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Hi L3Trader,
Q1, I don't have the numbers to hand. This was a brief exercise I did last week, which indicated a loss even if the $100m contingent is repaid. As I recall write-downs and impairments after the $300m exceeded the $100m contingent.
Q2, Add the two numbers for gross ultimate recovery.
Kraken 99.9 + 33.6 = 133.5MM
Catcher 54.9 + 47.4 = 102.3MM
Current 2P net c40MM to CNE.
I haven't looked at the detail of premiums but I was confused by CNE statement which I may have wrong but as I recall had realised prices below Brent (????), which they had price averaged different to ENQ in H1. I might take another look later.
Hi Londoner7,
Yes, indeed, many parts of my post were not clear. The dangers of posting w/out re-reading.
Here is what I was asking:
Q1) Is CNE making a profit out of its Senegal Expedition, if we are to assume they will eventually received the full $100M contingency payments (that adds to the $300M and the 2020Capex reimbursement?
Reading one of your earlier posts, it seems you had already answered the question: "albeit at a loss on the outlay over the last six years. Give me a few a hundred million dollars and I’d be happy to return 90% in six years for a lot less than management are paid" Thus, overall return is -10%. I have not gone back to read all that was spent in Senegal over the years, that is why I had asked.
Q2) Is on 2P reserves.
The 2020H1 presentation has 2P reserves for Kraken and Catcher that will be ultimately recovered https://www.cairnenergy.com/media/2806/half-year-results-presentation-sep-2020.pdf
Kraken (slide 14). CNE assigns 99.9 MMbbls 2P to Kraken (this figure must include the Worcester 2P converted at the end of 2019). This figure is substantially lower than the 137MM bbls at FDP back in 2013 (as presented by the Operator). And Worcester would have added 6MM bbls to it. 99.9MM bbls is about 2/3 of ENQ's figure of 137+6 MM bbls.
Catcher (slide 15): CNE assigns 54.9 MM bbls 2P to Catcher. But since their slides show that 47.4MM bbls have been produced, what is left is 7.5 MM bbls. However, since the FPSO will stay in Catcher until 2025 (or later), the reserves estimate must be outdated. The FPSO would not stay in place 4.5 more years to produce less than 2MM bbls per year. This is the reason why I am puzzled about the 54.9MM bbls 2P reserves to be recovered figure.
Thank you and GL.
p.s.: Incidentally, given PMO's statement that in H1 average Catcher premium was £2/bbl, if I find Therapist's H1 production data I might try to guess Kraken's premium, mindful that it will be a wild guess.
Hi L3Trader, reading your post I felt a sense of frustration. If you post your 'superficial thoughts' in the hope that I will answer the questions you raise then I'd like to see better clarity.
These questions may be clear in your head but they appear to me in print as very confused.
Take this extract, you say, "CNE assigns 99MMbbls 2P to Kraken"
I have no idea where you come by this number. At the end on 2019 CNE reported 142MM 2P, (2019 annual report). I understand that 99MM applied to Senegal( SNE presentation last year), leaving 43MM between Catcher and Kraken. Perhaps my detail is incorrect, but I don't know the source of yours.
Rather than reeling off a series of questions, perhaps you should focus on one at a time.
Hi Londoner7,
Thank you for sharing your views.
Quite busy at the moment, so a more detailed comment from me will have to wait. But here are some superficial thoughts. I like ST and JS, along with PM and EH. They all did very well and answered the questions. I wished some questions had been different, but for that you w'd need PIs on the call.
So, here is my 1st question: suppose the Senegal $100 contingency payment comes through in the end. What is going to be the "profit" of the Senegal expedition?
2nd question: What is the Kraken premium? We know Catcher's premium was $2/bbl (as per PMO's earnings. PMO tell you everything you need to know.)
3rd question: what are the 2P reserves now?
i) Have they revised the Catcher 2P up? Their slides show there are only 6M 2P left in Catcher, but given FPSO will stay in place until 2025 (or later), something does not add up... Would have to read past reports/etc.
ii) CNE assigns 99MMbbls 2P to Kraken (including the Worcester 2P converted at the end of 2019), that is way below 137MM bbls at FDP w/out Worcester. So, something must have been lost along the way.
A comment, rather than a question: I hope ST and JS do not overpay for assets. It is their excellent past financial discipline that has kept CNE in a strong financial situation. Seems no M&A, which is probably a good thing, but if CNE could nick PMO at a good price, CNE has the financial strength to get PMO's debt down quickly. They would have to use the proceeds from India's tax office. I hope all is left to do is for CNE to send them their account number and Swift code...
I hope this bb does not get invaded by the one-line moniker poster, or by any of the accounts he uses occasionally to abuse others...
GL
"$259m distribution."
Correction, "$250m distribution."
My qwerty keypad has the '9' too close to the '0'.
I guess that's why the number keypad is structured differently. Doh!
Interim cash numbers were in line with my FY expectations for $390m net cash, after receipt of $300m and Senegal 2020 CapEx, and $259m distribution.
For a company of this Mkt Cap production volumes are modest. If one of those ‘package’ deals isn’t announced within the next six months then it seems to me the window has been lost and another distribution should be made to get company scale to production. A good pipe-line of tie ins across both Kraken and Catcher, but these are modest, and will not arrest decline. I expect c20Kbopd production in 2021. The NS development with Shell looks promising, but again I’d expect only modest additions and that is a 2022 event.
I don’t know this year’s LTPP incentives are, but I’d hope there is a growth component rather than simply taking rewards for the efforts of PMO and ENQ who actually manage CNE producing assets. I wouldn’t be surprised if the LTPP includes a reward for selling off SNE, albeit at a loss on the outlay over the last six years. Give me a few a hundred million dollars and I’d be happy to return 90% in six years for a lot less than management are paid.
Interesting to see the renewed interest in the Indian award. Yesterday, CNE management maintained their ‘we have confidence in the merits of our case’, but analysts seemed more excited. They even had me wondering ‘what if’. Nah, let’s stay real!