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Thanks Pelle, HMH - I think I was getting a bit too clever for my own good. I'd imagine if you got a room of accountants and oil experts they'd probably still disagree but I'm only after a rough consensus. The exercise did provide me with some insight and it did help me control any "irrational exuberance" I might feel. As a layman it makes me wonder why they use EPS when it has so many qualifications it can get close to being as useless/useful as an analyst's target price.
I would say that we're a far bigger company now and in that sense easier to value once we tidy up the last few years of issuing new shares and complicated purchases and borrowings. The reserves of 2013 (194.8 MMboe) had Kraken at 60MMboe following sanction. That was relatively conservative but understandably wouldn't put a rocket under the price as the professionals know "There's many a slip 'twixt the cup and the lip" and weren't they right.
Hello lads,
Regarding earnings, I got $180m FY. This however, is kind of misleading since we're off-setting earnings by exercising "UK corporate tax losses and allowances" to reduce our taxable income.
Since this non-cash item is part of our assets in the balance sheet, our earnings takes a hit because the earnings is essentially the change in assets minus liabilities. Without this our earnings (non-cash) would be bigger, but we would pay taxes which is cash outflows.
The FCF is the important number, since it's the cash the company can use for investments/amortization/dividends. Diluted earnings is just including all stock options and warrants etc outstanding in the calculation of the undiluted earnings, which is earnings divided by shares outstanding.
Regarding reserves; the more the company drills the more they understand the fields. We heard during the call last month that Maureen sands was not booked as reserves yet (after intersecting "tens of millions"). Guess some of this will be booked and additional PM8 and Magnus drilling should add some as well. Also the Kraken overall performance increase may be good for some additional barrels. Guess we'll be flat to slightly higher.
Hi Romaron,
I am on bit deep water here , but this is my take on it.
H1 report you have 2,7 cent profit 44,3 mill after exceptional items 120 mill L3 talk about.
I doubt those will be as big H2 but I dont know
So I would assume something around 10 cents profit full year 170 mill.
And next year maybe 20-25 cents, but its tricky. I saw some calcs on swedish forum in this range also
I'm not even sure what figure you use to get EPS and diluted/undiluted is surely how you choose to drink Scotch!
Hi Pelle, I'm getting in a mess which is what usually happens when I try and read accounts. In the actual hard copy report of 2018 it has on P.92 under group statement of comprehensive income 'diluted EPS $ 0.0625'
On the results RNS'd on 21 March 2019 it has under reported basic earnings per share $ .104
It isn't actually that which is confusing me (it is) but more to get a figure to make a comparison with an earlier year.
In Y/E 2013 we had reserves 195 MMboe, production of 22,422 Boepd Revenue of $961mio and EBITDA of $621m
Reported basic earnings per share $.244
My reason for choosing 2013 was that was the last time we were flying and I was hoping to make some useful projections/comparisons. I'd say (I don't know) that the 2013 reserves included Kraken. Problem with EnQuest is that it's not only difficult to make peer comparisons but even year by year needs a PHd in forensic accounting.
Of course oil was c.$110 in 2013 and the share price was c. 100p
It's probably a wasted effort as so much revolves around the oil price and then you have debt and sentiment, both company and sector. I'm not even sure of debt in 2013. On the RNS I have $454mio and in the report something different but I'm probably looking at the wrong column. The number of shares in 2013 was 802mio
What did come out is that we shouldn't get overexcited using 2013 as a marker but as the FCF keeps growing, even whilst we sleep the picture improves all the time. To get back to .244 EPS we need to make $413mio and I haven't a clue how close we are to that! I don't pay much attention to MarketScreener as under shareholders (Company) it counts AB @9.45% and Jefferies at 8.64%; they're the same and it's double counting.
Romaron
On marketscreener it says 156 mill Net profit.
I would guess it bit better then that, maybe 160-200 mill.
Reserves no idea, pure guess +-0
Hi E121 - I'm not in disagreement with you. The smaller companies in shale face years of attrition and pray for a spike. The majors are probably quite happy as things are. They have an asset [shale] that can be brought into play very quickly into an increase in the oil price. What they don't have to do is keep pumping to make creditors happy whatever the price. They won't produce at a loss unless there's a very good reason as that would undermine the output of their EUR wells. People mention that shale is close to a manufacturing process with an ON/OFF switch. However, the majors are really the only ones who can take a longer view and press the OFF button. They aren't mom and pop companies and have zero sentimentality. They'll certainly hit the ON button if oil spikes and turn the revs up.
Anybody - Our reserves end 2018 were 245 MMboe and EPS $0.062. What are we guessing for Y/E 2019? I'm not sure when we'll have an official audit of reserves but at back of my mind I have Q1 2020.
Hello Romaron,
Whilst I don't think the "Shale is increasingly being managed by majors who also have an interest in maximizing EUR wells so their interest is our interest" line is correct, it is true that they're the ones who're actually adding rigs in the Permian, whilst the smaller/medium ones are the ones that have pulled back. It is true that Shale production is a capital intensive 'game, but then project durations are smaller. If there is a good spike in oil prices, shale will be back roaring I'm afraid. Unless there is clear evidence that Tier 2 sites can't produce as much as Tier 1 and so on, the current line of negativity on productivity and negative growth is misplaced. Slower/smaller growth may in fact be the best outcome.
P.S: I'm with you on the other topic of Scots' independence. Should they want to go down the route of another referendum given the altered reality around our EU relationship after Brexit, why should our government deny it? Let the politicians play that one out then.... ;-)
Brent 65 and we're in good shape though. Unlike how the global economy looked in October, it is in a better shape now and Brent's reflecting that reality.. I'd speculated that Brent may hit $70 in December if that trade deal happens - I don;t think that we'll get there, but Q1 2020 sure looks good. We'll move up soon - the day to day frustrated commentary by most of here not withstanding... ;-)
A good read E121. I remember our low point with no money available and every penny going towards Kraken, AB told me that decline rates were c. 20 %. What he omitted was that without TLC (maintenance) this is what happens with old EUR wells.
I'm guessing here but I doubt there is much maintenance on shale wells. Like the Who sung "they die before they get old". The economics of shale appear to be skewed capex instead of maintenance where you have to keep drilling for economic success. The business plan is shot if money isn't available or OPEC turns the taps on. Remember that saying. "What goes round,comes round". Shale is increasingly being managed by majors who also have an interest in maximizing EUR wells so their interest is our interest. Am I making sense?
The oil rig count finally rose by 4 after 16 straight weeks of decline. The growth came in a rather non-oil dominant basin, Marcellus. The big oil shale basins were flat - with Niobrara in Denver/Wyoming losing 1.
It looks like shale spend will be down more than it was in 2019, and increasing production growth won't be easy. And it looks like economic growth may bounce back in 2020, as global PMIs are now tracking upwards. We'll just need to hang in there.
https://www.oilandgas360.com/shale-spending-to-fall-12-in-2020-report/
Good weekend