Enquest Share Price (ENQ)

Romeron

Regarding your questions.

1. Tax losses were acquired with Tailwind and $331m tax loss included as deferred tax asset - see note 9D of financial statements. Only usable against Tailwind profits initially and so still some core Uk tax to pay annually in addition to EPL.

2. On 2P reserves and production. Approx 4k BOPD of profit from Malaysian production is paid to Gov under production sharing agreement and gas lift. Also approx 6k+ BOPD of Magnus production is paid to BP. While Magnus is responsible for operating 43k BOPD of production, a little over 10k or 25% is for third parties and no benefit flows to Enquest.

3. On gas OPEX costs, I would be guessing but should be in the $10-15 range per barrel. The larger gas fields in Norway are $6-10 OPEX.

I hope for UK ECONOMY that Bressay does get developed but a lot of water to go under bridge and the initial phase to access 35m 2P is projected to cost $700m CAPEX.

Actually change that. Serica a BUY and EnQuest a STRONG BUY.

Where did you find reference to tax losses 11. I don't have your forensic skills but I never heard or saw them mentioned?

Hi Stevo - can you expand on 5. Is that because of Malaysia and Magnus?

9. What would be a wet finger guess at gas OPEX? in today's presentation David Latin said that their investment into oil compensated somewhat for lower returns on gas.

I like your comparison. Not apples to oranges but definitely Cox's to a Bramley. Serica dividend since 2020 has also played its part.

I have Serica as a hold and EnQuest a BUY purely because Bressay is such a beast and sentiment has changed with ESG now on the defence. If Bressay passes Go then Bentley starts to be discussed.

Summer is coming.

I forgot to add that Serica’s cash cost per barrel for 2024 is approx $45 per barrel compared to Enquest’s $75 per barrel. However need to reflect that 50% of Serica’s production is gas which is currently realising approx $50 per BOE - so much less profit on Gas BOE.

SEK

I an invested in both Serica and Enquest and I do think comparisons of performance and market caps are useful. However I do not think you have fairly compared the two companies and my takeaways from today’s results announcement are as follows:

1. Adjusted for debt and cash balances, Enquest and Serica have similar EVs

2. Serica’ s FCF for 2023 was $195m after paying $183 of 2023 tax liabilities, including approx $100m of EPL. Enquest reported $300m of FCF but management noted that approx $100m was a result of working capital benefits which are non-recurring and will likely reverse in 2024. Also Enquest will not pay its 2023 tax liabilities of $125m (excluding. $50m Bressay EPL payment) until October 24.

3. Production for 2024 is similar at approx 43k BOPD but Enquest only has an economic and financial interest in 33k BOPD, while Serica has full entitlement to all its production.

4. Serica has limited finance lease liabilities and much lower decom liabilities than Enquest

5. Enquest 2P reserves are 175m compared to Serica’s 140m but, as noted above, Enquest has no economic or financial interest in approx 25% of its 2P reserves and so similar 2P

6. Serica inherited some pretty poor oil hedges with Tailwind that continue through to Q2 2024 which resulted in realised oil prices in 2023 of $70 compared to Enquest’s $82.

7. Serica 50% gas and personally I prefer the more predictable and higher value oil markets. However recognise there is a push to move into gas for ESG reasons

8. Serica CAPEX is adding more 2P reserves than its is extracting. In comparison, despite quite high capex over last 2 years Enquest has added close to zero 2P reserves.

9. Serica has lower OPEX for 2024 ($20 compared to $27 per barrel). However this would be expected with gas mix.

10. Serica paying $100m pa in dividends and $15m of buybacks

11. Similar level of tax losses - Enquest slightly higher.

As noted above I am invested in both Enquest and Serica but I have increased my Serica investment over last month - while Enquest is a hold. Higher percentage gain likely with Enquest shares if oil holds $85 plus, but lower risk with Serica and 12% dividend return. We all pick our own poison but I do not believe, based on above, that Enquest is undervalued compared to Serica.

Seric