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Yeah, if that happens I will have my own Jet going to the AGM 2025:-)
I'm looking at about $6 billion+ of free cash flow at 85kboepd/$65 brent 2020-2025.
Returning 7.5% of that to shareholders ($450m) seems unlikely. 50-80% is reasonable comparing the company to the industry.
Nothing makes sense at the moment. We'll just have to let the numbers speak for themself.
Yes, I also see no reason going for high growth. This will become safe, boring and with a huge dividend compared to current market cap of 450 million.
They will easy have given back current market cap in dividends over next 5 years.
I'm in Stockholm!
We'll surely have the cash for a dividend next year. Expecting north of $650m after interest payments of free cash flow which would leave us with about $550m net debt reduction for the year at $65 Brent after leases.
H1 carried costs that will not show up in H2, and the cashflow will likely be greatly enhanced with the higher production numbers we'll encounter.
Dividends will come. I'm seeing north of $1b of free cashflow in 2020 at brent $60 and forward even greater numbers. Assets are solid and our key pieces will not require a lot of investments over the coming decade to maintain the production numbers.
With AB at 168 million shares and a salary of about £1m, shareholder value will be delivered. I guess he's getting some gray hair after the last 5 years of oil prices, so growing the company further at massive risk multiples are likely not in anyone's interest.
HMH, yeah it sure will be some journey over next years. Guess AB will surprise us too with some move.
I also hope for dividend next year, even as small as 50 million.
Its better you post here then talking to yourself at Swedish forum:-)
There some great knowledge here to build up over several years.
Where do you live by the way?
I live in Malmö
Totally agree. My forecast may be optimistic, but is based on 75kboepd OGA numbers for May plus the additional ~10kboepd net from Kraken 35 -> 50kboep as of may 21 Cairn update.
I think 85kboepd for FY 2020 is reasonable considering PM8 investment and Magnus programme, and I believe we have somewhere in the range of 80-86kboepd at this time.
My cashflow numbers have been pasted here a couple of times by other members. Will keep on refining the numbers, but it looks really damn good even at 75kboepd and oil $60.
I've seen your posts regarding the calculations as well. I think we'd end up close if we assumed the same input numbers.
Will likely move my posting to here from the swedish forums. Looking forward to the journey! :-)
HMH, yeah the same.
I read your posts on Swedish forum.
And I am your side here looking into future this surely must come good if oil prices stays normal even if I think your production forecast is a bit optimistic.
Big plus with AB’s holding and increasing.
Not often you get a chance buy something so cheap with so many good signals
Tack Pelle! Trevligt att råkas ;-)
Välkommen HMH:-)
Alvheim cycle is about 12 days and 550kbo. Wont need two offloads in 2 days as the FPSO is about the same capacity as Armada Kraken.
We'll see.
If I put a straight edge on my PC Monitor Grena Knutsen is definitely pointing directly at Kraken. I think that is how they do the navigation so that's conclusive. Alvheim can't have them all.
Grena Knutsen is also heading for Alvheim according to AIS.
One must be wrong, but the destination could be other than Kraken. Grena seems to be heading in the the right direction, but to early to say.
Therapist, if I was a betting man I'd have put it on your pick, but sadly the Natalita is now showing ALVHEIM O.F as the destination.
The watch continues.
Thanks romaron. A very interesting insight, which highlights the value in attending AGMs or other events and taking the chance to question the main man (or woman). I find that the Q&A session following a presentation often reveals more interesting stuff than the presentation itself, but the analysists can sometimes be too respectful when a question has been dodged or poorly answered. At a recent event I took the opportunity to ask the BHP chairman if there are any party animals on the board with respect to a point I was making on a history of poor CapEx judgements coming at the top of the commodity cycle. I doubt an analyst would have used those words but my point was received very clearly, and just perhaps he'll reflect on it the next time he wants to write a cheque for $50bn.
I should add that if another company releases information that impacts on EnQuest then he is freed from concerns about any breaches of confidentiality etc. He does respond to questions when they are phrased around other companies and a specific EnQuest comment that releases him from that aspect. I also get the impression that he prefers not to regularly quote/comment on the performance of EnQuest outside of the AGM and half-yearly updates. Don't expect him to start tweeting any time soon; he is the mirror opposite of a David Lenigas.
It was in the QA when he responded to a question (I can't remember the exact question) saying that the estimates produced by posters here are pretty accurate (rule of thumb?)and he added that they need to factor in the 3 week maintenance shutdown which is a simple mathematical calculation. At another AGM he admitted to reading the BBs to prepare for questions at the AGM. I doubt he reads them regularly and certainly didn't find it strange. This is a guy that prepares and understands his brief. He is unusually open in my experience because there is a lot of scrutiny but he has his red lines and won't , for example, release contract details and was relatively circumspect about Cairn. In another AGM he admitted that he would have liked to have said more but he had an obligation to Bumi. It wasn't being evasive as there are constraints and stabdards that apply across the industry. I would say though that it is unusual for him to avoid or wriggle out of answering. He is very bright. I'm left with the feeling that whilst we zero in on Kraken barrelage he has moved on. He is conservative in his projections which isn't what PI's really want but this isn't an AIM stock. He is always talking to the larger shareholders imo. TBF there are always a lot of short term punters on BBs.
*I was once at another oil company AGM that had finished when the CEO (not realising I was there) said to other Directors, "right, lets move on and do the serious stuff". I wasn't offended. AGMs are often full of small shareholders and are procedural. Most of the important stuff has been agreed beforehand and proxy votes wipe out those attending personally.
Hi romaron, could you expand on your comment, "At the last AGM AB commented on the accuracy of tanker watching "
Natalita heading North and in our direction. Not updated but could be?. Sticky Vicky could be Flowy Chloe with a fairwind. Don't think that sentence has been written before. glaxxx
Just waiting for Sticky Vicky to issue a downgrade.
Hi Londoner, I arrived at something similar regarding CNE and in fact 'kitchen sink' was used in an exchange on this BB. It doesn't mean either of us are right but always interesting to have another person's view. The data room reference was the 2018 AGM, not this year's. I held CNE briefly but decided that country's trump companies and the arbitration award might never happen. I wasn't hinting at bid interest but that the sale of the 20 per cent of Kraken has never really been off the table and might be a lot more attractive now. It would change our finances dramatically imo.
Hi romaron, the chess analogy is interesting. AB may be a chess master but in my mind the chess board is floating on the North Sea and pieces are arbitrarily moved by passing storms. Perhaps he doesn't need to win but just outplay his opponents. I don't know the man but you seem to so your comments are encouraging.
Ineos walking away from a £117m deposit on a deal suggests they are very serious - perhaps they identified a better opportunity. Whether that's here or elsewhere I suspect there'll be news in the next year or so, but bid interest has never been a basis for my investments. Let's call it the cherry on the cake.
I've been reviewing Kraken on a number of fronts but held off posting. As a CNE holder I understand your point about the Kraken impairment - in the main my view is that it was part of a 'kitchen sink' exercise to get the SP down ahead of his options, and it worked. Time will tell as to the validity of the impairment, but two elements struck me. One, the financials CNE applied to their impairment lead to a positive read across to ENQ's holding even if the same impairment was applied. And two, it would be remiss of CNE not to assess the logic of building their stake in Kraken from 29.5% to 49.5%, and a first step would be to reduce its valuation in the market. There is the possibility of a large arbitration award later in the year. If successful CNE has stated that their existing plans don't require the cash injection so they would return the bulk of it to shareholders. Perhaps they would look at increasing their stake in Kraken. I'm not clear whether the 2018 AGM you mention was this year or last but I'm assuming this year. I noted in the report issued just a couple of months back a comment that a sale of up to 20% of Kraken was still an option. Again, looking at CNE financials on Kraken even the sale of a 10% stake would do wonders for Enquests financial position.
Hi Londoner, I can't match you guys in certain areas (especially technical/financials) but I have a reasonable memory and I know a lot about markets having been in FX for 27 years as a principal and broker. I like the different directions that individuals/contributors to this board come from and we do learn from each other. I'm the wrong person to ask about the smaller fields and afraid I have to pass there. I did go over my AGM notes and regarding the decline rates what AB actually said was "double digit or 'low' teens" for the fields. I did my own research and arrived at 'high teens' but I forgave him because we were in a hole at the time and what CEO wouldn't try to put the best spin on a situation? It's the incoming CEO's or those trying to change the news cycle about their company that really try it on [Cairn Kraken impairment?]. I speak to a few other investors and likened AB to a pilot. You get aboard and have to trust his professionalism but when you hit turbulence you need a top pilot. We hit that turbulence and the market is slowly awakening to this fact that AB and his team proved their mettle. People have been quick to criticise and downplay Kraken but I think it is a positive game changer.
He really is a 'top gun' among oil company CEO's imo. We were chatting this morning about the share volume and my pal remembered another question that I brought up at the 2018 AGM. I asked if the data room for Kraken was still open regarding the 20 per cent sale. It was. I doubt AB is sitting on his hands and I am personally not against more acquisitions but it is the larger shareholders he needs to convince. The LTHs here (that's us) aren't really relevant. I think that AB runs this company like a chess master and is thinking of moves months, if not years, ahead.
There is renewed interest in the NS and I found this from a July 18 post of mine on iii regarding Ineos: "Realising that bargains were getting fewer in the petrochemical world they turned their attention to the North Sea from 2014. After all, “oil rigs are basically are basically chemical plants on stilts whilst the machinery and equipment required is almost the same in both sectors – pumps, pipes, valves and steelwork”. This is all in the chapter headed ‘Against The Current’. One of their executives said that ‘if you stay in chemicals 10-15 years , you are always going to feel poor at some time, because it’s cyclical and your margins slim down’. He said this to criticise oil and gas where apparently ‘cost doesn’t matter’.
They saw bargains and have built up. A hint was dropped imo “Rumours circulate that it [INEOS] is now in discussions over a fourth energy acquisition , which could be larger than the first three”.
[ DEA, Dong & Forties pipeline.] Why put that in the chapter?."
I assume that the fourth acquisition was ConocoPhillips that didn't happen. Are they still looking?
Be Lucky
Hi romaron, you've been here longer than me and your insight into the availability or otherwise of cash for maintenance is interesting. I take the gist of your point to be that with a relaxation in pressure on cash flows we may see some reduction in recent field declines. Let's hope so.
I've been looking into the GKA hub, including Scolty/Crathes. The high teen decline rates you refer to are apparent, but there's no doubt that production efficiency has improved over the last few years mitigating that decline to just under 10%. The new SC pipework should bring Crathes back into production later in the year and IMO could be a significant addition. Looking further out I can see development of Eagle in 2020/21, which as Enquest will no doubt highlight, "The field is tied back to the Kittiwake platform and has greatly extended the useful life of this production hub." It should also maintain or reduce average hub costs. All good incremental stuff which is what I'm looking for from my investment in Enquest.
As another poster mentioned earlier, I'm sure AB is also looking for the next North Sea acquisition, however I'm not so sure that LTHs here are ready for it.
Hi Londoner, your common sense will get you into trouble on this board. Back to rocket science. At the AGM you get a genuine look of puzzlement from AB when questions over declines and maintenance are raised. Not that they are piercing and difficult to answer but a little bit naive (imo). One is physics and the other is necessary planned servicing of fields and equipment, or good husbandry if you like. At the last AGM AB commented on the accuracy of tanker watching (that is enough rocket science for me) and for the fans they can make an intelligent stab at the performance which includes the 3 week shut down later this year (from memory Sept/Oct) can be factored in as it is simple maths. At another AGM he defended the high declines as being "normal". Again from memory I think the rates were high teens. This is true if you don't spend money on maintenance on ageing fields but at the time we were basically potless, needs must! With cash available you can mitigate the declines and it becomes a commercial decision.
Declines and maintenance are facts of life and have to be accepted but I think your bringing it into debate is useful and I would not be at all surprised if we have healthier production across the portfolio. I think that between you and ProdOp we have better insight into what goes on under the bonnet.
Build it and they will come.
Pelle, chilting, I hope you don't mind me jumping in on this (Kraken maintenance question).
It isn't rocket science to understand the relevance of the timing of maintenance schedules with associated loss of revenue and increase in maintenance capex, to the timing of a 'reduction' of $100 to the RCF. Based on other dates associated with the credit facility I believe the $100m reduction occurs 15th Oct - DYOR. The final 2019 bond interest payment of approx. $30m is also due in Oct, so I see 15th Oct as the next liquidity hurdle.
On 21st Mar, on Kraken, ENQ said, "A three-week maintenance shutdown is scheduled for the third quarter."
At the latest update 23rd May ENQ said, "The planned maintenance shutdown at Magnus was completed in May, with the remaining programmes at the Group's other fields expected to be executed by around the end of the third quarter."
Those words are carefully chosen. I'd guess that ENQ have specialist staff (or contractors) for maintenance activities and will want to phase the activities across the various fields, so I'd be surprised if these activities are not started soon on the smaller fields. Posters here have indicated that there could be significant works scheduled for Kraken. If so, I anticipate two consequences, first, as Pelle says, the schedule is (date) fixed with key people involved, and second there is an increased risk of delay in completion. For these reasons I suspect Kraken will be last in line - provided the 12 day offload cycle holds.
That all said, I see 5th Sept as the key date. Alongside the H1 numbers I'd expect a clear statement on the schedule for maintenance and Capex. News of an early repayent/reduction in the credit facility would be nice.
Like many here I'll be watching those tanker offloads from Kraken. Each one is worth $20m net cash.