Member Info for theoryman

Invstrat, the physical assets might not be as straightforward as some imagine.

This is a PSC as opposed to a Concession, so GKP does not own the oil in the ground. Shaikan is a producing asset, I.e. an asset you do NOT own but one where you have the right to benefit from in the future; in this case from a share of the oil that is produced in a limited time.

I believe, emphasis on the believe, based on something that I read about PSCs many years ago that the plant; when bought by the company immediately becomes owned by the government. The company has free use of it and gets paid back for their outlay through Cost Oil.

There are two distinct ways of measuring the monetary assets of a company, cash or accrued values.

Cash is the simple, what already you have in the ban is what matters, viewpoint.

Accrued takes the view that goods you provided to the buyer but have yet to receive payment for can be included. Following the “regular” payment pattern from the KRG, GKP switched from cash accounting to the accrued version.

For the accrued version to be meaningful, there has to be a REASONABLE probability that the payments will be received in the FUTURE.

As far as I am aware, there is no numerical definitions of what the value of the probability is or how long into the future you have to wait.

As a physicist I would include the $100 million debt as negative cash when looking at the monetary assets - seems logical to me but might not be a kosher accountancy way of looking at things.

Bugsy911, GKP is missing two payments for Oct and Nov 2019, with a third one for Dec, also due this month.

The KRG did meet their promise to pay the two previously delayed ones for Aug and Sep 2019 during Jan 2020. GKP only RNSd the latter one in Feb but their last presentation in Norway did have a slide confirming it was received in Jan.

Amidst all this, GENEL seem a bit more positive than I am and added this at the end of their second Jan payment RNS:-

“Genel reiterates that it expects regular payments to continue, as they had since September 2015, and to be fully up to date on all payments by the end of Q1.”

So for those who think in terms of probabilities, what would you estimate were the numerical chances of GKP receiving, before the end of Q1:-

Just one monthly payment?
Two monthly payments?
All three monthly payments?

Hi, they haven’t stopped the updates on the buyback, there is one for yesterday on this site and the company’s.

Maybe it was a typo and you meant updates on the payments...

Hi, the following numbers compare what I expect the revenue to be compared to the actual, they should be to 2 decimal places but that has got lost in the copy and paste.

They are for the 9 payments received for invoices Jan to Sep 2019 and the 3 yet to come.

The first 8 are a very good fit, the 9th was the last payment and it was much LESS than expected, the ratio is shown as >1.00 because of how I then use it within my spreadsheet.

The last 3 are a result of me anticipating what the gross payments will be.

IF the next one fits the earlier pattern then I will explain how my model converting bopd to revenue works, if not then it’s back to the drawing board yet again, so I won’t bother!

0.985971
1.006046
0.994047
0.994029
1.003694
0.98659
0.997352
0.992689

1.075522 UGH!

0.995801
1.005903
1.002819

BB, just seen a copy of your post on ADVFN and there doesn’t seem to be any “ifs or maybes” contained within it wrt to SH-9, reads very much IMO as factual.

So simple question, are you in possession of evidence that confirms, with 100 % certainty, that SH-9 has failed in its intended purpose?

Or is that you simply strongly believe that it may have done?

Premise 1. I believe that the primary target of SH9 was the gas cap, with an oil producing region as a secondary fall back position, if the primary target was not hit.

Premise 2. Given the importance of finding the Gas Cap as part of the gas reinjection plan, the location of SH9 would have been chosen to maximise the probability of hitting the primary target.

Do we know any of the following information?

1How big a target is the gas cap?
2 How well defined is its location?
3 If the well had to be sidetracked for any reason, how much leeway is there before it cannot hit the gas cap?

We now know that it did have to be sidetracked but not by how much.

So now we need to be prepared for three outcomes and assess the short and long term implications of each in terms of market reaction and planning.

A Gas cap hit - full speed ahead.
B Gas cap missed but well will be a new oil producer.
C Gas cap missed and no oil production.

If B or C turns out to be the outcome, then what will be the new plan for actually getting at the gas cap?

Wrt “ They say that big fields just get bigger,”

If no-one is aware of data analysis done on fields in general, what about just big ones?

Is there an agreed predicted size at which a field is declared as being big?

Once it is declared big, is it guaranteed to get bigger?

If not, what % get bigger, what % stay as predicted and what % get smaller?

Is there any way of correcting simple typos by editing? Extra to be or not to be...

Given that any very early reports on the volume of Hydrocarbons that can be extracted economically from a reservoir, are based on very limited information; how reliable do they turn out to be?

They might be useful on a global scale, as a result of a swings and roundabout effect, so still OK in totality for a large IOC with wide portfolio but for a company with a single asset could be problematical?

Given that any very early reports on the volume of Hydrocarbons that can be extracted economically from a reservoir, are based on very limited information; to be how reliable do they turn out to be?

Is anyone aware of any work done in assessing their usefulness?

As more wells are drilled and production data becomes known, there will be a process of refining the original targets.

Is there a tendency over time for these to be reduced, remain the same or increase?

Are they just the best things that we have in the circumstances, given the incredibly high level of uncertainty in assessing the reservoir BUT in reality they could well be totally unfit for the purpose of making investment decisions?!

Mikey, your III account must have been hacked in Feb 2012.

https://www.ii.co.uk/discussion/t/i-have-the-patience/564862

https://www.ii.co.uk/discussion/t/ill-tell-you-all-what-is-happening/563809

d0dger55, the original plan was for the pipeline to be closed for 7 days in Sep, as included in some GKP info.

According to Platts what actually happened is:-

“ The pipeline, which connects the oil fields of semi-autonomous Kurdistan to the Turkish port of Ceyhan, was shut from September 29 to October 6 for repairs to the Turkish section, affecting flows of Kurdish KBT crude and Iraqi Kirkuk crude.”

So that was only 2 days in Sep, which is nowhere near enough to skew the payment as much as it has done.

That payment is circa 7% lower than I was expecting derived from the model based on the Jan 2019 agreement. The fit between projected and actual payments for the previous 8 months is less than 1%.

Anyone aware of bonus payments or other outgoings due under the PSC that might account for the shortfall?

C0ckeye, thanks for correcting my mistakes, at no stage did an alarm bell ring about the months I had wrongly used. Probably just reflects the timeframe I was used to with issuing invoice and expecting payment.

So here is the correct version with a bit extra added.

In advance of payment news, anyone like to have a go at putting a positive spin on:-

1 The payment for September does not arrive before end of January

2 The September one does but the one for October, which is also due, doesn’t

If what should happen I.e. we get both, then there will be no need for spin because their actions re restarting regular payments will boost sentiment

My concern is the lack of progress in settling the Budget contribution from the Central Government. It’s one thing being strapped for cash at the end of a financial year but it does not augur well at the start of one.

The October payment is by far the smallest of what should be coming our way in future months. If they can’t find that and get things back on track then it could well be a sign of real financial stress. As I have posted before, I have never known missed payments being a good sign.

In advance of payment news, anyone like to have a go at putting a positive spin on:-

1 The payment for October does not arrive before end of January

2 The October one does but the one for November, which is also due, doesn’t

If what should happen I.e. we get both, then there will be no need for spin because their actions re restarting regular payments will boost sentiment.

Now try looking at the longer term picture.

The increase in size is only rapid compared to the recent buys, still lower than earlier in January.

The price might have been good for the day but the weighted average for the second tranche is circa 204p, so compared to the 194p they have paid too much previously.

The reason I asked the question was to establish whether the av production figures for Nov and Dec 2019 were limited by production issues or processing limitations or if not those, then some potential unknowns.

If the field was producing 40kbopd at the start of September and another 4kbopd came online in October, why were they not in the region of 44kbopd rather than just 41kbopd?

However, the lowest av for 2020 is projected at 43kbopd. This should quate to the worst case scenario where there were zero complete months at 55kbopd, so that would be 43kbopd for the other 12 months.

Taking the highest projection of an av 48kbopd, where might this come from? If it the work was completed in early Q3, then I have allowed for 5 complete months at 55bopd. And guess what that implies for the other 7 months?

It comes out at the same 43bopd.

Given that they actually have a proven success rate of hitting the guidance targets for production, I am feeling a bit more positive than I was.

Seeing those figures for Oct, Nov and December did cause me some concern, it even ended up with BB’s projected income from the 4 remaining invoices being HIGHER than mine!

Invstrat, wrt the following “ - these tickets will be held in treasury collecting divis ,”

Those shares are not allowed to collect dividends and according to the company are not collecting them.

The email I referred to recently has specifically asked the company to explain where that money has gone - it’s circa $900k.

As of early this morning there has been no response.

The original max combined throughput was 40kbopd.

Does anyone know what their max capacity is at present as a result of the work that has been done?

Just given myself a written warning re incompetence concerning estimating negative outliers.

I placed too much positive emphasis on the Sept presentation of Sept Av to date of 39.9kbopd AND that Shaikan was now producing at 40kbopd. I didn’t allow enough downside for the export pipeline maintenance, the PF-2 work AND when SH-12 would get connected.

The combined effect of these FIVE errors, compared to my worst case scenario, was a significant overestimate of how low the total net payments for the last four months of the year could be.

I had it as $70 million, looks like $67 million give or take the odd million would be a more realistic expectation.