Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The KRG up their usual tricks by reducing percentage paid on arrears and extending payment terms:
Fantastic news about the $25m special dividend should hopefully counter balance the negative KRG news. Well played JH
R2R - I was asking put up for a valuation as I don’t believe I have seen one. It’s not confrontational just purely asking his opinion. There are different reasons why people are here. Personally for me I am a long term holder and have always believed the asset is a first class producing field that offers lots of potential value. We all know the challenges that have been thrown at us and the reasons why we currently have such a low market cap. The basis for my valuation is a combination of reserve valuations, cash in hand, outstanding arrears. Please see below values used for reserves:
1P reserves = 240 @ $4 = $960m
2P reserves = 505 @ $3 = $1515m
2C resources = 293 @$1.5 = $439.50m
Total = $2914.5m
Obviously there are so many different models that can be used to determine a valuation each has its own merits. Would be interested in seeing your workings how you got to your valuation and put ups. Also it would be interesting to apply your model to other oil producing companies to see how it stacks up.
R2R - I was asking put up for a valuation as I don’t believe I have seen one. It’s not confrontational just purely asking his opinion. There are different reasons why people are here. Personally for me I am a long term holder and have always believed the asset is a first class producing field that offers lots of potential value. We all know the challenges that have been thrown at us and the reasons why we currently have such a low market cap. The basis for my valuation is a combination of reserve valuations, cash in hand, outstanding arrears. Please see below values used for reserves:
1P reserves = 240 @ $4 = $960m
2P reserves = 505 @ $3 = $1515m
2C resources = 293 @$1.5 = $439.50m
Total = $2914.5m
Obviously there are so many different models that can be used to determine a valuation each has its own merits. Would be interested in seeing your workings how you got to your valuation and put ups. Also it would be interesting to apply your model to other oil producing companies to see how it stacks up.
Putup - what do you feel is fair value?
I noticed you have joined the board over the last few months and are very quick to respond to any positive posts so would like to hear your valuation and rationale behind it compared to other peer valuations. Take away any prospect of any takeover premium.
The previous highest valuations where when GKP held a licence to 3 fields now it’s one however we are now producing, have a route to market and provide dividends so a lot had changed.
For what it’s worth below is a rough guide of market cap and resulting share price. Having previously had a market cap of £3.5bn plus you can see the possibilities.
700000000 3.32746270672492
800000000 3.80281452197134
900000000 4.27816633721775
950000000 4.51584224484096
1000000000 4.75351815246417
1100000000 5.22886996771059
1250000000 5.94189769058021
1500000000 7.13027722869626
2000000000 9.50703630492834
2500000000 11.8837953811604
3000000000 14.2605544573925
3500000000 16.6373135336246
4000000000 19.0140726098567
Personally fair value based on current conservative CPR would be in the region of £2bn. Ultimately in my view we are undervalued by some, even comparing to Genel we are currently tracking approx 100m less market cap. Genel has a much inferior asset and reserve base too.
It’s good to finally landed what seems to be a decent CEO so here hoping a fairer valuation will materialise.
GLA
Great news our new CEO has started very well, long may it continue.
The timing of this should ensure we capture the benefits of the increasing oil price anticipated next year, smart move and also sends out a strong message to the markets which should be well received.
Here hoping for a very positive day for us with more positive news to come next week I would expect with the reinstatement of dividends/buybacks.
GLALTH
I have been in GKP for about 8 years now, I made some money with a relatively small trade and bought into the story and went big which in hindsight was the wrong thing to do. I feel the pain felt by all LTH a lot of sleepless nights in particular the time when it was looking like we would lose everything.
JF was a complete disaster and con artist all he managed to do was make himself and his ‘chums’ very rich. Ever since I invested I knew the political risks but underestimated the level of corruption and mismanagement that has happened down the years. TK was greedy but I still feel he would have delivered a better outcome to where we are now I.e. paying to hand SA back at a time when we were close to bankruptcy due to missed payments still stinks.
One thing I have kept faith in is the asset itself it continues to deliver despite very little investment compared to others. We are now in a better place than at any time in our history I would say. A strong balance sheet, not far off 55k bopd, 73m back payments, steady oil price only going one way over next 12mths, 500m cost pool, dividends and buybacks in pipeline and very importantly a new CEO.
Unfortunately I don’t think we will ever get true value as something has to be left on the table of any new owners but anywhere in the region of 2-3bn has always been my target which given the reserves etc is realistic in my view.
A £1bn valuation would give us a share price of £4.75 which gives you an idea of how undervalued we are. Let’s hope the end of the month will finally start to see a fair value appearing.
In answer to the question would I bail out once I reach breakeven the answer is no, I have been through too much with this share to leave without some reward. But totally respect anyone doing otherwise.
GLTH
So good RNS firstly reserves are as expected based on previous CPR which is a win of sorts when comparing to other companies in the region e.g. where reserves were downgraded.
Not entirely surprised there hasn’t been a huge uplift in reserves considering the same company prepared the CPR as the last one ERCE.
Nice start though for the new CEO particularly like start the distributions to shareholders.
All positive
So we’re off an appointment of a new CEO has to be positive and at least provides some stability and also a springboard for some decisions to be taken regarding possible dividends/buybacks.
Increasing oil price and forward looking increasing demand based on successful vaccine rollouts across the world.
Agreement on a payback method for the outstanding $73m owed to us should be landing soon along with a further increase in barrels produced all point towards a very positive 2021.
Good luck all and hope everyone enjoys a healthy and prosperous year ahead.
https://polaris.brighterir.com/public/gulf_keystone_petroleum/news/rns/story/xeqd5nx
What a year this has been, hopefully you and your cherished ones have managed to keep safe and can enjoy a ‘different’ Christmas as best as possible.
Looking ahead to next year I genuinely believe we could be in for a very good year, the continuing rollout of vaccines and reopening of the world will drive oil prices higher with demand increasing probably from Q2.
A Brexit agreement and and a more stable president in Joe Biden should bring more stability and assurance to markets.
JF’s departure, hopefully a decent agreement on payment of £72m debt and resumption in both drilling to achieve the promised 55k bopd. All this along with resumption of dividends and/or buybacks should see us return to a more sensible valuation.
I am super positive about 2021 no doubt there will be set backs along the way but overall I believe 2021 will be a huge year for GKP.
Good luck all, hope you and your families have a healthy and prosperous Christmas and New year!
Very positive update and looking very good for upward share price movement over the coming months.
Not surprised about the holding off of reinstatement of dividends and/or buybacks as I would expect these moves would take place once JF’s successor is appointed.
Really encouraging about the repayment proposal for arrears also being received hopefully a decent repayment plan can be agreed which would support the investments required to get us to 55k bopd.
Overall very positive GLA
They have hedged 70% but if the price is higher they will revive the higher price so I suspect they would have paid a price for this but we will benefit from the higher oil price.
Rarely for me but I actually think this was a good move by the BoD I suppose everyone gets something right at least once :)
GL
Simon - not sure if the next CEO will be appointed by new owners. I would be ok with that as long as a fair valuation was achieved at sale. My concern would be if sold now then the sale price would bear no reflection on the true value of the licence.
For me £2bn is the region where fair valuation starts to appear that’s based on current CPR which we all know is very conservative. Given the current market valuation I would very much doubt we could achieve a 2bn sale unfortunately which has always been my concern....getting sold on the cheap.
I personally would prefer a good dividend and growth with a good BoD than a cheap sale.
Haven’t posted for a while so thought I would give my thoughts. Given we are still in the midst of global pandemic it seems strange that I feel maybe more optimistic than I have done for quite a long time. The reasons are as follows:
- it’s recognised that we should have a number of effective vaccines and treatments available in Q1 next year
- confidence will begin to return and with increased capability of testing providing opportunities for global travel to open up more demand for oil will rise
- oil prices are cyclical and we have seen the bottom in this cycle given the bounce is demand driven by a return to some normality next year I see the curve in oil prices only going one way and that is up
- we should be close to appointing a successor to JF relatively soon which should enable some decisions to be taken regarding cancellation of shares and future dividends (one of the reasons I believe Genel has performed better than GKP over the past months)
- the increasing oil price should enable GKP along with other E&Ps in Kurdistan to retrieve back payments (approx 75m owed)
- resumption in the expansion program should naturally follow increase in oil price and appointment of a new CEO which should help GKP maximise any increase in oil price
There are a lot of positives I believe that should help restore GKP valuation to a more sensible level and hopefully start to attain more realistic valuations given the current CPR reserves.
GLA
If you look at the valuations and also at the time KRG were in effect a distressed seller looking to sell their share of certain blocks.
There is a lot of information out there which no doubt a lot of people have access to different presentations/reports that are no longer available on the GKP website. As I mentioned I think the more information holders share whether it be good or bad the better in my opinion. There is so much noise been generated throughout the years so it’s difficult to see the wood for that trees hence why trying to collate as much factual knowledge can only be a good thing?
GL
There have been so many reports and presentations down the years surrounding GKP and specifically Shaikan reserves which got me thinking. Given lots of the information was removed from the official GKP website a lot of historical findings have gone out of public view unless you go searching (you also have to know what to search for) you will never find it again.
Whilst we all know things change whether that be with the asset themselves, economic and political environments I find its always useful to have as much background information as possible to assess your investment and any future decisions.
Therefore, for what is worth and thanks to Everhopeful for posting snippets of the ryderscott report which triggered my thoughts I will post a few links to some interesting documents which may or may not prove useful:
1. Current PSC
http://previous.cabinet.gov.krd/p/p.aspx?l=12&r=296&h=1&s=030000&p=54
2. Wikileaks Oil Report
https://wikileaks.org/gifiles/attach/138/138446_BMI%20Iraq%20Oil%20and%20Gas%20Report%20Q2%202011.pdf
3. Wikileaks Valuations
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjxgeX1luvrAhWvsKQKHTDUB8UQFjAAegQIAxAB&url=https%3A%2F%2Fwikileaks.org%2Fberats-box%2F%2Ffileid%2F30563%2F12847&usg=AOvVaw3_-qWEdnOYZRHXdf3j6cKE
4. Kurdistan to sell assets to Turkey
https://ekurd.net/kurdistan-sell-oil-fields-turkey-2016-12-27
Have other articles will dig them out and post when I have a chance, I think I would be good for others to post any useful documents as you see fit as the more in the public domain the better.
GLALTH