Consensus eps falling…falling…falling…rising 2.0
29 Apr 16
In January we screened for companies with estimates that had been declining consistently since a year previously, but which had risen in the immediately preceding three months (see our note dated 22 January 2016). We have reviewed the performance of those companies and, given the overall strength of this selection, we have re-run the screen. In the c.3 months since selection, the unweighted average rise was c.34% against a c.11% rise in the main All-Share index. From the same universe as before (some 900 companies) we find 38 companies selected by the screen. We note a number of stocks in the list where we have a supportive stance including: Devro (DVO LN, Buy), James Fisher (FSJ LN, Corporate), Mattioli Woods (MTW LN, Buy) and Spirent Communications (SPT LN, Buy).
Two payments in two months
15 Oct 15
Today’s announcement that Gulf Keystone Petroleum (GKP) has been paid for the second month running is good news for all concerned. GKP gets much-needed revenues and a second payment starts to give Kurdistan companies (and investors) a taste that these payments could be the start of regular, reliable cash flows. We note Genel and DNO have yet to announce payments themselves, but would be surprised not to see these in the near future.
Updated CPR sees 2P reserves more than double
07 Oct 15
Gulf Keystone Petroleum (GKP) has released an updated CPR on its assets, with the resources of its Shaikan, Sheikh Adi and Ber Bahr assets all seeing revisions. Headlines of a more than doubling of the 2P reserves base demonstrate increased confidence in the quality of the Shaikan asset following strong operational performance. Importantly, the reservoir mechanism is now believed to be gas cap driven (rather than through global aquifer support), which will mean revisions to the development plan. It could also mean that ultimate plateau production may not be as high as we had modelled, although it does continue for longer. As a result, we have remodelled the company, moving our discount year to 2016, resulting in an adjusted core development NAV of 56p/share.
Payments anticipated in September
03 Sep 15
In its half-year results today, Gulf Keystone confirmed continued strong operational performance from Shaikan. The company continues to produce high volumes from Shaikan (a new daily high of 45mbblsd in August), though struggles to receive revenues for its crude. The payments situation remains unchanged, but first cash receipts from the KRG to contractors are now expected in September. This remains the overriding theme for investors in Kurdistan-based companies. We have tweaked our valuation, which remains at 55p/share.
Payments situation improving
09 Jul 15
In the update published on 9 July, Gulf Keystone (GKP) announced sound operational performance and an improving situation with payments. Production has been consistently high, with rates of over 40mb/d achieved in June. On the key question of payments and offtake, GKP has received a second payment from the recently announced domestic contract, taking cash received to $11.6m (gross). Additionally, the company expects to start trucking to Fyshkhabour for injection into the export pipeline to Ceyhan (realising higher netbacks). Should this occur, GKP will have three avenues for offtake, and we expect it to prioritise the methods that will ensure payments. Due to the production outage in Q115 (due to irregular offtake), production guidance for 2015 has fallen to 30-34mb/d, leading to an adjusted core NAV of 55p/share (from 56p/share).