Member Info for theoryman

So why, apart from DANA, have none of the IOCs in Kurdistan gone down the International Law/Arbitration route?

First rule of litigation involving seeking financial redress, go after those who can pay as opposed to those that can’t, even if the latter are slam dunk guilty.

Anyway the market doesn’t seem bothered at the moment, so go with the flow. It will soon let us know if sentiment does an about turn, then as always it’s down to individual choice of either staying or exiting from the ride.

I remember that post, made me go away and look at something, apologies for not giving you the credit at the time.

I have absolutely no idea why the market is behaving as it is and that doesn’t bother me at all. As you have probably picked up from the other place, I work with the outcomes of other people’s actions, compare them against previous examples and do a value assessment as to whether what is happening offers me an opportunity to join in or not.

The bounce off 67p, the reverse before dropping through 123p, the breakout through 138p, the reappearance of the support at 165p - I’ve switched off the “Why?” part of the brain and am just going with the flow :)

The increase of 11k bopd is significant in % terms for GKP but much less so for the the KRG.

Given that they have now missed a payment to all the IOCs, when they should also have started the agreed repayment plans for some of them; makes me very concerned.

Two extreme thoughts to maybe set the bookends, they either feel bullet proof and can repeatedly break any contract at will without fear of retribution or they are basically bankrupt.

They are GKP’s sole customer and yet the share price is moving up very nicely.

So which matters more, any individual’s analysis of the situation surrounding GKP or the price of a share?

I’d go for what is happening to the share price as opposed to what I think it ought to be doing but some VLTH might disagree.

OK JP2000, I take the bait :)

How can I forget something that I have never read before in a GKP document/presentation/RNS?

Where is this figure concerning interest being owed coming from? Can’t remember seeing any relevant clause in the PSC.

A link would be very much appreciated.

I agree that they ought to have to pay interest at the same rate that the company does but...

Just done a quick check on the % change in GKP from 5/2/21 until today and then did the same for (Brent-21) which is part of the formula to produce revenue.

Given the similarity it seems that not being paid this month is having zero effect on the market’s valuation!?

Just landed the first leg of my accumulator, just need the other three to come in now.

Sale by agreement would get a mention in a post by BBB today.

No payment RNS by 16:30 today.

Iraq Budget Bill vote does not take place today.

GKP IR will not respond to my mate’s question by 16:30 today.

If one legs fails I get a free cash bet tomorrow :)

Hi, I have covered this in earlier posts but here is a summary.

When it comes to the KRG is it a case of can’t pay or won’t pay?

If it truly is can’t pay then the IOCs have to learn to live with the consequences.

If it is won’t pay, then working as individual companies has got them nowhere. How about a class action through the International Arbitration clauses* in the PSCs for breach of contract?

DANA have massive leverage through being the main supplier of both gas and gas condensate to the KRG, they were successful a few years back in getting a judgement in their favour without repercussions.

IMO the only way to get the same sort of leverage is to work together, the KRG would implode if there was only minimal production required to keep the fields operating safely.

* I believe there is one of these clauses for dispute resolution in every KRG PSC but cannot verify it but they are usually a bog standard part of every one.

So IMO whoever is in charge of GKP will achieve nothing by working alone.

Why do you think this is a GKP specific problem as opposed to a general IOC one?

Why do you think there is a problem with payments in the first place?

If the central budget gets voted through today, how long before the agreements with the KRG collapse?

If the central budget doesn’t get voted through today when do you think it will do?

If the central budget doesn’t get voted through at all, what do you think the KRG’s Plan B will involve as fas as the IOCs are concerned?

One of the other debt repayment plans specifically referred to “working barrels” which I why I have used the Contractors’ Oil as a whole.I.e. the 52.2% of production.

I believe the two terms are interchangeable but if anyone comes up with a link to an alternative definition I’ll see if I find a reference to mine.

PUTUP, GKP’s Sparebank1 presentation slide 4 gives average daily production for January of 44.405 barrels.

FH1, don’t know if you missed my earlier post 13:36 or have me filtered :)

Just in case it’s the former, here is the crucial bit I hope you have built in to the long term calculation.

The problems arise with a next stage “of do nothing” because the stings in the tail of the PSC - specifically designed for the high production but low cost to operator stage. Have you allowed for those, how long before you think they will kick in individually and what do you think the longer term combined effect will be?

Nobull, I disagree with your calculation, don’t know how you got the first number, here is my version.

GKP gets 80% of the Contractors’ Working Barrels which is 52.2% before CBC (CO+PO = 36+16.2 from PSC)

So payment will be 0.8*0.522*31*44400*0.5*4.77 so just under $1.4 million IMO

Interested to see why you got a bigger number.

FH1, first question is, will the company be allowed to do nothing?

Suppose it is, could you briefly show the figures needed to get “So in summary just doing nothing will generate easy 3 billion. “?

My modelling suggest GKP is already in cash cow mode and it will improve with the spending of the $20 million to get to 55kbopd.

The problems arise with a next stage “of do nothing” because the stings in the tail of the PSC - specifically designed for the high production but low cost to operator stage. Have you allowed for those, how long before you think they will kick in individually and what do you think the longer term combined effect will be?

As I have posted before, I have never known any good coming from missed payments.

Shift your focus to net cash, no longer awash but not yet in any sort of short term trouble.

Last time when they were in trouble and PoO was high, they got a load of revenue from those four months and paid out zilch.

If your only customer has done that once, a company should have in plans to deal with it if it occurs again. The first time came as a shock, the second shouldn’t.

Edit, sure I didn’t type the original

So yet again they appear to have failed to adhere to their payment agreement, the old within 10 day lasted a month, the latest within 15 days drifted to end of month and now even that has been missed.

Now the payment is late by any measure I have ever used. Even if they were unable to send it until late on Monday 1st March, it would have cleared by end of yesterday and be RNSd today.

So yet again they appear to have failed to adhere to their payment agreement, the old within 19 day lasted a month, the latest within 25 days drifted to end of month and now even that has been missed.

The PoO is well above their $50 pain level, they are supposed to be paying on time AND paying off previous debts.

Absolute nightmare for GKP that their only customer has such a poor history of sticking to their side of the bargain.

Before anyone mentions that they are probably waiting for the budget vote, remember that they are supposed to have a Plan B if it goes against them. Does not paying the IOCs form part of that plan?

Bravedog, why not the same day? Mid week, middle of March, not a lot of alternatives :)

Last year DNO, Weds 18th March and GENEL Thursday 19th March.

How about DNO have kept the 18th and GENEL have kept the Thursday?

And by some miracle they both end up with Thursday 18th March...

No it’s not late yet.

Yes it was 15 days.

Yes that did manage that RNS April 17th 2020, payment sent 15th, then allow max 2 days delay for clearing and RNS. Rumour has it someone wanted to pay the nil invoice in May a bit early but his Uncle ,who got him the job, warned him about setting a precedent.

February 28th is Sunday which is a working day in Erbil, so RNS by following Tuesday would still meet timing delay constraints.

BBB, the (Brent-21) agreement ran out on 31st December 2020 and either the new version has yet to be agreed upon or it has, and they haven’t released the news.

You mention living in hope, perhaps there is something more substantive corporate news on the way. IMO much more likely, given previous evidence that they just can’t be a***d to let us know.

If the $21 still applies and the debt repayment is as for others, excluding any offsets I’ve pencilled in:-

Jan export net to GKP $17.0 million + or - 0.1 before any fees due that month.

Debt repayment to GKP circa $1.35 million, the excess above 50 was only 4.77, will be much better following month.

BB, there is some potential positive in there though. If the oil part of the agreement goes through in that form and the budget works as planned then:-

1 There would be no discount being applied to the Kurdish Blend as a result of its questionable legal standing.

2 The KRG would no longer be a distressed seller because they would now have known regular payments from the ICG - distressed sellers get less than true value!

What needs clearing up is are the contracts with the trading houses set up by the KRG still running and if so, how long is left on them and what are the terms....?

So how about a short term transitional phase which won’t be fun, followed by a significant long term improvement?