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I get a bit confused when people want the share to instantly rally (<1 year) after they bought it. Truth be told, if you bought Enquest back in 2017 or earlier you probably had a finacial deathwish as debt-level and production figures was pointing towards bankruptcy.
The company you own is now doing well, and there's consensus around here that plausible dividends of $2-400m yearly can be distributed to shareholders starting 2021 (with a possible taste in about 10 month) given current production numbers and oil price. The financial position will be strong enough.
If we're not to be the only company in the world with a 50-100% well covered dividend yield, shareprice should rise to the point where dividend is say, 7.5%. That would put a valuation on the company of $2.67-5.33bn.
The daily whining about the share price not moving is just plain stupid. People should log into their brokerage account less frequently - it will probably relieve some of that stress.
Investing is a waiting game. If you're here to reap the rewards of the company maturing, what does it matter if the share moves? I'm thrilled Enq is trading at this price with CEO buying massive blocks and balance sheet firmly improving. If the marked valued this like Tullow I would have never gotten the chance to buy in in the first place.
Best, HMH
Another aspect that makes EnQuest different and possibly more unattractive is the shareholdings. I quickly added up the reported major holdings of:
TLW 37%
ENQ 35.44
PMO 32.42%
Source https://markets.ft.com/data/equities/tearsheet/profile?s=PMO:LSE
I don't trust these figures but you have to start somewhere.
You have to add to ENQ Jefferies which is AB and DoubleA basically 8.64% and the Employess Benefit Trust 4.35%
On a good day you are close to 15 percent held by an influential insider group. That will put off some Institutions no doubt. It also reduces the free float to an extent.
When I've met other shareholders I am often surprised by their holdings. 7 figures not being unusual. If you call the major holders as one shareholder there are probably quite a few more just under 3% but using 50% as a rough guide it means the other 50% are held by retail investors. So you could have c.850 mio held by just 85 shareholders. I realise I've put in a high holding but with the OO and the RI most LTHs have ended up with more shares than they intended but it does bear some consideration. I think our share issue of 1.7mio shares is misleading as it makes us look like a battered AIM stock and that isn't true. Most of us here aren't day traders so it isn't surprising that we move less than our "peers". I was thinking would I sell some EnQuest at 25p? I don't know is the answer. If you need the money then it is a simple decision. If you can afford to wait - umm.
Understand K.....I’m like you heavily invested.....and expected more....when I go into reflection mode with this venture, I will
Probably have to admit it was a poor decision to go so deep with it......but I’m young and have very diverse portfolio and thank god is picking up the slack for Enquest poor performance
Maverick, what this poor Mcap has done for me is enable me to more than double my stock, Yes I can moan and show vast frustration but when we do have our 60p party I will have sorted out my retirement fund, my kids future and I'll be in a position to afford a hair transplant lol
KO, they will give out tupe on next AGM.
For me I didnt have much hair already but head and brain taken a hit.
Another year hold K?....that would mean a 4year hold for potential return 56%.... using the famous 60p guidance.......that’s 14%pa return for the risk involved?.....as I’ve said same investment just don’t work out
Just looking at our Major shareholders (Over 3%) We have 42% of the stock owned by major shareholders and PMO also have 42% owned by major shareholders but the difference is PMO have a lot of II's owning just under the 3% where as we don't. As you say Squif if Brent can average $65 for 2020 and our production can average above 70k then we must look very attractive to the larger long term investors. If AB can give a guidance for shareholder returns this time next year then the market will move the Mcap to fair value.
One more year of frustration is on the cards - Before investing in EnQuest I had thick dark hair, I now need furniture polish, a cloth and Just or men for the bit round the sides. AB you owe me.
Hi Romaron. Thanks for the interesting reading. It is frustrating for sure and something is occuring in the background and your theory is as good as anyone elses. Yes I agree we were probably teetering on the brink when the first RI was made. I do think that sometime in 2020 we will see a violent revision if the conditions of above 70k production and over 60 Brent. I indeed see that Brent may actually make its way up from here based on disappointing growth in US production, the OPEC+ agreement and a weakening US dollar. According to my spreadsheets if we average 72k and have a brent average of 65 then with Opex around 22 (could even be lower) and capex of 200 and interest of 260m will bring our net debt down to under 1bn. If brent rises significantly this will be reflected in the sp during 2020.
Romaron
Today I will blame the ignorance and stuppidity from the analyst.
And AB also because he only gives small pieces of the future and and you need to puzzle it together yourself.
AB / Enq have done a excelent work this year and put us in a very very nice position. No doubt!
But for shareholders we could have wished a little more and he more thought about himself here buying more.
Some shareholders probably gave up, or need to sell bits to live. Its few private shareholders that is in the details as we.
Now coming back to CMD.
1. to re-guidance 63-70k is joke when we have 68,5k and doing 80k forward.
2. Questions from analysts, one was worried about near term debt maturities I assume 1 April 130 mill.
Here I see 250-300 mill now from Oct to 1 April so no problem what so ever. They have 200 mill cash also.
3. L7 mention one analyst said 2020 FCF looks more light.
He must have missed that cost structure is likely down 200 mill and production up 100 mill so FCF double.
4. AB answer one analyst about Heather/Thistle outtake , look it up yourself in OGA its 7k.
Its not so easy, need puzzle here also because there Kraken / Scolty more then make up for this loss.
My opinion about CMD and such questions, then its a poor!
AB completely missed to explain that ENQ turned around a big corner
Maybe AB thinks its bit payback time to analyst after they been hard on him for years. I dont know
Sorry about this (I am confused) but in simple terms I think when death spiral financiers get involved one of the first things they do is transfer value away from the equity into the bonds or senior debt that they hold or set up a mechanism to feed into it. The clever money has usually left the building some time ago. We survived but the remnants of those trades are still there imo and the mechanism still working. We currently have no shorts over half percent and stock on loan of 2.99 percent as at end November. I don't think the share price represents our true value and once Institutions look behind the bond discount and our poor rating they'll change their mind. The management are too busy to worry about something they cannot control and we retail investors probably spend too much time staring at the price.
This is my view and very subjective plus stuff I googled. The Vulture funds would have arrived end 2015 beginning 2016; before the OO Oct/Nov16.
Around this time I think it fair to say we were distressed and closer to filing for bankruptcy than many holders like to admit.
"The philosophy behind distressed investments is therefore simple: There is generally an expectation that the targeted company can and will be restructured successfully or brought back to life through a merger, takeover or some form of managerial re-engineering and rejuvenation. Alternatively, if it comes to bankruptcy, the asset values must substantially exceed the market valuation."
I think another thing to remember (always) are the terms Hierarchy, Seniority and Ranking when it comes to debt. They always trump equity. P.293 of the Prospectus states that Dividend only come after other certain tests are passed . I wonder if the HYN's control the Retail Bond (RB)? The FSA/RCF has to be paid before any new Bond issue.
My amateur theory is that in the case of a default the equity holder gets sod all. Not even scrap value. The equity almost becomes a cushion for the vulture fund (VF) as the equity holders are frozen out if the worst happens. "Equity cushion protecting HY Bonds is typically smaller than that for investment grade bonds. HY Bonds are thus more sensitive to fluctuations in the value of the issuing firms assets."
It's still nebulous but I think the VF hedge a certain amount of equity when they buy into the bonds. This shorting of stock means that they are feeding into the equity cushion and it protects their position until equity hits zero. The stock is unlikely to climb too quickly with the sickly performance of the bonds and with skilful manipulation they can probably play the stock and keep control. We see it all the time in AIM stocks on life support.
The inability of the stock price to move suggests there is a blockage somewhere. I have a few ideas and to make it interesting and encourage contributions I thought an International challenge might stimulate whilst we wait for Dyno-Rod. The challenge goes out to the Swedes and the Scottish holders (there are always Jocks in oil). I'm probably doing them both a favour actually as at this time of the year it is almost pitch black with little to do up North. The Swedes have, since they stopped raping and pillaging and traded their long boats for a Volvo, gained a reputation for financial awareness as have the Scots (they didn’t need boats). I finally found this:
Enquest 7% 15/04/2021 ISIN Code XS1517932585 Market Euro MTF CurrencyUSD Type Debt Instrument Status Tradable 86,774 i % 13/12/2019 15:28:22
I mention this only because the Retail Bond and the USD HY are for arguments sake about the same price. They obviously have a similar rating (another assumption). As you will have guessed I think the problem is the debt but there is more to it than that. If you think about it our EV is largely our debt and has a disproportionate weighting yet we talk mainly about the equity. I think it also goes back to the Open Offer in 2016. I know a little about bonds but am far from being expert but through our links and contacts we may be able to fill in some gaps. I know there is a Swedish guy whose name escapes me and he has occasionally posted on here who does understand how they operate. I’m thinking more along the lines that as our bonds became “junk” and HY is only another name for junk that we attracted some vulture funds and they hedged the equity. I end up getting prospectus fatigue and lose the will to live so hope that some of you will challenge or correct my mistakes/statements. Something that I only discovered today is that when the original 2014 $650mio 7% senior notes were issued is that they were (purposely?) not registered under the U.S. Securities Act and are linked to obligations under the secured RCF. This may be irrelevant.