Member Info for Dumbly

Megla, imagine you buy a house and pay 500,000, but the house has a safe inside with 250,000 in cash and which comes with the purchase; how much have you really really paid? Now, imagine you buy another house for 250,000, but it comes with an outstanding loan of 250,000 which you take on; how much have you really paid for the house?

Anyway, once/if the deal details are known, everybody can make the decision they consider appropriate.

Yes, good video summarising the situation.

But… he says that the UK’s increased net imports of oil and gas: 1) leaves the UK more exposed to volatile international prices and 2) this has had a big impact on domestic prices. I don’t understand how either of these things is correct. (This point is related to the part of the recent interview between Wilfred Frost and Miliband where Frost, erroneously in my view, argued the EPL increases oil and gas prices (and electricity prices)).

Am I missing something? All the rest I agree with, but putting in something so fundamental which is incorrect risks to reduce the credibility of the overall presentation and message.

Sparhawk, Enterprise Value is more relevant than Market Capitalisation when comparing and structuring a RTO/Merger deal as the one proposed.

DtP, A deal with clauses conditional on oil prices is possible. A deal with clauses conditional on fiscal (tax) conditions is next to impossible. Oil prices and UK fiscal conditions would, grosso modo, benefit or damage Serica and EnQuest to a similar degree.

EnQuest’s potential, thanks to international diversification (Malaysia, Vietnam and Indonesia), and through its “Green” activities (Veri Energy) is far superior to Serica’s. Difficult to value though.

Bottom line; the two companies have a similar current value and the scale a merger would provide would benefit both companies and result in a combined value greater than the sum of the two separate values.

Kraken, Miliband is correct in what he says in this clip, that the price of oil and gas is set on the international market and UK tax rates don’t impact on those prices. He’s probably happy to be attacked on this point as it gives him the chance with his response to score into an open-goal. Later in the same interview is when he said: “The truth is that what it [the 78% tax rate] defines in a UK context is how investible propositions in oil and gas are. That’s why, for example, The Treasury has been consulting with the industry in the North Sea on the precise rate [or way] to set the tax. Obviously, tax is a relevant question, but I’m afraid to say when you say if tax was lower the price [of oil and gas] would be lower, you’re wrong on that”.

Miliband frequently states that “oil and gas will continue to play an important role in the energy system”’ He said it again yesterday in London at the Future of Energy Summit. At what point will this “important role” be given the chance to be met to a greater degree by home-drilled hydrocarbons? Reeves while in the US now will likely come under pressure to make changes to support the North Sea O&G industry. Is it too much to hope that following the 2 consultations closing end April and end May that a statement could be made of the intention to introduce the EPL successor regime earlier than 2030?

Miliband triggers me, as you may have noticed 😊. He knows he’s losing (lost?) the argument that UK’s NZ target will impact the climate (what he now calls “the old case”), so he’s twisted his spin so the number one reason now for NZ is “the new case for energy security”. Energy security without oil and gas does not exist, and having more oil and gas from within one’s own border greatly increases this security objective. He’s also attacking Farage, saying he has an “ideological and extreme view”. Pot, kettle! Miliband really has no shame. Next, he will say the main reason for NZ is world peace and to eradicate poverty.

Miliband says his number one aim for the “Energy market reforms” which he said is “extremely complex” and “going to take our time over this” is to reduce energy bills all across the country. It would not surprise me that to do this, and to nicely mask the cost-impact of renewables, costs currently included in electricity pricing will be removed and placed elsewhere. Reeves would have something to say about this, as costs currently in the electricity bills would have to be added to new taxation elsewhere. For sure, Miliband will try to do everything to ensure he comes up smelling of roses and achieving his targets. I can’t see Starmer replacing either Miliband or Reeves. The tension between the two can only increase.

Plus, the current electricity pricing system provides a nice stealth tax for the government, as tax raised from excess profits from some of the electricity generators goes into the general tax pot whilst infrastructure expansion costs are added onto the lecky bill. All, whilst the public is fed the diversionary message that the blame is due to the oil and gas producers with their obscene profits, and the EPL hits mainly the independent UK focused companies and not the oil giants. This suits Dale, the Pink Octopus fellow and co, The Treasury, fills the Labour Party’s coffers from complicit donors, and… screws the consumers, the economy and the country in general. Surely this charade, this cover-up, cannot continue much longer.

Stevo, the logic why Miliband does not decouple renewables from the price of gas could be that it would risk to expose the real costs of renewables and stop him being able to use the price of gas as his flawed explanation why lecky in the UK is so expensive. This could also be why, as explained in the interview, he wants to think so carefully and slowly about electricity pricing reform.

The whole 11:35 minutes of Wilfred Frost’s interview with Miliband is worth watching (I can’t find how to copy the link, but it’s on the Sky website). I take some encouragement from 10:15 when Miliband says:

“The truth is that what it [the 78% tax rate] defines in a UK context is how investible propositions in oil and gas are. That’s why, for example, The Treasury has been consulting with the industry in the North Sea on the precise rate [or way] to set the tax. Obviously, tax is a relevant question, but I’m afraid to say when you say if tax was lower the price [of oil and gas] would be lower, you’re wrong on that”.

OK, we know this consultation is underway, but it’s good to hear Miliband reference it and acknowledge that with a 78% tax rate investment in oil and gas in the UK is compromised. The encouragement I take is that this acknowledgement, something Miliband did not have to make, could also mean acceptance that the tax rate has to change before 2030.

I sensed desperation from Miliband in this morning’s interview: https://www.bbc.co.uk/sounds/play/m002b6zx (from 2:15:20). Going forward this interview needs to be used as The reference point for his policy. His statements, arguments and targets need to be taken apart piece by piece by those with the knowledge.

Miliband, essentially, is correct that “The price of oil and gas is set on the international market”, so I don’t see this as how to attack his plans. A sounder counter-arguments as to why electricity is so expensive in the UK is the dash to renewables because of their intermittency and the back-up and/or storage requirements this creates, the infrastructure needed to get power from where generated to where needed, the cost for which is placed on electricity costs and is not coming from general taxation. It’s the speed of the dash to renewables, without the certainty that renewables plus nuclear plus interconnectors will be able to guarantee availability of power when needed. My reading of this all or nothing . betting the house, “there is only one answer” type of approach is because Miliband knows if he admits any chink in his argument that it will be prized apart and his policy torn apart. Interestingly, he has now changed his case for clean power by 2030 to be for first for energy security reasons, then climate, then jobs. I’ve noticed he frequently uses the phrase “don’t take it from me”. He used it again this morning to say the previous government said “more North Sea drilling will not make a difference to prices [of oil and gas]. Again, essentially this is correct, but these prices are, contrary to what Miliband says, not why electricity is so expensive in the UK. Let alone that the 2030 targets will not be met, what happens between now and 2030? Prices will go up, investment and jobs, lost and so on. The man and his policy is probably the number one current danger for the UK. Reform knows this.

That’s a “big” interest:

Subject to the execution of the PSC, EnQuest will be designated as the PSC operator with a 40% working interest, working with its joint venture partners, the Tangguh Joint Venture (40% working interest, comprising BP Exploration Indonesia Limited, MI Berau B.V. (an INPEX and Mitsubishi joint venture company), CNOOC Southeast Asia Limited, ENEOS Xplora Inc., Indonesia Natural Gas Resources Muturi, Inc. and KG Wiriagar Petroleum Ltd (a Mitsui company)) and PT Agra Energi Indonesia (20% working interest).

Interesting indeed, bots, although the more pressing issue is the fiscal conditions. Reversing the ban on new licenses without a suitable successor fiscal regime to replace the EPL/ESIM before 2030 would not attract investment.

Https://www.newstatesman.com/politics/economy/2025/04/could-north-sea-oil-unlock-a-us-trade-deal

The consortium of 8 companies awarded the Gaea and Gaea II blocks in West Papua must have agreed terms between themselves. Presumably, Serica know the terms. Production will be years away, but EnQuest's participation must add value to the company, is this consortium detail not materially important for shareholders to be able to make an informed decision regarding the anticipated RTO proposal? When could these be disclosed publicly?

Pete, what part of the relevant RNSs make you conclude it was EnQuest who approached Serica and is driving the merger? (Although, at this point and considering it is a "friendly" RTO, it probably now makes little difference who approached who.)

Those estimates/potential reserves are a lot of hydrocarbons. If accurate and if extracted over 30 years and if divided equally by the 8 consortium members they would represent for each member… 206,000 boe per day.

OK, a lot of “ifs” and we don’t know the details within the consortium, but I am just trying to get my head round what such number estimates could mean.

NewKOTB, good idea about ML, but David Turver does not think Martin Lewis is ready to challenge the Establishment view on this yet.

Renewables (and gas) misinformation on the BBC:

https://open.substack.com/pub/davidturver/p/renewables-misinformation-bbc?r=gdn8q&utm_medium=ios

Yes, Cardinal, anything but oil and gas, but even worse, gas prices are being used as the culprit to (try to) explain the UK’s high electricity price. This is again misleading and manipulating people. Instead it is the result of the policy of successive governments, now made worse by Miliband* for his own benefit not the country’s.

Successive governments have:

1. Used taxation of excess profits from electricity generation from renewables, due to wholesale price being set by gas price, for general use and not fed back to reduce the price for electricity consumers.

2. Dashed to arbitrarily set unrealistic Net Zero targets together with inappropriately subsidising renewables without due concern for the consequences of timing and suitably bridging from the legacy energy mix to the future energy mix.

3. Funded infrastructure from electricity bills not general taxation

Far from the villain of the story, gas is actually the saviour for renewables’ intermittency, and the insufficient energy storage capacity and inability to get electricity from where generated to where needed.

*Security and economic growth are the government’s two top priorities. Energy IS the economy. Miliband controls UK energy policy. Is is therefore Miliband who controls (cripples) the economy. Will Starmer take back control?

Upomega,

Both oil and gas prices need to be below their respective thresholds for the EPL to cease.

“This measure legislates for the Energy Security Investment Mechanism (ESIM), which will ensure that the EPL ceases if the 6-month average price for BOTH oil and gas is at or below the ESIM threshold prices (71.40 dollars per barrel for oil and 54 pence per therm for gas) prior to the EPL sunset date. These thresholds are based on a 20-year average to the end of 2022. These thresholds will be adjusted from 1 April 2024, and annually thereafter, by the preceding December’s Consumer Prices Index figure.”

I’d imagine if there is the intention for a policy change to better encourage O&G UK production that to avoid opposition at multiple points that the government would want to get all the information, regulation for consenting of already licenced fields, fiscal changes, maybe even a reversal of the ban on new licenses, out in one go. The environmental consenting rules are expected in “the Spring”. The government’s “consultation to develop a predictable fiscal response to future oil and gas price shocks” closes on 28/5/28. The timing therefore does not match to make a comprehensive announcement covering consenting/licencing and fiscal policy. Perhaps when they announce the consenting/licencing rules they could announce that the introduction of the successor regime to the EPL will be brought forward from 2030. They could spin it that, given events, the ESIM is no longer fit-for-purpose blahdy, blahdy, blah.