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dotlink i have bad eyes thanks -- in the rns it says shares were sold for tax
Did he tell you that personally? Also what is up with the CAPS? You sound aggressive.
DOTLINK TO PAY HMRC TAX
Why did the director sell at 7.8p before results, he could of sell today for 10p or for even more tomorrow maybe.
gkb
Only time will tell - certainly agree that tomorrows meeting won't provide any respite - maybe a modest recovery - hopefully to cover Enquest's break even - though that might be AB's new break even of $35 after the cutbacks.
RNS - Results tomorrow - a real make or break day!!!
I agree, If we see any spike in the coming days with Brent due to the announcement of a deal.... I hope Enquest hedge the s**t out of it......to break-even this year will be a huge success imo, move onto nx year will the reward will huge!
GLA!!
The OPEC+ strategy of squeezing down the price of oil with the help of the downturn created by the coronavirus has clearly worked and had the desired effect of knocking back other producers especially shale producers in the US.
But to win this war and knock out other producers for the long term it will be necessary for OPEC+ to develop this strategy - otherwise they would have endured financial pain for no gain.
So they have to fix their own oil price - a price where they are happy to sell crude at to gain some income but where other producers cannot produce enough profit.
They can easily do this now because they have control of supply - to keep this control they can simply flood the market when the oil price starts to rise beyond their target price.
This strategy of low price control will last until OPEC+ consider they have knocked out enough producers to cut available supply. Only then will they release the oil price to surge up towards and beyond $70 and probably top $100.
They will have a big ally as time goes by - inflation and the resulting rise in interest rates created by the rise in money supply as a result of the coronavirus.
How long it will take for the OPEC+ strategy to pan out depends on so many factors that it is impossible to predict but it must be years rather than months.
Hello E,
Strong words, it would be interesting know hedge process, think it needs approval or vote by AB/JS so would not blame the guy they hired after last failure.
It’s the common sense that fails, not the intelligence in my opinion.
Anyway, I would expect oil to go really high next time when demand is closer to pre corona levels.
Doubt that shale can put a lid on that rise as so much production will be lost in world.
Let’s save that for later, but my guess is they should hedge less in next phase
P.S: if there's a trade I'd make at this time, I'd short the **** out of TLW after the move up from 11p to 27p in 3 days. This looks good for a at least 30% downside at least in the coming days. Easy come, easy go...
L7 - I broadly agree with the theme of your post. Barring 2016 when Enquest hedged with Swaps at $65 when Brent went down to the 30s and gave Enquest cash flow of $200mill +, they've been mostly behind the curve. It pains me to say that even though we're financially much better off than PMO/TLW, they're treated better by the market than us, and you could laid of the 'blame' on our insipid hedging.
Many of the Shalers are hedged 50% to 90% for 2020, albeit many of them are hedged with 3-way collars that negates a lot of the benefit they generate with these hedges. I know of Devon that's 80% hedged for 2020 (100 kBOPD) at $45 WTI and that'll help them enormously this year. We're left at the mercy of OPEC++ at this time and that isn't a good place to be.
P - you and I have been long arguing that Enq has been a slacker at hedging and that is only too obvious to the market as well. I hope they're learnt their lesson and get intelligent hedgers on board. For the sake of holders here, we can only hope that this becomes a reality when oil rallies next year. Remember that Shale will NOT disappear and they'll bounce back just as soon as WTI gets above the mid-40s and push production up. No matter what others think, oil WON'T go up meaningfully gets above the 50s/60s WTI as that'll unleash additional production from the Permian.
In the medium/long term, Enquest has to cut out assets with higher OPEX costs that aren't viable in a low oil price environment, and that'll set Enquest up for success with Brent in the 50s. If that means Production is the mid 50kbopd rane, that's still OK. But that's the best way to give us the upside in the long term.
GLA..
Anyways, looks like poo showing a bit of weakness ahead of the Opec meeting. Let’s see what Amjad got to say in the final results.
Last time they got it right was many years ago when oil was 100.
After last miss autumn 2018 they hired new hedge person.
But I guess it’s several person involved in decision and AB have final decision.
I always been in favour build up more and more hedges and extend horizon.
More stability and no panic hedge.
At current situation I would argue bite the lemon, hedge at current levels 2-3 months and make basically +- 0 FCF
And hope for better oil prices in summer
Probably his incompetent team that looks after hedging.
They should have hired someone from premier oil.
Anyways it’s too late now.
All we could do is pray oil goes back up. Brent is roughly about 32 so still 6 short for breakeven. Too much riding on this Opec deal.
I agree Pelle. If the Company knew the break-even would be around $38 (appreciate it would have been higher when the other higher producing wells were still running) and that the aim was to reduce debt, then it would have made absolute sense for them to have hedged more - even barrel produced would have led to profit. That isn't to say they should have hedged all, because no-one could have predicted the oil would fall as much as it has, but they missed ANOTHER chance.
AB really has done a decent job at ensuring that ENQ has survived through troubling times, but he never has helped himself when it comes to hedging.
Hello Londoner
You have good memory:-)
But I didnt expect they sit on theit hand completely 2 months with no additional hedging.
Even 50-60 oil would be very profitable for Enquest and stability
In last couple of years both times oil crashed we had minimum of hedging.
Hopefully oil can recover in summer to 50-60 and maybe alot more next year
Thats one reason why ENQ sp is much lower than PMO, TLW or maybe ENQ is just a slow riser which is another reason, 12p tomorrow then 15p on thursday.
Yeah I agree with you. Enquest missed a trick by not hedging enough.
Schoolboy error.
On the 3rd Jan with oil at $68.6 I posted the following comment, “If Enquest want to report any hedging for 2020 now would be a good time to act. Let’s not be too greedy on price.”
Pelle responded, “Agree L7
Hedge 3-4 months 50% now.
If oil goes up to 80 in 1 month, continue hedge further
If oil goes down , we atleast got some hedge good on these levels”
Another poster responded, “Approaching $70, but Iran will plan some sort of revenge ( as they have said already )..
So I would avoid hedging today, and wait for the response , given the US have told their citizens to leave. Apart from the risk of kidnappings, and murder../ ransoms.. the market will panic much more next week.. Brent $75.. and then layer on some hedging for 1H. I would expect $80 if they block the sea routes for a month or 2 until the US blow them out of the water.”
We don’t know the timing but Enquest subsequently reported, “EnQuest has hedged c.2.9 MMbbls of oil in the first quarter with an average floor price of c.$65/bbl. Also, in accordance with the Oz Management Facility agreement, the Group has a further c.1.1 MMbbls hedged across 2020 with an average floor price of c.$52/bbl” That’s pretty much bang on 50% of Q1 oil production – Pelle, I guess they heard you.
I raise this in response to this mornings update from Ithaca on their hedging program, which unless I have misinterpreted (always a possibility) is remarkable against listed North Sea companies. (Some posters will be familiar with Ithaca. It was taken private about 3 years ago. It has publicly listed bonds so still updates the market via RNS. As a listed company -I was a shareholder- it drew criticism on the LSE board for its hedging program at $102, when the oil price subsequently rose to $108. A month of so later the 2014 oil price crash began. It was the hedging program that saw Ithaca come through the next two years better than most.
This morning Ithaca announced:
• Average first quarter 2020 production of ~75,000 boepd leading to strong cash flow generation of approximately $150 million
• 2020 capital expenditure has been cut by 50% to approximately $120 million
• 2020 operating expenditure has been cut and is forecast to reduce unit costs from $17/boe to approximately $15/boe
• 32 MMboe (67% oil) hedged from the start of January 2020 into 2022 at an average price floor of $62/bbl oil and 51p/therm gas
(My comment - Two thirds of the 75K boepd is oil (50K bopd), so the hedging covers 58% of oil production for the next two years, which leads to their final bullet point:)
• Hedging position means over $450 million of free cash flow generation forecast in 2020, even if Brent drops to $1/bbl for the balance of the year.
A private company like Ithaca can manage its finances more conservatively than public listed companies like Enquest, who face share holder criticism if the prospect (real or imagined) of near term $80-$100 oil is lost due to conservative hedging.
Approaching $70, but Iran will plan some sort of revenge ( as they have said already )..
So I would avoid hedging today, and wait for the response , given the US have told their citizens to leave. Apart from the risk of kidnappings, and murder../ ransoms.. the market will panic much more next week.. Brent $75.. and then layer on some hedging for 1H. I would expect $80 if they block the sea routes for a month or 2 until the US blow them out of the water.
GL.
Agree L7
Hedge 3-4 months 50% now.
If oil goes up to 80 in 1 month, continue hedge further
If oil goes down , we atleast got some hedge good on these levels
If Enquest want to report any 2020 hedging next month now would be a good time to act. Let's not be too greedy on price.