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Common factor here I think slift is your good self?
Stick that in your equation?
mrc,
Not back peddling with working capital adjustments at all - guess you don't know how to read equations?
But sure, i'll admit i'm wrong (when i'm wrong) following completion of transaction.
Works either way for me, I have a decent holding here.
As for HUR BB, apparently they have no need for my input, but they sure have a lot of people with similar personality to you lmao.
Slift - get yourself away back to the HUR bb. They can use your expert input over there perhaps. You have been found out here and not man enough to admit you were wrong it seems. Now back peddling with working capital *******s.
Prime
Otherwise what is stopping Suncor pumping the well dry upto completion but still asking for same consideration ?!
Slift - I'm not assuming anything. The RNS notes below clearly states this fact.
EnQuest plans to finance the Transaction through a combination of a new secured debt facility, ***** interim period post-tax cash flows between the economic effective date of 1 January 2021 and completion, ***** and an equity raise (collectively the 'funding arrangements').
I agree with laidback
Suncour can not keep pumping the end figure will be ajusted.
Slift
Its obvious purchase consideration has to adjusted for cashflows from 1.1.2021 simply because Suncour is pumping out reserves
You are wrong on this mate
epiphany121,
I'm aware of the Magnus transaction. Except it clearly states that the transaction will be funded by cashflows from the effective date.
I'm all for something similar for GE transaction, but let's not assume that it's the same.
I do think there will be adjustment on the original purchase price (based on working capital at completion date), but doubt it'll be $100m.
Rather not be disappointed.
MRC - I did type up a message that we've had this exact type of trasaction with Magnus back in 2018. But, I didn't really want to engage on this topic much longer as it was getting animated between you and Slift. ;-) L7 gave a good detailed breakdown of what the Purchase Price adjustment could look like and we may end up with a circa $100 mill adjustment on the original $325 mill purchase price, give or take a few.
On another note, Covid is tempering a bit in India with localised lockdowns in key states to be woud down from next week and apparently their homegrown vaccine works well just as well on the Indian variant as it does on the kent variant. They noted a slight decline in efficient on the Indian variant though. Given that the AstraZeneca vaccine efficacy was better than their homegrown one, it just may be that AZ vaccine works just fine on the Indian variant too.
Brent 70s soon enough.. ;-)
We have a very good example from the Magnus transaction.
“The economic date of the Magnus Transaction is 1 January 2017 (the “Economic Date”) hence, on completion of the Magnus Transaction, cash flow since the Economic Date will be reclassified as accruing to EnQuest’s account and reduce the amount of the BPCO vendor loan. Based on Magnus’s performance to date and assuming current oil prices persist until the end of 2018, the amount of the vendor loan is expected to be reduced by approximately $100 million by 31 December 2018. If current oil prices prevail, the Group will benefit from the asset’s cash generating capability significantly ahead of that assumed in the original acquisition case.“
"Slift - the purchase price will be adjusted by post tax cash flow FROM GE from the 1st Jan 2021.
Right or wrong?"
Wrong. Adjusted upwards or downwards based on working capital and other adjustments.
Slift 15.47 - that's another complication. Until Suncor vacate and we get the revenue directly we cannot use the tax losses.
AB is right.
I am right.
You are confused.
Slift - the purchase price will be adjusted by post tax cash flow FROM GE from the 1st Jan 2021.
Right or wrong?
mrc,
No, I don't believe i'm wrong.
Here's quotes from AB himself:
"Upon completion, this acquisition will add immediate material production and cash flow to EnQuest and will allow us to accelerate use of our substantial tax losses."
Now off on your bike.
Will Slift admit he is wrong?
The effective date of E&P deals usually occurs before the closing date. Therefore, revenue and costs related to the period between the effective date and closing date that are associated with a property acquisition are often accounted for as a purchase price adjustment.
https://www.iasplus.com/en/publications/us/industry-spotlight/og/issue-3
Therapist,
"economic effective date" this is for ENQ, i.e. the cashflows will be accounted for from 1st Jan 2021, rather than from announcement of transaction.
"immediate incremental prouction" - when transaction completes in Q3.
Simple Equation for transaction:
$325m (+/- $A m for working capital/other adjustments at completion date) = $B m from headroom of RBL facility (from increased reserves) + $Cm FCF (ENQ FCF - tax at interims result that is) + $D m equity raise.
Oh dear Slift - egg on face pal. I'm not surprised you are angry with me!
I'm not here to "clash" with anyone. I'll continue to post my views.
Happy Sunday to you.
Interesting point Slift. Can you please explain "the economic effective date of 1 January 2021" ?
Post-tax for Enq roughly same as pre-tax i assume so maybe strange to mention tax in the rns in that case or?
Hi,
I see how you read it.
Why "Economic effective date 1 January 2021" and "immediate incremental production of c.10 kboepdfrom low-cost fields with low near-term capital commitments". If immediate is when the deal is signed why is the January date given?
Genuinely curious to know which version is correct.
I know which I prefer!!
GLAXXX
Therapist,
"interim period post-tax cash flows between the economic effective date of 1 January 2021 and completion"
ENQ's cashflow.
Slift
"EnQuest plans to finance the Transaction through a combination of a new secured debt facility, interim period post-tax cash flows between the economic effective date of 1 January 2021 and completion, and an equity raise (collectively the ‘funding arrangements’)."
Seems bulletproof to me. Part of the transaction deal. No?
GLAXXX
@londoner7 Exactly!
If Enqs balance sheet is significantly improved with the half year i think it is likely that the amount is less or maybe even 0. Apart from POO staying at this level a deal of some kind, e.g. involving EP, migh also contribute
Interesting times ahead!
GLA
mrc,
Why do you even respond to my post? Everytime, i've clashed with you and do not wish to respond to you at all since I don't believe you even know what you're talking about.
You certainly have your calcs wrong and are nothing but a ramper.
epiphany121 and londoner7,
ENQ are not receiving GE cashflow until the transaction completes.. nor will it be taken off the transaction deal.
No idea where you are reading this, but I do understand that ENQ will benefit from c. $100m from tax losses.