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Having read the RNS and presentation (unfortunately missed the webcast) I must say given the circumstances I think JH has done an excellent job. I think since his appointment a few years back I feel a lot more comfortable that there is better alignment between the BoD and shareholders. Let’s not forget the previous regime at the held JF and the crew were absolutely diabolical and purely self serving.
I am liking the fact they draw a line in investing further until restart, back payment and commercial framework aligned with existing PSC terms are agreed. Also, like the fact they are calling out rewarding shareholders with dividends when time permits.
Unlike a few I am glad they did not consider a dividend this time around and are preserving liquidity. One thing we have learned here being holders is uncertainty is there pretty much all the time.
Feeling confident that a resolution will be found in time , just a shame it’s taking so long.
GLA
No significant changes as expected, one positive is that costs are being covered and we can sit this out until things are resolved. Had hoped for slight increase in sales but as long as covering costs happy with that at the moment.
Patience is key
GLALTH
Prudent and good management from JH, positive signs regarding selling to local market, reduction in expenditure and a 20% deferral of salaries.
https://polaris.brighterir.com/public/gulf_keystone_petroleum/news/rns/story/xp8z49r
I think whilst todays RNS confirming cancellation of dividend is disappointing it’s prudent given the current situation.
Reflecting on what has happened over the last couple of months are a few thoughts:
- GKP has had a much higher valuation when the field wasn’t proven
- GKP has had a much higher valuation when there was no route to market for the oil
- missed payment, even paying for fields to be given away!
- we have seen shorter after shorter appear on here and scaremongering going on for years
- we have had ridiculous valuations placed on us such as 20bn in the past yet here we are at approx 300m
- Since then we have had numerous executives consistently talk about how world class Shaikan is
- we have survived poor management, court battles, war, pandemic but to name a few ‘challenges’ albeit at the expense of shareholders (myself included, never thought I would still be here over 10 years later)
Given all the above and in my belief having a good CEO at the helm (JH) I do believe we have a bright future once the dust settles and the oil begins to flow again which at some point it will. What gives me this confidence well again some thoughts:
- for the first time the oil will be controlled via SOMO
- we should have increased stability (albeit might be on different terms but at least it provides a platform for greater investment and risk reduction)
- we were pumping 55k bopd prior to shut in
- once the payment mechanism and hopefully back payments are made dividends will return which in turn should provide a route to unlocking the undoubted potential valuation
- it is not only impacting GKP it is effecting other companies and Kurdistan/Iraq and Turkey.
GLALTH
So clearly the RNS today will bring some realisation to the table and I think JH has been sensible in his approach. However there are no surprises in the RNS and JH is quite rightly being prudent in preserving cash.
Long term holders including myself are not new to the roller coaster that is GKP. This time it’s very different in that it’s not just GKP it impacts all oil companies in the region which personally provides more assurance.
KRG/MNR have for a long time proven themselves to be unreliable and untrustworthy. They have now been backed into a corner by Iraq and agreed an interim model for managing and handling oil from Kurdistan (I feel optimistic that this will become a longer term solution in the passing of O&G law). The passing of this will provide certainty and assurance which will provide GKP and others to be able to plan and progress. Business loves certainty hence why we have been undervalued for years due to the lack of it.
The asset is not in dispute we have a licence to produce and it’s proven time and again it will deliver. We also in my view have a good CEO.
The issue now is that Turkey understandably wants certainty too, they have received a 1.4bn fine and no doubt will want assurance regarding any additional future fines before restarting exports (let’s face it anyone in there shoes would want the same).
Obviously given the above this will inevitably take longer to resolve, however it does at least mean that both Kurdistan and Iraq should now be on the same page or pages regarding the need to restart asap given the revenue being lost on a daily basis. Any movement on resolving the issues will invariably have an almost immediate impact on the share price I suspect.
Therefore, my personal view (not a recommendation as I would never recommend you take advice from a BB). Is we have choices
A) sell at depressed prices
B) hold
C) accumulate at depressed prices
I have made my personal choice and will be around for a while yet.
GLALTH
I felt there was an overreaction last week which reflected in the share price. Given the urgency to resume the oil flow todays news is welcome but we have to take stock too.
As a long term holder with many ups and downs over the years (probably more downs to be fair) I do feel the fact the Kurds hands are being forced may actually work in our favour. There is still things that need to be ticked before I get the cigar out including:
- official confirmation of resuming pumping oil
- recovery of delayed payments
- agreement and clarification of future payment mechanism (based on Brent/Kurd Blend)
- payment terms (assuming via SOMO)
I do feel positive though as with more certainty maybe just maybe GKP will be allowed to fulfil its obvious potential and realistic valuation. It does feel we are actually entering the last quarter of a long long game and just maybe we might be rewarded.
GLALTH
Any long term holders in GKP will be aware of the roller coaster ride we have been on over the years, on the brink of bankruptcy with huge debt pile, to paying to hand licences for other fields back to KRG. Having a higher market cap when no route to market or lifting had taken place!
The point is that GKP as a company is in much better shape to withstand these type of shocks, strong balance sheet included and a CEO who is much more aligned to shareholders than any of his predecessors.
Whilst the ruling isn’t good news it may in reality speed up the process of KRG/Iraq agreeing future agreements and ultimately provide more stability in the future which is no bad thing.
The quality of Shaikan is not in doubt it has proved time and again it is a world class asset. The challenge is to establish a more economic stable environment between Iraq and Kurdistan.
I believe it would not be in anyone’s interest for the issue to prolong and a resolution even if temporary will be found.
GLALTH
Very impressed with the update today and continued excellent performance from JH. Such a difference from the previous mobsters.
- reached 55k tick
- 25m dividend tick
- reign in investment if payment delays continue - tick
- now debt free and ready to spring - tick
- FDP progress - tick
KRG
- delayed payments
- shift to KBP from Brent
When will KRG learn win win business… live in hope but hey at last we have the real deal in our CEO
GLA
Great set of results obviously driven from the high oil price but credit has to be given to JH too. Yes he has joined at the right time but he hasn’t really put a foot wrong.
The distribution of excess cash has led us to becoming the leading dividend payer in then sector. He is also correctly prudently managing the wells.
Very positive for the future is the encouraging news of dialogue taking place with the MNR regarding the FDP and further update provided in June (this would be a complete game changer).
So enjoy receiving the dividend until confirmation of the FDP seems to be the story. I also see oil prices remaining high for the next couple of years at least (albeit there will be dips naturally).
Finally LTH are being rewarded and have a BoD that are aligned. What I wouldn’t want right now is a takeover as the premium likely to be offered wouldn’t be fair value.
GLALTH
Shakineven - very admirable and honest post, unfortunately a lot of people haven’t even managed to survive this far and it’s a shame you are not still in to see some of the benefits.
Good to hear you wish other LTH holders good luck.
Best wishes
Having been a LTH for quite a few years now and endured the dismal performance of the last CEO (albeit JH has been quite lucky) it’s great to finally see GKP on the move.
Hopefully people are starting to notice the deep value here, I still believe a long way to go yet until we get to fair value.
Let’s hope is LTH can benefit from the flow of dividends and rising confidence in GKP and prove us that we were right to sit tight.
GLALTH
Happy Christmas all and let’s hope 2022 is a happy and healthy one for you and your loved ones.
For GKP progress made this year, competent CEO although the less said about the rest the better. New year wishes for me, Shaikan value is realised, we use the FCF to finally land the 55k bopd then we diversify the I get a second revenue stream.
Good luck all
I think overall it’s a reasonable update with some positives and some negatives:
- great that the FDP has finally been submitted which is a big achievement
- good that we are closing down the debt receivables in-line with everyone else
- disappointed that we haven’t achieved the 55kbopd target but hey let’s not forget this was actually brought forward by JH so a delay of a month is still ahead of what was originally planned.
- not surprised at delays in payment it’s been a common pattern for many years
Overall I think taking stock of the last year JH has done more in his first 12-18mths than JF did in his whole tenure. We have a healthy balance sheet consistently producing and will have approx 200m in the bank so quite a healthy position I would say.
GLA
Well I must admit today’s RNS takes me back a few years when there was so much excitement around GKP.
Few stand out things for me:
- another $50m dividend wow just wow
- extra well ahead of further expansion
- commitment to upper end of guidance
- Nod to potential further dividends and/or buybacks
- Movement on FDP and acknowledging that getting this approved provides greater clarity for growth
Overall very impressed with Jon Harris and the first 8mths at the helm. He is a significant upgrade on Jon Ferrier who was a disaster.
I have a feeling we could be in for some very exciting times ahead.
GLA
I think JH really hasn’t put a foot wrong since taking the helm. I like the clearer RNS’s and the decisive actions massive improvement on the Disaster that was JF.
The KRG will continue to play games to suit their needs which is why in my opinion a combination of increased shareholder returns and possible diversification is the right approach.