Member Info for theoryman

Is it just me or were there more than one issue about operational matters in the latest RNS, that should raising concerns?

The rig chosen to drill SH-12 appears to have not been fit for purpose when chosen. “As stated at the AGM, ahead of the drilling of SH-12, a number of necessary upgrades had to be made to the drilling rig in order to ensure it met appropriate standards, safety requirements and had the proper certification; these upgrades delayed spud by three months.”

So 3 months production down the Swanee and now brought into production just in time for the shut down of PF-2.

What on Earth is going on with these ESPs? Why were the installations given the time slots on the plan from early this year - doing so made no sense then and even less now!

It’s not as though no-one already knew the wells would need cleaning up when the ESPs were fitted; and it might be a good idea to have the plant in place to do that. Did they intend to have temporary plant before the planned permanent plant was in place? It really feels that it was never thought though in the first place and the side effect is the ESPs being put back when they should never have been planned so early.

7 day shut down late in Sept for the pipeline and then 25 days in Oct for PF-2, given my first two points probably too much to hope that the PF-2 work could have been shifted forward a bit - it probably might not even have been in their control but even if it was....

Always look on the bright side, immediately after the interims the share price has dropped and the buy-in has restarted.

LuckCounts and Mikey, thanks for your thoughts and now time for why I wanted everything clear in my mind - you have both mentioned things I was wondering about.

I need some time to sort out ideas circulating in my head.

Thanks Mikey, thought you would have the GKP specific info.

So how can I put this without ending up in court?

It would seem that there has been a longstanding difference between what should have happened and what did happen.

The present arrangement is an attempt to put things right but only after GKP allegedly nearly went bankrupt and was forced to restructure using the DfE route.

Given that the operating working interest is now 80%, it would seem to imply that the KRG are not contributing to the costs of the present move to 40, 55 and onwards.

However, those costs, if they pass the approve test, will eventually be recoverable through Cost Oil.

Now for the bit that worries me. If another IOC bids for GKP what % will they use to value the PSC?

I have this nagging feeling that they will only use the 58% but in the meantime GKP are funding 80% of the work to make it a better producer than it is at the present.

Could anyone with an understanding of PSCs in general and/or Shaikan’s in particular have a look at the following.and come back with hopefully constructive comments...

1 During the exploration phase the IOC carries the risk for all interested parties.

2 Once the field is declared commercial and moves into the development phase, we then move onto working interests (WI).

3 The %s of these WI refer to the original IOC and general Back-in Rights (BIR) These BIR allow the Government and potentially other IOCs to join in at this later stage. [Including Governments through this process was historically intended to introduce them, in a risk reduced environment, to the experience of being a Contractor; without being the Operator.]

4 Anyone taking up the BIR has then to pay the original IOC their pro rata share of the costs incurred in the exploration stage.

5 In GKP literature, the two general BIR are specifically referred to as the Government Participation Option (GPO) and Third Party Involvement (TPI).

6 It is clearly the Government’s responsibility to contribute to the GPO but they must also do that for the TPI until it is either taken up by an IOC or reallocated to the active participants in the PSC.

7 GKP has a theoretical working interest in Shaikan of 58% but in reality it now has an operating working interest of 80%. (As the Operator it is presently receiving ~78% of the monthly cash due to the Contractors)

8 This means that the Government is still taking a share of the production derived from what is known as Government Oil but it is not taking its share of the Contractors’ Oil. (Refer back to 3 above if you don’t see why the Government is a Contractor).

9 IMO 7 above is possibly linked to the failure to comply with 6 above. Arrears for payments of delivered Oil have been cleared but what is now happening is about dealing with paying back their share of Agreed Costs. [Not all costs incurred by the Operator can be claimed back. They have to be submitted on an invoice by invoice basis and only if agrred to by the MNR do they become Agreed Costs.]

Straycat, I wasn’t going to mark your observations, just compare them to mine - there are no rights and wrongs in my approach, just alternatives.

What would have followed in my response would be the answer to the two questions you posed.

Thread closed as far as I am concerned.

Straycat, my way of thinking is very idiosyncratic, it suits me because I have been developing it ever since I had to think that way when I was doing postgrad research. If you go into uncharted territory then you just have to rely on what is inside your own thread.

It seems to be that most investors want to know what is going to happen next, which is a bit strange IMO because no-one knows, unless of course they have vital inside info.

I generally don’t like using fundamentals because I don’t understand how the raw information is turned into those numbers. With GKP they have well readings, seismic data, core samples etc. and from those they build mathematical models of what is underground. Those models have all sorts of built-in assumptions and yet people work from the “fundamentals” they produce - it just doesn’t appeal to me.

Why don’t more people use the sort of methods I do? There are a lot more out there than is generally realised, every “quant”, particularly the ones having studied Theoretical Physics, will have had the same sort of background training.

Where is GKP going next? Could be up or down or maybe sideways.

If you have the time, and want to give it a try, have a look at the move up from 165p that started at towards the end of last year. Use Daily candles, what in your opinion are the key features...? Were there any clues as to what might be about to happen?

Post them and I will come back with my interpretation, why what happened next got very very interesting and why I am positioned like I am at the moment with GKP.

There might be a bit of a delay with me getting back because I am about to visit friends around Europe and then end up in Cyprus for a holiday.

When it comes to my wealth, I have no financial worries whatsoever.

BB, ProRealtime appealed to me because it is structured in the FORTRAN style of language rather than the C, C# type. As an aged Physicist, that’s the style I was used to and whilst I can read the other stuff I cannot speak it! ( Bit like my ‘O’ level French)

Sounds like you have moved on tremendously since we last exchanged posts about that spreadsheet.

Profitt, anyone who makes a prediction about something they have no control over will either be proved wrong or get lucky ??

My methods generate all those possibilities, assign probabilities to them but they do not tell me which outcome will actually happen.

Basically I am applying the concept of value betting - looking at the potential risk and reward, versus the chance of success.

It did take a lot of time and effort but I needed the mental challenge when I retired. I have slowly weaned myself off the 14 hour trading/programming/analysing shifts that I used to do when I first stopped work!

Good luck to you too, always helps even the best value investment.

A key part of the problem was how the PoO was going to behave. Since no-one knows what is going to happen next, that does raise some interesting issues.

On UKX was a guy who was using EWT (Elliott Wave Theory) and that was something that I had not come across. What I did notice was that he sometimes pinpointed turning points, in advance and with remarkable precision.

A lot of people out there rubbished EWT and pointed to when the some users got it completely wrong but then again some got it right...

Information has no value until it has been processed by the brain, same information gets interpreted in different ways by different people.

I decided to focus on where EWT users were predicting opposite outcomes from the same rules and data. I set about learning to see the patterns through different sets of eyes.

Once I understood their rationales I wanted to use my programming skills to automate the process, having to think like four or five “different” personalities did get a tad bit tiring.

I already had used ProRealtime to create my own indicators but there was one that almost did what I wanted. It would not adapt using time based candles but once I went to single tick points I got around the original problem but created another I.e. huge amounts of data. I then added another stage which reduced the amount of data but still gave me a very workable solution - not quite what I wanted but very very close.

So now instead of four or five alternatives I could generate many more automatically, some showing trend continuation, some reversal, some large further moves based on Fib ratios, some small, some fast, some slow etc...

Where do the probabilities come from? A huge bank of previous examples.

When the price of WTI was around the $100 a barrel mark, that original guy posted a count where it dropped to around $25. He took a lot of very personalised flak, as did EWT! The measure of the man was that he did not return and say, “Told you.”

It was a possibility, I had built it into my spreadsheet because it was a valid projection IF his count was correct. I was “almost certain” Brent would not drop below $30 but just in case, there was a 10% chance allocated to that possibility based on the historical pattern database.

When I ran my 10,000 simulations of GKP’s projected cash flow, the issues raised by BroadfordBay were much more evident that his model suggested. Some of the LTH accused him of scaremongering, IMO he was understating his case.

I did not know that the PoO was going to behave as it did, I did not predict what it would do, I did not predict what the consequences would be - the outputs just opened my mind and I was ready to act.

Mikey, ss’s response is well within the boundaries I would expect to a first time poster on a BB related to GKP.

The strangest response I got was when I posted a suggestion on iii to BroadfordBay about how he might want to rework a spreadsheet. I was using one in a totally different manner. He was using sliders to alter the size of variables, I was using probabilities and a Monte Carlo based approach.

An LTH deduced that since we were both using spreadsheets, we must be working together behind the scenes!

Ss, I was merely picking up on your historical reference to the $10 billion figure and the sources you gave as supporting evidence - following the link to ML follows as a natural consequence.

At the time he wrote those articles I had zero interest in GKP and was posting on the UKX board. I was a trader who was interested in developing computer based systems to be used on Indices.

So why my interest now in these references to the pre-restructuring day’s?

Many LTHs refer on various sites refer to things that were said or written about GKP during those times. They still seem to genuinely believe that all those positive statements were true, even if some of them can no longer be evidenced and after all these years there is no developments that support them.

As well as being very interested in the technical side of investing/trading, I am also keen to look at the roles of “cognitive bias” and “motivated reasoning”. I am an ex-professional gambler but I was a semi-professional one for many years after the need to settle down appeared on the horizon. One of the things I learned was to emotionally detach myself from the effort that went into deciding whether to bet or not; and the outcome which was outside my control.

I have zero interest in how ML came to write those articles, I am fascinated as to how people interpreted the information at the time and, if they are still around now, how they
reconcile the present outcome with their original expectations.

The ability to see the other side of the argument, the opposite way of thinking etc. IMHO play a vital role in investing. When you buy the person selling thinks you are wrong...

So I have no problem with you thinking the $10 billion valuation was made and you questioning why we are where we are now.

On the other hand, I think you should also start from where we are now and then question the probability that the valuation ever existed, and if it did, how realistic was it?

Ss, my first post on here but I am the same “theoryman” that has posted on iii for many years now.

Quick search came up with the two articles written by ML.

I’ve just done a bit of critical analysis looking for the (thought/rumoured/speculated/believed) group of qualifying words in his clauses versus the (known/confirmed) group.

My initial thoughts are there is a very heavy weighting towards the former group.