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James Hammond
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18 years tracking emerging markets and running data businesses in them, I now CEO of New Sparta Media and publisher of BNE IntelliNews. We are a specialist financial information company employing a global network of analysts and editors and journalists. Our flagship print title is BNE... More
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Emerging Markets Direct
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IntelliNews
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  • Is There Central European Appetite For Gulf Keystone?

    GUKYF, OTCQX:GFKSY

    As January came to a close, we reported on the IntelliNews news service that Gulf Keystone Petroleum (GUKYF, GFKSY), the London AIM listed exploration and production company, could be taken over by listed Hungarian oil concern MOL Hungarian Oil and Gas Public and Limited Company.

    Since there is so little here on Seeking Alpha about Gulf Keystone, I thought I would add selections from our bit of reporting to the thin gruel heretofore on offer.

    Our story was based on interviews with company officials at a conference in Vienna. Here are some highlights:

    • A MOL director said that Gulf Keystone, which has major oil production sites in Iraqi Kurdistan, is looking for both a "cash-in" and an "exit" and that MOL could look at making a bid for the company.
    • On January 10, MOL's upstream executive Alexander Dodds said that the company is considering "inorganic options" to grow the company's E&P and indicated the company has a war chest of over USD 1bn for such buys.
    • Gulf Keystone is viewed as a likely target for MOL as the company already has a 20% working interest in the Shaikan field operated by Gulf Keystone, financial sources said.
    • While high-level Iraqi government officials said they would bitterly oppose any major acquiring a independent in Kurdistan, the same officials expressed significantly less opposition when asked if the would oppose a purchase by a Central and Eastern European player such as MOL or PKN Orlen.

    The market has not reacted so, caveat lector. We'll be watching though.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: GUKYF
    Feb 13 2:38 PM | Link | Comment!
  • Turmoil In Taksim: A Contrarian View From The Grand Turk

    Today we had lunch with the Grand Turk in Boston. He's had impressive experience in both industry and finance and now is starting a private equity fund. We like speaking with the Grand Turk because he knows a lot, does not let his opinions interfere with the facts and always buys good wine.

    He left Istanbul just before all the mischief started a few days ago (and swears he had nothing to do with it.) Asked whether there was any downside to running around the USA looking for money for private equity projects when the headlines are spotlighting Turkey's conniptions, his answer was, surprisingly, "No".

    The Grand Turk has no love for the Prime Minister. He thinks and as do most (except for Erdogan's adoring fans of which there are apparently many in the countryside) agree that his rhetoric is ill-chosen and impetuous. But he is not stupid, and neither is his circle. Packing him off on a state visit to the Maghreb made a lot of sense. And having one of his minions prostrate himself with apologies does too.

    The Grand Turk thinks there will be little immediate aftermath from the protestations of the urban secular student bourgeoisie. It is too unorganized. It has no leaders. And its complaints too vague, its fate is likely a fizzle.

    No, the Grand Turk takes a contrarian view and sees good coming out of this. Longer term, the letting off of steam will serve to remind Ergogan that there are practical limits to throwing his toys out of the pram. Calling those of us who tipple the odd glass of wine alcoholics won't win him friends, and could contribute to unwanted declines in tourism (and concomitant impact on the public purse) if nothing else.

    We won't see a kinder gentler Erdogan, and we may not see any development in Taksim Square for a while. But we won't see any significant negative economic impact, and probably we are witnessing the classic buying opportunity for those who subscribe to the 'blood in the streets' credo.

    The bigger story with Ergogan is the rapprochement with the PKK. Who knows what he has done or promised to get the more spirited among them from their mountain hideouts and lay down their weapons. Anecdotally, according to the Grand Turk, they are headed to Kurdish Iraq, where Turkish trade is booming. A Turkey sporting a less feisty and combative Turkish minority...now that's an intriguing scenario for a broader country growth scenario. We'll be watching this at IntelliNews. (We've been reporting on good numbers in Turkey for a while and see no let up, so we're in sync with the Grand Turk.) With the Turkey ETF (TUR) near a 52 week low, it might not be a bad time to place a trade.

    Looking out even farther, the Grand Turk believes the Erdogan era may be on the wane. An as yet invisible alternative is likely to emerge. He (let's face it, it probably won't be a 'she') will likely be conservative. After all, 12 years (the length of Erdogan's tenure) is a long time. Only the most connected cronies won't recognize this. It is not written in the Koran that absolute power corrupts, but even the most devout get the picture.

    So get your land deals (between Istanbul and the new, yet-to-be-built airport) done now. That great real estate rush may not be as lucrative when the guard changes in a couple of years. That's what the Grand Turk is doing....

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TUR over the next 72 hours.

    Jun 05 6:37 PM | Link | Comment!
  • Oil Major TNK-BP’s US GAAP Net Profit Up To USD 9.2bn In 2011.

    IntelliNews flagged intriguing results from Russian-British oil major TNK-BP's (TNBP) today.

    GAAP net profit shot up by 41% y/y to a record-high USD 9.21bn in 2011. Revenues rose 33.5% y/y to USD 54.89bn and EBITDA increased by 34% y/y to USD 13.74bn. Improved revenues were attributed to higher oil prices, as well as active overseas operations.

    TNK-BP's net debt as of January 1, 2012 increased by 44% y/y to USD 6.74bn.

    This is a significant turnaround for the company, which posted far less rosy results in recent years. TNK-BP US GAAP net profit declined by 5.7% y/y to USD 5bn in 2009, but began a rebound in 2010 when their net improved by 17% y/y in 2010.

    TNK-BP is third largest oil company in Russia, owned equally in what sometimes is an uneasy partnership between British oil major BP, and AAR (Alfa group, Access Industries and Renova; controlled by tycoons Mikhail Friedman, Leonard Blavatnik and Viktor Vekselberg, respectively).

    In 2011 Russian shareholders of TNK-BP (AAR alliance) managed to block the what had been called the "deal of the year"...a deal that had broad Russian government support, proposing a strategic alliance for exploring the Arctic shelf between BP and Rosneft based on a USD 16bnshare swap.

    In Stockholm Arbitration, AAR blocked the deal claiming that TNK-BP's co-owners' agreement states BP was obligated to carry out all oil and gas projects in Russia and Ukraine with TNK-BP's cooperation.

    TNK-BP also controls a 50% stake in Slavneft, and the two companies account for about 16% of Russia's oil extraction.

    In November 2011 Fitch Ratings affirmed a long-term Issuer Default Rating (IDR) of BBB- on TNK -BP. But debt seems manageable.

    Fitch noted that financial situation of TNK-BP would to remain stable given the current structure of debt refinancing. As of September 30 2011 the company had a total unsecured debt of USD 7.8bn, with an average repayment at 3.8 years.

    Until 2012 the company had to refinance USD 1.2bn, but Fitch saw operational cash flow of TNK-BP in 2012 at USD 7.4bn before capital investment, acquisitions and dividends that amount to USD 8.4bn, while liquidity will be supported by USD 2.4bn cash and unused credit lines of over USD 0.4bn.

    In August 2011 TNK-BP raised a USD 1.5bn club loan from 10 banks, the company announced. 4-year loan is carrying an interest of LIBOR+1.3%, to be repaid in quarterly payments starting in two and a half years.

    Of note in Management's presentation is prospective interest in acquisitions, particularly in Vietnam and Venezuela. This is clearly an intrepid management mix. A target could well be assets of Harvest natural Resources (NYSE:HNR), whose woes in the Land of Chavez are not insignificant. But that is another investment story.

    This is an oil major worth a look.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Information in this post comes from IntelliNews (intelliNews.com) and it's Russia Today newsletter. Thanks to the editors.

    Apr 05 3:14 AM | Link | Comment!
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