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I don’t think we are selling so it matters little to me what an asset sale would raise. The value at the moment is in holding and organically growing / maintaining production IMVHO.
At least we reviewed the EV number. Debt reduction over 2022 should see the SP rise 5p every Qtr....plus sector rerate.
"Basically I think it’s not really worth comparing." - Maybe but we need to try. Just as important is that it is private equity picking up these assets. They are not so PC or scared of the activists as the traditional investors. I imagine that some of those forced out by political pressures might come back in but through convoluted back door investment.
So for me L7 has it about right. However I would call it closer to 30k now and add 10k over the next 2 years.
We also don’t know what lifetime the reserves have, what operating costs / tax / decomm liabilities etc do to profitability.
Basically I think it’s not really worth comparing.
Yes, here says 55k 2020.
I think they pay a hell of tax on those cashflow.
Enquest 0 tax
https://www.euro-petrole.com/spirit-energy-sells-its-norway-business-and-statgjord-uk-n-i-23152
Thanks mrc but please talk among yourselves. In the annual report it said annual production 44.9 mmboe which is 123k boepd and the bulk seems to be Norway. So must have been some collapse in 2021. Making a little more sense now, thanks.
Romaron
https://www.reuters.com/markets/deals/sval-energi-nears-deal-buy-spirit-energys-norwegian-business-sources-2021-11-18/
“Spirit Energy's output in Norway in 2020 stood at 52,732 barrels of oil equivalent per day (boepd), according to the Norwegian authorities.”
Probably need to subtract the statfjord production from that to get the daily reduction that Scal have acquired. Also natural declines.
Add I. Some near term drilling / projects and Sval can end up with 40k by 2023.
Not sure it is that easy
They have sold 20K boepd producing (q3 this year) from their stake in statfjord to equinor for $50 million plus contingent on gas prices. Presumably so cheap because the decommissioning costs are high. Also mainly gas produced these days I believe.
Last attempt from the shallow end of the Accountancy pool. The only thing (for me) that would get the numbers that L7 mentioned to the production in 2020 would be that the production in 2021 at Spirit nose-dived off a cliff. I'll wait until there is a consensus or somebody points out my major error.
Wish I hadn't started the initial post.
I got lost in seconds there L7. I can't reconcile the 40k increase to 60Kthat you mention to production in YE Dec20. They were producing c.123k boepd and now you've reduced the Sval production to 20k. I'm dropping out as it makes no sense to me.
Am I right in that they get 92% of oil and 38% of gas with the Norwegian assets?
*any new readers - I am useless at accounts!
L7 and Romaron,
Reading it again I think L7 is correct.
Noted also in second link the price was around 2xFCF.
That’s cheap.
I looked for a similar metric to compare with ENQ.
This seemed relevant - "The acquisition, which includes stakes in seven producing fields and several potential developments, will boost Sval's production by around 40,000 barrels of oil equivalent per day (boepd) to 60,000 boepd by 2023, Sval added."
Not 40K boepd today but potentially by 2023, which would have some development cost.
Ignoring the development costs and gas :oil mix:
ENQ 54K in 2022 boepd
(54/40)*$1.1B = $1.5B.
Current enterprise value for Enquest (£356m*1.35)+$1280m = $1.76B
Valuations not so far apart.
Or have I missed something?
I think that's wrong Pelle. This from Centrica "The Sales result in a 92% reduction in the Spirit Energy Group’s oil and liquids reserves and a 38% reduction of its gas reserves, and represent a significant step towards Centrica delivering on its strategy to decarbonise its portfolio and reduce its exposure to oil and gas production."
I'm struggling to find figures and the Y/E 31/12/2020 on their site is hard to read but their production seems to be 44.9mmboe (P.13) and that's 123k boepd and the release says Norway had 92% of their oil and liquid reserves and 38% of their gas. That's a lot more production than us. Their reserves appear to be c. 247 mmboe and pretty difficult to extract a valuation. Maybe I'm wrong but 20k production seems very wrong? Unless you know the split of oil and gas you can't begin to estimate imo. From a distant memory I seem to recall a 50/50 spli in reserves. I'm getting something like $6.875 per barrel for reserves and production of closer to 80k boepd. Don't ask me to do it again as I'll come up with a different figure. I'm not sure we're comparing like with like and I'm possibly miles out.
https://www.centrica.com/media-centre/news/2021/proposed-sale-of-spirit-energy-s-norwegian-assets/
That’s our true value and that is why I get so annoyed with our current market cap
We should already be at 60p
So its 20k for 1,1b and GE was 325m for 10k with 50 oil so its around same.
Total Enq would be let’s say 50k equal 2,75b
Minus debt 1,3b equals 1,45b equity.
Yes that’s around 3 times current Mcap.
My simple take on it
Thanks for posting this. Interesting. Does that value us at about 60p ;-)
(Christopher H is sadly missed.)
Spirit's Norwegian assets have gone to private equity as part of a $1.1 bn deal: https://www.reuters.com/markets/europe/centrica-sell-spirit-energys-norway-assets-800-mln-stg-2021-12-08/
From Energy Voice: "Meanwhile Centrica, who has been seeking to divest its holding in the exploration and production business since 2019, said the remaining UK and Netherlands business will continue in “run-off” mode.
A spokesperson said the firm will “continue to assess opportunities to exit from its remaining oil and gas exploration and production activities over time,” however it expects to retain its holding in the near term."
This is the largest acquisition in the Norwegian sector since 2019.
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