Member Info for Dumbly

Romaron, re your 06:02 post, you’re right, i am looking for something not there in terms of projecting a forward valuation of Bressay based on the 2 tranches EnQuest purchased. The commercial details of the 2nd tranche, tho, should be available somewhere as both sellers and the buyer are publicly traded companies. Going forward, yesterday’s deal does allow some sort of valuation to be calculated, but as we don’t know the value-split between the field and the FPSO we can’t use it to accurately calculate the value the parties ascribed to the field itself.

Subject should have read “Details of the 60% of Bressay purchase”

I am trying to make some calculations.

We know:

-EnQuest in Jan 21 acquired from Equinor operatorship and 40% of Bressay for £2m upfront and $15m upon a FDP approval. (In hindsight this looks a massive bargain)

-In late 22 EnQuest purchased the remaining 60% of Bressay from

Equinor and Harbour.

-Dec 23 EnQuest sells to Rockrose 15% of Bressay and EP for £46m.

I cannot find the financial details of the 60% sale late last year does anyone know the details? We don’t know the field/EP split of the £46m and i will assume 70% for the field and 30% for the FPSO, is that reasonable?

As has been said, the conditions of the Rockrose purchase indicates well the total current value of Bressay/EP. A further arms-length sale of a tranche would solidify the valuation, and likely higher.

Worth having a read over the buyer’s comments too:

“Francesco Mazzagatti, CEO of Viaro Energy, commented: “We are grateful to the team at EnQuest for the smooth negotiation process on the Bressay acquisition. Long considered one of the largest developments on the UK Continental Shelf, Bressay is an essential component of the country’s effort to secure viable energy sources in the long term. Apart from its significant potential to contribute to the UK’s energy security, ensuring the development of Bressay is crucial in order to encourage more investments in the UKCS, where we hope the tax regime will soon stabilise.”

https://www.rockroseenergy.com/viaro-energy-signs-spa-with-enquest-to-acquire-15-stake-in-the-bressay-field-development/

B&B as already licenced fields are also more defensible politically. Maybe I give this too much value but, for example, B&B’s 2C reserves are only 30% or so shy of Rosebank’s, and B&B should be able to proceed relatively below the political radar.

Indeed, romaron, i was thinking the same thing, it shows how EnQuest Producer will be put to productive use, as otherwise why tie with Bressay a slice of it’s ownership?

This deal, as with the de-listing, is a stepping stone to bigger value-generating things. This is the bigger strategic message. Plus on a tactical level it has brought shareholder returns closer. I’m surprised the 15% jump did not hold.

Romaron, pape, i made my last post before seeing romaron’s 11:13 post. I understood EnQuest owned 100% of Bressay but your post, pape, made me wanna check this.

Papegoja, good question, 15% of Bressay or of EnQuest’s share of Bressay. I wonder why on the EnQuest website it says “EnQuest is the [not “an] owner and operator of the Bressay field having acquired an interest in it from Equinor in January 2021.”

Reflecting on what someone underlined earlier, B&B together have some 245mb of net 2C resources. That’s an enormous amount (not sure if a completely valid way of visualising it, but is 34,000mboe/day for 20 years) and the path to extraction it is becoming clearer all the time. And, as I understand, without any new primary level, and attention grabbing, licencing requirements.

Hedging

§ For the last two months of 2023, the Group has hedged a total of c.1.5 MMbbls. Of this total, c.0.7 MMbbls relates to put options with an average floor price of $60/bbl, while the Group have also entered into c.0.8 MMbbls of swaps at an average price of $88/bbl

§ The Group has hedged a total of c.3.5 MMbbls for 2024 and c.0.2 MMbbls for 2025, predominantly using put options at an average floor price of c.$60/bbl

Looks like the agreement on the wf tax was watered down once implemented in the countries.

https://www.euronews.com/my-europe/2023/10/30/windfall-taxes-on-european-energy-companies-weakened-by-intense-lobbying-says-new-study#:~:text=In%20September%202022%2C%20the%20EU,over%20the%20previous%20four%20years.

Thanks, Modestus.

I did/have not followed what the EU did regarding windfall taxes. Was there an EU-wide windfall tax (how would that be policed and collected?) or was it an EU-wide policy agreement then requiring each country to implement it as they saw fit?

Yes, good spot, Mod.

Do you have a link to the review pls? (I searched but could not locate it.)

Thanks.

Aim, it is not “if” regarding the link to the gas price. BOTH price triggers have to have been breached downwards for 2 consecutive quarters for the EPL to fall away.

Stevo, thanks, and if you carry on like this I, and a few others, will soon feel obliged to ask you to submit your fees for advice provided😊.

Stevo, thank you for your response today at 1324. Very helpful.

As you pointed out at your point 3, I mistakenly calculated RFCT/ST on the figure after EPL had been applied instead of on the full taxable profit, irrespective of the EPL.

On the 50% of losses restriction, my understanding is this is a general rule applicable to all companies, whatever their activity. I imagine you are, but could you confirm pls you’re sure on your point 2 that the 50% restriction of loss utilisation, for the reasons you explain, does not apply in the O&G sector where losses are utilised on the same activity as where they were incurred?

6ish years falls, just about, within a reasonable definition of “several”.

I’d like to understand whether IR is being as sufficiently clear/accurate as I would like with their comments regarding tax losses and their use.

Craig states “at 30 June 2023 we had c.$2.3 billion of historic tax losses immediately available as an offset to taxable profits, while we expect to satisfy the conditions necessary to book the $1.3-1.4 billion of losses associated with the Bentley asset at the end of 2025 or into early 2026. Utilising the cash flows from our current portfolio will certainly take several years to extinguish these losses but we continue working to accelerate the benefit of these losses through accretive M&A."

My understanding is

1. these “historic tax losses immediately available as an offset to taxable profits” represent approximately $920m of tax credits

2. the amount of group profits which can be relieved by carry forward losses in an accounting period to 50 per cent of (group) profits over £5m,

3. Utilising the cash flows from our current portfolio a reasonable estimate of annual EBIT going forward without any M&A could be $500m,

4. after EPL at 35% this would be around $325m,

5. RFCT/ST at 40% on 50% of this $325m could be offset by using $65m ((325/2)*40)) of the accumulated tax credits

6. $920m of accumulated tax credits/$65m used per year = 14 years

Craig states “utilising the cash flows from our current portfolio will certainly take several years to extinguish these losses”. “Several” in my mind means in the range 3-5, yet it looks to me that if nothing changed it would be much more accurate to at least say it would take “many” years (up to 14 according to my calculation) to extinguish the historical losses.

Are my calculations and conclusions ballpark accurate? It may seem like this is nit-picking and about semantics, but my objective is to understand whether IR, and the company in general, is as being as candid and clear as I would like regarding the tax losses/credits and their possible use and value.

Stevo, corporate tax losses at 31/12/16 were $2,894bn, at 31/12/17 2017 $3,121bn and at end 2018 $3,225bn.

(maybe each each some pre-existing tax losses are used and new tax losses added?)

Oxygen, your comment “why now appoint a new CFO, who will have sought security of tenure, given it transpires Salman Malik had a natural route elsewhere” is logical and reasonable. As well as a past as as an energy analyst, JC also has extensive M&A expertise. Could EnQuest be looking more to buy than be bought, predator not prey? Then we have Malcy’s endorsement Loch just posted about. Interesting and positive feeling times indeed. By end Q1/24 all should be clearer. OK, that comment is also only speculation 😂

"Welcome to the Harbour Energy 2023 Half Year Results presentation. The live webcast took place at 09:30 BST on Thursday 24th August 2023 and the ondemand replay is now available to view."

https://www.investis-live.com/harbour-energy/64d0d05d0120c60d00dae9fd/hdrt

Yesterday at 1457 I posted on the Harbour LSE board asking for comments regarding a possible Harbour/EnQuest link-up. A couple of posters responded as can be seen on H's message board,