Member Info for epiphany121

I don't get into the day to day price movement predictions on no corporate news, but it's great that Brent has comfortably moved above $62 in the last few minutes..:-)

ENQ will get going upwards soon enough..We'll be comfortably generating decent FCF at these levels too.

It's good to see Brent back at 62 after getting down to the 58s this week. With the OPEC cuts negating the still surging US production, we should be comfortably at or above the $65 level we need to start breaking down the debt in earnest. As KO stated based on inputs from IR, we do hope that AK's teething issues in the past couple of months are behind us.

GLA..

Check out this article on Oil price. https://oilprice.com/Energy/Crude-Oil/Heavy-Crude-From-Glut-To-Shortage.html

The Heavy Sweet (Low Sulphur) crude that comes out of Kraken may well get a premium over Brent, as opposed to the discount we'd been getting in 2017/2018. And if the 2020 IMO rules do kick in (and not pushed back as the US is insisting), then we'll certainly see this happening.

If indeed, as KO learnt from IR, that the mechanical issue with the FPSO is resolved (and I hope that they did undertake unscheduled maintenance during this downtime), then we can take that as a positive to counteract the 2 downgrades we had last week.

Best

AB would've thought that he was communicating a sign of positivity to the market when he made that purchase in November. Obviously, he didn't content with AK issues in December and the analysts have taken note and added to the overall negative views towards the SP in the past week.

The shale players have actually done a lot better in the past 3 weeks than ENQ or PMO, and that says a lot!!!

It's literally 3p away. Sure, it can..sadly.

GKB,

Kraken is still our largest field, 2P reserves-wise and the largest source of saleable oil in a given year that it becomes an important piece of the jigsaw for ENQ. If the FPSO is struggling to maintain a steady 35 to 40 kbopd, then it just gives more room to the naysayers that ENQ can't execute these type of projects and the massive investment just isn't warranted. It brings out all sorts of execution questions such as should they have gone with a NS novice like BUMI for a heavy field like Kraken or someone who knows the NS oil fields well like SBM offshore, which is what PMO did with Catcher. Debt reduction is still paramount for us and higher the production, the faster we can deleverage when Brent is at or above the mid-sixties.

Mr. Market is still broadly concerned about how well the AK FPSO will perform. We have anecdotal evidence that it's now extracting at circa 25 kbopd or thereabouts, and that isn't a great place to be in. I'm counting on this being a temporary event as we were doing fine till the NS storm hit that region in the middle of December. The lowered production is occurring just as Brent hit these lows, and so that may not be too bad. ;-)

I believe that the numpty may have just come around to the thinking that avoiding a full-scale trade war with China may help his much vaunted US economic prosperity indicator - Dow Jones Index (DJIA) . As long as that trade war is avoided, I can see Brent in the 70s by late Q1/Q2. That gives us a lot more cushion with FCF generation, even if AK is still under performing. Once we're at those levels, the points you bring up - FCF/Hedging - become very relevant to ENQ's valuation.

Best

Cheers, Jan.

To the oil bulls from Morgan Stanley.

https://oilprice.com/Energy/Oil-Prices/There-Is-Still-Room-To-Run-For-Oil-Prices.html

Chilts, GKB and Jan,

Broadly agree with what you say. The under performance of AK is a big factor in ENQ's SP not picking up off the lows. We've had 2 downgrades this week and as much as I like to ignore analysts' SP calls (they're pretty sh**te and backward looking anyway from a commodity price viewpoint), they do have an impact on the SP in the near term. I'm just as frustrated as most share holders are and we know that positives are being ignored at this time. I'd agree with whoever posted that we'd be at 16P if Brent went down to $50.

I'm less concerned about Brent - I think that'll head back above 65 in the next few weeks. US and China (for both their economies' sake, will strike a deal). Perception of growth and demand is a bit more potent for oil prices than supply cuts/disruptions. I'm definitely concerned about Kraken though. We just can't sweep that under the carpet and say all's well. It's maybe crawling along at 25 kbopd rate at this time, I'd reckon, given what we saw with the last load.

It's probably a good idea to do a maintenance shutdown the beast from east hits the UK in a couple of weeks' time (as we know it's been hammering the continent at this time) and see if the problem with the FPSO can be resolved. That's a hope.

Good weekend all.

profit taking...

GKB taking the piss..;-)

However, the reality is that the correlation of the SP to Brent seems broken as a result of 1. these downgrades and 2. AK issues. Even though we over performed the likes of PMO's SP on the way down to the bottom around the 24th December from the beginning of October, ENQ is now running behind them as Brent recovers. PMO is up 50% in the past 2-3 weeks, and we're up like 17%.

I have no doubt we'll catch up eventually - we'll just need a bit more of a helping hand from Brent and AK...

Yes, indeed Pelle. Hindsight is a wonderful thing. Although, I remember posting here late September/early October hoping that they should have hedged substantially for all of 2019 given that all months' in 2019 were above 80.

I didn't suggest this to IR, but even if I did I doubt it would've made a difference as most of the market was shouting $100 at that time. Given that the oil market was looking up at that time, put option premium wouldn't have been substantial and would've locked into net $75 floor for all of 2019. 70% hedge at those levels would've been spot on.

I doubt we'd get back to those levels in 2019, but .....;-)

Evening Pelle,

As per the Magnus CPR projects, Opex and Capex for 2018 is approx.119 mill = 29.75 mill for the 25%. Half of that for H2 approx = circa say 14 mill. That gives us circa 34 mill net cash flow.

We'll know for sure the next month in the Ops update or maybe in the Annual results in March.

Hedging loss is a financial loss and doesn't impact the gross revenue realised from the 25% Magnus stake. The NET cashflow (gross revs -capex -opex) from these sales is what is used to pay off the vendor loan.

Pelle - the paydown was 27 mill in H1 with an Average Brent of $71. H2 average Brent price was $72. I can't see the entire $39 mill being paid of H2 - we'll probably end up with circa $10 mill contingent provision on the Balance sheet. If it did stay higher in Q4, then maybe yes we'd have cleared off the vendor loan..

Yes, right. All these 'idiot' analysts claim not to understand the complicated financing and waterfall structure in the magnus acquisition and don't seem to give that much of a value. Unfortunately, AK isn't in a good place and that's another sword over ENQ's neck.

We'll have to see in the ops update where we end up with net debt and an update on AK. As it stands, Brent will be the only meaningful driver for ENQ's SP in the next few weeks.

That is moving ENQ to the downside today. Revised target of 16p. They've kept ratings on PMO/TLW, but lowered price targets a bit.

Haven't seen the full notes yet, but if anyone does, please post. I'm assuming they'll harp on about issues at AK, which are known anyway. Let's hope that oil doesn't fall a lot, although it is due technical move down after a string of up days since after Christmas.

Nice...

Filter out Ponzi. You got to do what you need to do to a Ponzi - avoid and preserve your sanity.

Here's the link. https://twitter.com/LiveSquawk/status/1083040267589029890

I get these updates in my IG account

Al-Falih saying that they may have additional co-operation with NOPEC to bring the market back to a better balance if needed. That was a key trigger for the spike.