The Crude and the Ruthless (GPRK) – QAV AMERICA 44

QAV AMERICA 44

Cameron Reilly: [00:00:00] Welcome back to QAV America, Tony, episode 44. The Strait of Hormuz is still closed. Tony, any day now it’s gonna all come good.

TK: What do you think is gonna happen? It’ll come good.

Cameron Reilly: Well, we were talking about this on the last show, so you know, I’m reading lots of different analysis. No one really knows, obviously what’s gonna happen here. There are theories that, um, it could be shut down for a long time. There are theories that Trump and Israel are gonna bomb Iran into oblivion, and the regime will give in or collapse.

The regime seems to think it’s not gonna do that. I read a report that said they can produce 10,000 drones a month in Iran, but that obviously depends on if there’s anything left of Iran for them to produce drones in. But, uh, we did also talk about the impact to the world of not having oil. Australia’s got maybe a month of oil supply [00:01:00] and the impact on global fertilizer trade, about 30% of which also goes through the Strait of Commerce.

What that’s gonna mean for. Just economies worldwide standard of living worldwide. It really does seem that Donald Trump and Benjamin Netanyahu jumped into this thinking it was gonna be, uh, uh, less of a global catastrophe than it could possibly be. Uh, we’ll see how it plays out, but it’s not looking good right now.

TK: No, I mean our minds always jump to the worst case scenario. All gets turned off and we can’t get it refined or whatever. And it’s gonna be different in the US And this is a US audience, so it’s, it’s, we’re talking in from an Australian point of view, the type of crew that needs to be refined in Asia is risk and Asia might stop exporting it even if they get some to refine.

’cause they’ll leave it for themselves. So that’s gonna play out. Um, it’ll have some impact on the us. Uh. ’cause it’s gonna [00:02:00] depress the economy. Um, but yeah, I would’ve, I would’ve thought somehow the straits of them wasn’t gonna be opened up. I don’t know how that will happen, whether it’s obliteration for Iran, whether it’s US Navy ships escorting tankers through, um, or some combination of all of the above, or whether it’s a tucko trade and, uh, the, there’s a deal done.

Who, who knows? I suspect the tucko. Oh, I mean, yeah. I shouldn’t say, I was gonna say it’s probably the likely option, but then on hi, history would say it’s not. But I think the, the risk is if you don’t resolve this to open up the straits of whos without risk in the future, Iran can always use it again. Which should, which will be an issue.

Cameron Reilly: Well, they’ve. Had the ability to use it and have to varying degrees for many, many years. But, uh, you know, we’ve never seen it shut down to this degree for this long before. But it’s an extreme [00:03:00] situation. I mean, the way that I’m reading it is the. Regime. The IRGC see this as an existential threat, very much like I believe Vladimir Putin and the Russian oligarchs saw the Ukraine situation as an existential threat.

Um, and they refused to give in to the US pushing Ukraine into NATO and putting NATO bases on the Russian border. And Iran is refusing to give in to. The US and Israel trying to threaten them with regime change, existential threats. People tend to dig their heels in and are prepared to go to the mattresses,

TK: Yeah, you’re giving them another option. That’s, I think what’s happening. it’s gotta either be withdrawal or annihilation, I think.

Cameron Reilly: and annihilation is gonna require boots on the ground, which I don’t think is, uh. It’s gonna be a quick solution and at some point [00:04:00] China and Russia are gonna play a bigger role in it. De just depending on where they feel their interests lie and at what, at what point they need to get more engaged. And North Korea possibly.

TK: Yeah, and I think, I think oil’s gonna play a very big part in all this, and I think the pressure’s already mounting on the US government to sort something out. I’ve written the Wall, wall Street Journal overnight before oil majors sent their CEOs into the White House for for meeting. So

Cameron Reilly: So what do you think the content of that discussion was?

TK: sorry.

Cameron Reilly: What do you think the content of that discussion was?

TK: Um, you are, you are stepping in our turf and clean cleaners mess up, I think would’ve been the or position. they’re making, making money now ’cause the margin’s up. But if it, if it does disrupt supply chain and they can’t sell, sell product, they’ll be, um, very upset.

Cameron Reilly: Well, the market has obviously [00:05:00] been very volatile, but as I said in my newsletter last week. Volatility is our friend. That’s one thing I’ve learned from you over the years is that we don’t fear volatility. It creates opportunities for us.

TK: We need volatility.

Cameron Reilly: Yes. Um, it’s can be scary when you’re going through it, but when the market retreats and prices retreat, that creates opportunities for us to buy good quality businesses at bargain basement prices, we.

TK: Correct.

Cameron Reilly: We benefit from that in the long term, but our portfolios tend to go down

TK: Mm-hmm.

Cameron Reilly: uh, my portfolio has gone down in the last couple of weeks. Yeah, my mistake, uh, I did have to sell Tusk from our US portfolio this week. Uh, I think Tusk. We did a deep dive on it. Uh, [00:06:00] it was a bit of a cigar butt option. It became a three point trend line sell.

I think I lost 12% on that trade and I added GPRK, which is the company I’m going to do a deep dive on today. Tony Geo Park limited, a very interesting story. Uh, a lot of founder drama in recent years. Which has led to the company basically being in play. But I’ll go back and I’ll, I’ll do a bit of a background on it before we get into that.

So this is a Latin American oil and gas Explorer operator and consolidator. This is according to their website with assets and growth platforms in Columbia, Argentina, and Brazil. We are a leading independent ENP company that’s. Exploring, uh, exploration and production positioned across Latin America, one of the world’s richest and most under explored hydrocarbon regions.[00:07:00]

A clear set of priorities and key values have driven our ground floor startup through a two decade track record of consistent growth, superior ESG performance and strong value delivery now under the history section of their website. It says two decades, building the best company with the best culture.

No mention of the fact that the two co-founders went to war with each other about five years ago, and both have since left the building.

TK: out of the process though, culture’s improved.

Cameron Reilly: Maybe that’s it. We had to get rid of those guys. Once we got rid of them, the culture improved. And as I said, the company seems to be at play at the moment. A couple of entities, uh, involved in taking big stakes and trying to take it over, which is fascinating. It’s like something out of succession or, um, I don’t know.

[00:08:00] Yeah. Wall Street, something like that. So, uh, as I said, they’re based out of Columbia, like eco petrol that we talked about in episode 38. Ec, uh, and like eco petrol, these guys are not an A DR, so I checked that first off.

TK: Right?

Cameron Reilly: is, there is some system where Latin American companies can list directly on the New York Stock Exchange.

Uh, so these guys are in that boat. Now remember with Columbia, they have the appropriately named President Gustavo Petro, who is the 35th president of Columbia since 2022. He is the first left wing president in the recent history of Columbia, and he campaigned on a pledge to halt all new oil and gas exploration.

Contracts. [00:09:00] So he’s allowing existing contracts to continue, but pipeline for new reserves is legally choked off. So that plays a role with companies. Like this. And one of, as we’ll see, one of the reasons they’ve recently acquired some assets in Argentina is because their ability to grow new projects in Columbia has been choked off by the existing administration.

But as I recall from the eco petrol episode, Columbia relies on oil revenues to a large extent, but they’re trying to transition away from it. But the founding of this company, uh, not as old. Like we’ve talked about a lot of oil companies in the last couple of months, and a lot of them go back a hundred years.

These guys go back 23, 24 years. Founded in 2002 by James Park and Gerald O’Shaughnessy,

TK: Oh.

Cameron Reilly: two [00:10:00] seasoned oil and gas professionals who wanted to build a independent energy company in Latin America. The founders, uh, brought a couple of different backgrounds. Jim Park was a geophysicist by training, had over 50 years of industry experience, had previously pioneered commercial production in Central America with basic resources.

Gerald o Shaughnessy was a lawyer, came from a family oil company called Lario Oil and Gas. Where he, um, had been like a legal counsel there. Then he became an entrepreneur, was the first Western partner for Luke Oil in Russia during the 1990s. He goes back, his career in the fossil fuel industry goes back to 1976, general counsel at Lario Oil and Gas and Senior Vice President.

That company was started by his grandfather, Ignatius IC [00:11:00] O’Shaughnessy. Founded in 1927. Gerald O’Shaughnessy is a cousin of James O’Shaughnessy

TK: way. Really?

Cameron Reilly: What Works on Wall Street. Yeah. ’cause the first place my head went to both grandsons of Ignatius Aus O’Shaughnessy. James also worked for the family owned venture capital firm early in his career and apparently in interviews.

He said that his interest in the stock market was sparked by family debates. Regarding how his grandfather’s fortune should be invested, and that’s what led him into Wall Street. And for people who haven’t read it, his book, what Works On Wall Street, is a very, very good book for value investors to read.

It reflects a great deal of, um, QAV philosophy and um, approach to value investing. So there’s a connection there. [00:12:00] So, uh, as I said, they got started in 2002. They established their first operation in Argentina’s, Patagonia region First oil production in the Del Mosquito field. And then they continued to grow the business.

But then after 20 years, the founders went to war with each other. In 2021 over a governance dispute, O’Shaughnessy claimed that Jim Park operated as an Imperial CEO exerting near total control over pliable board of directors that acted as a rubber stamp for his plans. He claimed park consistently resisted independent valuations of company assets and blocked potential value maximizing transactions.

Because he insisted on leading any resulting combined entity. There was also a lot of [00:13:00] allegations that, uh, executive compensation was being withheld from independent directors and, and or critical information around executive compensation was being withheld from independent directors and the board.

When O’Shaughnessy challenged Park, the board allegedly forced him out. As chairman, rather than addressing his concerns, the dispute reached a breaking point on June 4th, 2021 when the board issued O’Shaughnessy and Ultimatum resign as chairman within 24 hours or be removed. Following his removal, the company claimed his exit was related to a lack of transparency regarding his pledged shares, asserting he was in breach of board policy.

O Shaughnessy dismissed this as revisionist history. Noting that his share pledges were a matter of public record and were never raised as an issue until the leadership conflict intensified. He launched a formal campaign ahead of the 2021 annual general meeting, urging shareholders to vote against [00:14:00] Jim Park and three other incumbent directors.

He proposed a slate of three new independent nominees. However, the leading proxy advisory firm ISS recommended that shareholders vote for the company’s nominees stating that O’Shaughnessy had not made a compelling case for change, and that the board had already begun making good faith efforts to refresh its composition.

Ultimately, shareholders reelected all Geo Park nominees with at least 70% of the votes. Just reminded me, I, I recently re-watched the first season of succession when, uh. The son, whatever his name is, tries to roll the dad and they have the board meeting and the son’s stuck in traffic and he is on the phone and his dad just brow beats them all into getting his own way.

So yeah, it was a big deal. Um, so then he left O’Shaughnessy and then Jim Park retired as CEO in 2022. Although he remains the [00:15:00] principal shareholder and serves as vice chairman of the board, he holds about 16% of the stock. From what I can tell, O’Shaughnessy is down to about 6% of the stock, but between the two of them, they still hold quite a big chunk of the stock, even though Shaughnessy isn’t really involved in the business anymore.

Um. Parks departure of CEO. The following year is described on the website as a successful leadership transition. Barry and Stan came up with that one for them. He was replaced as CEO by Andre, uh, Andre Ocampo, who was in turn replaced in 2024 by Philippe Beon, who had run eco petrol for many, many years before that.

They have like a kind of a joint venture with eco petrol. So anyway, these guys are going through a transition period. Um, obviously the oil price has been depressed for quite a while up until [00:16:00] Donald Trump’s adventures in Venezuela and Iran. Um, and so this company’s sort of been. Reinventing itself for the last couple of years to try and figure out how it was gonna survive in an era of low oil prices.

Plus what’s going on with the election of Gustav Petro in the last three or four years in Columbia. They’ve had to rejig, things had to pivot as the, uh, succession boys would say, we’ve gotta pivot. They did manage to deliver production above the upper end of the guidance range last year, which was impressive considering they were under pricing pressure.

But at the end of last year, they also closed acquisition of some property near Patagonia and Argentina, a place called Vata. Do you wanna guess what? Means in Spanish. Tony?

TK: Would be dead death, wouldn’t it? So I don’t know. [00:17:00] No,

Cameron Reilly: Va. Va.

TK: uh, va

Cameron Reilly: Mm.

TK: go go, go with death. I don’t know. Death track. Death track.

Cameron Reilly: Dead cow.

TK: Dead cow. Okay, VACCA. I,

Cameron Reilly: Mm.

TK: from that.

Cameron Reilly: Vata, um, largest oil discovery, I think in this area, discovered in 2010. So they’re moving from, um, traditional easy oil, which is what they’ve done previously into more difficult, complex shale, which is what this thing is in Argentina, pivoting away from Colombian oil to Argentinian shale. Um, so that’s part of the pivot.

They’ve also been cutting costs, um, and also trying to figure out how they can continue to produce more oil from [00:18:00] the current blocks that they have in Columbia. Uh. And they’ve come up with something they call their North Star targets. They’ve done what they call a strategic reset of the cost platform cutting costs, and they’ve got some pretty hairy goals for how much they’re gonna be able to, uh, how low they’re gonna be able to drive their costs down.

The structural changes they’ve made in the last couple of years are expected to generate approximately $45 million in annualized savings moving into 2026. But the business is still primarily based around its mature assets in the Laos 34 and CPO five blocks in Columbia, you got the C3 PO blocks and, and then the CPO five blocks, the most significant.

Um. Part of their new interest in Vata is a hundred percent working interest in the [00:19:00] block, and a 95% interest in the West or silver Oeste block totaling over 12,300 gross acres in the highly productive black oil window of the Nehuen Basin. But. A lot of protesting in Patagonia, Patagonian do not like oil companies setting up shop in their area.

So there’s an e es, despite the fact that they, uh, um, lauding their ESG track record. On their website. There’s a lot of issues in Argentina, a lot of protests. A lot of lawsuits going on around trying to stop fracking and oil mining in Argentina, so that could be an issue for them. Getting out of Columbia may not rescue them.

TK: Hmm.

Cameron Reilly: But up until recently, and this is where the story gets even more interesting. Up until recently, they [00:20:00] looked like they were about to acquire, uh, another Colombian asset, Fronterra Energies, upstream assets in Columbia. They’d agreed to acquire them for $375 million in cash. It was going to double. The company’s reserve base added approximately 40,000 barrels of oil per day of production, and it was going to, it was a big deal.

Deal was pretty much done until at the last minute, and I’m talking a week and a half ago, a company called Parex Resources, a Canadian oil company. Who also owns 9% of Geo Park, put in a competitive bid for Frontera Energy. Uh, ran about $500 million plus [00:21:00] the assumption of debt. So the Geo Park Board of Directors made the decision not to try and compete with Parex.

It was obviously, I mean, that’s a, that’s a big premium, right? They bumped it up by $125 million. Again, it’s like succession, a succession deal. Just, yeah, just throw so much money at it that no one can compete. So they decided they weren’t gonna try and compete either because they knew that this was a game that they weren’t gonna win, or because they just didn’t wanna overpay for the resources either way.

But then. Within days of that happening 10 days ago, March 6th, 2026, they announced that a Colombian billionaire called Jamie Galinsky had just become a cornerstone investor in Geo Park, sort of a White Knight deal.

TK: All.

Cameron Reilly: He’s a Panama based Colombian banker, investor, and real estate developer. According to Forbes, he’s the second richest person in [00:22:00] Columbia with a net worth of 15.1 US billion dollars.

His company, Calden Investments, acquired 12,876,053 newly issued common shares. At a price of $8 31 per share, representing a $107 million investment, which gets him about 20.2% of Geo Park’s new outstanding shares. However, he paid $8 31 a share. Geo par, sorry, Parex. Had put in an offer for the entire company about six months ago at $9 a share.

The board rejected their offer saying that it was undervalued, and then sold 20% of the company for $8 [00:23:00] 31 a share

TK: Mm-hmm.

Cameron Reilly: Now, at the time, Parex offered $9 a share. The share price was about six. Bucks, $6 30 or something. So it was a pretty big premium to the share price at the time. Sounded like a good deal.

If I owned it at $6 and they were offering to take me out at $9,

TK: Mm-hmm.

Cameron Reilly: I would’ve been like, thank you very much. Do the deal. They turned them down and said that it wasn’t attributing enough value to the Argentinian acquisition, which was in the process of just happening then. But then when Parex did an aggressive takeover, um, offer and then that failed, then Parex is trying to get a bunch of directors appointed to the board.

And so the Galinsky deal is fascinating. So he not only [00:24:00] gets 20% of the shares, he gets board nomination rights, approval rights over certain major corporate actions. And has agreed to vote with the existing board for all, all of these things moving forwards. And he’s locked in for 18 months. He can’t sell his shares for 18 months,

TK: Yep.

Cameron Reilly: so it’s not a poison pill, I dunno what you call that, but it’s, it’s basically a white knight.

He’s come in, he’s given them a ton of cash. And Parrack are basically stymied. They can’t get independent direct or their own directors nominated onto the board. They, and so, yeah, I don’t know what they do with their 9.4% state, but so this, this whole thing has been in play recently. Um, but it seems to me that both Parex and Galinsky see this company as offering value

TK: Yeah.

Cameron Reilly: and um, they’re both trying to get [00:25:00] control of it.

Which is good for us, I would think.

TK: definitely. Um, and makes sense. If Columbia isn’t allowing you, uh, reserves to be explored, then you’ve gotta buy an existing company if you want access to that market. And if one’s also then getting into Argentina, um, it’s, there’s gotta be upside.

Cameron Reilly: Yeah. Um, the whole Frontera thing that they tried to buy and Paris came in and paid a premium for it. I don’t know how that plays into any of this, um, how that plays out. But anyway.

TK: yeah, it’s, I, I would imagine Parex have said, we can’t buy you or buy your competitor. And they probably had insight. I don’t, I shouldn’t say that. They had 9% of the, of the company that was looking to bid, so they may have known a little bit about, about what was going on and what the. The target was worth and the synergies and all that kind of thing.

So, um, they decided if we couldn’t [00:26:00] get Geo Park, we’ll get the other one.

Cameron Reilly: Yeah, so that’s some of the background, what’s going on. It’s kind of interesting. Um. Things are happening behind the scenes. Their annual report is due out on April 2nd. So the numbers that we’ve got, uh, you know, last quarter, uh, so we’ve got three quarters of numbers,

TK: Hmm.

Cameron Reilly: but it’d be interesting to see how the annual report plays out.

Um, that’s the 2025 annual report, so it’s not gonna take into account all of the recent goings on in the oil sector, obviously. Market cap is roughly 454 million. They carry about 553 million in debt, which is a lot when your market cap’s 454 million, but they’ve got that 107 million cash injection from Galinsky, which is giving them a bit of a buffer.

Total revenue for the [00:27:00] year reached 492.5 million. Their adjusted EBIT was 277 million, down from 417 million in 2024, but the analysis that I read said this is almost entirely price driven because their. Uh, production averaged about 58.1 million barrels in 2025 versus 65.6 in the prior year. So production dropped a little bit, but the oil price dropped a lot.

Cash went down from 277 million at the end of 2024 to a hundred million at the end of 2025, but they. Paid off 512.6 million in debt, and then 115.5 million for the acquisition of the Vata assets. [00:28:00] So paying off debt, buying some Argentinian assets, probably a good way to spend their money. Um, they also paid 24.2 million in dividends and 41 and a half million dollars in interest.

So that explains some of the cash delta. Um, what else have I got? Uh.

TK: Well, a couple of things I noticed when I was about the company. Uh. You referenced this before about their cost cutting, uh, program, but, uh, they seem to have a history of, of being a very low cost producer. So one of the benefits of whether it’s because of the Colombian government’s, uh, rules and regulations or because of the company’s policies, is that been developing the, the same sort of area for a long time now.

So. The benefits of that are that you, once you build the infrastructure for the first wells, [00:29:00] um, terminals and rail lines and pipelines and things, that’s it. You don’t have to build it again if you find another strike in the area. So they’ve been very good at being able to maximize that initial investment in their Colombian fields and they. Proposal is to do the same thing in Argentina. So build some infrastructure, stay within the current permits, um, or the area, and try and maximize the output from that without incurring more costs. And the analysis I saw said that they were profitable at sort of sub $50 a barrel. So sort of 45 to $50 a barrel.

They’d still be which the oil price hasn’t gotten down to. Um, so they are a low cost producer. People can’t stay profitable at that low, uh, oil price. which is a, I think, which, which is probably one of the reasons that’s they’re becoming attractive and on the radar of other companies who are looking to expand into the area.

There’re a low cost producer with [00:30:00] reserves, um, in Columbia. They’re reserves that can’t be repeated at least unless there’s a change in government or government policy. Um, so yeah, they’re there. As we often see with QAV, we like them. They’re attractive, and they’re also attractive to players in the industry who try, who are trying to take them over.

Cameron Reilly: Yeah, so running through the scoring for these guys. Um. They had a QAV score of 0.19. They weren’t at the top of my list, but they were up there when I ran it this week. By the way, um, our Australian listeners know when I ran our Australian buy list this week, there was four stocks, actually three stocks on it that I could buy all, all companies, the us, um.

Portfolio had a lot more stocks. Obviously it’s a lot bigger market, but there was a lot of things to buy over there. Um, not being as impacted by downturns as much as our market was. Um, [00:31:00] price to operating cash flow 2.81. Which was, um, which is very attractive from our perspective

TK: Mm-hmm.

Cameron Reilly: from a, from a Wikipedia perspective.

They’ve got a quality rank of 78, which we gave them a score for. Their stock rank is, uh, actual stock rate 95. So we scored ’em for that.

TK: Hmm.

Cameron Reilly: Their F score is a five, which is pretty healthy, so we score ’em for that. Their price is above both of our IVs, so I, uh, couldn’t score them for that. Our iv, uh, one is $5 32 and Sarah’s our IV two.

Um, that’s interesting. I wonder why that is. Uh, the price is around $8 70. I didn’t look into why the [00:32:00] IV two is the same as the IV one. That’s weird. Um, what else have I got here? Price is, uh, not less than book. What’s their book? Price? Uh, EPS.

Um, equity per share, $4, so yeah. They’re a lot higher than their book. The book, they’re higher than their book plus 30. So EPS growth is, um, negative. Um. So couldn’t score them for any of those things. So really, um, uh, growth, um, over PE is not greater than 1.5 Book value growth is not positive. PE is not less than yield.

Yield is not greater than bank debt. Couldn’t score them for many of those things. At the end of the day, really it comes down to some of those Wikipedia scores, which are quite strong and positive. [00:33:00] And, uh, the Pr/OpCaf, I think is what it all comes down to. At the end of the day, they got seven out of 13 on the checklist, so quality score of only 54%.

For us, it’s not great, but cheap, um, on a Pr/OpCaf perspective.

TK: And we haven’t seen the impact on their business from the surge in the oil price yet too.

Cameron Reilly: Which may be nothing like that, may be very shortlived depending on what happens. Um, and even, you know, if the oil price goes up but the global economies collapse, it may not necessarily be a good thing. I dunno how it’s gonna impact, uh. Latin America’s economies and, uh, the, the fortunes of Colombian oil production companies.

But, um, the fact that there’s this bidding war for ’em between Parex and Galinsky, I think is evidence, as you said, that we’re not the only people that see there’s some latent [00:34:00] value in this. So anyway, that’s all I’ve got on GPRK. Um, which isn’t the Republic of North Korea. Just wanna point that out. And, um, I added them to the light portfolio this week, so we will see how they go.

The QAV light portfolio. Before we go, I should do a quick portfolio update on our US portfolio. So the US dummy portfolio, the main one I’ve been running since. September, 2023 has dropped a lot in the last couple of weeks. It’s now up 85.6%. Versus the s and p up 50.75% over the same period of time. So it’s still an okay relative, but it was up over a hundred percent a couple of weeks ago.

So the whole, uh, straight of Uz Iran thing has had a toll on this. And, uh, [00:35:00] the light portfolio that’s only been running for, uh, since we’re in December, I think. I started in December. It is currently down 1.95% versus the s and p down 2.6% over the same period of time. So it’s beating the s and p, but only because it’s lost less money.

Uh, some of the stocks that added have done quite well. Cord energy is up 32%. Eco petrol is up 15%. Scripps is up 12 SSP and GPRK is up 4.3% since I added it yesterday. Oil Murphy oil’s up 3.7% since we added it. I think it was last week or the week before maybe. Nabs industry is down a couple of points. Dans is down six and Shinhan financial company is down 13.

So, [00:36:00] uh, so much for the Korean, uh, banking sector. Dunno what’s going on over there. And that’s an A DR too. So we’ve probably got a DR impacts on that one as well. Anyway, all in all, it’s still finding its feet, but some good performance from some of those stocks. Like court energy in particular.

TK: Yeah. All companies at the moment, at least in Australia, are doing very well in terms of their share price.

Cameron Reilly: Yeah, but like as usual, like. The companies that we’re seeing in the us, the companies that we’re seeing in Australia are all sector driven. You know, the, the checklist is driving us into certain sectors

TK: Mm-hmm.

Cameron Reilly: some people may be worried about over concentration, lack of diversification, but we just go where the checklist tells us there’s value to be had.

Right.

TK: Yeah. Fish with a Fish are.

Cameron Reilly: But it’s interesting because you would think in one way that with oil [00:37:00] prices spiking and all of the global turmoil that’s going on, everyone would be jumping on oil companies right now. But yet they’re still turning up on our buy list as where the most value is right now.

TK: Yeah, true. Um, I think, I think people are having, just like we are a hard time at predicting what’s gonna happen. the oil price staying at a hundred dollars a barrel? Is it dropping back? How, how long is this gonna last? are the

Cameron Reilly: And,

TK: in terms of interest rates rising or, um, supply chain disruptions or impact of the, your price into food?

All sorts of things are being crunched and modeled and gained at the moment.

Cameron Reilly: and of course we look at none of that. Not really tangentially. We do like the commodity charts we look at. We won’t buy anything if the commodity’s falling and oil’s going up.

TK: Mm-hmm.

Cameron Reilly: for these individual stocks will look at their sentiment charts and if they’re [00:38:00] going the wrong way, we won’t buy them.

TK: Mm-hmm.

Cameron Reilly: there’s a little bit of interest around them that, but we don’t. We don’t really care where the oil price is. We don’t care where interest rates are. We don’t, we’re all looking at historical numbers, not trying to predict future numbers. So it’s all based on last year’s financials, not predictions of this year’s financials.

So, well, maybe a little bit we have the EPS forecasts, you know, sorts of things. Yeah. And some of the financial metrics from um, stock edia and that kind of thing.

TK: Mm-hmm.

Cameron Reilly: Alright, well that’s all I’ve got, Tony.

TK: interesting. And the Shaughnessy reference, I didn’t expect that. That’s great.

Cameron Reilly: Yeah, I thought when I, his name came up, I thought, oh, he can’t be related. That would be, but yeah, no, he is, um, yeah, no, I thought the succession level, um, founder dramas and boardroom dramas and acquisitions and takeovers and all that kinda stuff was the most interesting [00:39:00] part of that story.

TK: that’s, you know, that’s, I wouldn’t, shouldn’t say it’s often the case, it’s sometimes the case with owner founders. Like, know, when I was reading about this company, the analysis I was reading kept emphasizing it was a low cost producer. They kept a tightly long cost, clearly that was at, you know, at the behest of the. Probably came up through the, through that kind of, um, you know, background of I’m small, I’m scrappy, I’m gonna keep a lid on cost, I’m not gonna spend money when I don’t need to. All that kind of stuff. And then, you know, exerted influence on the board who were there to. Basically do his bidding. Um, or didn’t provide much resistance, but is that a bad thing?

Because his bidding was still keeping a little on costs and a good strategy about let’s just explore the areas that we own and not try and waste money on duplicating infrastructure. Let’s use the stuff we’ve got and maximize that. So it was all good sound strategy. always this [00:40:00] debate around governance when it comes to owner.

Founders is, are you better off having good governance? Better off having someone who knows the industry inside and out who’s lived and breathed it. And uh, and yes, they’re forceful and they’re domineering ’cause they’ve had to be, to keep costs down and to keep the company focused on what, on their vision and that kind of thing. it’s an interesting dilemma, I think when you look at a lot of owner, founder businesses.

Cameron Reilly: And I looked up the O’Shaughnessy family oil business, Lario, they’re still around as far as I can tell, still run by the O’Shaughnessy. I think, uh, you know, there’s been successes, succession plans from the grandfather all the way through the family. They still run it. Um. So that’s interesting. So Shaughnessy’s obviously come outta this, you know, 120 year old family run oil business.

Also, the other interesting thing about this company is it’s a Colombian oil company founded by two Americans, not [00:41:00] Colombians. Uh.

TK: And they, and they have changed CEO and the, from the names you’ve mentioned, I’m, I’m wondering whether there was some kind of pressure or, even just a, a, you know, tip of the hat towards the Colombian government to say, Hey, we’re on board and we’re willing to play ball or to, to use local staff or whatever. I don’t, I don’t know, but it’s interesting timing.

Cameron Reilly: And as I said, the current guy was the CEO of Eco Petrol for I think, well many, many years. So, and I think the Vata thing that they had. Bought, they sort of share that land with eco petrol. It’s some sort of a

TK: Yeah.

Cameron Reilly: joint venture or some sort of a collaborative operation they’ve got going there. So yeah, there’s a lot of interplay with eco petrol and the Colombians and the government and all that kinda stuff.

So anyway, beyond my pay grade, that’s Geo Park. We’ll see how it does. Alright, well.

TK: [00:42:00] Thank you. We can come back next week and talk about the straits of her was again.

Cameron Reilly: There’ll be another royal company on the buy list probably next week the way things are going. Yeah.

TK: Yeah.

Cameron Reilly: Alright. And or, or a company that makes tomahawk missiles or, um, anti drone defense systems maybe.

TK: the ones that are going up in Australia as well. They’re just not value stocks.

Cameron Reilly: Yeah.

TK: make little, little money usually. And now, now their share prices are rising dramatically.

Cameron Reilly: Well that brings us to after hours. What have you got for me this week, Tony?

TK: Uh, yeah. So a book called The Bed of Pro Crusties by Nasem Nicholas Talib. Um, do you know the story of the bed of Ty’s camp?

Cameron Reilly: I got your notes

TK: Ah, okay. Yeah, so Ty’s, it’s a great story, probably a myth, but he owned an inn that would, um, take in travelers and then he’d, uh, give them a bed for the night. But he would make the traveler fit the bed.

So if the, if the traveler was shorter than the bed, he would stretch [00:43:00] them. And if the traveler was too long for the bed, he would lock their legs off or their feet off. So, um, another, another very nice person, and eventually he was slayed by thesis, who slayed the mour, and he turned the bed on Crusties and, uh, put him in the bed and then chopped off his head for, for being too long.

Um, so the book is a whole series of aphorisms, um, kind of stories around this. This is an example. And, uh, that was pretty good. It’s pretty good. So it’s a bit like that book you. Referred to me ages ago, uh, from the guy who wrote homosapiens, where it’s a list, a compendium of sort of two or three lined aphorisms.

Um, I’ve got some examples here. I’ll just read out a couple. Uh, and this is how, how the book is, it’s just laid out, you know, sort of four or five to a page, page after page. But it, here’s some examples. In science, you need to [00:44:00] understand the world in business. You need others to misunderstand it, using as an excuse.

Others failure of common sense is itself a failure of common sense. And the last one, I’ll, I’ll read out, France took Algeria hoping for countries for a country to encapsulate. And instead France is eating ous.

 Yes. They’re all, all quite quirky and good. Oh, okay.

Cameron Reilly: Yeah.

TK: Yeah.

Cameron Reilly: crack in it when I finished the Odessa file. Maybe.

TK: Mm. I like tale as well. I, there’s a sort of cadre of authors who I just automatically buy the next book that they put out and he’s one of those.

Cameron Reilly: But this is an old one, right? 2010. I think this came out.

TK: Oh, okay. I must have just come across it recently, I think. ’cause yeah, I’ve just bought it.

Cameron Reilly: What else? Anything

TK: No, that’s it. I’ve, like I said, I’ve, I’ve watched some movies [00:45:00] like Minority Report, um, nothing really worth reporting. A lot of big grade stuff this week, which has been fun, but hardly worth recommending.

Cameron Reilly: Mm, well, um, have you seen the Mel Brooks Doco?

TK: No,

Cameron Reilly: I think it’s on maybe Um, it’s called The 99-year-old Man.

TK: no. Right.

Cameron Reilly: uh, directed by Judd Apatow,

TK: Okay.

Cameron Reilly: and it’s just interviews with Mel today, telling his story and a whole bunch of people, fans like comedians, Dave Chappelle Seinfeld, Sarah Silverman, people like that, but also lots of archival interviews of him from over the decades, plus Carl Reiner and people like that.

TK: Mm-hmm.

Cameron Reilly: It has David Lynch’s last filmed interview in

TK: Oh, wow.

Cameron Reilly: talking about Elephant Man and lots of interviews with Rob Reer in it too, which I assume are[00:46:00]

TK: Mm

Cameron Reilly: some of his last interviews.

TK: mm

Cameron Reilly: Um, but it’s great. Like I assume you’re a Mel Brooks fan. I mean,

TK: mm-hmm.

Cameron Reilly: you’re a Python fan. I don’t know if we’ve talked about Mel Brooks much, but you, like me must have grown up watching Mel Brooks films

TK: Young F Frankenstein, blazing Saddles. Yeah.

Cameron Reilly: get smart

TK: Oh yeah. Get smart. Yeah. Yeah.

Cameron Reilly: what I didn’t realize until I watched this is that he, his career was in the toilet before Get Smart. I thought was like successful when he did get smart with Buck Henry. But the story is that he was working on the Sid Caesar show for quite a few years Kind of, he either quit or got fired from that because he wanted to make movies.

And he, uh, I think, Sid signed up for another series and Mel didn’t wanna do more TV and whatever reason he left then was broke, couldn’t get, you [00:47:00] know, arrested in Hollywood and career was going nowhere. And then somebody approached him, I think a producer approached him with the idea of doing this TV show to make fun of James Bonde type stuff.

And he

TK: Yeah. Right?

Cameron Reilly: and that launched him. So then he made the producers

TK: Mm-hmm.

Cameron Reilly: was a flop. Then he made the 12, made the 12 chairs. It was a flop.

TK: I haven’t seen that one,

Cameron Reilly: Oh, great film based on

TK: is it?

Cameron Reilly: novel. Um. Yeah, again, he was a complete failure by the early seventies. And then a producers approached him and said, I’ve got a, some, a young screenwriter’s given me a screenplay called Black Bart, and I want you to direct it. Mel says, only direct my own work things. I write myself, the guy says, I can pay you, when do we start? And that was Blazing Saddles. And he brought

TK: Yeah.

Cameron Reilly: Richard Pryor and then the whole story

TK: Gene Wilder.[00:48:00]

Cameron Reilly: and, and

TK: Mm,

Cameron Reilly: no one is ever gonna see it ’cause it’s a Western. No one’s ever gonna watch a Western.

No one made a Western for 35 years. No one’s gonna watch this. So he, they just, was getting paid. He didn’t care. He didn’t have a percentage in it, so he just went balls to the wall. He said, somebody told him, if you’re going to, if you’re gonna approach the bell ring it.

TK: yeah. Right.

Cameron Reilly: They just went,

TK: Good saying.

Cameron Reilly: joke they could think of, they just put it in there and, uh, of course, yeah, it was hugely successful. Um, yeah. And then, and then he is had other flops, but I didn’t realize, apart from Elephant Man, like when he started Brooks Films, ’cause

TK: Mm-hmm.

Cameron Reilly: to make serious films, but he knew, he says, you know, if I directed Elephant Man, people expect it to be a comedy musical.

TK: Yeah.

Cameron Reilly: Um, he also did the Fly. I didn’t realize that

TK: I didn’t know that.

Cameron Reilly: the Jeff Goldblum version of the Fly, which is one of my favorite films.

I just re-watched that in the last year. Loved it. Um, so yeah, what a, [00:49:00] what a life, what a, what a career and

TK: Mm.

Cameron Reilly: and,

TK: But married to Anne Bancroft too, which is always found surprising. I,

Cameron Reilly: You, you weren’t the only one. Everyone,

TK: yeah.

Cameron Reilly: with people going, everyone at the time was like, he said there was, uh, they’d only been together for a short while and there were some, they were at some event and there was some famous guy, I can’t remember who it was, big Hollywood dude who looked at her, looked at him, looked at her, looked at him and said, I don’t get it. But the story between them getting together is fascinating too. She was on, she was in a play, like she won an Academy Award in like 62 and then she was in the graduate and was on, she was a big Broadway star. Some friend of his dragged him along to see this thing. She performed a number on stage. She finished, he stood up apparently in the audience and yelled out. And Bancroft, my name is Mel Brooks. I.

TK: He rang the bell.

Cameron Reilly: Yeah, and then he [00:50:00] stalked her for the next five days. She says everywhere she went, he was there and he was like, we meet again. This is kismet. It’s meant to be. She also says that the first time she saw him, she knew she was gonna marry him

TK: Oh

Cameron Reilly: And then they were together for you, dunno, 45 years or something like that. she dies and then he ends up going to Carl Reiner’s house every night for dinner. You ever seen that? Comedians in

TK: yeah.

Cameron Reilly: episode?

TK: Yep. I love it.

Cameron Reilly: so Jerry is in this thing talking about that, and he is great. He says, yeah, look, it was probably pretty intrusive, but he said, now America gets to see when you’ve achieved everything there is to achieve. do you finish your life?

TK: Mm.

Cameron Reilly: in front of Wheel of Jeopardy,

TK: With a T TV dinner. Yeah.

Cameron Reilly: with a tv, dinner, eating deli sandwiches. Like

TK: Yeah, yeah. [00:51:00] Which I thought was fantastic. That was a great, great setting for them. Very realistic.

Cameron Reilly: so Rob Reiner then says, when Carl died, Mel was there. Carl went to the bathroom and collapsed. Mel called the, you know the, whatever you call it, the,

TK: One. One.

Cameron Reilly: yeah, I think it was like a retirement village

TK: Oh, okay. Yep.

Cameron Reilly: he called medical support, kept begging them to keep the machine on him, hoping they could bring him back around, didn’t said Then Mel turned up at the house every night for months. To continual continue the ritual of eating. He wasn’t prepared to let his friend go

TK: Wow.

Cameron Reilly: And he said to them, look, I know you’re gonna have to sell the place eventually. Just tell me when I can’t come anymore. And Rob Reer says, he said, uh, well, maybe we’ll sell it with you in it, you know, buy the house, get Mel Brooks for free. [00:52:00] But yeah, like he’s, and then, you know, Carl’s dead, Rob’s dead. Um, gene Wilder’s dead. He’s outlived everyone. But, um, yeah, it’s, it’s really, uh, you know, and it talks about, then he goes and does the producers on Broadway, reinvents Broadway, Nathan, uh, not

TK: Right,

Cameron Reilly: um, yeah, well, Nathan Lane’s in it too, but, um. Josh Gad is in it ’cause he’s producing Space Balls two, which they’re making at the moment. But he says that, uh, like the Book of Mormon wouldn’t exist without the producers on Broadway because the producers on Broadway reinvented Broadway. All of a sudden you could do stupid slapstick comedy on Broadway, which opened the door for movies being remade into musicals,

TK: right.

Cameron Reilly: but also, which it hadn’t been done before, or hadn’t been done for a long time anyway, since maybe the sixties. Um, and also [00:53:00] zany really zany stuff and, you know, brought a whole new generation of people back to musical theater and Broadway. Um, so anyway, and it’s still, I think the

TK: Remember?

Cameron Reilly: in this, it still has more Awards than any other production, including Hamilton. It got 11 Tony Awards or something.

So, yeah.

TK: I remember going, I remember going to see it when it was revived in Australia with Burt Newton playing the Nathan Lane part.

Cameron Reilly: Was he good?

TK: It’s great. Really good.

Cameron Reilly: I saw him do, maybe I saw that too. I just remember him doing springtime for Hitler.

TK: Yeah. That’s it.

Cameron Reilly: but that’s not

TK: no, it must have been the Nathan Lane part. No, he was the, uh um, no, you’re right. He was the German. Yeah.

Cameron Reilly: guy doing Hitler.

TK: Yeah. Yeah.

Cameron Reilly: Shut up. Apatow asks him when they made the film in 60 70, he goes, anyone else making jokes about Hitler? And he

TK: Yeah.

Cameron Reilly: no, no one,

TK: Mm.

Cameron Reilly: It was, he said, Dave Chappelle talking about Blazing Saddles is like, people [00:54:00] say you couldn’t make that movie today. You couldn’t make it back then either.

TK: Yeah.

Cameron Reilly: was never a time when you could make fun of racism

TK: yeah.

Cameron Reilly: did in

TK: Would’ve been worse back then, I think.

Cameron Reilly: and Mel Brooks is the only reason he could get away with it is ’cause Richard Pryor was his writer and was supposed to play the role.

TK: Mm.

Cameron Reilly: so anyway. Yeah, really, really, if you like Mel Brooks, really, I loved, I loved this

TK: I’ll have a look.

Cameron Reilly: My musical, uh, suggestion for this week is Lamber Hendricks and Ross.

TK: Okay.

Cameron Reilly: Do you, do you know what Vocalese is?

TK: No.

Cameron Reilly: You probably do, but, uh, like me, you probably dunno by that name. So, you know what scat is?

TK: Yeah.

Cameron Reilly: Scat is when they put English lyrics over the jazz part. Yeah. So they take a jazz standard, but

TK: Mm-hmm.

Cameron Reilly: the trumpet line, they put words over the trumpet line, [00:55:00] da, d da d, d, So anyway, um. Lambert Hendrix and Ross were the, uh, pinnacle Vocalese trio in the sixties.

TK: Right.

Cameron Reilly: listening to them. They, they put like, they did like four or five albums, but listening to that while I work over the last couple of days, it’s really, if you know, it’s a really cool sort of

TK: Okay,

Cameron Reilly: jazz background vibe. Um, this vocal trio singing over the top of jazz standards. Yeah, that’s, that’s been a lot of fun. Uh, that’s it.

That’s what I got.

TK: good. No, it’s been fun,

Cameron Reilly: got washed out. You heard my camping story. We got washed out, came

TK: but.

Cameron Reilly: drive through a bloody dirt track through the forest, uh, which was hairy. No reception, no sat nav. The guy that came in the morning that we left, I took photos. He had, he had, um, a map on his phone still.

I was

TK: Yep.

Cameron Reilly: photos of his map to [00:56:00] guide myself through these forest tracks. Thought if we break down or, you know, hit

TK: Mm-hmm.

Cameron Reilly: and do an axle or something, 10 o’clock at night, no mobile phone reception, it’s

TK: So what, so what happened? You, you, you lasted a night, did you?

Cameron Reilly: So we got there on Friday afternoon, it was raining. We set up

TK: Right?

Cameron Reilly: rain. We’d

TK: Hmm.

Cameron Reilly: tent the day before, didn’t know how to put it up. Spent 90 minutes trying to get this tent up in the rain. Uh, it poured rain all night. We found out the next morning all the roads in were flooded the dam had released a whole bunch of water.

So, like in

TK: Uh, yep.

Cameron Reilly: which was flooded last week, the roads were flooded. Um, the only way in or out was a dirt. Road through the forest, which was hairy. And then the forecast was, it was gonna rain all night on Saturday night, but it had been sunny all day and it was dry. So about six o’clock Chrisy and I made the call, let’s just get outta here.

I don’t, and it was [00:57:00] gonna be raining the next day. We didn’t want to have to pack up in the rain. And it was,

TK: Yeah.

Cameron Reilly: so we packed up, left about eight, tried the main road out. Yeah, it was flooded. Chrissy walked out into the bridge over the river and it went up to her knees and uh, she didn’t even

TK: Mm.

Cameron Reilly: to the road section.

It was up to her knees and we’re like, yeah, this is bad. So we turned around and hit the dirt track and just sort of, it was only about half an hour through the forest road and got out and got home by 10 30. It was fine. Turns out it didn’t rain and everyone the next day just left on the main road. But you know. We, uh, we made a call,

TK: Yeah.

Cameron Reilly: our sanity. Um, I thought I’m, if it rains, I’m just gonna be lying here, worried all night about, oh shit,

TK: Mm.

Cameron Reilly: this thing up and pay us. But Fox, because we turn up in the rain the Friday afternoon, one of Fox’s friends, ’cause it was a school thing. One of his

TK: Oh, okay.

Cameron Reilly: comes running up to the car in the rain Fox just jumps out, takes off in the rain. We don’t see him for the next couple of hours. [00:58:00] He say he’d pop up to the tent every now and again and go dinner ready? No. All right. He’d be off again. You know, we were talking about this so beautiful camping ground. Only families from his school there. They’d sort of book the thing out. There was like 30 families or whatever. So the kids, we didn’t see the kids for the whole day. Friday night and Saturday. It was like living in the seventies. The kids are just

TK: Mm.

Cameron Reilly: on

TK: Right?

Cameron Reilly: skateboards, bikes, going to creeks in the bush, just. It was like growing up that we did. Right. You just don’t

TK: Yeah.

Cameron Reilly: the day, you know, the kid’s just off playing with his friends. It was, it was great. You know, it was something he

TK: That’s fantastic. Yeah.

Cameron Reilly: Brisbane, you

TK: You should be able to,

Cameron Reilly: Yeah. If, yeah, if he doesn’t even have any friends that live within, you

TK: Hmm

Cameron Reilly: 20 minute walk from here. But, um, it was, you know, yeah. Just, I dunno, [00:59:00] I wish it was like, it was in many ways, you know, whole thing.

’cause you know what, it was like we’d, I’d disappear

TK: hmm.

Cameron Reilly: seven o’clock Saturday morning, I’d be on my bike and I wouldn’t come home until dark. My parents had no idea where I was. We, we

TK: Yep.

Cameron Reilly: were the same growing up. Right?

TK: Yeah, absolutely. School holidays was like that. Um,

Cameron Reilly: Yeah.

TK: every afternoon was like that.

Cameron Reilly: Yeah.

TK: Go out. Go out until the street lights came on, ride your bike, go down and play football on the footy oval. Yep.

Cameron Reilly: Yeah. Go, you know,

TK: Skateboards. Oh.

Cameron Reilly: exploring

TK: Oh.

Cameron Reilly: and going

TK: Number of times I’d get

Cameron Reilly: parks and

TK: hauled, like dad get home, and then the neighbor come over and say, the kids have done this.

And like dad would go, what have you done? Oh, nothing.

Cameron Reilly: Yeah.

TK: me. He did it. Yeah.

Cameron Reilly: And that whole thing of, you know, there was, there was a hill, uh, this place, a road, main road leading up to a dam. Fox and his friend were on [01:00:00] scooters, no helmets, no shoes up to the top of this hill and then it down this

TK: Yeah.

Cameron Reilly: fast as they possibly

TK: Just like the seventies. We never had any helmets or shoes either.

Cameron Reilly: Exactly. And I was talking to Chrissy about, you know, that ability to evaluate personal risk. In a physical sense only comes from trial and error. Right? You, you have to fall down and hurt yourself a bunch of times to get a sense for, okay, maybe that was pushing it too far. Maybe I should think about

TK: Yeah. But also watching your dumb mate do it first and go, well, if they can do it, I can do it. Ah,

Cameron Reilly: Yeah,

TK: yeah. And like, ’cause they’re, they’re like three years older than you and they can do it and you can’t, but you’re not gonna give up.

Cameron Reilly: yeah.

TK: Yeah.

Cameron Reilly: school is based on this principle too. The kids need to take a lot of risks because

TK: Hmm.

Cameron Reilly: learn to, um, evaluate risks. But [01:01:00] then kids get hurt. of arms get broken and concussions happen, and parents get upset. Why, and I’m like, that’s kind of what you signed up for when you send ‘ em to

TK: Yeah.

Cameron Reilly: It’s part of the philosophy of the school is they let kids use knives and power tools and you know, blast objects and heavy objects and build forts up trees. That’s kind of the point, right, is like of the flies in a somewhat loosely managed environment. But anyway.

Yeah. All right. Have a good week, tk. Thank you.

TK: Cam. Bye.