Member Info for Wiseman72

I was looking to see what the latest revenue arrears looked like and the only information I can find is from the 2017 results presentation which shows:

- $33m revenue arrears as of June 2017
- $76m MNR government participation option (back in costs)

Since this presentation I would have expected the revenue arrears to have decreased but the back in costs to have increased (given no 2nd amendment).

Goodpoint about the sales agreement maybe it does cover the next three months payments. Although we still haven’t received an RNS for October payment yet.

Cheers

https://oilprice.com/Latest-Energy-News/World-News/Sinopec-Ready-To-Pour-3-Billion-In-Iran-Oil.html

Thanks Mikey.

I agree the different institutions will have different approaches some long and others shorter term traders as well as shorters (Sothic being an example). I many cases it will also be about opportunity cost I.e the cost of having capital tied up in GKP instead of investing elsewhere and potentially getting better returns. I like yourself so find it interesting that so many institutional investors continue to hold, there is obviously a reason.

Most of us agree that the current valuation is below fair value when comparing to peers based on even current conservative CPR figures, I for one would like to see an updated CPR undertaken by someone other than ERC which could throw out some interesting figures.

Thanks again for digging out the WI slide.

If I remember they paid around £2.72 a share so as it stands they as significantly under water.

Thanks Mikey - the key point being ‘net or fully diluted working interest’

Angina - agree with most of your points apart from point 5 as if you look where the vast majority of Middle Eastern oil is produced there hardly holiday hotspots :)

I do feel JF has badly let us down though with all the promise upon his appointment over 3 years ago, he has failed to deliver so many things over his tenure. As us PIs are almost negligible now given the large institutional holdings I do find is puzzling they are prepared to continue to persevere with him. Let’s hope he does actually deliver a good outcome in the end.

So overall the operations update was positive with high end estimate BOPD being achieved during 2018 and a very healthy cash position. Opens a few more questions however:

- where is the payment for October
- what payment rates/terms are now being used as oil sales agreement expired end Dec
- where are we with the elusive PSC amendment
- is the WI 58 or 80% as recent presentation says 80% but I thought that was part of the PSC negotiations
- when will the next CPR be delivered and by whom?

I do think we are looking in a very healthy position and the free cash flow looks good, I am surprised we are still sitting with such a low share price given we hit £3 last year yet we have made more progress (submission of FDP, confirmation of upgrade to 55k BOPD etc). The current valuation based on any model is extremely low given the current net cash position, FCF and current price of oil.

Here waiting for further information regarding above!

So we finally have an update, mixed bag really as excellent news of current cash holdings almost $300m and strong average production during 2018. Downsides include delayed delivery of drilling equipment so delivery to 55k a day delayed by 3 months.

Still no word on PSC or commercial contract agreement replacing now expired agreement. I would expect another RNS soon to confirm additional payment received today hopefully?

They may take instructions but are duty bound to report their findings, like any auditor they should report what they see and is a true reflection of there investigation.

I agree JF is partially to blame in that if true ERC are used again for the upcoming CPR then that surely is unforgivable given the disagreement between ERC and GKP previous CPR findings.

If you ask the same company to do the same thing all the time it’s unlikely you will get much difference. Hence why I believe a different company should be completing the updated CPR obviously using historical data to support new research and findings.

I have posted to IR a couple of times in the last week or so and neither email has been responded too. I find the complete disregard for shareholders as absolutely disgraceful. I along with a lot of holders here have invested hard earned cash and the least we deserve is some communication.

I still believe in the asset just not this BoD.

GLA

I find it strange that GKP have used ERC yet on both occasions they have produced CPR’s GKP has disagreed with the findings. In any other situation in any walk of life you would surely not use them again you would use another proven auditor to validate and substantiate the findings.

I am sure there are alternative reasoning behind why they where used, however surely now is the time to put the doubt and mystery of what is actually contained within Shaikan by using another company to produce the next CPR.

Btw another payment should drop anytime soon, wonder if there will be any update regarding the missed target of agreeing the 2nd PSC amendment!

GLA

Nice to see a sustained rise although we need to get back to at least 3 ideally before any significant news drops. I would expect another payment either later today or Monday and hopefully an operational update shortly after.

As suspected not a word from our illustrious BoD.. I thought the change in chairman would have improved communications, clearly not.

All I will say is as a long term holder and sufferered the pain like a lot on here I am more confident than ever we will at least get a proportion of our money back at some point. At one point it looked like we would lose everything through the greed, mismanagement of numerous people who have passed through the company.

Personally I am not after a quick sale I would much rather see the full value be realised for us shareholders. Either way I suspect 2019 could be a big year for us.

Hope you all have a happy and healthy new year!! GLALTH

My understanding is that the current 58% working interest is based on the MNR contributing to the development and caped costs which they haven’t hence the buy back in option as part of the 2nd amendment of the PSC. So either way the result will be a further uplift based on:

A) the MNR paying the unpaid back in costs
B) Confirming GKP WI is increased to 80%

It’s a win win for GKP either way hence the anticipation of the amendment.

Forgot to add that is based on 58% working interest which if as expected this changes as part of 2nd PSC amendment to 80% then there is another big uplift in the valuation.

There are lots of different models for placing a valuation on oil companies however if you purely focus on reserves and cash in bank less liabilities then a very crude calculation is below:

1P 134m x $8 = $1.072bn
2P 356m x $4 = $1.424bn
3P 547m x $3 = $1.641bn
1C 81m x $2 = $162m
2C 138m x $1 = $138m
3C 500m x $0.50 = $250m
Reserves Total $4.687Bn
Cash Total $180m
Total $4.867Bn

Obviously you can play with different rates and percentage premium in addition for future sales etc.

Mikey

My basic assumption to get a rough cut of cash on hand is running cost of approx. $9m/month. Given the last RNS cash on hand statement was $240m as of the 7th Sept and we have received 4 more payments since then what is your view of available cash balance?

Also be interested to hear your view regarding the accounting method currently used and why given we have now been receiving regular payments for 2 years we cannot show/accrue outstanding 3months payments which will make the balance sheet look even stronger.

Thanks

I notice all the fun and games continue, based on what we know (which is clearly less than a lot of the core institutional holders) we are in a very healthy cash position, currently expanding according to plan so in the main a lot of positives. Just looking at current cash position $240m as of 7th September (reported via RNS as part of half year results) plus 4 payments since then as follows:

- 13th Sept $17.7m
- 11th Oct $20.9m
- 14th Nov $17.6m
- 12th Dec $21.2m
Total net $77.4m + $240m = $317.4m less approx $9m/month running costs leaving approx. $281.4m cash!!!

Less $100m debt leaving positive cash position of approx $181.4m which covers the cost of upgrading to 55k bopd!!!

Also consider we are on 90 day payment terms so have another 3mths payments due (Which given payments have been regular for last 2 years) could be included dependent on change in accounting reporting methods. This is all without any backpayments and/or buy in from the government.

For me this is now so compelling it’s getting ridiculous the current valuation. The only things I would suggest are holding us back is:

A) lack of PSC 2nd amendment
B) lack of trust in BoD
C) confirmation of oil and gas law in Kurdistan

Either way the top 2 should be resolved one way or another soon given that the BoD really have to deliver soon given their poor previous delivery performance otherwise the big holders will pull the plug on the BoD.

GLALTH let’s start seeing some realistic valuations here.

Personally I think fair value based on current CPR should be around £1.5bn to 2bn whether that’s achievable this year is another thing.

Obviously dependent on updated CPR figures the above valuation could change significantly. The good thing is that we now seem to be reasonably aligned with peers.

A lot of positive news to look forward too and I do genuinely believe we are past the worst (for us long term holders at least).

GL

Mikey - great to see you on this board and also nice to see some useful discussions. GKP is in its strongest position for years, the market is down as are GKP peers.

Don’t panic we have a lot of positive news on the horizon and personally I am more confident than ever I will eventually get back my original investment and more. Remember very really do shares climb in a straight line, slowly slowly catch a monkey :)

GLALTH

https://www.fool.co.uk/investing/2018/09/29/3-things-you-dont-know-about-the-gkp-share-price/