The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Pelle,
how do you come up with the 150MUSD capex?
From what I gather of your numbers the big change from this year is the capex going from ~250-300 to 150.
That is around 5$/barrel reduction and today ENQ have break even around $60.
What are the other changes that bring it down to 40$?
Looking at the private sales
ExxonMobile 170k for 4BUSD
Shell Danish Assets 40k 200M reserves for 1BUSD
It seems that ENQ is reasonable prices with EV of 2BUSD and 70k production.
There are ofcourse alot of ifs and buts, since not much is known about the the assets.
But two data points at least point that ENQ valuation is in the right neighbourhood.
It can still be dirt cheap, but might be that oil just is dirt cheap at the moment.
Exxon seems to be selling their Norway Assets for 4BUSD and the have production of 17k production. No information on reserves.
Could anybody explain how Exxon can sell at this price when Enquest has EV of 2BUSD and 70k production.
https://www.reuters.com/article/us-exxon-mobil-m-a-norway-exclusive/exclusive-exxon-agrees-4-billion-sale-of-norway-oil-and-gas-assets-sources-idUSKCN1VQ23W
I came across NOR and it seems quite similar to ENQ but at a better value.
They bought Shells danish north sea assets. The deal has just finished.
60K production and 200M reserves
EV ~1300MUSD
Market Cap ~630MUSD
16$ opex/barrel
10$ capex/barrel
Comparing with ENQs ~2500MUSD EV this seems to be quite cheap company with less leverage.
Thoughts?
They bought the assets for 1.11BUSD financed by RI of 400MUSD and the rest with bankloan and convertible bond issue.
Interstingly they also have a fixed price agreement in place for 80% of production until sep of 2020. This was agreed Q4 2018.
No information on the details and price for the fixed price.
Company presentation:
https://www.noreco.com/uploads/documents/190731-Noreco-Company-Presentation.pdf
http://www.premier-oil.com/premieroil/media/press/trading-and-operations-update-25
Hedging at 72$ implies they did the hedge when POO was above 80$
Faroe Petroleum has an EV of 635 MUSD and reserves that are around 100 mboe.
Enquest has EV of 2300 MUSD and reserved that are around 300 mboe.
So Faroe is valued at 6$/boe and Enquest at 8$/boe.
This might explain some of the difference in valuation.
They said three-way collar so if the collar is not on the upside
it shouls be on the dowside. Which means that they will only get Brent price if it gets below another floor.
I find it strange that they did not put the second floor in the OU.