Member Info for uncertain

The day traders are selling, particularly those that don't get up early in the morning. We will have to clear them out of the way before resuming our climb

The 0.0444p dividend per month is a minimum, and if cash flow warrants it, it will be higher. This is likely to be the case with work scheduled on the shallows from Q1 next year, with 3 - 4k bopd likely from the spring
The annual dividend will be a minimum of 0.5328p and this would give an sp of 10.656 based on a 5% return basis.
The market has to believe that this will continue into the future before the sp actually rises to this level,

Kheldar, welcome to the board. Discussion on here goes in cycles. There's not much at the moment because we all know we are waiting for news and don't expect much in the way of RNSs in the near future. If you scroll back then there is plenty of discussion of the prospects for the latest deep drill, the frustration that the shallow wells have encountered more problems, the uncertainty of a contract for the boat/drilling platform, the promise of a dividend and the silence since.

I have not been posting much recently because i have concluded that we just have to wait for information. I will start posting again when we get some. The people on here are collectively very knowledgeable about the company, despite the company making it quite difficult to know things about it bcause of their poor communications

https://www.opec.org/opec_web/en/press_room/7021.htm

Since Kazakhstan is self-sufficient in oil, I assume that the domestic price is affected by the excise tax differential and other costs such as transport between export and domestic sales for oil producers in Kazakhstan, which discussion last week suggested could be around $17. The reference price is Kebco, which is in the $50+ range at present.

Difficulties with the operation of pipelines will push the price down further.

Since Kazakhstan is self-sufficient in oil, I assume that the domestic price is affected by the excise tax differential and other costs such as transport between export and domestic sales for oil producers in Kazakhstan, which discussion last week suggested could be around $17. The reference price is Kebco, which is in the $50+ range at present.

Difficulties with the operation of pipelines will push the price down further.

Doesn't work I'm afraid KK. The way I worked my variable costs out was a bit of a black box, and the black box has just changed shape. It was always a bit of a pig's breakfast anyway and depended on the pig having roughly the same breakfast every morning. Now it may not even be a pig having the breakfast, or perhaps its lunch.

One version of the menu could be $8 for domestic and $35 for export which gets you to $23 on 45:55 split. Assuming the MR variable cost is the same as domestic, that would give us $10m profit with an average 2700 bopd and a 50:50 split. Seems a bit optimistic to me though. On the other hand a $17 cost advantage for MR over KEBCO would explain the switch away from export.

The figures for H1 were 42% domestic; 55% export and 3% MR. There is a clear indication that they are moving towards MR and away from export. KEBCO is somewhere around $55I believe but the implication was that $38 from MRs was more profitable because of lower excise tax treatment and transport costs. I am assuming maybe 50:50 domestic MR now, with a transition to this split during Q3. This is a complete guess however.
I may have to go off spreadsheet mode, or else put in some dodgy assumptions, until I get more data in the new year.

PS The costs associated with domestic sales are lower than export because exports attract more excise tax. My model is very unsophisticated and I have always lazily lumped the two versions of costs together. MR is also better from a tax point of view ( I haven't got the details) so this would probably mean a lower variable cost in the new trading arrangements. I may have enough data with H2 results to model this, but for now I can't guess what the improvement would be.
The $30-$35 breakeven estimates from CASP in the past have always been in relation to Brent, given the price and output of domestic sales at the time which have always been much lower

No, if the price was $23 we would only be covering our variable costs and would be making no contributions to fixed costs. We would be making a loss of $7.3m irrespective of output. CASP have put in various breakeven estimates in the past with rather vague indications of which costs they are talking about. They tend to be in the $30-$35 range but that has always been in the context of the output at the time -generally about 1500 bopd. Output is higher now (although not as high as we though it would be) so the breakeven price could be a little lower.

The 3% sold to MRs is for H1 and is likely to be much higher now. The cost per barrel depends on what costs you are talking about- average cost, marginal cost, including or excluding excise tax, transportation costs etc. I use $23 per barrel in my spreadsheet which seems to have worked quite well for modelling profits over the last year, based on the average price and output once those are known. The model also has a fixed cost element of $7.3m. The average cost per barrel will therefore depend on ouput as these fixed costs are shared out per barrel.

Contribution to profits should come from $23 per barrel upwards but to begin with will only be covering fixed costs. There is no actual breakeven price because it also depends upon the output level. A 50:50 split between MR and domestic at current prices at current prices requires an output of 1700 bopd to breakeven.

Its a very simplistic model and far from perfect, but has worked quite well under recent conditions. I recalibrate it from time to time to keep up with current circumstances. The move to MRs is one of those circumstances as it will reduce our excise tax payments, so take it with a pinch of salt.

My interpretation of the Block 8 deal is that the Oraziman family do not have the liquidity to develop the field further by themselves and have therefore resorted to using the liquidity that CASP suddenly do have (plus some equipment) to get Block 8 back on track. The loan needed for this development is likely to be one of the reasons (if not the main one) for the deferral of the CASP dividend. It may also slow down CASP in recovering its stalled output.

Paying the Block 8 loan back out of dividends due to the Oraziman family from CASP, means that they need not pay anything back until we do get a dividend, so the loan is open ended until that point. A question arises as to whether there are licence requirements for drilling in Block 8 which the Oraziman family were having difficulty in meeting. A further question arises as to whether the interests of the PI shareholders were properly represented at board meetings on this matter.

Just noticed the word "maximum" in the Block 8 $60m deal. I think we are renting it at $5 a barrel until such time (if ever) as we reach $60m. It's all an internal family job once again, so will be managed informally.

I think the $5 per barrel has to come from Block 8 output. Why would the Korean company we are buying it from take the revenue from a different field altogether? Poor communications as usual.
I would expect the repayment agreement is a little more complex than as described in the RNS. If the oil price fell substantially it might be worth closing the field down and not paying anyhting back. I would imagine that eventuality would have been dealt with in the agreement.

On reading the RNS through more carefully, I have to agree with you McQueen. It is unclear what average output will be in H2 and KEBCO is disappointing. The mini-refinery sales at $38 and the domestic at $32 are interesting and the tax treatment of the mini-refinery sales may make this option more profitable than it appears at first sight. On the basis of these changes I would anticipate profits in H2 to be similar to H1 and the eps closer to 0.6p but this is more of an educated guess than my previous attempt.

Apologies for jumping in with a more optimistic estimate before reading it carefully. The share price is still undervalued IMO and I am confident that there will be a dividend at the year end, but perhaps 0.3p with an implied share price of 6p

PS the market may be a bit slow to respond to this RNS because they want an actual dividend, not just yet another promise of one, and may also take a while to digest the new acquisition. However, from my number crunching below I think the divi is definitely coming and will push up the share price when people realise this.

We need to know a bit more about Block 8 before we know whether it's a good deal. Provided we can make more than $5 a barrel after costs and taxes it is of course a good deal, but we don't know the reserves or the history of production difficulties. For comparison we have made $17.6 per barrel after tax in H1, but it will take quite a while to pay off $60m and the price of oil may well come down well before it is paid off

I have put the H1 numbers through my spreadsheet which also came up with a $10m profit before tax, so it seems to be still reliable. I put an average of 3500 bopd for H2 and $75 /$25 for export and domestic respectively, keeping the export % at 55% and got a H2 profit before tax of $15m on these fairly conservative assumptions. After tax we should get about $18m for the year or 0.8c earnings per share - and about 0.8p at current exchange rates! A divi of 0.4p per share would not be unreasonable. A P/E of 10 would put us up at 8p by the end of the year.

Say what you like about Kwasi Kwarteng, but he certainly has increased the chance of a larger dividend next week as the pound sinks against the dollar.

It's OK Daisy, you don't have to spell it out. An interesting extra speculation to keep our spirits up before the RNS next week, but not one which is likely to come to pass IMHO

But if they do, the share price will fall presenting a brief buying opportunity until they tell us the good news.