Enquest Share Chat (ENQ)

Hi January,
hope you are well.
i did not say it was bad. i'd be happy with that Kraken figure every month in H1 2021. but, i really hope for more from magnus to lower that bp contigenct consideration at a fast pace now that poo is selling at a good price.

hi dumbly, i do not have confirmation, but all i have read or heard points towards to the fpso everyone is talking about, Voyageur Spirit. worley would be able to confirm.

Hi L3,
Therapist numbers were "53,736 with Malaysia estimated at 40% capacity".
I think you are being a little negative !
I agree, we would all like more, and more ! However with Malaysia down at only 40%, then 54k is OK.
Remember in future we can add the Golden Eagle around 10k.

@L3Trader, you're certain Hibiscus choice of FPSO is not EP? Thanks.

Hi Therapist,
Thank you. I was hoping for a tiny bit more from both Kraken and Magnus. Need to get that debt down...
As expected Londoner7 was correct on Mallard. It is auf wie´dersehen GKA. All we need now is confirmation from AB.
ATB

What made oil share spike 1h ago?
Same pattern Lundin Energy
US market open?

Hi L3

Kraken gross 37,260 bopd
Magnus 16,340 bopd

Dashboard rounds to nearest 10 so some small adjustments to come.

I know my Golden Eagle from my Eagle . . .just wasn't thinking . . . McLondoner provides a swift and firm pointer back to the straight and narrow

Hi gkb47, Modestus, and E121,
Thank you for the suggestions and exchanges on the different oil companies, APA, UOG and TGA. I had not heard of the two latter ones. I will look into them.

All,
Interestingly, I cannot get anyone to comment on Tullow around here from anyone.
Does any one have the time stamps of the last 5 Kraken offloads? If so, and you can share the data, that would be much appreciated.

Hi Therapist,
Let me see if I got it right... Kraken in Dec was 37.3Kbopd, and Magnus 16Kbopd (i.e., leaving the gas out), correct?
p.s.: Londoner7 makes sure we report accurate data. Where did you get the 15% from? Is there any sale of the GE's WI already? BTW, Hibiscus choice of FPSO is not EP...

P - to be clear - those numbers I quoted was for their Permian production in the US. THey had better realisations in NS and Egypt, with slightly higher costs.

Firstly, Shale's cash opex costs per BOE are lower than ours, but their revs per BOE are way poorer, depending on the OIl % mix of their BOE. A company like APA has a really bad Oil % mix of their overall BOE (circa 35%), but this % is probably only a bit higher with larger shale producers I quoted previously. Gas doesn't generate as much revs as Oil and hence tracking BOEPD for shale producers is highly misleading - zone in on BOPD to get a better sense for how it can affect WTI/Brent.

Secondly though, if you look past the Opex costs, because of the enormous Capex needed to sustain production, their Depreciation/Amortisation costs even on a 10 year Straight LIne basis is still big when it then comes to the quarterly P&L accounts and the EPS they generate. This is another metric to consider. The message I want to drive home here is that Shale producers are and I believe, will be going forwards, highly circumspect about spending outside cash from ops and this bodes well for oil prices overall. After all, they're among the few producers that can turn the taps on quickly when compared to the likes of OPEC+. How they'd react when Brent reaches 75 and higher is a complete unknown at this time and hence why we need to track those numpties closely. Shale is not dead and will never be - it's more a question of whether they can be aligned to the greater good for their shareholders - higher margins versus production growth. I believe they'll lean to the former.

GL and excuse the typos.

Hello E,
To compare this Apache shale with Enq some rough figures assume size about same and include cost to replace declines (Capex). I see there debt is approx double if you weight it by size.

Enq opex 15
Finance cost+leasing 10
Capex 15

So its around 40 usd total and maintaining production flat
Might be bit high side on Finance cost and capex

Apache Opex 10
Finance cost 10
Capex 15

So Apache is around 35 or lets say the same ball game as Enq.
Or have I forgotten anything?

Or what would your numbers look like?

$21 realisation across their BOE and $9 Opex = cash margin of $12/boe. We're much higher on all 3 metrics, but then that is not an accurate way of looking at it considering they have a wider portfolio spread across the globe

No cash cost is $9 versus $15. The thing you should focus on however is the margin, which is much better in the North Sea.

21 usd? To be compared with our 15?

Pelle Slide 12.

https://investor.apachecorp.com/static-files/5603ad3c-8ece-4742-9e48-899cf30a382a

I thought it was quite common in business to restock? If you know of any oil companies giving away production and reserves for free could you give EnQuest the details gkb.

What is the OPEX for Apache Shale roughly?

E121 - I take your point and I wouldn't have got involved with APA if they were a pure shale play, but they are not, they are actually bigger in the North Sea than EnQuest. I'm trying to be objective here (I have no axe to grind either way) but I would also point out that EnQuest are spending $325 m with additional contingent consideration of up to US$50 million for the Suncor acquisition to increase their overall production 2021 over 2020 by about the same amount, i.e. 0%.

I've traded in and out of Apache a couple of quarters ago and don't have it as a holding. In the most recent quarter Q4 2020 - in the Permian, APA produced 74 kbopd (out of a total of 233kboepd) and with 35% of their $1.1 billion capex in 2021 going to the US (their Permian assets), they're projecting a 2021 production of 74 kbopd out of a total 225 kboepd, which is a net increase in 2021 of....wait for it ...... 0% for oil and -4% for their overall production (Oil+Gas+NGLs). It's the good old treadmill in the shale land - you need spend huge just to stand still. This is reflective of almost every shale company I track and many of them are way bigger in the US than APA is (OXY/FANG/EOG..etc).

Bottom line - Permian growth is shafted and onwards and upwards for Brent/WTI in 2021... ;-)

*Permian

L3 - Not an end of life company but if you are looking at other O&G plays there is an up and coming one that I think is way undervalued, so you could maybe run your spreadsheet over UOG, some of the BoD are ex Tullow anyway and some big boys have recently taken a position there. Be interested to know what you (and others) think?

BTW the other main O&G company I hold is Apache and recent 4Q report indicates ramping up again in the Permin after 2020 curtailment (they also have a big strike in Suriname as well as their Egypt and North Sea assets).

Hi E121,
Thank you for your elaborate reply. You know shalers' modus operandi better than I do. I have never owned any shares of any pure shale play and have never looked at their accounts in detail. I do read the Dallas Fed survey and update my priors using surveying error.
Hopefully, we are headed to 3 digit price of oil (I like £112/bbl -:)) . Pelle will get his SEKs and I will have plenty of cash to spend on diffent things.

Hi Pelle, I have enough ENQ (I have had a 6 figure since when the SP was above 30p, to which I have added... , and larger than most of the non-execs on the board). So, I am done. I am happy to increase my exposure to oil but I am looking at other companies, for diversification purposes. That is why I asked about Tullow.
Alternatively I would like a company that specializes in fields at the end of their life. Usually they still have some life in them, and as Londoner7 pointed out at the very end you can resell to someone else who thinks he can do a deal with the fishes... In the past someone named such a company, but I forgot the name.

Hi Londoner7, I will wait to hear on the strategy for GKA. You mentioned there is a spreadsheet somewhere for the drawdown. Is there some pension provider that provides this? I have not spent anytime thinking about it, as I am not even 55... but, I believe in long term planning, and if the poo skyrockets as predicted around here then non-bingding constraints might start to be binding.

Hi Pelle, I have flown plenty over the last few months. Last flights in February... So, I am doing my part. It is now the turn for others to do their part. But flying internationally at the moment almost always requires a PCR test, and sometimes other tests just before boarding, e.g., if you fly to the Netherlands, and it is tiring and annoying. There won't be much flying until testing and home quarantines change.

Hi gkb47, I did not in any way imply that the calculations you posted last week were wrong. Presenting a simpler version, as you did, is enough to deliver the main message.
I only implicitly alluded in a subtle way to the fact that I often see calculations posted here that assume the projections put forward by ENQ or other oil companies will occur with probability 1. We know that is not the case. Sometimes, the actual outcome is better (Catcher will produce more than in the FDP, hopefully the same is true for Scotly and Crathes), but most often it is worse (paraphrasing, Londoner7 "sometimes stuff happens" and is "never good". He can correct me if I am quoting him incorrectly). I always use a margin of safety (see my calculations back in early Jan, with a 1.65Kboepd margin of safety for production in 2021) whe there are oil platforms/FPSOs/rigs involved. It is up to each one to do his own calculations as he wishes.

GLA

Sounds good, P. We can toast a Mackmyra in Malmo. ;-)

Thanks E for giving the bull scenario a chance.
The participants in 65-72 range will have roll of dice if it now end up there.
If oil prices spike you and me will just have a coin flip about the bottle:-)

Hello L3,
Forget about TLW, this looks better.
Also don’t forget to book a couple road/air trips in spring/summer. Catch up for a missing year.
It’s what everyone in Sweden will do!

Hello L3 - with regards to this point you wrote -
"What I wrote is that the supply curve is very different nowadays. Give shalers the opportunity to hedge their production 6 months from now at $70/bbl for a period of 9 months, and they will do it, and will increase their production considerably. (Their answers to the Dallas Fed survey are a bit of cheap talk...) In the US there is always capital available when one can tell a good story (sometimes even when the story is not that good!)"

The above may happen and that's a risk factor, but I'm for now going with what the shale patch is telling the market. Capex discipline by living within Cash from Ops and focus on bringing debt. They've never been ones to even ever focus on that metric previously across the board, but this is where they are. I can live with that for now and the market is pricing their US porduction estimates on that basis. US averaged 11.3 mmbopd production last year and may end up a few 100k lower than that average this year. That's still a net net positive for the overall oil market with OPEC+ filling the gap when demand recovers in the coming months/quarters in a post Covid world. The market is front-running this 'rapid' inventory draw-down scenario and further pushed along by the steroid effect of all the stimulus measures globally. This is why I'd be very cautious about using historical price data points to extrapolate what this year's price action may look like. If the US economy (and other global economies) absolutely takes from Q2 and onwards, then all oil bets could be off and Pelle may well end up winning. ;-) Oil may end up having a bonanza year or two if the stars align - obviously risks exist, but the markets always rides a wall of worry higher.

WRT further positive developments or otherwise, we should know more in the upcoming 2020 H2 report.

Hi E121,
I did not post the link to the EIA to make any case in particular, but only to point out to Pelle that he was betting on a phase of the cycle last seen on 2014. The POO depends on many factors, many of which you describe (and on which I will not comment, as I should not). For example, we know that the recent increase of the poo occured at the same time the dollar has depreciated. I will not comment on fiscal and monetary policy in the US and elsewhere.
What I wrote is that the supply curve is very different nowadays. Give shalers the opportunity to hedge their production 6 months from now at $70/bbl for a period of 9 months, and they will do it, and will increase their production considerably. (Their answers to the Dallas Fed survey are a bit of cheap talk...) In the US there is always capital available when one can tell a good story (sometimes even when the story is not that good!). On the demand side, I would like to see those jets flying across continents (that is what is going to get jet fuel back to its pre-2020 level; number of flights is not very informative (Pelle posted such info) - a flight between London and Manchester is not the same as a flight between South Africa and the UK), and get a better idea of how much the demand has shifted due to structural factors, namely on flying that was driven by business reasons. At the moment all I have is anedoctal evidence that a lot of my future trips (and trips of others flying to my location for work related reasons) will no longer be necessary. Probably in your case nothing has changed. So, you would have a different perspective.
Finally, the market structure is also different. As we know production and consumption are different from supply and demand, because inventories are part of the equation. And, we have yet to see if China will manage their inventories in a strategic way. The US cannot (by law) use its SPR to influence the poo, but China can.

Even if our views can come across as slightly different (and I hope I am expressing mine in a respectful manner), I believe everynone around here agrees that ENQ has had two great months in terms of FCF in January and February.

As I wrote even before the TU, I would like to hear some positive developments on the use of the EP, and of further drilling and deals in Malaysia (here with the issuance of sukuks). Also, AB's udated vision on ENQ. Also, more transparency: there was never a RNS after the accident in Malaysia.

As I wrote before, I took up the OO when the SP was 14.x p.

The company I am looking now at is Tullow, one that is very much disliked here. I am coming to think that if they can get their act together in terms of their RBL facility, it could go up very fast. Does anyone have any views on this? Thank you.

GLA