Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Watching Al Gore on Bloomberg the other day confirmed to me how much investment is going into Green projects , unlimited really , complete opposite for oil projects like shale , you won’t find many chasing them . The Herd has moved on, Think US production will remain flat .
Jan
Yes, it would certainly be essential to know the true situation on the ground.
But, with the incentive of high oil prices and the ease of getting to market with the new pipeline capacity, I guess anything is possible.
Chilting,
This can't happen quickly.
The most productive ducs are in operation now and with the current number of rigs depletion will slowly grind down US production numbers. They need another 150 + rigs to begin to turn things around. Even then it will take many months to get production near their old 13m bpd.
Maybe E121 could add something here, as he has done much research on the US situation.
Even if it very unpalatable it does seem that in the Permian, US producers are coming back strongly.
Also the problems of the past regarding pipeline capacity have been sorted and there is now spare capacity.
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/permian-oil-production-could-near-record-in-2021-with-pipeline-capacity-to-spare-62058588
Hi L3
"Coefficient of dispersion" straight out of an EP job description. Hope your take includes planned and preventative maintenance.
Skills depletion? I have always read that Enquest are admired for operational efficiency. Maybe Magnus is now fixed (for a while)?
GLAXXX
L3 - don’t try to make out that this is how you saw the rig count playing out. You’ve been predicting shalers spoiling the party since POO was above $50, and it ain’t happening.
Jan is right - you are trying to mislead. Rig count is largely flat. I expect we will see production dropping further in the US.
january2, i am not miseading anyone. yes, it is true only+2 this week , and -1 last week. but more now that at the same time last year, i am also hearing productivity now is higher, but until we have good estimates it is mostly sparse evidence.
you can go through my posts and read my prediction for US production made many months ago.
does the rig count really matter to ENQ during 2021? no, what matters to ENQ is its daily production coming in in the mid point of the guidance interval when H1 is over.
ATB
Disagree, rigs were down one last week and p,us 2 today. As E121 pointed out sometime ago, they need to pile on much more than this to just maintain production at current levels, let alone increase it !
You are being misleading L3 Trader.
hi Therapist,
thank you for that file. well, i understand that in other industries stuff also happens.
if i get the raw production data, i might just treat it nicely. the coefficient of dispersion of the production data is abnormally high. i wondered what does Londoner7 make of your graph and comments. the latter basically tell us stuff happens non-stop with Magnus. will it ever be fixed? i really doubt it: old platform, and the experienced teams in the fields that have gone into CoP are gone. they would be very much needed now.
gkb47, that for reminding me of the company. i will look at it,
onto other matters: another week w/ brent at >$65, good! i am going w/ pelle on a max of $100m of net debt reduction in first 4 months. less than ideal, because there are maintenance shutdowns in late May and June.
keep an eye on tullow's bonds...they offer a very good return, but they are risky... rigs contune to increase. i wrote many times that the shalers will keep going.
GLA
Be a miracle if that were to happen today considering its Friday.
Fingers crossed
Let’s get through 18.5p today
Hi Therapist.
Thanks for sharing.
It’s an old asset and in my experience they often lurch from one problem to the next. It’s just the nature of the business. EnQuest hold there own when it comes to sorting these things out...but...
They have cut very deep last year and I do worry about their engineering capability.
Hopefully the issues are resolved and they will get a clear run for a few months.
Hi L3,
Your PS puts me in a spot to show I have a rationale. I do, believe it or not, and it is based on my experience of operational efficiency gleaned from a different industry. Stuff happens but it usually doesn't keep happening . . .until it happens again. I don't think they have ever had a clear prolonged clean run at Magnus. I can see production numbers when they do. I don't track the water but maybe I should start. I suspect Covid would also have had an operational impact on efficiencies last year for various reasons. Link has a graph and some facts. I am an optimist and I predict a kindly period.
https://www.dropbox.com/s/be521ysqzpxrn8h/Magnus%20Rationale.pdf?dl=0
GLAXXX
Hello Romaron,
Yes, I agree we in much better shape than TLW.
Let’s hope for interesting update next week
sorry - too many dates and figures. we'll need to sort out our bonds by Oct 2022 imo but we'll still have a year of cash building to repay them. Probably some errors in my figures as I'm not slavish to these things and am not invested in Tullow. Things are looking good.
Hello L3, thanks all good here:-)
Hope you also.
Yes, the interest rate scale seems wide.
Let’s hope Enq can get something lower then they have today.
Maybe they will surprise us in good way because loan will be short and FCF big
Hi Pelle, unfortunately our Oct 23 debt is valued a c.86.5 which translates to a YTM of around 14% which is double the coupon rate (Tullow's 01/03/25 is around 10.8 % but of course they pay the coupon 7% AS DO WE 7%).
I am not worried and neither should Tullow shareholders be. There was a bond debt payment due in c. 11 months for Tullow and that has been repaid in full at Par. Back in November they were trading at c.65 equivalent of a YTM of over 40% so you can see the mountain that TLW have climbed. 11 months in bonds is really short term and pressing debt which is why I said in an earlier post we should have our Oct 23 done and dusted by Oct 22 (17 months from now).
Another point to remember is that no debt is FREE. To me 10.25% is 3.25% over the 7% I'd snatch your arm off for. For TLW they now have debt that they can manage at an extra $63Mio a year. Jim Buckee said in 2013 that 8% was workable but many were using 10% for debt. TLW were going to the wall but they're still standing and I wish their shareholders luck.
Our position is infinitely BETTER. we'll be close to paying off the RCF. The HYN and RB are what? $1bn so we'll pay off a chunk of that before we need to refinance in the 12 months from Oct 2023 to Oct 2024. There is a lot of nonsense spoken about debt and I had a mortgage of 18% in 1980 for a few months. Nobody expects us to get prime lending rates. I wouldn't be surprised if Tullow's new bond are soon attracting a premium. A pound of flesh has been excised. That's what HYN traders do!
hi gkb47,
Hope you are well.
UJO, wasn't it? What are the main pluses?
I have not yet looked at it, but will do. Lots of oil companies are sill trading at a discount if brent is staying at current levels.
Behavioural biases...always easier to look at what one already knows... One only needs to look at the changes in portfolio of assets and accounts, etc.
TLW is not for the faint hearted. My investment in there is much less than in several other oil companies...
ATB
Hi Pelle,
Hope you are well.
Well, Lundin is a different beast. As I wrote, it might be that the interest rate TLW is paying is totally irrelevant to ENQ's debt renegotiation.
ATB
AB Should have a chat with Lundin, they got 5b at 1,6% above LIBOR
This might be totally irrelevant for ENQ, but here it goes, some of it is good news, some of is not...:
"6 May 2021 - Tullow Oil plc (the "Company") is pleased to announce that it has priced its offering of $1,800,000,000 aggregate principal amount of 10.25% senior secured notes due 2026 at par (the "Notes")."
As a shareholder in Tullow, i am not pleased. ENQ should be able to do a lot better than 10.25%. One thing is for sure: "one has to be careful out there," i.e., oil companies need to be less reliant on debt, as it is going to be more and more expensive for oil E&P companies to borrow money. I wrote about debt becoming more and more expensive back in the Autumn of 2019 (ESG)... One can only hope that the shalers will face the same harsh borrowing conditions.
GLA
p.s. Therapist, could you please let me know the rationale for you upping Magnus's production to 16Kbopd for the rest of the year?
To put the current oil price into perspective - Brent has only been higher than it is today for around 50 days in the last two years or so.
I'm sure there a good many holders on here who, like me, are impatient to see their break even reached and jump ship.
I have no faith in the CEO and major doubts on his strategy. Lots of promises/ wishes/ hopes knocking around around but
to me hope is not a strategy.
Just need someone to fire the starting gun.
Ops updates are normally a disaster but next week I think might be an exception. Update on net debt figure and hedging should give a bit more certainty on debt repayment. I would be happy for them to hedge all production for Q3 at these prices if it is enough to guarantee the October repayment. Seems there is still some doubt in the market about that being cleared.
Was really looking forward to your mourning and wailing morning call, Krak, really was....Nobody can wail the way you do. Am in the same boat with you, by the way, have loaded up again at 18p, haven't sold a share, wish i had a couple of times. https://www.youtube.com/watch?v=h8eWkOB3zaE