Member Info for theoryman

Bravedog, looking for something else and came across the following:-

ShaMaran financial presentation Dec 2020 sets out what service Nemesia provided - slide 9

The Lundin-Energy homepage states what Nemesia is under its own major shareholders i.e, “An investment company wholly owned by a Lundin family trust.”

Might be of some use to you?

Thinking about your quest re the tender and RNS, is there any specific list of things that must lead to an RNS other than a general coverall like “market sensitive information”?

GKP seem to be rather flexible in the language they use in the ones they do issue, avoiding anything to upset the KRG, two examples are:-

1 Describing payments from the KRG as regular when they were demonstrably anything but regular.

2 Issuing one about the KRG agreeing to make payments within 15 days of receiving an invoice, followed by a watered down one referring to simply the following month as per its commitment.

LS, can you check your calculations?

I have the Jan Oil exports as $17.0 plus or minus 0.1 million or just over £12 million., rather than 18.

As far as I know the company say that the missing payments are $73.3 million net, so where is the £75 million coming from? What else have you included?

Jeez! Yet another edit needed.

Starts with January 2021 invoice

HKN were at same Conference and this is part of a financial report released today.

It combines two ways of the getting their missed payments back, I have changed the lower case and to AND to emphasise this - note it starts with January 2020 invoice.

Think that only leaves GKP to announce their details

“InDecember,wereceivedaletterfromtheKRGwhichoutlinedthemechanismtheyintendto use to pay outstanding receivables for oil sales from November 2019 - February 2020 ($68.6 million net to HKN). The repayment mechanism includes offsetting liabilities owed to the KRG against the outstanding receivable AND payments when Brent prices exceed $50/bbl in any month with the incremental revenue shared 50-50 between the KRG and the Sarsang contractors. Incremental amounts are slated to begin with payment on the January 2021 invoice and liabilities totaling $16.3 million (net to HKN) have been offset against the outstanding receivables as of 31 December 2020.”

sp2, first I’ll sort out a couple of errors.

R2R, the company does not pay the 15%, the KRG do, verified by PUTUP following exchange with company.

Next, for some reason I have chosen to use CBC of 30%, rather than the 40% confirmed by the company to PUTUP and what I have been using for years.

So for GKP, CO is still 29 but PO is reduced to 7.8

So the % of revenue that is PO is circa 7.8/(7.8+29) or 7.8/36.8 or 21.2%

Now to answer your questions

In a typical 30.5 day month, not February, the revenue to GKP would be 21.3 million, split 16.8 CO and 4.5 PO.

The repayment for your numbers under the conditions I outlined a few days ago would be 3.9 million for that month.

WARNING, that figure is proportional to (Brent-50), every dollar rise and fall has a much bigger effect than in the (Brent-21) we are used to when calculating changes in revenue.

Double edit, which is less than 25% of their revenue.

I much prefer numbers, trying to specific and remove all doubt using words is obviously beyond me today :)

Had my jab yesterday, made more posts today than I usually do in a couple of weeks, not seen that listed as a side effect anywhere.

I know, enough TM, enough, over and out.

Edit, which is less than 25% of the (CO+PO).

CCC, it looks to me like you have considered the cost side only from the Contracts’’ point of view.’ If at any stage someone wants to apply the 80:20 then that is fine because there is no further reduction to one contractor or the other. I have no issues with what you have posted.

What I can’t see is any reference to the PO stream. You can only go so far down the flowchart before you split 80:20, then the CBC has to come off GKP’s share. The 54 gets crunched down to circa 9 as far as GKP is concerned, which is less than 25% of their share of the CO.

I am already using GKP data as confirmed by the company, where am I misusing it? That’s a serious request, if I am wrong I need to be shown where I’m am wrong.

FH1, the present market cap is the result of two numbers, number of shares and price of each share - one is fact the other is the market’s opinion, so the result is an opinion.

I’m like you, I think the market’s opinion is on the low side but I will exit if my value calc tells me to do so - nowhere near that at the moment, so far the outcomes have been very positive.

On using Market Cap, saw it taken to an extreme the other day :)

“They took a previous figure from before restructuring and divided by the current number of shares to get what the present share value should be.”

CCC, you have answered a different question, the effect of running costs and CO on the cost recovery pool.

I am looking at the ratio of the CO:PO with GKP’s revenue as a result of the PSC, R-factor, CBC, fees as main contractor etc.

I am using figures from GKP flowchart, RNS payment to government and GKP slide presentation as confirmed by PUTUP that CBC is 30% but only withheld from GKP share of production.

CO 80% of 36 goes to GKP call it 29

PO 80% of 30% of 54 should go to GKP, call it 13 but the CBC reduces it to 70% of 13, call it 9

So only 9 out of every (9+29) barrels is profit oil, which is already less than 25%.

Why does my quick method of using 22% work? Main contractor has to pay fees which are non-recoverable.

R2R, if someone can confirm that lifting costs are an approved cost, and hence allowable as entries into the cost pool, then it would lengthen the time before the cost pool is exhausted.

R2R, the current revenue matches my spreadsheet output, when the official production is released, to within 1% and I use R<1.

The total cost part of the R-factor calculation should, IMHO from memory, include the lifting costs of the whole production, which is therefore increasing on a monthly basis.

If anyone knows differently I would be obliged if they could point me towards the correct version, I have tried unsuccessfully to get an answer.

The revenue part is a problem area, does it include the revenue that haven’t been paid yet?

CCC, if revenue is 26.2 under the specified conditions it splits 20.6 and 5.6, CO to PO.

That is a result of the PSC split AND 30% of the PO being taken as CPC.

Quick and dirty calc is take the revenue, divide by 5 and then add in 10%arrives at ball park number.

26 leads to 5.2 add in 10% to get 5,7.

FH1, there are four levels of thinking being applied wrt revenue from the field.

1 The revenue from the field as a whole before it goes into the PSC - you did one of those.

2 The revenue that exits the PSC and enters the coffers of GKP as main contractor, WI 80% CPC 30% deducted off PO etc.

3 The split between CO and PO for GKP’s revenue.

4 The changes to 3 above, and hence the fall in total revenue derived from fixed production and fixed PoO, under various scenarios; as a result of the internal workings of the PSC.

IMHO don’t knock those who are working on 4, it is not scaremongering to frighten LTH into selling their “golden tickets”, it’s a simple heads up on PSCs and how they are designed.

Do the KRG want to get budget agreement, Oil & Gas Law etc. sorted with the CGI or do they want to go it alone?

If the KRG are going to put their own budget together, they need to get these updates sorted so that they know what they are dealing with.

In the meantime it shows the CGI that there is a plan B and it also quite firmly puts the goods in the shop window.

SWOT analysis anyone?

surreyscot, you wrote, “What is the risk?”

I’d go for the pluralised version - what are the risks in each of the following areas?

1 The behaviour of the field.
2 The development of the field.
3 Issues with getting the product to market.
4 Price achieved at market.
5 Geopolitics.

“Intellectual Empathy” aka being able to see the other point of view is a vital part of Critical Thinking.

IMHO every investor in GKP should be able to come up with a list of potential downsides in each of those area. Some of them should be real downers, very low probability maybe but they should be considered.

After doing so, then comparing them with the positives, which get the same treatment, it becomes an individual matter of assessing value.

surreyscot, you wrote, “What is the risk?”

I’d go for the pluralised version - what are the risks in each of the following areas?

1 The behaviour of the field.
2 The development of the field.
3 Issues with getting the product to market.
4 Price achieved at market.
5 Geopolitics.

“Intellectual Empathy” aka being able to see the other point of view is a vital part of Critical Thinking.

IMHO every investor in GKP should be able to come up with a list of potential downsides in each of those area. Some of them should be real downers, very low probability maybe but they should be considered.

After doing so, then comparing them with the positives, which get the same treatment, it becomes an individual matter of assessing value.

During the buyback, from memory I believe that whenever their holding went above 5% of the new adjusted share count, they sold enough to take it back under.

So freely moving up through the 5% is a complete reversal of strategy.

Is it due to them moving into attack mode, is this just the start?

Is it due to a simple admin error which has led to them inadvertently crossing it by a smidgeon and it will be corrected by a sell?

Is it...?

As ever, time will tell.

PUTUP, End of Year 2019 presentation

https://wp-gulfkeystone-2020.s3.eu-west-2.amazonaws.com/media/2020/04/23080047/GKP-2019-Results-Presentation.pdf

Bottom slide 5, $73 million net to GKP - total also matches the sum of the last four rows of my spreadsheet for 2019 which is why I was using the 40% CPC.

Invstrat, as far as I can remember there isn’t a single specific clause in the PSC which covers interest on the MNR missing payments. As mentioned previously there is usually a big standard route to international Arbitration in the case of disputes, wasn’t looking for it though at the time though.

Since none of the IOCs have ever mentioned interest being added I think it is best to assume there won’t be any. I think the idea that there might be has arisen on boards like this, as posters could not get similar interest free loans when things got tough.

Probably haven’t worded that last bit very well.

If production fixed but Brent rises from 55 to 60, the repayment would double.

If Brent stays fixed then to get the same effect the production would have to double.