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Looking at CMD production profiles I believe no acquisitions will be probable prior to 2024-25. Near field is the way to go, and we've got Eagle to offset -21,22 declines and Scolty/Crates and Western flank should give us a nice upswing 2020.
Wouldn't agree with the "NO DIVIDEND TIL 2021 crew", AB understands that he could put about $40m in his own pocket this year and see capital gain of maybe 5x that if a $400m dividend would be payed.
FCF 2020 should be at least $700m. We had $300m last year, capex/opex is cut by at least $250m and production is up. On top of that $700m we've got a potential Kraken premium which would be a massive bonus.
We're bidding for licences, but that production is 6 years down the road and production could easily stay around current levels for the time being. We're in great shape.
I have no doubt that Enquest/AB would be on the lookout for deals/opportunities to expand their current production footprint - my point was they wouldn't go do anything as silly as PMO did in taking on more debt to make such (pricey) acquisitions, with Brent at a relatively robust low to mid 60s. AB stated in the last AGM and re-iterated via the CMD update that the key focus for Enquest was to focus on incremental investments (read existing field expansions), rather than via a debt-fueled spending binge, until current debt levels are lowered meaningfully.
Perhaps in 12-18 months when net debt levels are down below $1 bill and the market cap is well over £1 bill, Enquest can/will seriously look at an acquisition through a debt/equity mix. Until such time, unless BP can do another Magnus type deal, (no doubt on more favourable terms for BP) Enquest wouldn't make a real move - IMO.
Bold statement re acquisitions not going to happen E121, I reiterate that it is no secret that ENQ has been at the deal table lately.
I agree with you Chilting. With Alma/Galia being a flop ENQ needs to build production (revenue). ENQ Board is surely not thinking in two-year cycles E121................
There is a case for saying that small oil companies shouldn't pay a dividend at all but instead invest all they can in managing and developing their reserves to offset any dips in production. Maybe Tullow made this mistake last year when they paid a dividend.
Revenue drives the SP - investors should base their investment decisions on current performance and future expectations - this is much easier if production is fairly constant.
Well said E121, totally agree.
I am sure the last couple of years have been a roller coaster of a ride for AB and the board, as well as us.
We need stability and to form a strong base first, before we should consider further expansion. The times of "flying by the seat of our pants" are over. Structured planned growth will come after the market has been convinced of our longevity !
All the best
JAN
There are plenty of drilling opportunities at existing fields for the next couple of years that we don't need to go running to buy new fields in this still unhealthy debt situation that we're in. @Ndalla - new acquisitions are not going to happen. Enquest BOD are not as idiotic as PMO's to go asset buying at this time when Brent's at 65. AB made a fabulous move with Magnus when Brent was circa 50 and that provides enough drilling upside for the next couple of years without needing vast amounts of capex, until net debt is brought down substantially below $1 bill. That's what their focus will be for the coming 18 months, IMO. AB and the directors are pretty sane, having licked their battle wounds from past debacles and they know what the market really wants to see - solidly lower net debt. This is where their focus should be and IMO, they have a laser focus on that goal.
Divs next year is still on for me...
There's nothing to say they can't do both.
You may not care about dividends if you are a retail holder. The ii /bigger holders most certainly do. And if they leave, the price will collapse.
What nobody seems to discuss or consider on here is the potential for ENQ to acquire more producing assets. It's no secret that ENQ has been at the table for recent deals - ENQ needs to continue to build production - doing so via the drill bit is part of the equation however I figure that acquiring BOEPD via producing assets has to be part of the plan. It's what kicked ENQ off after all. It is possible that ENQ has gotten / will get further ahead with timetabled debt repayments such that they have free cash to play with for a period, within which a significant acquisition could be made..... I'm not qualified to state this other than an opinion, but ENQ production profile is too fragile IMO for them to consider divis - I would imagine that increasing / shoring up their production will be higher up the wish list. Just my thoughs - DYOR.