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RNS . . Transaction in Own Shares

lse:gkp

#1

https://ir1.q4europe.com/asp/ir/GulfKeystone/NewsRead.aspx?storyid=14373564&ishtml=1

9 July 2019

Gulf Keystone Petroleum Ltd. (LSE: GKP)

(“Gulf Keystone”, “GKP” or “the Company”)

Transaction in Own Shares

Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq, announces that it has made the following redemptions pursuant to the share buyback programme (the “Programme”) announced on 8 July 2019.

Date of purchase

9 July 2019

Number of Ordinary Shares purchased

117,000

Highest price paid per Ordinary Share

224.000 pence

Lowest price paid per Ordinary Shares

222.500 pence

Volume weighted average price per Ordinary Share

223.402 pence

Following the repurchase of the shares set out above, the Company’s issued share capital consists of 229,429,566 Ordinary Shares. 230,000 Ordinary shares are held in Treasury. For reporting under the FCA’s Disclosure and Transparency Rules, Shareholders should exclude any shares held in Treasury and should use the figure of 229,199,566 Ordinary Shares (the issued voting share capital) when determining if they are required to notify their interest, or a change of their interest in the Company.

The Company will make further announcements in due course following the completion of any further purchases pursuant to the Programme.

In accordance with Article 5(1)(b) of the Market Abuse Regulation (EU) No 596/2014 details of the purchase of its own ordinary shares by the Company, which were all executed through the Company’s broker, Canaccord Genuity Limited, are set out below:


#2

As promised ongoing buyback updates.
2 days progress : 230,000 bought cumulative so far at VWAP £2.24
Cost $ 644,000
4.3 % of cash committed $15,000,000


#3

https://ir1.q4europe.com/asp/ir/GulfKeystone/NewsRead.aspx?storyid=14374969&ishtml=1

10 July 2019

Gulf Keystone Petroleum Ltd. (LSE: GKP)

(“Gulf Keystone”, “GKP” or “the Company”)

Transaction in Own Shares

Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq, announces that it has made the following redemptions pursuant to the share buyback programme (the “Programme”) announced on 8 July 2019.

Date of purchase

10 July 2019

Number of Ordinary Shares purchased

120,000

Highest price paid per Ordinary Share

222.000 pence

Lowest price paid per Ordinary Shares

222.000 pence

Volume weighted average price per Ordinary Share

222.000 pence

Following the repurchase of the shares set out above, the Company’s issued share capital consists of 229,429,566 Ordinary Shares. 350,000 Ordinary shares are held in Treasury. For reporting under the FCA’s Disclosure and Transparency Rules, Shareholders should exclude any shares held in Treasury and should use the figure of 229,079,566 Ordinary Shares (the issued voting share capital) when determining if they are required to notify their interest, or a change of their interest in the Company.

The Company will make further announcements in due course following the completion of any further purchases pursuant to the Programme.

In accordance with Article 5(1)(b) of the Market Abuse Regulation (EU) No 596/2014 details of the purchase of its own ordinary shares by the Company, which were all executed through the Company’s broker, Canaccord Genuity Limited, are set out below:

Individual transactions:

Number of shares purchased

Transaction price (pence per share)

Time of transaction

Trading venue 120,000 @ 222 . . . 08:14:42

London Stock Exchange
. . . . . . . . . . . . . . . . . . . . . .

So one of the 120,000 @ 222 where CANA’s and the other 200 to 240,000 shares I could see being bought were to fill the other large O trades that were reported


#4

RNS TRANSACTION IN OWN SHARES

image

Best Regards @ValueSeeker8


#5

Hi, had 20 mins to spare so took your idea and extended a bit to produce an estimated final total for the number of shares that will be bought back with the $15 million.

Assumes no costs, exchange rate alters and the spreadsheet updates the projection at the end of every day, when we know how many bangs they got for their bucks on that day.

Basically at the end of every day we roughly know how much money they have left in £ and what the VWAP per share is so far, so if that continued how many could they buy…

Added as edit, if the price starts to get a bit lively then the long running VWAP could be easily replaced by one which reflects the shorter term😀

Some thoughts about what is going on here.

1 Reducing the number of shares increases both the declared dividend per share and increases the EPS even if everything else stayed the same.

2 The effect of the buyback in terms of % change in the number of shares is OK but IMO nothing special.

3 Paying the extra $15million as yet more dividend would have a marked immediate effect on the yield.

4 Deciding not to spend the $15 million on Capex seems to imply that it is not required to raise production and hence income or if it is then it would have less effect on the Dividend and EPS than how it is being used.


#6

Hi @theoryman,

Good to hear from you again, it’s been some time. Hope you are OK.

I did try to calculate how many shares would $15 m buy back but failed. There are far too many unknowns for me to do that with reasonable accuracy, the changing FX is just one of them. It changes not just every day but every second! Also how the exchange is happening? Every day? In several batches? The whole lot in one fell swoop? I can see for example GKP got quite a bad (relatively) GBP/USD conversion for the interim dividend and done all the conversion in one transaction someday just before pay day.

Regarding the points you mentioned:

1- The final dividend will also depend on GBP/USD just prior to pay day not just the number of shares bought back. But as a rough estimate 11.6 p - 11.8 p assuming the buyback programme put more than 2% of GKP’s shares in Treasury.

2- According to GKP’s announcement, the $15 m is an ‘initial amount’ and that they wish in the end to buyback $25 m by the 2020 AGM. So there could be a second buyback after October 31. Relative to the authority they have (as voted for in the 2019 AGM) however, they can buyback more than 29 m shares.

3- Dividend or Buyback? This is a long running issue! Many holders prefer Dividend and regard Buybacks as (smoke and mirrors - say no more!!!)

4- They don’t need to spend it on capex in the first place! They have enough cash in the bank already to cover the entire 55 kbpd phase without even accounting for the 12 monthly payments they’ll get until then - remember this phase suffered 6 months delay (so far :roll_eyes:). Personally I’d prefer to use the pile of excess cash to pay off debt. There is absolutely no need for those 10% $100 m notes. IMO they should only borrow when needed.

Best Regards @ValueSeeker8


#7

Hi, very well thanks. Mrs. t. declared that this would be the year when we got out and did lots of things - we went to a lot of funerals last year!

I get just over 2% for the first stage as well, at the moment.

The declared dividend strategy had a negative effect on the share price. If you believe that market theory applies to GKP then that raises all sorts of concerns about sustainability, cash flow etc.

The expansion plan has had delivered in some areas but has fallen well short in others - the latter issues could well be sorted within the whole timeframe now allocated to the complete plan. Usual concern though that problems lead to extra cash needed but hopefully covered by contingency fund.

So I took the $15 million being put to use as outlined above as being a sign that there were no concerns about it being needed to held back, just in case… We will never know what SZ thought.

I had forgotten about the debt, maybe they need to keep it running to maximise a claim for the PPI they took out :upside_down_face:

As an aside, still running that other spreadsheet that monitors gross production versus nett payment to GKP, it’s still predicting correct to plus or minus 1 in the THIRD sig figure. So while I have no idea what is happening in terms of the detail within the PSC, the outcome is predictable to within 1%.


#8

Theoryman and VS8.
Please remember to take into account that the $15,000,000 includes PEEL & CANA’s expenses, which can be “up to” 0.5p per share, but will probably be around 0.2 to 0.3p per share


#9

Mikey, we already have done since we are only estimating how many shares will be bought - one of the assumptions I listed was zero costs.

I am only working to 2 sig figs, focussing on the millions and hundreds of thousands of shares.

The 0.5 to 0.2p will be having an effect but much further down the powers of 10. ( The 1st decimal place in the price is the 4th sig fig)


#10

https://ir1.q4europe.com/asp/ir/GulfKeystone/NewsRead.aspx?storyid=14377874&ishtml=1

12 July 2019

Gulf Keystone Petroleum Ltd. (LSE: GKP)

(“Gulf Keystone”, “GKP” or “the Company”)

Transaction in Own Shares

Gulf Keystone Petroleum, a leading independent operator and producer in the Kurdistan Region of Iraq, announces that it has made the following redemptions pursuant to the share buyback programme (the “Programme”) announced on 8 July 2019.

Date of purchase

12 July 2019

Number of Ordinary Shares purchased

36,173

Highest price paid per Ordinary Share

227.500 pence

Lowest price paid per Ordinary Shares

224.450 pence

Volume weighted average price per Ordinary Share

226.136 pence

Following the repurchase of the shares set out above, the Company’s issued share capital consists of 229,429,566 Ordinary Shares. 510,973 Ordinary shares are held in Treasury. For reporting under the FCA’s Disclosure and Transparency Rules, Shareholders should exclude any shares held in Treasury and should use the figure of 228,918,593 Ordinary Shares (the issued voting share capital) when determining if they are required to notify their interest, or a change of their interest in the Company.

The Company will make further announcements in due course following the completion of any further purchases pursuant to the Programme.

In accordance with Article 5(1)(b) of the Market Abuse Regulation (EU) No 596/2014 details of the purchase of its own ordinary shares by the Company, which were all executed through the Company’s broker, Canaccord Genuity Limited, are set out below:


#11

image


#12

Thanks VS8, great format precise and correct.


#13

What about the same for each week, then one for the weeks as they pass
Or whatever you think best


#14

From next Monday I’ll remove subtotal for the week and put totals so far. This way the table can extend as far as needed to be. and the table will be like this:

image

Best Regards @ValueSeeker8


#15

Great stuff. Thanks


#16

Hi, the rise in the share price, if it continues, will soon start to put this strategy into question IMO.

Hopefully there is a minimum target for the number of shares that the $15 million can buy, with suitable built-in strategic withdrawals from the process if it looks like it cannot be met due to market behaviour.

If you compare the number of shares that could be bought at the running VWAP, with those if they have to buy at today’s Close; then there is already a difference in the hundreds of thousands of shares that will be bought with what’s left.

Good news and bad news time, if this continues then everybody’s holding would be worth more but the effect on the dividend per share would start to diminish.

As someone who trades with a view to ending up as a LTH, I know which one I would prefer at the moment :roll_eyes:

Added as an edit. If the Price action is being driven by the market knowing the GKP is buying and the market believes it will continue to buy then if GKP stops buying it’s Plan B time - yet again!


#17

I noted the following in the RNS which I read as pre-set parameters = price

“The Buyback Programme will be carried out on the London Stock Exchange and will be effected within certain pre-set parameters,”


#18

The details OF maximum allowable prices are mentioned in resolution 12 which states the following:

The maximum price (exclusive of any expenses) which may be paid for a Common Share is not more than the higher of:
(a) an amount equal to five per cent above the average of the middlemarket quotations of the Common Shares in the Company (as derived from the London Stock Exchange Daily Official List) for the five business days immediately preceding the date on which that Common Share is contracted to be purchased; and
(b) an amount equal to the higher of:
i. the price of the last independent trade of a Common Share; and
ii. the highest current independent bid for a Common Share on the London Stock Exchange at the time the purchase is carried out, as derived from the London Stock Exchange Trading System;

So they will temporarily suspend the buying when such condition is met, or what? The wording is a bit complicated but looks like there is quite a wide margin there as it tracks the 5 day moving average? Anyway, personally I think any buy below 250 p (3x oo price) is good as probably we will never see prices below £3 whence the 55 kbpd is achieved (unless Brent Crashes or some other major event).

As for the dividend, the yield will go down as SP goes up for the new buyers. Each holder has his own personal yield derived from his average price.

Funnily enough half of me wishes that SP stays down while the buyback is ongoing :confused:

Best Regards @ValueSeeker8


#19

Hi, those are the sort of operational constraints I would expect but what is the target of the strategy in terms of number of shares they would like/expect/hope to buy?

If we don’t know that target, how can we decide if the outcome hit it or not?

If the share price goes up during the process, it would be easy for them to say it had been successful when the rise was due to other factors.

When SZ leaving was announced, the last sentence referred very positively to his intellect and strategic thinking.

IMO this buy-back plan looks strong from an operational point of view but weak from a strategic one.


#20

The following is an extract from the Chairman’s letter dated 23/05/2019 in the 2019 AGM notice:

He clearly stated that the company will hold the purchased shares in treasury to satisfy the vesting of staff share option plans, and if they are not required for this they will be cancelled.
So I guess this will prevent future GKP share dilution when such options mature and the company has to issue new shares? GKP decided to start the share buyback now is clearly an indication that this is the most cost effective way to do it as the company may believe that share prices will be a lot higher in the coming years. Meanwhile the shareholders are happy to see an additional return and a higher yield.

Best Regards @ValueSeeker8