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I'll qualify this by stating I'm a novice processing and predicting data but I have a production opinion and that is all part of the fun. Going with my historic/predictive model for production and adding some upside /downside based on what opinions are here and what I have researched I'll go Yr 19 BOEPD with month 9-12 :Scolty +2000, Kraken + 5000 and Magnus +3000, Thistle -2800 which gives me 2019 ABOUT 67300 BOEPD. No Malaysia improvements factored in as yet . Sorry if that isn't big enough but lets see.
Scary what happened to Tullow but we've been there and I hope that we have the opposite next week or it might become more than a virtual strip club for me and y'all!!
KO - whats your expectations for H2 production? I had not factored in Scolty but with Kraken performing as expected and Thistle off-line I was expecting 75K but this could indeed push us closer to HMH number of 80k. I still have net debt year end at 1.5 BN but see that others are expecting H1 less 80M which puts us around 1.55bn. I would hope for 1.5 bn or below.
Cheers, KO. That makes sense. Looking back at Alma's production increase after the workover in August 2018, production did go up from circa 1.9 kbopd to 5.3 kbopd for a month and dropped off after this initial flush to the 2.7 kbopd range. The monthly average production since then has been 3.7 kbopd.
From the horses mouth :
Scolty/Crathes restarted in early September following the successful installation of the replacement pipeline. I can’t give the specific number but production rates have certainly been good. Essentially you get very high rates for an initial period as you get “flush” production (a the reservoir pressure has built up while the field has been shut in). This then declines fairly quickly and you settle at more reasonable rates (which for a period will be higher than has been seen in the last 18 months or so as we shouldn’t have any wax restrictions).
Enquest currently holds 50% of Scolty/Crathes, not 40%. After first oil was produced in November 2016, December 2016, Jan 2017, Feb 2017 were the only months ever where > 10kbopd was produced (14.5 kbopd, 10.5 kbopd, 10.4 kbopd). Given this reality and given what Enquest has guided regarding future production from these 2 wells - "Improved performance at Scolty/Crathes following the pipeline replacement project offsets expected natural declines across the portfolio", I can't see how these wells will start performing at projected peak FDP rates now. At best, they're probably neutralising (on a WI basis) the loss of production from Heather and Thistle.
Field is said to peak at around 20kboepd. We have a 40% WI so I suspect the "Substantial improvement" should in my mind put us in the 6-8kboepd net range.
I got production close to 80kboepd Oct/Nov/Dec.
Hi Hitman - Yes, agree on the capex guidance for 2020 being an important driver for the SP. If they cut that down to say $150 mill from $275 mill this year, that'll be a plus. I don't know if ENQ will provide an 'early' guidance with regards to 2020 capex, but that will be very metric useful to telegraph 2020 intentions to the market. I see lots of shale E&P companies do exactly this with their Q3 results, just setting the scene to Wall Street as to what their 2020 thinking is. The US oil companies are a lot more adept at managing the Wall Street sell-side expectations, however, I can't really see Enquest do such a thing, TBH.
I firmly sit in the camp that there must be more engagement with the sell-side and more clarity, both on projections and operations is never a bad thing. I lean more towards Pelle's side on this - if there is a good story to tell, it must be told. Enquest needs to get the sell-side firmly on board and bring more investors on board. Time will tell.
Thanks E121, I'm interested in the 2020 capex budget. (2019: $275m) as a SP driver.
If we say $50m for annual basic capex , I'd be interested in what Enquest pencil in for Kraken western flank, and a bit more annual drilling at Magnus and PM8 . If we cap total 2020 spend at say $120m, that's $145m less than 2019, which goes to equity and strengthens the balance sheet. Thats worth 8p/share.
I just wonder if they will announce the figure now or wait till the new year. If they release a much higher number , I'll be disapointed, albeit with short pay back periods, some might be pleased investing more into a higher Brent prices environment.
Londoner7 - A couple of points for me. I doubt that the Magnus 2-well capex will results in cash outflows this year, not fully anyway. It's very likely that the bulk, if not all, of cash payments for these wells will happen in 2020, given that the drilling would've only commenced in Q4. By my calculation circa $21 mill interest accrued ($69mm vs $48mm cash paid) in H1 was deferred for payments in H2 (inline with what you have), likely the RCF interest. If I remember right, management did state that interest payments will be higher in H2 - thus, we're likely to see interest outflow of $80-90mm in H2.
Brent's averaged $61.5 thus far in H1. The 4MM hedged barrels at $66 would help cash flows, and so would any upside over the next 45 days of the year, although they wouldn't matter from cash inflow viewpoint for 2019. With the above, I have my base case for a circa $150 mill FCF for H2 at 69kboepd. We'll know next week what they guide for the first 4 months.
Tesla are just a fad, let’s see if they are are still as prevalent as they are currently in say 5 years.
To make them a truly profitable Global conglomerate they should have sold their technology to the German automotive manufactures 3-5 years ago.
Audi, BMW & Merc now have the capability to produce ranges of 350 miles plus.
Tesla’s look like a rich mans Vauxhall Insignia. Elan is a genius but not an out and out business man.
Rather like a Motorola handset with Apple technology.
Back to enq this is the start of the uptrend let the rises commence.
I'd have to agree with you L7, Scolty is a wild card, but I can't ever recall hearing how much extra they expected to produce with the replacement .
I never thought it would be that much, but given how much fatbergs affect sewers, we could see above 5k /day ?
Hi HMNn, thanks for your reply.
I now see the point you are making with the timing of Capex. I hadn't picked up on it in your original post. Perhaps the payment of some Capex will be deferred to 2020. Otherwise I don't see how you get >$100m FCF for the last two months.
Assuming full Capex expenditure in 2019 I expect a net debt reduction for 2019 of £200-$220m for the full year so yes, $80m for H2 sounds about right if Scolty comes good.
hitman1a, you say, 'Some people might think the 2h average realised price might be lower than 1H, and they might also think production might be lower in 2h'
I do, with one caveat, Scolty. I'm looking forward to the update on Scolty Sept production either from ENQ at the CMD or the OAG number early Dec.
In addition, H2 capex, opex and interest has been guided higher - I estimate $25m of H1 interest was deferred to H2. For these reasons I struggle to see how H2 FCF will be higher than H1 but I'd love to be wrong.
I expect the year end net debt number to be close to the number reported for end Oct, which is why I question HMNn's >$100m additional reduction in net debt.
In many ways this reminds me of Tesla, last set of numbers showed a much better picture after heavy capex periods and products were finally getting to market in meaningful numbers , the SP improved. You could see something similar with Enquest with a 50% jump in price due to the revenue and earnings improvement being more visible .
We should get the net debt and average daily production to date, as of 31 October 2019 on CMD /ops update. Not long to wait , and some guidance on remaining hedges for rest of year. Some people might think the 2h average realised price might be lower than 1H, and they might also think production might be lower in 2h. Let's see if the company releases better than expected info.
Yearly guidance don't specify when the cash will change hands.
PM8/SELIGI had 2 wells drilled, and Scolty/Crathes pipe-work was probably paid for (~$110m) during the 4 months ending October, impacting the FCF and therefore the net debt figure.
Production was down in July and August. Now we added the above assets and Kraken is producing good numbers, creating a higher revenue while costs are lower = more cash left in the bank.
You still got net debt reduction of $80m for H2?
Hi HMNN, you say, 'I don't expect fireworks for the 4 months ending October. My model is spitting out Net Debt of $1.460bn, but due to scewness in the Capex/Opex spending during maintenance season and Scolty/Crathes + PM8/Seligi I would be happy if we'd end up in the $1.5-1.525bn range. '
What are you referring to? ENQ guided on Capex and Opex, are you now expecting something different?
I haven't seen any material comment on PM8/Seligi. What are you referring to?
Working your numbers it appears you expect a >$100m ($1.5bn minus 1.399bn) reduction in net debt between end Oct and year end. Why do you expect debt reduction to accelerate over the final two months?
Will be extremely interesting. If we get a guidance for 2020 production and spendings we could start doing the math. A general plan of what investors could expect going forward would be welcome as well.
However, I don't expect fireworks for the 4 months ending October.
My model is spitting out Net Debt of $1.460bn, but due to scewness in the Capex/Opex spending during maintenance season and Scolty/Crathes + PM8/Seligi I would be happy if we'd end up in the $1.5-1.525bn range.
Expecting a YE net debt number in the $1.3xxbn. Next year net debt should drop by aprox $70-75m/month (80kboepd, $65 brent) for the first 6 months.
With Kraken "fixed" I believe there can be some really high production numbers next year.
Kraken + Magnus + Pm8/Seligi + Scolty/Crathes should alone be well over 70kboepd in H1 if they run smoothly. This leaves alot of upside given all the other assets.
This could be the tipping point. Fingers crossed.