Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Evening E, yes but today glass was less then half empty. Watching the golf? Rose is doing good
Evening P - L3 is the king/queen of pessimism and is the epitome of a 'glass half empty' person ;-). I suppose we can all make a case for issues with cash flow if Brent drops a lot lower than these levels, but I'd like to focus on this rather long paragraph.
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Because out of that $200M you need to remove the part of the FCF that corresponds to the Mercury loan (that will have been paid now) and the FCF that is linked to 15% of Kraken, that is ring-fenced to repay the Oz loan (that is, FCF corresponding to 5K bopd is tied to this loan). So, effectively what is left to repay the RCF is not $200M but an amount around the $150M RCF repayment dues this year, of which $50M has been repaid. This means that if the POO drops further or if execution in terms of production were to fall below londoner7's forecast production ENQ will have to do another deal with Mercury, postpone payments to suppliers to meet its RCF obligation.
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FCF is FCF - whether it's generated from the 15% Kraken ring-fence or not. I'm not sure why you need to deduct that FCF component from the overall FCF? The net CF from that ring-fence will go towards repaying the OZ loan. That OZ debt repayment is still reducing overall debt anyway. I'm not sure why the $100 million repayment is a big concern given there's no other big loan repayment due this year and there's enough cash on hand already to pay that amount back, not to forget all the cash being generated over the next few months.
Relax L3 - we have bigger concerns beyond the RCF repayment - that's Trump and what he would do to the world economy and Brent as a consequence.
L3, that was really pessimistic.
Its 100 million RCF left to be paid in October + Oz deal.
Given what they done prod/cashflow first 4 months and what we seen Kraken May/June prod and know the hedge at 66.
I dont see any problems do 100 million +OZ in 5 months.
So we are pretty far from calling Mercury for another loan
Hello MO, Chilting, Londoner7
MO: I am glad you are back posting regularly. Have you seen any relevant ships working around Magnus or other fields worth mentioning, as per the 2019 CAPEX works?
Chilting, could you please let me know the approximate times and dates of the two most recent offloads, #38 and #39?
I understand that offload #39 started on 12/06 around noon(?) and ended yesterday around 2/3pm(?), and that the tanker of offload #38 had left AK on 01/06 at (what time, please?).
A 12-day offload cycle (I remember reading messages posted by MO longing for such short offload cycles; I hope he is now smiling...). Several weeks ago, I posted a message saying that an execution driven re-rate of the SP would happen if #40 took place before the end of H1 (this will for sure happen, hopefully with 3 to 5 days to spare), and load #50 before the end of 2019. Assuming downtime of 21 days in H2, it should be very easy for AK to offload another 10 times (in fact with offload cycles of 14 days, seeing 11 offloads is feasible).
The first 35 offloads delivered 17 Mbbls, so another 15/16 offloads before year end would bring 25 Mbbls extracted out of Kraken. Recent offloads have shown that AK can now produce above 40K boepd. Now we hope that this spurt in production can be kept and is not driven by DC4's initial production. So, let us hope the water cut can be kept at a level to keep producing above 40K boepd, consistently.
With the 3 weeks shutdown and assuming production can be kept at 42K bopd from 5 May to 31 Dec., I see production of around 35K bopd for K in 2019. But Londoner7's 33.8K bopd target is very reasonable because as he says stuff happens. The financial spreadsheet modelers, need to bear in mind that 15% of this production's FCF goes to pay Oz capital's loan, so is FCF with a recipient, and cannot be used to repay the RCF.
This brings me to compliment and thank londoner7 for all his efforts and outstanding work in providing a very objective figure for debt reduction in 2019.
Let me say that Lodoner7's prediction of around $200M of FCF net of paying the vendor loans and unwinding some of the working capital, is too close for comfort.
Why? Because out of that $200M you need to remove the part of the FCF that corresponds to the Mercury loan (that will have been paid now) and the FCF that is linked to 15% of Kraken, that is ring-fenced to repay the Oz loan (that is, FCF corresponding to 5K bopd is tied to this loan). So, effectively what is left to repay the RCF is not $200M but an amount around the $150M RCF repayment dues this year, of which $50M has been repaid. This means that if the POO drops further or if execution in terms of production were to fall below londoner7's forecast production ENQ will have to do another deal with Mercury, postpone payments to suppliers to meet its RCF obligation.
I am not concerned, but I fully believe that such deals would postpone a re-rating of the SP by the brokers.
GLA