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The first phase of the Programme will be carried out through an agreement with Merrill Lynch International ("Merrill Lynch")
Does this suggest that ML may not use all the $15m to purchase shares in the allocated period?
Enquest have a $15m buyback announced at YE2023 results
They have an authority from the last AGM for 10% of shares
They don’t need to buy all $15m before the AGM where they will get renewed authority.
Buying the shares into treasury for the EBT makes a lot more sense than cancelling shares and then subsequently reissuing.
A lot of emotive posts on this board re sleight of hand and duplicity etc. all a bit embarrassing.
Hi KO,
No I think it means that this is just the beginning of a much larger buy back programme over time/years and this first phase is being handled by ML . This then does not mean that Enquest will use ML in future programs. I expect to see a much larger buy back program for 2025. Maybe using ML, maybe not. Options open for Enquest.
All the best, JAN
Deltic in trouble, down 44% today. From the RNS:
"The feedback from Deltic's Pensacola farm-out process has indicated that the continual tinkering with the Energy Profits Levy and resultant fiscal uncertainty created by the current government, along with recent rhetoric emanating from the Labour Party, have had a severely negative effect on the ability of UK Exploration and Production (E&P) companies to commit to long term investments in the North Sea. This has resulted in many operators diverting capital away from the UKCS or delaying investment decisions, especially with respect to new large-scale opportunities like Pensacola.
Against this hostile political environment, and despite the Company's best efforts, Deltic have not yet been able to secure a farm-out partner for Pensacola and although there are a number of live discussions with respect to a way forward on Pensacola, there is a risk that a farm-out may not be secured before the end of May 2024. We remain of the view that Pensacola represents an excellent value-driven opportunity for the right partner and would be willing to engage with any additional potential partners."
Redbuffet you’re the embarrassment on the board.
Enquest in a strong position To take advantage of some of the distress caused by EPL.
Hi Kraken
It's quite clear that ML are authorised to buy up to $15m from 29th April until 30th June. If there was any other dealer/broker involvement in the $15m buy they'd have said so in the RNS.
Must admit though, I don't know what "The first phase of the programme" means. The implication is that there are subsequent phases, but no mention of it in the RNS.
Profit, perhaps it means simply that in the instance ML does not buy shares up to the maximum for which they have authorisation then there would one or more subsequent phases of the same Programme?
The way I read the somewhat cryptic announcement is that the $15m will be spent before 30th June 2024 and that is the first phase. It will be followed by a second phase which is justified because of the huge amounts of cash being generated at $87 brent. $15m buys around 73m shares at the present price. So we will see the buying crank up as we have only around 40 trading days to spend the $15m. But who would be a seller at these levels when the FCF in 2025 could be around 12p a share?
As I read yesterday's RNS, the first phase relates to the first 25m shares bought back to be held in treasury for later distribution. The remaining 45m will be cancelled:
"To the extent permitted by law, and after the initial 25 million Ordinary Shares are purchased, all additional Ordinary Shares purchased under the Programme will be cancelled."
Sek, the RNS does not say $15m WILL be spent before 30/6/24. It says:
“EnQuest PLC (the "Company") announces that it will commence the share repurchase programme of its ordinary shares of 5 pence each (the "Ordinary Shares") of UP TO $15 million (the "Programme"), as first announced at its full year 2023 results on 28 March 2024”, and
“ While the Company has launched the Programme, there is NO CERTAINTY on the volume of ordinary shares that may be purchased OR ANY CERTAINTY on the pace and quantum of purchases”
I see no evidence in the RNS that there will be a further and new Programme (although, it’s a good bet there will be, just we don’t know from when).
Steel, there is no evidence in the RNS that the shares to be allocated to the Treasury represent the first phase of the Programme. ML will buy the shares they decide to buy and the first 25m will be allocated to the Treasury – ML has no say in this internal allocation.
It is more likely that there may or may not be more than one phase of the Programme depending on whether ML manages to buy the full $15m worth by the end of their mandate.
More interestingly, what are the conditions that could exist for ML not to be able to buy the full $15m during their mandate? To note “ Merrill Lynch will make its trading decisions in relation to the Ordinary Shares independently of, and uninfluenced by, the Company”. So, again, why would ML not be able to buy $15m of shares in the next 2 months? Either unavailability of shares or the price is wrong. Effectively the same thing, no? And if the price is considered too high at any point in the next 2 months, does that mean ML expect it could be lower later? Thoughts?
True it does not say it will be spent. But there is no point in referring to the 30th June 2024 if it is not the intention and expectation that the money will be spent by that date.
I imagine the intention is to buy $15m of shares by end June, but I am less sure on the expectation. For sure, though, it is better not to be obliged to buy all by end June as that would gives away a lot of ML's negotiating position. Imagine they get to 28th June and it is known ML is obliged to still buy $10m.
Buybacks.
There are rules that govern the conditions of trading - in simple language, rules to prevent market abuse.
These rules are restrictive on the buyback pricing, which are subject to the trading of independent participants in the market. Given the size of the buyback over the short first phase period, and the relatively low trading volumes in Enquest stock there will be days when it will be difficult be purchase an appreciable level of stock. It's likely that bots will be making these purchases in accordance with the rules and they'll be opposing bots programmed to profit on the other side.
I don't know if yesterday's small buyback was a result of the restrictions/illiquidity in the stock or not. Time will tell.
Exactly. It is impermissible for example to pay more than 5% above the average share price over the previous past 5 trading days.
Thanks for that Sekforde as I have no intention of diving into the rule book. You did answer my question before I asked it though. FX is largely traded electronically nowadays but there is nothing to stop banks from dealing direct with each other. This is all moot if ML is competing with another buyer who is prepared to pay a fraction more than ML or what if there is a large seller who sees this as an opportunity? I'd ring ML traders. Does this have to be recorded? The shenanigans with Premier show how loosely policed this area is.
There is always a different price to the market which is why I wouldn't get bogged down in trying to decipher the announcement. In EnQuest terms $15mio is a sizeable sum.
Just as long as they aren't trying to butter us up and announce a share in a rights issue for a new deal. A lot of deals like a small portion to be taken up by equity holders.
I'm sure AB has faced stronger pressures in the past and our bonds did reach PFC levels at one stage. I have a sneaky feeling that this buyback is just a sop to mask what is happening on the deal front.
I work on a trading desk (have worked for a decent spread of the banks in past) i understand that for retail investors like people on this forum this is a big deal (and to be clear i am heavily invested in ENQ) but no bank (and especially BAML) care about 15m of stock especially spread over a half year. They’ll have given a good deal to ENQ in expectation they this will serve them well in future biz investments if announced.
There’s simply no ‘edge’ in it for them and no reason to play any games - and the fall out from any silly games just dwarfs any gain they might make on a small fry trade like this
As to the bot/algo chat that goes on this forum - drives me nuts - i trade and use banks algos all day long - you could argue tht some of the high frequency guys do have bots to take advantage of stock buyers and sellers but they simply dont have any interest in specifically pushing ENQ one way or other. If there is a buyer they will simply pull their ‘offers’ momentarily so stock will go up a little more than expected or on sells they will remove their ‘bids’ so downside move on that sell is more than expected but this whole view of them pushing us down is simple nonsense.
Sometimes they are left with positions overnight but thats just when they get taken out by a broker or client to a level more than they expect but they HATE having overnight positions especially in stocks they cant hedge and are volatile like ENQ
Evening voice, Do you have to disclose to the Banks and the desk you work for every single trade you make and what you hold ?
Hey Kraken - yes and yes (unless funds or non specific investments)
Addendum to Kraken question - in fairness a lot of banks now just outright ban their traders and other front office staff trading in single stocks for themselves as the regulation and admin just not worth it