Member Info for theoryman

ss, so next daft question, When the loan is repaid would the money to do that come from the cash balance shown in the current assets at that time?

ss, probably a daft question but here goes anyway. Does the present cash in the bank include the $100 million that was borrowed?

Point1, so the question has become, why is so much of the revenue showing up as profit?

Wind back the clock and let there be no restructuring.

The Cost Oil would be contributing towards paying back agreed costs of setting up the operation - which was heavily funded by borrowing.

The Profit Oil would be paying for costs that were not agreed, paying the coupons on the borrowed money, running the company.....

So from the revenue there would be minimal profit, maybe even none...

The restructuring comes along and wipes out most of the debt.

So now the Cost Oil has a much reduced target to wipe out, the rest was removed by the DfE.

The Profit Oil likewise has a much reduced coupon payment

So now the revenue has very little demand placed on it, this shows up in the profits, which are now being used to pay dividends, buy back shares and hopefully fund the staged expansion we want.

The problem with this for the LTH is the increased number of shares that are benefitting from the increased profit and subsequent activities - all depends on their ratio of those two increases.

Hi, I have taken a much simpler view and mixed reality with the dream.

Take the individual daily production rates for the last 12 months for which we have the net revenue each different level generated.

Use this to calculate the revenue / actual daily production rate for that month, it will be different for each month to reflect the underlying real conditions.

Now take each individual calculated value and multiply by the dream 55k and see what the revenue would have been for that month if that figure had applied.

Sum the last 12 monthly figures that would have generated and get as close to $350 million as makes no difference.

Anyone care to question the logic and or the value I ended up with?

Ss, with reference to your extract in upper case.

This means that if all shareholders are issued bonus shares, the ones held in Treasury qualify in their own right; so the ones in Treasury get a pro rats bonus.

Hi, just got back from a break in the high Troodos so have been out of the loop.

A couple of points:

Firstly there is no evidence I am aware of that the shares in Treasury attracted a dividend payment. They were used in the calculation of the dividend per share but any payment could easily have been withheld. The only way we will know is if the accounts show a payment in total of $50 million or slightly less (circa $900k).

Secondly if the shares have been vested early they should no longer be held in treasury, it’s an either or situation. Either the company owns them or someone else does and vesting involves transfer of ownership. According to the latest RNS they are still in Treasury so they cannot have been vested early.

The company have yet to reply to a my friend’s email, asking them to explain not just why they are satisfied they are correct in their methodology of calculating the dividend per share ; but also why he is wrong!

I will be back in the UK towards the end of October and will then try to think of alternative free ways of rattling their cage.

Just seen this on the ADFN site:-

“habshan: beernut - "Can anyone else ring investor relations and see if we can get anymore info." From Mark Antelme. "Thanks for the call just now. The figures in the RNS of 20 Sept are correct, and take into account the recent buy back activity. The treasury shares are included for the calculation, but the treasury shares are not paid. As ever, the calculation was done in conjunction with Computershare and we are satisfied it is correct."”

Big problem with argument IMO.

The companies has RNSd a total dividend this year of no less than $25 million plus a special one of $25 million - hence a MINIMUM of $50 million.

The total returned to shareholders using their methodology results in less than $50 million, so they are in breach of their own RNS.

What information were Computershare given?

Does the Computershare program allow for this type of situation, fixed total of dividend but changing number of shares that qualify?

If the program does allow for it, is it structured correctly and giving the right answer?

Point1, I wasn’t interested enough in GKP when the SHAG team were around.

My interest stems from the tail of probability distribution curves and there application to obtaining value.

Pareto ran a survey on companies that had lost 90% of their max share price and what happened if you invested in them as they dropped through the 10% max level.

What % survived and what sort of profitability was there in those that did...

GKP is in a very very special subset, a company that dropped through the 10% of that 10%max and even further AND is still in existence.

465, 46.5, 4.65 but not quite down to the next cut off.

Back to the wine, thanks for all the suggestions - had some village wine last July that was truly remarkable. The guy who made it was so chuffed, it was for him a once in a lifetime outcome.

Shock and horror, two grammar mistakes; couldn’t spell predecessor and missed the apostrophe in “predecessor’s conclusion”.

I’d blame the Maratheftiko if I could remember how to spell it.

Point1, there was a reference to their prediecessors ERCE, so that only narrows the “when” to a range of times, not a specific date.

From memory one thing that was missing from the report was the usual “Thanks to.... without whose valued help. ...” bit.

Do you believe the cores were supplied by the KRG or know that they were from a verifiable source?

Why couldn’t it be a general study of rock structure of the type found in Shaikan, which then came up with a testable conclusion. They tried their idea out on a well and it worked, showing that the predecessors conclusions were too conservative?

Bravedog, I think the way some people interpreted that Chinese report was a wonderful example of confirmation bias - there was very little neutral analysis of the possible alternatives.

The basic argument went, it’s about Shaikan, it’s written by Chinese scientists; the tests must must have been done in China, you don’t do something like that without good reason, join the dots, a Chinese company must be doing some DD prior to making an offer.

Whoa!

We know when it was published and hence the data must have been collected earlier.

We do not know where the data was collected, when it was collected or who collected it.

We know the apparatus used and the protocol used to collect it so that it was useable by the international community. When analysing data you need to know the conditions under which it was collected - in this case using the English translation of a standard Chines protocol.

So here are some of the questions that should have been asked before people rushed off down the blinkered trail I outlined at the start.

When was the data collected?
Where was the data collected?
Who paid for it?
Who has requested access to it?
Which came first, the data being collected or the Chinese request to get some data?
Why did the Chinese want to analyse the data? Was it Shaikan specific or a more general quest towards a better understanding of this type of structure?

This way you generate lots of alternate scenarios, you can have a look at them, allocate probabilities etc. - it’s about opening the mind to things you might not want, as opposed to zoning in on the one you desperately need to be true.

Off out for a late lunch, will catch up later.

IMO once the DD is done with respect to a company’s ability to pay a dividend, it stands.

If there is a mistake then it might in some circumstances put the dividend under threat but in this case that does not apply because the $33.3 etc million is fixed.

Opening up a can of worms wrt to that “Chinese Report “ that was not done on the present CEO’s watch.

We know who published it and what type of instruments were used but where were the experiments carried out and why was the protocol used the English translation of a standard Chines one?

Later RNSs declare the number of shares still in Treasury, so none of those can have been vested because if they had been; the company would no longer own them: someone else does, hence no longer in Treasury.

Bravedog, once shares are vested they are no longer held in Treasury.

The vested shares would now have named ownership, other than the company, and hence qualify for a dividend - so the circa 229 million would be correct.

If it happened on or before the 18th, it would show on the Record Date BUT the RNS said they were still in Treasury, so they had not been vested, so using the 229 figure seems to be a mistake.

If the shares were vested on the 19th or later, they would not effect this latest Record Date but they will on the next one.

I suppose it depends on whether they are aware there might be an issue - failure to read emails or act on them.

If they are aware and there is no issue, then a lack of reply could be down to poor communication, pressure of work on more important issues.

If they are aware and there is an issue, then just how big a problem do they now have? Two areas there, external authorities and internal HR involvement.

Is there any precedence for this happening?

Personally, if a mistake has been made, then I would not like to be the person who sanctioned the process!

Straycat, repeatedly tried to raise these issues last Friday, both on here and with the company but for some reason they kept getting blocked.

Had to use ii GKP board and a proxy to send email to GKP ir.

Over several weeks I have been posting about the side effects of the shares held in Treasury and the second dividend - my best estimate was £100 of div without any buyback would be now £103 with it, to 3 sig figs.

Throughout my life as an investor I have believed that shares in Treasury do not qualify for a dividend payment - I could be wrong...

Bermuda’s Company Law Clause 42B re shares held in Treasury seems to confirm my view.

The Record Date was the 20th September, so using T+2, the position of the shares in question at the end of the 18th is the key one. The RNS on that date after Close specifically gives the number and they are still in Treasury - what happens next would not apply to this dividend.

Still waiting for a reply from the company.

Hi, just testing to see if they are still blocking my poss from outside UK.

SS, combining your two questions, how will it affect the oil price and how will it affect GKP?

OPEC as a group are exporting at below maximum output, so in theory the short fall will be made good.

In reality it becomes how quickly can they react, can they match the quality of the Saudi Oil and can the supply chains deal with the sudden extra requirements?

IF Brent rises then GKP will automatically benefit from the fixed deduction even though in itself its oil is a very different beast to what has been removed from the market.

In the very short term the export pipeline will be shut down for 7 days and on a slighter longer timeframe PF2 for 25 days. IF the benefits were obviously very high could either or both of those be shifted back?

Markets do not perform perfectly but by Monday morning we should know what the participants feel the answers are to those two questions.

SS, you are correct in saying that a Black Swan event cannot be allocated a probability of occurring because by definition it is unpredictable.

Now consider the following questions being asked as part of a risk assessment.

Where are our key installations?
Are they in a war zone?
Can they be reached by missiles?
Can they be hit by armed drones?
Can they be reached by armed insurgents?

After answering those questions, a company in Saudi Arabia should have allocated at least a slight probability to something happening that could be very disruptive. Hence this should be classified as a Grey Swan event.

Turning to the KRG and GKP. Hopefully during the troubles with ISIS, potential attacks on the pipeline and potential attempts to destroy to the trucking route should have undergone some analysis. Organisations do not broadcast that they are undertaking these studies. So what to an outsider looks unpredictable has actually been allocated a probability- whether you can do anything about it or choose to are other matters.

Going back to GKP, what should they be doing at this very moment given the attacks by those drones on key installations?

SS, a couple of points.

I would assume that the person thinking of booking the rig would taken on some form of DD. Having identified any issues that would need dealing with, they would have allocated time for these to put right. The original plan would then have been altered before publication. The way they did it meant hopes of earlier production were raised when there was no need to.

These issues I have raised about the ESPs were above and beyond those you have replied with. What was the point, in the first plan, of introducing the ESPs if the protection for PF-2 was not in place beforehand?

I used to work in the operational side of the organisations that employed me. Sometimes the strategic plan hit issues no-one could reasonably foreseen and other times we just used to shake our heads that the plan was ever given the green light.

Since GKP changed from exploration to exploration and production, it’s not really got a reputation for hitting its targets in terms of output and timelines. Now some of that is down to issues outside its control but not everything.

Is it a company that has been very unlucky or is it down to over enthusiastic targets or the wrong people being in position or maybe a combination of all three? There comes a time when making excuses has to stop IMO.