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hitman1a
You may have hit nail on head, though I doubt AK could handle all that oil might need EP on Bentley, we have $600m with a 5 year extension on Bond refinance already in place, so get reduced Bonds on a new 5 year lower rate ASP and crack on.
Interesting times we will see any plans soon. In mean time looking good.
Looking for a 23.25p UT today
As a long term holder of the bonds, firstly it is great to see the bonds back at par. And secondly getting 7% on any asset at the moment is incredible. Considering where we were 22 months ago frankly its unbelievably rosey.
However it's will over 20 months until the bonds are due to be refinanced. What a wild wide bondholders have been on, been down to below $30 twice and each time recovered. Will it be a dull walk into repayment, I hope but I would never ever say that there are not risks. Firstly oil price can do anything, anybody who tells you what oil will be in 20 months, well just don't believe them. Been there too many times to know to expect the unexpected. Secondly anything could happen with North Sea oil, don't rule anything out with Boris (Carrie) at No. 10 and Sturgeon in Scotland. Thirdly, quite frankly I am not that sure that Enquest is that good at running oil rigs and history has taught us to expect to be disappointed on the production front. This has been counterbalanced by the rising oil prices in recent years but that could change.
So for me I am selling out at par after the feb cash payment. Had a wild ride and now is the time to get off. If I hold to maturity I will either get around an extra 15% or more likely the bonds will be redeemed soon anyway. An extra 15% would be nice but I am not greedy. I can take my cash and forget about the price of oil.
We need it in the sense that without a longer horizon the market will wet it’s pants.
Even if repayment were “guaranteed” by hedges it would be a bit dodgy if we had any longer term production outages.
I still think our current debt schedule is a big drag on the SP. Might be why TLW is outperforming recently.
If they are going to drill and hook up Bentley and Bressay to Kraken FPSO in 2024, then sure.. a new bond would be useful to pay for the capex and sea-bed drill centres and modifications to the Kraken FPSO.. if Bumi know how to do it.. But if it's a 2025 and 2026 project, given I thought we were drilling the Kraken Western Front in 2024, then it looks like a new Bond isn't needed yet imv. I'd rather have a 5 yr , $1b RBL facility.. and pay interest on what you use..
Hmm I disagree, of course we ”need” a Bond refinancing? And especially rather sooner then later. Oil is high, its a good window of oppurtunity to get a good rate, lower cost, better covenants? Its not and end in itself to be debt free, we want a reasonable debt level at better terms, we will then be ”safe”
Financially and at the same time have greater room for offense and get better ROE.
Hi hitman1a
If they let it run we would not need new Bonds I agree but we will have the interest on Bank loan reduced to 4% and it extended for 5 years if Bonds are refinanced this year. We can probably reduce rate on new Bond for next 5 years and we have many opportunities to develop what we have to raise production. You don't wait till you clear the mortgage before moving to a bigger house especially if they offer a cheaper mortgage.
I still think we won't need a new bond by Oct 2023.. We should be close to net debt zero by then... and a simple overdraft facility would suffice..
With Brent at $87 negotiations for Bond refinance must be close, hedging at these prices must take away most of the risk for the banks so am confident it will be done in time to extend the $600m loan by 5 years. Am expecting to have the problem of were to put £70k of retail bond money soon. 7% income will be the problem Enquest will not pay that much on refinance.