any advice, I have outlined how I intend to react in certain circumstances - those actions are based on the trades that make up my position in this share and how in general I manage the money I have invested.

If facing up to an intellectual challenge is beating myself up then I would fail any concussion protocol - I have been doing it for so long. The madness would only follow if I stopped the critical thinking and watched daytime TV.

FH1, interesting that it was BroadfordBay & PUTUP who pointed out the errors in principle wrt Arma’s calculation of profit generation.

Five others gave him a Recommend, which probably reinforced his view that he was correct - did they share his misunderstanding of the most basic component of the contract in operation?

Why did no “positive poster” point out that he was using the total production for the field rather than GKP’s share?

Further balance could have been added by pointing out that the $35 break even he was using only applied to the special conditions that applied at the time it was published. At that stage the company was curled up in a ball in protective mode, now it has moved into expansion.

Maybe even suggesting he use just 42kbopd since that is the mid range value for the Company’s guidance.

Then why assume that 365 days production would lead to 12 monthly payments, in the last two calendar years it has only averaged 11 per year? So probably prudent to multiply by 11/12.

Then of course the important reminder that the profit is far more than is being generated by the Profit Oil, OK for the time range being used but not to be extrapolated beyond that.

kaaran, agree with your summary.

As a result of yesterday’s price action I have gone from 50% overweight to 25% overweight and will reduce further to standard size if it drops through support at 171p. Total exit will take place if that much lower support that avoided the overlap fails to hold.

I was focussed on 199p and above as first target, now it has become 188p.

As far as my Daily chart is concerned, yesterday had four warning signals - horrible!

“Value trap” - that won’t be a popular descriptor but seems to be a fair representation of the situation at the moment.

@Bravedog, did you get a reply to your email to GKP about the matter? If so, what was the gist of it?

My problem is that you are the one who is adamant there were two RNSs but you have not provided any verifiable evidence that there were.

What benefit do you see in chasing something from over 9 years ago?

Since I am trying to make money from this investment, what sort edge do you think finding out what happened will provide?

I had a well documented history on the old UKX site on iii of collaborative working - in this case I need more to get my interest.

At this stage I don’t fancy ringing up the Customer Services at the RNS organisation and start by explaining I am contacting them about an alleged missing RNS from Jan 2012 that I personally know nothing about.

@Bravedog, since the second RNS refers to the missing first one, if it was an attempt to hide information it would be a very poor attempt IMO.

Once an RNS is published there is a facility to “replace” it if necessary but I can find no reference to being able to remove it from the central database.

Have you contacted the RNS people themselves and asked about the issue?

@Bravedog, look how the “significance” of the clause changes when I swap the uppercase:-

” if a person is expected to obtain Control of the Company, the (remuneration) Committee MAY give notice to Participants ".

When it comes to H&S and the inverted version, obvious question, do they offer value in general and does this one have any specific added positives?

I think Bulkowski covers the former, maybe worthwhile checking.

I am focussed on the internal structure, so far it is very good indeed. There have been three key events in the last couple of days - all positive in terms of shifting the probability of getting above 199p.

I am overweight GKP as a result of the value rated opportunities to add that have occurred.

Usual caveats apply, it could all go pear shaped in an instant and I have preset exits if it drops based on extracting value from the original trade(s).