Member Info for theoryman

Bravedog, if I had to put any word into upper case to draw attention to it, it would be MAY.

There are three alternatives to consider:- must inform, must not inform or can do if they want but don’t have to - it’s the latter :)

If I asked for evidence that they have been informed, I have a horrible feeling I know what facts have been interpreted as evidence by the those who like to join the dots and end up with the picture they want to see.

Bravedog, you wrote “ We have shareholders increasing their stake constantly: they are the bidders.”

Your statement allows for no other alternative but how about another possibility?

The people doing the buying are just like some of the posters on here, they perceive value based on the cash flow and there is the potential bonus of others making a bid?

These buys are merely the same process being applied by Fund Managers and HNWI. They buy what seems to us as a large numbers of shares but it represents a very small percentage of their trading bank.

In the RNSs about the LTIP implementation there is reference to a 50:50 bias towards relative and absolute value - IMO that is there to reflect the complexity introduce by the company introducing dividends and buy-back.

Anyone know someone who actually understands what is going on?!

Bravedog, didn’t you previously post you had access to data that showed they were listed as shareholders and now you say that won’t be?

If there are two processes involved it does not necessarily imply that their total effect is neutral. Take a look at what the FTSE 100 would be valued at if dividends wee reinvested!

Had a look back at your original post, you wrote, “ Anyhow it shows one thing: there is no hostile actor among the bidders.”

What bidders? There is no evidence I can find of any recent bids being received by the Company. Historically there was one around the time of the Restructuring and a couple of rumoured ones in the press.

Bravedog, IMO you have to build in the effect of the dividends and buy-back.

There are two ways of looking at a share price. What people are prepared to pay for one or what the market values the company at divided by the number of shares.

If you use the former, the share price goes ex-div and some investors buy into that by reinvesting others don’t. Some sell into the buyback to retain their % holding, others do nothing and raise their exposure. How do you assess the change in Value for the VCP?

If you use the latter, the company has $75 million less assets than it would have but fewer number of shares as a result of the two ways of distributing capital.

The first effect penalises the members of the VCP but the second bit benefits them. Again how do you assess the Value that should be used in the VCP?

If your $2.67 is their target figure then I get that to be circa 192p at the Close.

Yesterday, have a look at what happened when the sum of the small trades tried to push it up through 185/184p. Bang, bang & bang AKA “Get down Shep.”

Luckily the MNR are also playing their part, no sign of payment by the end of the month again, amazing how quickly everyone has grown to accept this pattern.

Hi VS8, that’s what I got, basically sell a barrel to the ICG and get the revenue of two back!

Have the KRG actually got 250kbopd to transfer that they haven’t already forward sold to someone else?

If what we both have arrived at is a true reflection of how the budget will be implemented, how on Earth did the Shia factions settle for just that production level as being reasonable?

Can anyone answer the questions that follow the scene setting, using recent data preferably for 2021?

I am trying to get a ball park figure for how beneficial a full implementation of the budget agreement will be for the KRG.

Iraq has recently been getting an average of circa $(Brent-2) for its oil sold through SOMO - they struck some great deals in the Asian market.

The budget was set using $45 per barrel but the break even is circa $80 - that $45 was set by the legislators and not SOMO.

The budget was set at $89.65billion and the KRG share is 12.67% of that, giving a revenue of $945.1 million per month if all the criteria are met.

1 What is the latest monthly total oil production for the KRG and what average price was achieved?

2 What % of current production has already been forward sold, at what average price and how long is the contract?

3 Are the 250kbopd to be sold through SOMO as if they were Iraqi oil OR is it to be sold by the KRG and they will be told by SOMO what price the ICG need for it OR something else?

4 As part of OPEC+, Iraq needs to reduce its total production by circa 10% in the short term to balance out over production at the end of 2020.

The ICG have asked the KRG to do likewise. Does that reduction apply to the 250kbopd and the excess above it OR just the excess, so the 250kbopd still needs delivering?

5 Is there any evidence that anything to do with 3 & 4 above have actually started?

The underlying theme of my approach is a probability based interpretation of opposite alternatives, based on pattern recognition and distribution curves - what you will get is a summary of the analysis, not the deep detail.

If you like certainty and being told what’s going to happen next then it’s not for you at all.

I reserve the right to outline one interpretation and then set about destroying it - that is the way I work.

If you think that sounds like evading the issue then remember SWOT analysis, as opposed to SO based positivity.

Anyway if you are still interested the email is the one I used to use on the UKX board on iii and the one I am registered on here with.

It is my username on here, it’s at live dot co dot uk

Just include who you were on ii or are on here and I will send out bcc copies whenever I think there is something worth mentioning.

First one will go out sometime today with an introduction outlining how I got to where I think we are now.

nufc9, big day for both our teams today - hope it turns out well for both.

The problem with that article revolves around the trustworthiness of the sources who are allegedly revealing confidential information.

The figure of $500 million is one that holder’s of GKP would want to see.

Suppose it was only $50? They would rip it to shreds!

Three problems with bias, how individuals research, how they interpret what they find and what they remember.

Positive articles/views should be attacked with the same venom as the negative ones.

There seems to be massive confusion on here between positive and negative by some of the declared LTH.

Just because something is less positive does not necessarily mean it is negative.

One reverse example was from a positive poster who listed negatives for three oil companies operating in Kurdistan. The info was less negative for GKP, so he thought that made it a positive!?

surreyscot, I assume you were aware of the track record of the person carrying out the analysis, if not the methodology used to produce them.

Is there any chance you can get permission from the originator to post the details of how those figures were arrived at?

If not, then could you clarify two simple points?

1 What P values do those two figures represent? Without knowing that, the figures are open to misuse and misinterpretation.

2 Was the data used obtained solely from the CPR at the time?

I think those are reasonable questions given that those numbers you quoted are circa an order of magnitude higher than the current price.

@sr2004a, agree about using email, I have a previously well known one from my days on the UKX board on the old iii site.

I am pushed for time today and tomorrow but I’ll give details at the weekend.

Seems a long time since I started that analysis based on the probability of bounce from the 65p region and then 67p delivered...

The very good news, so far anyway, is the thick horizontal orange line which was at 157p held - key idea, a bit like location wrt property; avoid the overlap, avoid the overlap and avoid the overlap.

Same fundamental idea that worked so well for us with 123p and the bounce back when it went close at 126p.

It would have been an excellent outcome if the 165p support zone had held intra day - just about managed it in terms of Close but rules are rules.

Initial target for this move, as previously stated is above 199p, with the updated limitation of 232p if that whole orange pattern on the original chart delivers the max allowable.

IF that looks like it’s happening, I’ll find a way of getting an updated chart out to those who were showing an interest.

@PUTUP, doing it the way they appear to be doing it, based on two sets of data, makes perfect sense on reflection.

If they use the same (slightly flexible) ratio in both export and debt payments, they finish the debt repayments to GKP and MOL at the same time.

@Nobull, I am getting the export revenue to within 1% based on what now appears to be the public but wrong version.

Does it matter? The changes produce neutral or slightly beneficial outcome for the company but at I least I think I understand the original. The nuances appear to be how cost are recovered, directly or via cost pool.

When it comes to the change, where from the 80% they give the MNR 20% leaving themselves with 61.5%, I know I don’t understand.

3 to 4% discrepancy - is what I typed!

The debt bit was circs $200k below expectations, which was in the region of a 3 to 4% deicreoanct, when I can usually get the export figure to within 1%.

So why the difference?

I’d assumed they would split the gross debt repayment 80:20 as in the working interest but they are using the rough slightly variable 78:22 they use with the gross export sharing - makes sense because it a debt based on missed export repayments.

So for the March production I am going for net $21.9 million export and net $8.1 million debt giving a rather chunky $30 million give or take a bit.

The two early trades that formed the rapidly closed gap up were a single digit UT and a double digit SINT. The rest of the price action was very subdued, based around previous CP and below, given the arrival of the RNS and the figures within it.

Problem seems to be IMO that the holders of GKP are both relieved and happy with the payment but everyone else is focussed on the next payment arriving even later or getting missed altogether.

Given all the risks usually associated with oil production, pity we are stuck with a customer where payment risk is so centre stage.

sp2, the monthly production was lower though for two reasons. Well workovers and only 28 days.

I gave my pencilled in figures earlier, think it was last week - debt chunk seems a bit low from memory, other is well within tolerance.

I will put the March figures into the spreadsheets and post tonight when I am back at base.

sr, I’m not buying into any of that.

The Kant agreement re payments to IOCs was within 15 days following the invoice submission. That means the Feb payment is almost a missing one and the Mar one is moving toward being late.

These are from before the Budget Agreement was signed off, have a think about the implications following from that.

How long will it be before the Budget kicks into action between the ICG and the KRG? Somewhere between this month and never.

If it does kick in, how long will it last? Between 1 month and the end of the financial year.

If the budget does kick in and was well designed by the ICG, where is the cream coming from for the KRG to repay all its debts? To Banks, trading houses, own people, IOCs?

Cash is circa $160 million, debt $100 million. With zero revenue GKP has running costs, finance costs, $25 million div to pay, cost of expansion to 55kbopd..., maybe an idea to check what the covenant is wrt the debt :)

As for the matter of harm...

147king, if you haven’t already come across Taleb’s idea of Extremistan then maybe a good idea to have a read - you might find it useful in this case or others you come across.

The base price is usually taken as being the 10 day SMA of the Close prior to the first bid being made public.

Using whatever year’s data for M&A you want, you will find most rise by 50% max, a few get up to 70% and very few, often zero get above 100%.

Given all that previous data it does not rule out the 10 bagger or above that might occur in a very special case - that is the argument that is often put forward about GKP.

I’ll give three situations, others might want to add their own.

1 Betting against it happening and offering odds that are too high to those who think it might could well destroy you financially if it did.

2 Not being in it if it happens would cause no financial damage but the psychological impact would vary, from those who shrug their shoulders and get on with life, to others who end up festering in a deep well of self pity.

3 Relying on it happening to get yourself out of a financial hole of your own making - not a good place to be IMO.

To summarise, rare events do happen, assessing the odds wrongly can be very destructive and relying on them having a probability of 100% or 0% is not so me thing I would ever encourage.

@PUTUP, the problem with technical analysis of price action on a share like GKP is how reliable a specific piece of price action is compared to the whole data set for a day, week ...

The other day a gap down opened up and it was closed by a single SINT trade before dropping again. Instead of it being the usual single figure trade SINT, it was for a few thousand. That single trade went against the pattern for the whole day and yet it shows as a gap closing High.

The attack, so far intraday, on the circa 165p support zone was a few trades in the high 164s, very remote from a hot knife through butter and hit the exit button ASAP move.

My system rules were developed on high turnover instruments like the FTSE100, DAX, DOW and SPX. Since trying to use it a single share like GKP I have needed to loosen them a bit, more like very strong guidelines than rules.

opulentia, from my point of view there are two possible trading opportunities but both require clearly defined exits if they don’t deliver - so anyone who believes that a loser is not a loser until you close it can stop reading now but they probably have me filtered anyway.

1 As it drops towards the support zone circa 165p without evidence of stopping there is a very aggressive opportunity. Go Long at say 166p, exit if it drops through to circa 163p. In terms of defence against price action it is incredibly inefficient because of the spread, the chance of success is low but if does survive then it’s down to personal skill with trade management, reducing the risk to bank without destroying too much of the potential reward.

2 Use the bounce and a move up through 169p to go Long, exit 163p, target 199p plus. Risk to bank 6p, minimum acceptable reward 30p. Odds of 5-1 or probability to justify taking the risk circa 17%. So unless you think it’s a 20% or more chance, it’s not offering you value so avoid it like the plague. If you do however think it does, then take the opportunity, realise that even the best value situations can go pear shaped and rely on your skill to ensure the return from the winners exceeds the losses from the losers in the long run.