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Based on Gulf Keystone Petroleum's (GKP) 2023 Full Year Results announcement and subsequent updates:
1. **Production and Sales Performance**: GKP faced challenges in 2023 due to the suspension of Kurdistan exports and delays in KRG payments. However, there has been a rebound in local sales volumes in 2024, with year-to-date gross average sales reaching approximately 33,300 bopd, and March 2024 sales standing at around 43,000 bopd. This indicates a positive trend in sales performance.
2. **Financial Position**: Despite the challenges, GKP has managed to adapt to the local sales environment and become cash generative. As of March 20, 2024, the company has a cash balance of $86 million with no debt. This reflects prudent financial management amidst the operational challenges.
3. **Profitability**: While there was a significant impact on revenue and profitability in 2023 due to lower production and realized prices, GKP has taken decisive actions to preserve liquidity. The loss after tax for 2023 was $11.5 million, compared to a profit after tax of $266.1 million in 2022.
4. **Cash Flow and Liquidity**: Despite a free cash outflow of $13.1 million in 2023, mainly due to lower Adjusted EBITDA and delays in KRG payments, GKP has been able to strengthen its balance sheet. Cash generated from local sales has covered monthly expenditures, reducing accounts payable significantly.
5. **Reserves and Future Plans**: GKP estimates its gross 2P reserves to be 458 MMstb at the end of 2023, considering the impact of production shut-in and suspension of expansion activities. The company remains focused on maximizing local sales, minimizing costs, and pushing for an exports restart and payment solution to unlock significant value.
In summary, GKP has shown resilience in navigating challenges, with positive signs of recovery in sales performance and prudent financial management to maintain liquidity. However, uncertainties remain regarding the timing of exports restart and normalization of payments, which could impact future profitability and investment decisions. Investors should monitor the company's progress in addressing these challenges and its ability to capitalize on opportunities for growth.
The most significant information in the RNS, in my opinion, is the excellent management of cash.
Accounts payable have reduced from $44.1m at 31st December 2022 to $26.0m at 31st December 2023 to approximately half the 2023 year end figure currently i.e. c.$13.0m.
This has been achieved whilst slightly increasing the cash balance without debt.
At the current level of local sales (nearly double break-even), a very considerable reduction in accounts payable & lower monthly outgoings (under $6m per month) the prospects for near term cash generation are positive.
All, of course, subject to maintaining the current level of local sales.
Obviously the company is still facing considerable challenges but appears to have coped admirably since the closure of the pipeline.
@JLB58, I reached exactly the same conclusion using the same information in the same way. There are those who would suggest it might be an idea for you to seek help 🙄.
I pictured the accounts payable as being composed of two distinct groups, unavoidable historic ones and those arising from recent production.
The excess monthly cash has been used to pay off the historic ones rather than being banked.
What’s left now in accounts payable will either be almost completely or completely down to current production.
If correct then the company will be in a self funding profit generating state.
I am happy with the results given the extremely challenging circumstances. Some folk hoped for a divi or buyback but without future clarity it is good and prudent management to withhold cash for now. The SP is being punished with a 4p drop at the moment. No doubt, If there had been a 4p dividend the SP would have shot up for a short while before investors saying a distribution was irresponsible. Let’s see how the market values GKP at the end of the day, after the analysts & investors presentation at 10am.
I think we are nearing the end game in negotiations over the opening of the pipeline, so everything to play for with Erdogan's visit only weeks away.
At 12pm.
There's an additional presentation here, it started at 10 but I think you can listen from the start, imagine it will just be the same as the investors presentation hxxps://brrmedia.news/GKP_FY23