Member Info for ValueS

correction 31/12/2022

A better explained chart of the PSC regardless of the terminology used. However, it is still using Brent pricing rather than KBT! Reflecting GKP's disagreement of the move. And according to notes 1 and 2 the CRP = $213m and the R-factor = 1.18 as at 31/12/2023. Good stuff, I searched the FYR for those crucial numbers and couldn't find them.

Sweet news indeed, the 55 kbopd occurred 3 months ahead of what I originally expected. Obviously, both SH16 and SH17 are performing well. The concentration now is more focused on processing capacity expansion to allow for further production rate increases. This explains why 2023 capex is allocated as explained in the RNS. Most of it is towards processing and water handling ($85m - $90m) + ($45m - $50m) for long lead items, and only ($30m - $35m) for drilling and completion of the 2 new wells. But we'll have to wait until H2 2024 (at least?) for this to complete.

I should expect at least another $25m dividend declaration in the HYR2023 RNS even if the KRG continues to misbehave.
Possibly more dividend declarations of $25m or more in any trading update in-between or there-after.

Best Regards ValueS

The ex-CEO claimed that GKP breaks even at around $35 Brent. Of course, that was during Brent based pricing as (Brent -$21). Now, with the discount to Brent previously increased to $23 and now an additional differential of $11 as we move to KBT pricing, then I presume break even Brent price for GKP = $48. So, if ever Brent starts approaching the $50 mark we could see GKP below £1 again!

Best Regards ValueS

Thanks TM, I feel now like I should bang my head with the nearest wall for not selling off altogether instead of just reducing. Would wearing a truss do?

Best Regards ValueS

https://uk.investing.com/news/commodities-news/us-senators-in-new-bid-to-fight-opec-price-fixing-of-oil-2943023

The senators said OPEC needs to know that the United States was committed to stopping its anti-competitive behavior and that they intend to “send a clear message to the oil cartel that its days of illegally pricing and distributing petroleum products are numbered.”

The Senate has repeatedly tried to police OPEC over the years with the NOPEC law, stopping each time after the cartel’s leader Saudi Arabia threatened to retaliate by over-pumping oil and flooding the market to cause a price crash that would sink U.S. oil drillers.

What is meant by "Sept payment" is the KRG payment to GKP for oil produced in Sept 2022.

"The Decision for me is do i re-invest and buy some more stock OR hold the cash and wait for the Sp to drop to £1.96 level?"

I will wait to see what the Sept payment is going to be. Might be a big shock there! However, waiting time may be limited as Russia's production cut starts to bite while US driving season begins. I actually reduced today @ 211p.

Best Regards ValueS

Good update with some more detail and better transparency. I am particularly pleased to know that current total field capacity currently stands at 60,000 bopd. GKP would be producing at this rate and more once the water handling facilities installed. Also, for the first time I now know that the natural decline is 6-10%.
If the KRG play its part regarding the outstanding payment for Sep-Nov 2022 invoices, I'd expect a $50 m dividend declaration in the FYR 2022 RNS :)

Best Regards ValueS

A big GKP shareholder offloading perhaps? Noticeable for the past few days.

Vodafone has so far bought back 1,293,872,492 shares. So, there is still 224,757,201 shares to be bought back to fully neutralise the MBC share issue. At a rate of 6,074,521 shares per session, 37 more buyback sessions are required.

Best Regards ValueS

Incredible to see that high quality oil producer (better than Bent) such as that of HKN could get paid up to c. $19 discount to Brent! Makes me wonder what the discount would be for the poor heavy oil Shaikan produces! Just shows the difference between a real PSC and (practically) an RSC with the KRG doing as they wish.

I would like to change my answer to q4 to November instead of June. Forgot that the question was about an Average 55 kbopd rather than first time it gets reached! -:) 4- November.

1- May
2- April
3- None
4- June
5- May
6- Oct
7- July
8- None

"Does anyone know how much more they have left to buy?"

They have so far bought back 1,208,829,198 shares; which means they still have to buyback 309,800,495 shares to fully neutralise the MCB effects. At a rate of 6,074,521 shares per session ; 51 of buyback sessions are still to be carried out.

Best Regards ValueS

Turning to other themes, my strongest held view is that 2023 is the year of oil crushing all other CUSIPs. I know I made the case in early 2022 for a similar outcome, but sometimes things just don’t play out on my schedule. In the months since then, there has been minimal spending growth on exploration, while global demand has continued to rebound and grow. The postponement of my theme was mainly caused by the unexpected purge of SPR inventory, along with China going offline due to germs.

These two trends seem destined to reverse during 2023. Meanwhile, Russian oil production is permanently impaired and likely in free-fall. When I tally these three components, I come to a mind-numbing swing of nearly 5 million bbl/d. Now, I know the swing cannot actually be this large—mainly because demand will suffer given the magnitude of the swing. However, demand will only suffer at triple digit oil prices.

While I was off on the price of oil, my energy investments mostly appreciated. I haven’t spoken about offshore oilfield services on these pages, but a pretty good chunk of my exposure is through Valaris (VAL – USA) and Tidewater (TDW – USA) and they’ve both been stalwarts in my portfolio during 2022. Given their valuations, I suspect that they’ll continue to lead the energy markets higher.

Of course, I also had an overweighted position in oil futures and futures options, and these did not appreciate as much as hoped, but maybe they’re just deferring my gratification until oil murders every other CUSIP. Once again, I think it’s important to repeat that if you haven’t stress-tested your portfolio for oil prices north of $200, you’re going to suffer dearly when that should come to pass.

https://www.zerohedge.com/markets/oil-will-crush-all-other-investments-2023

Happy New Year to all.

Best Regards ValueS

Only 9 payments in 2022 were made so far, I now very much doubt a 10th payment let alone 12!
Mind you the 04/01/22 payment was a double payment, one of them was for a missed payment from2021!

I've never heard of an oil company that keeps drilling more wells and yet production falls back before! Production was better at the beginning of 2022 than it is at the end! o:) KRG kleptocracy at work? I wonder ...

"They effectively borrowed money at around 110p"

To be more accurate:
The MCB was worth £1.72 B and was converted to 1,518,629,693 VOD shares (including 1.5% interest!). So, for each share VOD got (1.72/1.518629693 =) £1.1326. And today they bought 6,074,521 at £0.8436 making 28.9 p PROFIT on each share!
So, just today's profit = £1,755,536.60 ! If one could calculate the profit (or loss) made with each buyback transaction since 17th of March 2022 and add them all up would come with hefty sum.
What was regarded as debt has turned out to be a profit making investment! MCB holders lose, VOD win!
Back in the old days (pre 2008 credit crunch) Mr market used to love companies with leverage if the return on leverage employed is larger then the interest paid. The larger the leverage the better! VOD debt = E45.5 B with an average interest of just 2.5% and 11 years maturity while post-tax ROCE = 5.1% and now (in the post 2008) VOD is being punished for that!

NNUUTTSS

Yes, sorry, the 17th of December.