Member Info for Wiseman72

****eye - the hope and it is hope is that as the debts are applicable to all Oiler’s in the region an agreement will be done where payments are made I suspect over and above monthly payment. Similar to the top ups we used to receive previously.

The issue for me is the fact we are totally reliant on the MNR/KRG. I have banged on about this for some time for me diversification is key but the current BoD can’t manage one asset let alone another business venture.

GL

First of all well done JF on destroying GKP the current market valuation approx £157m less £100m debt values and cash on hand of £40m our total reserves and assets at £17m which is absolutely ridiculous. Consider this:

- we currently are owed £73m
- we have a cost pool of over £500m recoverable
- we have almost 1bn barrel reserves conservative estimates including:
- of which 194m 1P
- 578m 2P
- 239m 2C

This is what happens when you have an invisible BoD allowing them share price to be driven into the ground and primed for a hostile low ball takeover. Let’s hope we can attract a decent CEO who can actually positively promote the company and actually deliver.

Anyway below is a new presentation posted on the company website:

https://wp-gulfkeystone-2020.s3.eu-west-2.amazonaws.com/media/2020/09/08164502/GKP-Fearnley-Webinar-Presentation-vFinal.pdf

GLALTH

https://oilprice.com/Alternative-Energy/Renewable-Energy/Fossil-Fuels-Are-Here-To-Stay.html

Doesn’t really tell us anything new but interesting to see it published. Oil is here to stay for a long time yet, GKP have a lot of it which is massively undervalued.

GLA

So we are officially owed $73m net to us for non payment of oil supplied between November and February. I would be surprised if we receive any of this during this year, we should however receive another monthly payment of approx $8m net this week.

Don’t forget we also have over $500m cost pool which is recoverable.

GLA

Pressed post too soon :)

- Positive update half year results on 3d Sept
- Cancellation of treasury shares
- Release of updated CPR/FDP (ok I know I am being optimistic)
- Oil law agreement between Kurdistan and Iraq (being very optimistic)

In summary we are currently standing at such a low valuation any of the points highlighted should get us moving again. When compared to other E&P's even in the Kurdistan region we are valued extremely low, as I have said before I believe a lot of that is to do with the lack of trust in the current management for failing to deliver. Hopefully with the appointment of a replacement CEO this will change for the good.

GLA

So as it stands we seem to be in a holding pattern before things start to move, obviously one of the triggers will be the appointment of a replacement CEO which I would expect to happen over the next couple of months. In addition to the CEO replacement there are no number of positive events which can give us a kickstart including:

- Return to regular payments
- Payment of arrears
- Resumption of dividend and/or buyback
- Resumption in development/uplift to 55k bopd (according to latest updates we should not be far away)
- Uplift in oil price (depending on your views it looks increasing likely we are range bound for a bit yet)
- Positive update ha

I suspect your right which vindicates some of my previous posts about the mismanagement of GKP.

Ultimately the primary purpose of a GKP CEO is to deliver value JF failed miserably apart from lining his own pocket. Let’s hope his successor fairs better.

GL

Interesting reading some of the debates currently taking place about the possible reserves. I like many believe the current CPR is very conservative (supported by the views of numerous amount of people who have passed through GKP over the years). However just looking at what has been officially communicated rightly or wrongly I wouldn't expect a significant upgrade any CPR released whilst the current management are in place (this pains me to say).

The reason for this is if you take a look at the presentations released by GKP they even state the following:
"On that basis, GKP’s internal review of reserves indicates: An upgrade in Proven (1P) reserves, No material changes to Probable reserves (2P) compared to previous work" see page 52 of the presentation below:

https://www.gulfkeystone.com/wp-content/uploads/2019/12/gkp-cme-presentation-vfinal.-28.03.2019-1.pdf

The wording is also interesting as it suggests the CPR is already available but has simply not been released (which again is frustrating and typical of GKP with its mixed messages, another bug bearer of mine is the fact they use the same company ERCE to complete the CPR when historically they have disagreed the findings).

Like all these things there are wide implications and political motives behind the actions that have taken place over the years with GKP from the scope of the CRP to the porosity figures used to determine the reserves (another interesting presentation is the Scottish club one below)

https://www.gulfkeystone.com/wp-content/uploads/2019/12/gkp-scottish-oil-club-presentation-7-feb-19-vfinal.pdf

Either way unfortunately I suspect we will never truly find out the sheer size and scale of Shaikan I just hope we land a proven CEO who can restore confidence in us and get the valuation to a much more realistic level (even if that is based on a very low reserve figure). There are a lot of things which will trigger an upward trajectory for our share price and if a few of them land I would expect quite a quick shift upwards.

GLALTH

https://oilprice.com/Energy/Energy-General/Chinese-Majors-Sign-Contract-For-Huge-Iraqi-Oil-Field.html

Could this be the start of further M&A in both Iraq and Kurdistan?

I just hope we don’t get taken out on the cheap, hence why as a long term holder I would be much more comfortable seeing a current valuation much closer to reality.

GLA

So as of today Genel has a market cap of approx £420m with GKP just over £200m both massively lower than their peaks. However given recent events have applied to both companies what is so drastically different given the massive difference in current valuations (bearing in mind GKP has the better asset and more reserves albeit a slightly lower grade of oil currently).

For me there are a few distinguishing factors:

- the leadership team at Genel portray a clear plan and have the trust of the market (even after huge downgrades in reserves a while back)
- dividends continue to be paid
- potential gas (if route to market can be established)

So looking at GKP what is dragging us down, as I have said in previous posts for me there is still a hangover from the restructure and lack of trust in the current management additionally:

- lack of dividends
- lack of trust and confidence in BoD
- outgoing CEO
- not meeting development targets

So in summary for me just based on what is known in general public GKP should have a far higher market cap than Genel but and it’s a big but JF replacement needs to deliver on his/her promises and get the development to 55k bopd done and start to build trust and confidence in the company again.

We have a lot of potential positives which would warrant a rerate just a couple of them would really get us shifting in the right direction in my opinion.

GLA

Distressed - I agree with you that something changed from his early days of joining to the man he has become. When he joined he was full of beans saying the right things and I too was hopeful he would deliver clearly that’s hasn’t been the case. Who knows what has gone one behind closed doors but clearly something changed and whilst I firmly believe he was not upto the task his lack of skills/experience doesn’t completely explain such poor communications and failures during his tenure.

SS - Leaving of JF opens up a vacuum in my opinion we could be vulnerable until a replacement is found and appointed as anyone knows once a person has decided or been asked to leave motivation to take on new endeavours wouldn’t be high on the agenda. The sooner we can find a high calbre replacement the better. As a long term holder I certainly don’t want us to be taken out on the cheap or a merger which doesn’t reflect the true value of what we have.

In my opinion JF was always out of his depth whether you believe he was ‘told’ to fall in line or not I am not sure however he had a decision to make it that was the case comply, whistleblow or leave. Clearly he has been happy to pick up his money and bonuses despite failing to deliver his own set targets and that for me makes him just as guilty if he was falling in line.

Regarding GKP/Genel merger rumours personally have always felt it could be a good move however the devil would be in the detail around any merger proposals. Personally GKP has the far superior asset but Genel has a superior management team and better investor relations.

Let’s see if we have better times ahead all the fundamentals point that way.

GLA

Interesting article particularly find this part pertinent to our current situation:

‘ Typically, in order to generate the capital growth required Peel Hunt says they need:

First-rate management with a proven track-record (the most important factor for us). Good quality assets with a production bias. A healthy balance sheet.
“Having all three is clearly the ideal scenario and will maximise the chance of success, but companies with a combination of any two may also provide interesting opportunities if they can attract the third’

If you look at GKP I am a firm believer it’s the poor management that has held us back significantly, hopefully this is corrected and bing we have all three factors: excellent asset, strong balance sheet and .......

https://www.google.co.uk/amp/s/www.proactiveinvestors.co.uk/companies/amp/news/923314

GLA

Bugsy - Assuming the treasury shares were cancelled £2bn valuation would put a share price of around £9.50.

I think the issue we face is that the current share price is so low and has been for such a long time and the majority of shares are now owned by the large institutions we are vulnerable in my opinion of being taken out on the cheap and that is my biggest worry being a long term holder.

I think the highest market cap we have reached since the restructure has been approx. £700m (£3/share) which just reinforces my previous points about JF’s tenure.

Here hoping for a more realistic valuation pronto.

GL

Invstrat - I think there are whole load of ‘mysteries’ which need explaining but unfortunately I just don’t see us ever getting to the bottom of them.

I believe SA was handed back with us also having to pay for the privilege due to our inability to deliver on the contractual terms between ourselves and KRG/MNR to develop the field. It’s ironic that we couldn’t develop the field because we didn’t receive payments from KRG/MNR which put us in the mess in the first place.

The $500m plus is ‘owed’ is relating to the recoverable cost pool please see slide 6 of the presentation link below. This relates to previous capex spend which can be recovered.

https://www.gulfkeystone.com/wp-content/uploads/2020/02/gkp-corporate-presentation-22-jan-2020-vfinal..pdf

Either way there is no doubt decisions have been taken in the past that have have had a negative impact on private investors like myself and many others. However a lot of ‘opportunities’ to make good on the potential are still there providing we get the right person at the helm.

Any positive movements between Political wranglings between KRG and Baghdad would also give a huge positive uplift in my opinion as it would provide stability for any future investors.

It will be interesting to see how quickly a replacement is found for JF as finding replacements for senior level roles can often take a considerable amount time unless they already have someone in mind.

GL

I don’t think JF had the appetite or knowledge to diversify, he has obviously became a very wealthy man off the back of GKP.

The unfortunate thing is that whilst we have a fantastic asset we are completely reliant on one customer (KRG/MNR) which has proven difficult at times hence why I believe if we had another income stream even just to cover operational expenses it could have been a shrewd move. However I would doubt JF’s ability to be able to successfully manage something like that considering it took so long to exit Algeria we also had a country manager employed their up until recently!

I think looking head clearly the priorities for the new CEO will be to:

- restore confidence and trust
- resolve back payments $73m plus
- deliver the uplift to 55k bopd
- reinstate dividends/buybacks
- get the FDP approved
- issue revised CPR

Any movement of the above will have a significant positive movement in the valuation so like I have said previously a lot to be positive about going forward.

Let’s hope we get the right person in charge, the sooner the better.

GLA

SS - I am positive about GKP future I have to be as I am a long term holder and if I wasn’t I would have cut my losses and sold which I haven’t done so.

Whilst it’s always good to see differing views and opinions hence why I think this board is the only one that actually encourages that debate instead of the constant rubbish posted on the other boards. I do genuinely believe JF did more damage to GKP than positives, people lost trust and confidence in his leadership and that for me was and still is a major contributor to the poor share price performance over the last few years.

Clearly there have been events which regardless of the leadership would have negatively impacted us like all the other E&P in Kurdistan (Payments, Regional disputes, ISIS, Covid etc) however it’s at these times I believe good strong leadership is necessary and that’s why I think other companies have fairer better during these events. I also think the buyback could be forgiven regarding the timing I don’t think anyone could have predicted Covid however the fact they have not cancelled the treasury shares in a timely manner and awarded bonuses at a time the shareprice was falling to the floor showed the complete disconnect between the BoD and shareholders.

Regarding diversification, I also believe there are opportunities to utilise the money better elsewhere although I think that time has passed in the short term (think Bahamas acquisition of CERP to reduce risk and create another revenue stream).

JF in my opinion was completely out of his depth and I think his next successor whoever that may be had a fantastic opportunity to deliver value from a very current low base valuation.

My personal view hasn’t changed about the valuation of our asset I just hope we get the right leader in charge to be able to realise it without us being taken out on the cheap.

GLA

The GKP board probably have one of the best assets in Kurdistan and have consistently underachieved yet rewarded themselves despite not delivering their on set targets.

Genel on the other hand whilst have a far inferior asset base have over achieved in the past due to strong leadership.

SS - please tell me what positive contribution JF has made in his 5 years in the post that has benefited private shareholders?

No doubt there has been many challenges in the region but that has not stopped DNO, Genel amongst others delivering value to shareholders.

I have long felt JF has been out of his depth and was very fortunate to land the CEO position in GKP. When he joined I was encouraged by his plans of improved communications and delivering growth. However like many long term holders to say I have been disappointed with his tenure is an understatement.

He has been very well rewarded for delivering very little. Both him and Sami have earned a fortune without delivering any tangible value creation and failing to hit any deadlines they set.

I feel one of the key things holding back GKP has been the baggage and legacy of the restructure and always felt both JF and Sami lost the confidence and trust of private investors. Although I have been surprised that they both lasted so long given the large holdings held by the big institutional investors.

There have been so many failures during his time in charge:

- failed to deliver the PSC 2nd amendment
- failed to deliver the 55k bopd development (dates moved on three different occasions)
- failed to deliver shareholder value creation
- failed to improve shareholder communications
- failed to deliver approved FDP and updated CPR
- failed to develop the relationship with MNR/KRG
- failed to diversify or utilise the money to deliver value for shareholders
- paid $10m to hand back SA field
- continue to pay high interest rates for $100m debt

His body language during recent presentations didn’t exactly inspire and I felt he clearly did not want to be there. JF was never a natural sales person like TK although that could have been forgiven if he delivered on his promises but unfortunately that wasn’t the case.

I am positive for the future of GKP there are so many things that should be value creative going forward and with the right leadership in place hopeful that a more realistic valuation is restored, the sooner the better too as what I really don’t want is for us to be acquired on the cheap which is a real risk in my opinion.

Like most mid size E&P there will be challenges along the way but there is no disputing the quality of Shaikan it’s now all about getting the right person in charge who can realise and deliver on the potential.

Here hoping for some exciting times to come for GKP.

GLA

Oh well he has finally decided to go surely this is positive news for us!

https://polaris.brighterir.com/public/gulf_keystone_petroleum/news/rns/story/wkvyn2r