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Charts wise it was beginning to look a little overbought so not surprised it's pulled back Just needs to consolidate the gains before taking off again. IMO - no advice intended.
Britishvolt’s gigafactory site sold off in electric car blow
US private equity investors have bought the site of what had been hoped would become Britain’s first electric car battery gigafactory in a blow to Britain’s net zero ambitions.
Land in Cambois near Blyth in Northumberland had been expected to become the home of the £3.8bn Britishvolt factory before the company fell into administration last year.
However, Northumberland County Council revealed it has sold the site to Blackstone, which plans to turn the site into a data centre.
Britishvolt, which was backed by mining giant Glencore, collapsed with the loss of more than 200 jobs and had been in line for £100m in funding from the Government via its Automotive Transformation Fund.
"The claim that abandoning fossil fuels will make this country safer in a hostile world is a perversion of reality; it should be treated with contempt. "
https://www.telegraph.co.uk/news/2024/04/15/true-british-patriots-have-gas-boilers-and-petrol-cars/
In US not so different : Bets against energy stocks were higher at the end of March. Average short interest across energy stocks in the S&P 500 index rose 14 basis points to 2.56% of shares floating at the end of the month from February end.
Oil, Gas, and Consumable Fuels remains the most shorted industry within the energy sector, with 2.66% short interest as of March-end, up from 2.50% at the end of February. Energy Equipment and Services was the least shorted industry within the sector, with 2.07% short interest as of March-end, up from 2% during February end.
Didn’t think we were going to see such a fall today considering oil prices only down by 1.3%
Oh well let’s hope we don’t see more of the same tomorrow
Stevo,
As you often say we have to always calculate FCF over the whole year and not worry about the odd month or two. I also guess that oil could go a lot higher. I think the present price is really all about current supply and demand and I rather doubt the claim of some sort of middle east uncertainty premium. Also in real terms Brent is not high. Brent averaged $108.56 in 2013 and that in inflation adjusted terms is over $160.
Redb
Take a look at page 19 of the dec 2022 annual report and financial statements which’s details our working interest and decom share for all fields. It does not detail who the other parties are (ie Waldorf fro kraken) but a quick google will give you names of other parties.
The 2023 annual report will update this in near future but I don’t think anything has changed from 2022.
Really struggling to see it clearly laid out what all of the equity interests (including other partners share) are in ENQ assets - can anyone help?
" we had the stunning news that deep green energy minister Graham Stuart had resigned. The reason given - that he wanted to spend more time on local issues - seemed somewhat unconvincing, and reasonable people will be assuming that we haven’t heard the end of this story.
Meanwhile, the reverberations of last week’s European Court ruling continue. The Supreme Court judge, Lord Sumption, has spoken out over the weekend and even the Prime Minister has joined the chorus, although presumably he will not actually do anything about it. And as if to remind us of the threat that Net Zero represents to liberty in the western world, a German minister has now mooted a ban on car travel at weekends.
It’s truly a mad, mad world."
All very interesting but why has Andrew Montford described GS as "deep green"?
I'm sure there's a story here. Ed Miliband tweeted " It’s no wonder Graham Stuart can’t bear to serve in this government. He doesn’t want to be locked in the boot of a strategy of climate denial and delay. If you want lower bills, good jobs and climate leadership, vote Labour." but no real follow-through.
Disagreement with Coutinho or another sexting scandal?
Hardly a crash himmatsj - we've been here before. Our new GM was the MD of First Oil which we took over in 2016. basically we were the only bidder I guess. Later we tried to sell a share to Delek which was aborted and we took a loan with Sculptor instead which was our only option and then a few rights issues. No wonder people are wary of the UKCS. All from memory and I think Waldorf bought from Cairn who'd had enough.
If nobody else appears we'll take the Waldorf share at a nominal price. This could even be behind the Telegraph story as it stirs up interest. The Waldorf story has been know for some time and certainly among the ever reducing number of NS players. It also becomes another chess piece. Still have my view that a deal is ongoing and obviously this complicates it but is not a surprise.
SP back doing the Enquest Waltz, one step forward, two steps back. Getting to the stage where we’re back at 13.55 p. I’m into the year 2028’s patience.
Used todays movement to use up this years ISA allowance.
Lovely jubbly.
That's a fast change from being a prospective acquirer to having liquidity problems. I'll be interested to see how this plays out. I guess a firesale of assets could be good for us.
Just over a month ago WP said their focus was buying UK production to use their tax losses. The expectation was to fund this thru the bond market.
https://www.energyvoice.com/oilandgas/549197/uk-north-sea-acquisitions-are-waldorfs-focus-for-2024/
“Waldorf Production shared earlier this year that it was planning to sell its stakes in a pair of CNOOC operated North Sea oilfields. However, it did say that it wanted to buy up larger UK projects soon.”
“The Waldorf CFO said: “We are in multiple discussions ongoing with our peers at the moment to acquire producing barrels in the North Sea that we can quickly slot into the entities with the tax losses to then crystallise the nearly $700 million of nominal value that we have available.””
“To be able to fund acquisitions we would, depending on the size of the acquisition, our idea would be definitely to come back to the bond markets to to raise additional funds, to acquire new assets.”
So how interesting might that be to us? On the face of it, as long as EPL is not killing us, it would seem interesting to me?
Apologies they own 30% of Kraken and 40% of Catcher (operated by Harbour) plus a collection of non operating interests in other fields.
I think they also have tax losses.
They own 40% of Kraken.
Interesting. Anyone have a feel for their assets? Fit with us?
Mid-tier UK North Sea oil and gas Waldorf Production is working with its auditors regarding concerns about potential liquidity shortfalls.
Waldorf said on Monday a key area of focus on the completion of the audit for the financial year ending 31 December 2023 is the assessment of going concern due to potential liquidity shortfalls over the going concern period to June 2025.
Link: https://www.upstreamonline.com/finance/uk-north-sea-producer-waldorf-facing-liquidity-concerns/2-1-1626872
-------------
Is this what's causing the crash in the sp today?
I find this confusing. In the response from Craig Baxter on Thursday he said that the initial report was "premature and mischievous". He contacted the regulator to say "it weren't us Guv" in being behind the story as well as the Telegraph for not beiing clear that they are only at stage 1 in development of the field (Kraken gas tie-back) and full development is far away. I doubt the author of the second piece (Liam Halligan, Telegraph 14 April) would have had to change his copy much. It all stems from the company presentation of the 28 March which mentioned the gas tieback and just about scrapes into "announced last week" category.
It could be just 2 journalists trying to create interest in a story and maybe attract comment to what is effectively a non-story. I imagine there are ongoing environmental impact assessments going on for Bressay and Bentley prior to moving toward the next stage of feasibility which is kinda confirmed by the need to contact NSTA.
I'm treating it positively as the story is coming to us - not from us. You can't stop people talking and speculating. If it puts pressure on the politicians and regulator I'm all for it.
SEK
agree that if Brent remains at $90, cash generation from operations and including the Bressay funding should be in $220-$240m region. I am however a little concerned on cash generation in Jan and Feb which was negative $30m+ excluding the $108m received from RockRose and most likely reflects the reversal of the temporary $50m working capital timing benefit at year end. I am also expecting a reduction of JV cash balances as the capital programme is rolled out throughout the year.
The working capital reversal and JV cash balance movement could impact FCF by $100m which would be the reversal of the 2023 FCF benefit. However the key is whether oil remans at $90 and personally I would like to see the Middle East and Gaza situation resolved as soon as possible even if that does take $10 off Brent prices.
On the longer term, I do believe the world will be in a structural oil supply deficit and $100 oil will become the norm. The big question is whether Labour Gov want to support further investment in NS and the risk that labour will follow through on its current stated position is reflected in all NS oilers share prices. I hope like you that Labour will see sense but we need to see what is included in their Manifesto.
I think it is almost impossible to look beyond 2025 until we know Labour’s policy. Oil prices in the $90+ range are not going to help as Joe Public experiences petrol price increases. However gas is probably more impactful on public opinion as it drives energy bills and increased US LNG exports should keep a lid on gas prices in Europe.
1) With the exception of the Saudis, the OPEC+ cut is not real. Supplies are higher than what's being penciled in, so the risk of supplies surprising to the upside is significantly lower than what people think.
2) US oil production growth is nowhere near what headline figures show. As a result, the decline will be larger and more severe than people expect. This will directly impact how we exit 2024 and 2025.
What Does that Mean for Price?
Even with our variant perception, we still see oil prices being rangebound this year. Why? Because the Saudi cut is real and they have every incentive to start unwinding it by H2 2024. This means supplies could surprise by ~500k b/d to ~1 million b/d.
This year is an election year and if oil prices get too hot, the US could use SPR again to combat higher prices. China is also capable of releasing SPR this year, which could complicate things.
However, once the market sees what we are seeing, the unwinding of the voluntary cut will be bullish for balances in 2025. People will realize that this production cut is not real, and the reversal of it will have no real impact on the market. Analysts will have to readjust their modeling for 2025 and oil traders will see that despite the production increase, exports are the same. Physically and financially speaking, oil prices will get a tailwind because of this (unwinding of the voluntary cuts).
Lastly, because of the overstated growth in US oil production, market participants will be surprised to see both the drop in US oil production this year and the subsequent lack of growth. This will alter people's perception of supply growth in 2025. Once US shale production peaks, non-OPEC supply growth also peaks. The peak supply thesis is going to come much sooner than the peak demand thesis.
What does it mean for price?
It's going to be a lot higher than $90/bbl WTI.
https://seekingalpha.com/article/4683659-two-variant-perceptions-in-the-oil-market-today-and-why-they-are-so-important-for-where-we-are-headed
Stevo Craig Baxter also confirmed that the net cash advance on the 15% farm down deal was $58m. Add that to the $180m FCF you have forecast for this year with $90 brent and we get a massive retiring of net debt - even before the 2025 golden year. The conflict in the middle east and the possible blocking of the Strait of Hormuz should remind the Labour Party how important the North Sea is in terms of energy security. Frankly I think we have nothing to fear from Labour. It has always been more pragmatic in Government that it signals in opposition. Do you agree that with Brent rising from $80 to $90 per barrel and all the forward prices rising as well, that the company is worth a heck of a lot more than $406m using ordinary valuation metrics? May be something like $250 - $300m a year FCF is sustainable for the next 40 years or so if Bressay and Bentley come on stream and we get Veri Energy going properly.
SEK
On decommissioning - the well decommissioning programme for Heather and Thistle will be largely completed in 2024 but the topside (platforms) will be removed and decommissioned in 2025 and 2026 (I recall Heather first). I have no idea what it costs to ship these platforms to a scrap yard and what it cost to scrap them compared to plugging the wells.
The lease note in the financial statements discloses that leases costs fall from $160m in 2024 to $70m in 2025 ($90m reduction) and then presumably slightly lower in 2026.
I was struck by how open Craig was having watched the recording of the meet the investor call. It would be great if he could do these twice a year rather than once. I was comforted by his comments that there were ongoing discussions with Cons and Labour and that he was reasonably confident that the fiscal environment would ultimately support ongoing investment in NS. Unfortunately Labour and Cons have visited Aberdeen before with positive supportive words and then gone back to Westminster and reneged on their assurances - we will see what ultimately gets included in Labour’s manifesto.
"
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.'