Member Info for Dumbly

Romaron, I am not sure the TTT (Trump Tariff Turmoil) calls automatically for a pause in progress towards a RTO. The reasons and benefits should remain equally valid. It could even be that TTT makes the RTO even more pressing/important.

Separately, and unless I've missed something, I am surprised following TTT that there has been no comment from industry leaders underlining the absurdity of the EPL and the damage it is and will cause, and calling for urgent remedial action. Could this be a sign that they know something is in the works and therefore not the right moment to escalate the rhetoric?

Thanks for the suggestion, oct23. I understand at a basic level how swaps work and how they are used for hedging by the company. I was not so interested in understanding more about swaps but instead how what the company has done translates into actual financial protection. My concern, as you also stated, was that without more detail we could not know this. Instead, IR by staying they "have locked in $72/bbl for 3.7 million barrels of production, irrespective of timing during the year" gives me confidence that the financial instruments they purchased can give financial protection when the price of Brent is below $72 for up to around 25% of 2025's production.

L7, I agree with you. Sorry for any “confusion”, and thanks for the help to understand. Yes, the swaps effectively sell 3.7 million barrels of EnQuest’s production at $72/bbl. The company says while these instruments are currently weighted toward the latter half of the year, they could choose to take the benefit earlier, against current production, or leave it until later in the year, at their discretion. The main point is that they have locked in $72/bbl for 3.7 million barrels of production, irrespective of timing during the year. I now have peace of mind that I understand the company has a hedging position to be able to weather a fairly prolonged Brent below $72. Hopefully this has been useful for others to know too.

Sorry for the multiple identical posts - WIFI/Internet connection problems.

Good morning, Oct. I get that hedging provides some insurance, but what I am after is being able to “interpret” the hedging in place to understand, ideally to quantify, the benefit it could be providing when Brent is below $72. The message I am getting is “don’t go there”, meaning without being on the inside and knowing all the variables it is close to impossible to know what I am after. This would mean that when us PIs read what has been hedged at what conditions it is sort of meaningless for us.

Good morning, Oct. I get that hedging provides some insurance, but what I am after is being able to “interpret” the hedging in place to understand, ideally to quantify, the benefit it could be providing when Brent is below $72. The message I am getting is “don’t go there”, meaning without being on the inside and knowing all the variables it is close to impossible to know what I am after. This would mean that when us PIs read what has been hedged at what conditions it is sort of meaningless.

Good morning, Oct. I get that hedging provides some insurance, but what I am after is being able to “interpret” the hedging in place to understand, ideally to quantify, the benefit it could be providing when Brent is below $72. The message I am getting is “don’t go there”, meaning without being on the inside and knowing all the variables it is close to impossible to know what I am after. This would mean that when us PIs read what has been hedged at what conditions it is sort of meaningless.

Good morning, Oct. I get that hedging provides some insurance, but what I am after is being able to “interpret” the hedging in place to understand, ideally to quantify, the benefit it could be providing when Brent is below $72. The message I am getting is “don’t go there”, meaning without being on the inside and knowing all the variables it is close to impossible to know what I am after. This would mean that when us PIs read what has been hedged at what conditions it is sort of meaningless.

Good morning, Oct. I get that hedging provides some insurance, but what I am after is being able to “interpret” the hedging in place to understand, ideally to quantify, the benefit it could be providing when Brent is below $72. The message I am getting is “don’t go there”, meaning without being on the inside and knowing all the variables it is close to impossible to know what I am after. This would mean that when us PIs read what has been hedged at what conditions it is sort of meaningless.

Thanks, L7. Sounds like more info is needed to know the financial effect of the hedges. If it is like you assume it could be, that hedging is spread through the year, then should Brent be below $72 for a prolonged period the beneficial effect get's diluted as in any given month only about 25% of production would be "protected". I'll wait to see what others can add and then probably ask IR. It seems reasonable to me that IR provide a transparent explanation of the effect of the hedging.

We have covered this before, but given the circumstances, help please again understanding what EnQuest’s hedging position means in practical terms.

“For 2025, EnQuest has hedged c. 3.7 MMbbls of oil with swaps at $72/bbl and a further c. 1.0 MMbbls with put options at a floor price of $60/bbl.”

What is the financial effect of these financial instruments? Take the “3.7MMbbls of oil with swaps at $72/bbl”. 3.7MMbbls is about 3 months production. At its simplest, does this mean that even if up to 3.7MMbbls are sold below $72/bbl, that due to the swaps purchased that the effective financial effect is the same as if the bbls were sold at $72? I understand the bbls will still be sold at the price agreed between the contracting parties, it’s the financial effect of the swaps I’d like to understand. Does it, in effect, mean EnQuest could weather up to 3 months with oil below $72 yet still effectively benefit from $72/bbl?

I could also ask IR, but probably someone here can explain. TIA.

We all know the economic irrationality and falsehoods of the EPL/ESIM. Heads the government wins, tails the industry loses. The government knows this too. But now it’s tails the industry loses and the government loses. This policy since it started, and the new licencing ban and uncertainty of licencing and environmental regulations for existing licences means investment has been what it has been and will be. Low oil prices now will also impact investment worldwide and will inevitably lead to higher prices later. As things stand, the UK will find itself on a net basis importing more and more hydrocarbons at a higher price. And NS jobs and supply chain will have withered to a point of no recovery. The government needs to urgently, like now, intervene in relaxing the EPL/ESIM, clarifying the licencing/environmental regulations, and announce defining the successor fiscal regime will be accelerated/fast-tracked and introduced sooner than 2030. Something has to be done to give the industry something to grab hold of to stoke confidence. Maybe even announce, given events, that the new licences ban is also up for review. When the situation/information changes, the decisions need to change too. I’d like to think the pressure on the government to act must now be so intense that they have to act. Blunt and direct statements are needed from the industry.

Https://www.msn.com/en-gb/money/other/drilling-in-the-north-sea-is-ethical-and-labour-must-scrap-net-zero-claims-climate-author/ar-AA1CcDPq?ocid=msedgntp&pc=HCTS&cvid=0d69d81022fd4cca92710878194e84da&ei=27

There’s yet another reason to reduce longer-term dependency on LNG imports, including and especially from…. the US.

Sasa43, a combined company would enter the FTSE 250 with all the benefits that would bring. As I understand, the merger would also allow 50% of Serica’s profits not allowable to be offset by their own tax losses to be offset utilising EnQuest’s losses. If the deal goes through the total NS tax losses should be around $5bn, so the assumption is that to accelerate the utilisation of these losses that other acquisitions of profitable NS production, without or with little associated tax losses, is planned. The scale of a combined entity should provide sellers with the confidence that decom liabilities would be honoured. EnQuest also has a FPSO looking for a use and the enormous potential of the Bressay and Bentley fields. EnQuest also has a renewables/CCUS entity, Veri Energy, with big potential, and which add further diversification and show intent in this area. Then there are the other synergies both parties would enable. As you say, the terms are key, but the potential is certainly there for all to come out ahead of where they are now.

As I understand, Friday could bring confirmation a firm offer will be made, with or without more deal detail, or a communication that no offer will be made. If both parties agree and the take-over panel agrees, there could also be an extension of the period to decide whether a firm offer will be made.

Mommur, even worse than than. From lows of 7/3/25 to COB today, EnQuest is up 44% and Serica up 12%.

Https://www.insider.co.uk/news/chambers-north-sea-taskforce-calls-34949891?int_source=amp_continue_reading&int_medium=amp&int_campaign=continue_reading_button#amp-readmore-target

Computer says:

Under Rule 2.7 of the UK Takeover Code, the offeror is generally required to make a formal offer within 28 days of announcing a firm intention to do so. However, if both the offeror and the offeree company mutually agree, the deadline for making the formal offer can indeed be extended. This extension would typically be subject to the consent of the UK Takeover Panel, which regulates the process and ensures that the integrity of the timeline is maintained. So, while the 28-day period is the standard, an extension can be granted if both parties agree and the Panel approves it.

Strange no mention in the IC article about the $550m of transaction-ready liquidity or the $3bn plus of NS tax losses asset.

The company should be looking to use soonest a good tranche of that liquidity to buy profitable NS production to utililse faster the tax loss asset? Taking on a limited amount of extra debt would be justifiable if it is to purchase profitable NS production. With B&B in mind, production scheduled fo decom around 2030 (parts of Harbour and Apache, should fit the bill. And then there’s Waldorf).