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As rising oil prices complicate the UK’s escape from this ghastly cost of living crisis, it was noteworthy a British energy company announced last week it is to start drilling at the biggest oil field discovered in the North Sea in at least 20 years.
EnQuest plans to bring two fields onstream with the potential to produce 500 million barrels of crude over coming decades. This reignites the political battle over the UK’s energy future, with the Tories having just extended the 75pc “windfall levy” on North Sea output and Labour threatening to block new production completely, citing environmental concerns.
This makes no sense. There are around 300 active North Sea oil and gas fields, over half of which will cease production by 2030. The North Sea currently delivers the equivalent of 83pc of UK oil demand and 54pc of our gas use. What are our plans to replace those supplies?
Even the Climate Change Committee, the official green watchdog, acknowledges fossil fuels will still account for around half of Britain’s energy needs by 2030 and a quarter by mid-century. And that’s if the proposed net zero 2050 transition to renewables is achieved, which looks pretty unlikely.
So if that’s the case, that we’ll be using oil and gas for at least the next three decades, why not drill our own? Even if such energy is exported, at least UK energy workers would keep their jobs and the Treasury would get the tax.'
Ready reserves can cushion the blow – but only if we are prepared to use them.
Hoping the narrative keeps changing...
https://www.telegraph.co.uk/business/2024/04/14/britain-north-sea-oil-resources-protect-rising-fuel-prices/
What happens next…
No intention to trivialise war or even suggest a desire to benefit from conflict, but I hope the people responsible for our defense understand Cruise missiles, long-range drones, warships, trucks and tanks are not fueled by electricity, “clean” or otherwise!
A lot of misinformation flying around at the moment. Deliberate and speculative.
Seems we have a Middle Eastern war.
- 50 suicide drones apparently heading from Iran
- missiles launched from Lebanon
- cruise missiles and suicide drones from Houthi Yemen
- US jets scrambling
Most markets are shut but I do wonder about buying some gold from dealers at Friday’s closing prices…
NS oilers will not without speaking (through back-channels) to Labour leaders and unions invest tens of millions into their operations. They're not that stupid.
I agree with Sekforde (12:00) that we are in intensive talks but who with? It might surprise people but CB probably doesn't know who with either. He reminded us that he is not on the board several times. His guesses will be better than ours and it is possible that he stumbled on the other party or was told something in private that breached a confidence. Sometimes we are told things we'd rather not hear. Not in a bad way but it can compromise you if you ever had to say on oath; I didn't know. It also means you can't be held responsible for a leak.
It doesn't mean CB is unhappy with the situation other than he might worry about his job safety. But he keeps his integrity and I for one was impressed by his handling of the presentation.
We've had some guesses on here. What about taking us private? Unlikely but an outside bet imo. Ineos haven't been mentioned. I don't see them with us but I reckon they're involved in deals because that's what they do. They are contrarian and would give a big boost to the sector if they make new investments in the UKCS. I wonder if there is any potential synergy between us and Petrofac. Spirit is run by an ex employee of EnQuest, Neil McCulloch and Centrica were interested in divestment but I haven't followed them. AB says the number of players is reducing but there is still the possibility of a surprise. I'm thinking that the Telegraph's Jonathan Leake got a sniff of something but can't get anything on record. CB spoke to him but JL really wants to hear something at board level and that ain't gonna happen.
I could ramp this further but the signals are all there if you know what to look for. It could take until October but these things are drawn out but seem to finish in a rush. Of course things can always go wrong but I can't think of a reason to SELL EnQuest. Not when ADNOC considered a BP takeover due to ridiculous UK valuations. The renewable movement is conflating with the Cass gender review. Both involve the manipulation of young people. That's what happens when movements are fuelled by activism instead of science.
Summer is coming.
*Wrexham 6 - Forest Green Rovers 0 (could vegan pies have anything to do with it?))
The good news is you're probably not but holding UK O&G stocks can induce similar symptoms - I think the medical term is "fungibility". There is no known cure for either it seems.
11 April from Doomberg: "On an equivalent energy content basis, the price of a barrel of oil should be roughly six times that of a million BTUs of natural gas. Accounting for the complexity of handling natural gas, oil has historically oscillated between 10-20 times natural gas. As of the time of this writing, it stands at 45" followed by the fact that spot prices for natural gas are negative. Suggesting that gas is a dirt cheap byproduct of oil in the US and the arbitrage is to power everything by gas and the oil price will collapse.
11 April from Goehring & Rozencwajg: "We believe today’s North American natural gas market resembles that uranium market: despite widespread investor pessimism, it too is about to slip into “structural deficit”. Careful research and a differentiated outlook may reward the enterprising natural gas investor just as large profits accrued to the uranium investor back in 2018."
It got me thinking. I was unaware that NG was negative in the US but I don't take the Doomberg view. I've said it before that a glut is often a precursor to a shortage. Clever money strategises but getting timing right is impossible. For Doomberg to be right you've got to fight the ESG headwinds AND spend huge Capex. The Permian and associated US plays aren't farmed and husbanded in the same way that other countries practise. They still follow the 'gold-rush' spirit of mining. Anyway, I'll stop there behind the cliche of O&G - "it's complicated".
Aim - I would think around 20p before just the share buy backs start. Thing is, it's a fairly illiquid stock anyway with only around 50% free float, so the buying could have a massive effect.
I see that Iran has seized an Israeli linked cargo ship in the Persian Guld, ramping up the tension. Hopefully this is the extent of their threats of retaliation for their Syrian embassy, as I dont expect them to start a war they cannot win. I'm expecting crude to open much higher Sunday night.
Israel has naturally promised "consequences" and who knows where this will end, or will it ever end ? But if that Strait of Hormuz gets closed crude will be through the roof !!!
If I was ENQ I would not be hedging oil, just yet !
I hope Starmer and his idiots are taking note of the potential national security issue in trying to close down this countrys north sea oil operations. Thick as two short planks they are !
No one can justify a market cap of $400m. Moving from 17p to 25p implies only an increase in market cap to around $600m. That is still far too low. The FCF for 2025 alone could easily be around $400m if $90 oil holds and we achieve the promised increase in production. I invite everyone to listen again to Craig Baxter's comments on M and A. It is quite obvious the board is in intensive discussions, but he was constrained to talk only in generalities about publicly available information. The logic of doing a deal to acquire late life assets for very little up front money is completely compelling. We have talked on this board about the massive drop next year of leasing costs ($80m) but CB also seemed to imply that a lot of the decommissioning costs would also fall away next year.
Guessing a SP for ENQ or other British oilers is a fool's errand as politics and enfollowing money streams play such an important role. I can only say our actual valuation is abyssmal. I even don't want to start comparing our valuation to that of US mid- and small cap oilers. A small French oiler with operations in "risky" jurisdictions -that is my sarcasm, sorry- of Tanzania, Gabon and Angola that is only pumping 28 000 BoE/d has a market cap of 1.28 Bn euros and net debt of $ 120 million, they had FCF of $157 million. Wowwowwow!!!!
Friday had the highest volume of trades since 29th February and a level well above average trading days. Punters are starting to take notice and who would not with a steady rising trend - +36.7% since 12h March. I have certainly added, as I believe other long termers have been - a bit of a no brainer........ Some new names popping up on the BB suggests that we also have new comers on board for the ride. Personally, I believe the MCap and Sp does not represent the value of the company for all the reasons previously given and this week's presentation confirmed.
If no news from AB apart from the commencement of buybacks, the next important update is in about 45 days time and assuming POO holds or rises, it should be a good update. The question is - what will the share price be then? I reckon we could be in the 24.5-26p range, anyone got a view?
Following the success of HS2 the government is now getting involved in "anticipatory investment". This is to be applauded because they know more than us and the voters like to see things being built. This is why we shouldn't be concerned that energy bills which were rising before the Ukraine invasion show NO signs of coming down as promised. The government will shortly be handing the baton over to the Labour Party with Ed Miliband doing the last lap with a sprint to 2030. Thank goodness we'll soon have a government that can "anticipate" the future.
https://notalotofpeopleknowthat.wordpress.com/2024/04/12/eu-to-spend-trillions-on-net-zero-grid-expansion/#respond
*If you think education is expensive, try ignorance. -Derek Bok, lawyer and educator (b. 22 Mar 1930)
I came across this whilst going through some old stuff. This was the shared ownership of SVT a year ago.
EnQuest – c.13%
CNR – c.25%
Taqa – c.25%
NEO – c.10%
Shell – c.10%
Total – c.9%
BP – c.6%
Others – c.2%
It's a jungle out there monkey.
Yes we need to stick to buybacks and forget dividends. It is by far the best was to reward investors. No tax to pay unless you have made a gain. Tax much lower.
Romaron, did you know Elephant's can grow up to 11 feet, Most only grow 4 though, bum bum gla monkey
Bressay and Bentley are going to be developed over the next 40 years. A lot of the capex will be up front cost, but we will not be spending $10bn to get to first oil
I agree we could do with less hatred BTF, but I'm not convinced about this bit "If ladies were in charge we would not have any wars', women are not necessarily the fairer sex. A recent study suggested that the idea that there is a lower % of psychopaths/sociopahs in the female population is based on misunderstanding the traits expressed by female vs male pyscho/sociopaths. The conclusion of the study was that the numbers not far off 50/50. And it's not hard to find examples of awful behaviour from women in contemporary or historical times. Probably the reason that it seems there are more male nutters vs female is to do with the proportion of world leaders, top dogs that are male vs female.
I discounted the idea of us buying Neo assets because Craig Baxter said yesterday that he "was not aware of anything in the Norwegian sector". However, Neo's assets are in the UKCS so still a possibility. My own feeling is that we could be in for a surprise. Q. How do you eat an elephant? A. One bite at a time".
What is to stop us buying a percentage of (say) Neo's assets. Maybe the Harbour template might be interesting. We replace Premier in a deal ; the difference being we are healthy and would retain senior management. There's not a lot of difference (to me) between HitecVision and EIG. The senior partners and shareholders can get their money early via swaps as EIG did with Harbour. Then there's the ENI/Ithaca deal that has stalled. For every potential deal in the UKCS you have to run it past EnQuest. The peer group has considerably reduced.
The Magnus deal took 18 months of negotiations to complete. On same timeframe I reckon we'll hear something within 6 months so October at latest.
Schmiechel god let’s hope not the world does not need anymore hatred and bloodshed.
If ladies were in charge we would not have any wars, when you have children suffering because of the old egotistical cretins at the helm on the world stage this has to stop.
I’m a mid 45 year old chap btw.
At last value is outing here let’s push above 17.5p and hold it.
Profit taker
Developing a new field costs approx $20 per barrel in NS. Rough estimate but pretty close.
Enquest would be much better served by buying Parkmead in my view for the conventional oil exploration / development upside. But I doubt the PMG CEO would sell at anywhere near current valuation - like AB , he has been building Parkmead for more than a decade . And EnQ are not really an exploration company anyway.
Completely disagree, buybacks will bring much more than dividends as long as equity is trading at these ridiculous levels.
Sekforde - the only reason I can think of right now for our PE ratio being so low is dividends, or the lack of. Whilst the Company is starting to bring it more into the conversation until we get some indication of a committed dividend policy then we won't see a PE ratio anywhere near the likes of the other O&G companies that do have such dividend policies in place. Luckily we should be nearing that stage... buybacks was the start... debt removal and dividends should follow (in that order IMO)
GLA