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I think there is a still a few more dollars downside before WTI/Brent moves up a bit, possibly in December - this is largely contingent on what happens between China and the USA. If nothing positive happens, I can see WTI move to the low 40s.

There are way too many bearish factors at this time and loads of wall street banks are apparently on the wrong side of the oil trade by selling puts and these are all now in the many.

All of ENQ's collars for H2 2018 and H1 2019 would now solidly be in the money, as opposed to the realised losses in H1 2018.

https://www.bloomberg.com/news/articles/2018-11-23/oil-options-traders-turn-more-bearish-than-during-2014-crash?srnd=premium-europe

https://www.bloomberg.com/news/articles/2018-11-20/wall-street-playing-option-defense-is-said-to-speed-oil-plunge

KO - it was the hedgies taking speculative long positions right through the beginning of October and then beginning the massive unwind/new shorts with news of supply being OK and the trade wars not yet being resolved. Brent's now overshot to the downside massively. The equilibrium price level with the volume of production from the US is probably somewhere in the $65 to $75 range - we'll only get there if there is . progress on these 2 sticking points.

There's no doubt oil has overshot to the downside, just as it maybe did when it hit 86 just last month with all the Iran expectations. 70 to 75 would be about the range, I'd speculate. It's a plethora of bearish factors that have come home to roost

1. Numpty's trade wars and perceived effect on growth and demand
2. Strong dollar pushing down oil
3. OPEC and US boosting production at the same time
4. Weak Stock Markets driven by US corporate earnings dropping possibly next year, signalling slowing US growth which has really been the only growth driver across the world

At the very least, Numpty needs to strike a trade deal with China ASAP and that will have the effect of negating points 1,2 and 4 above. Positivity would return, dollar will fall and commodities go up and so will the markets. Combine that with a cut from NOPEC, that should push oil into the 70s by the year end. In the near term, in the absence of any action on either of the 1 and 3, we'll see Brent in the 50s, I'm afraid.

Like it or not, the moron in the White House holds all the cards...

Can we hold 20s is the next pertinent question? I'm not quite a clairvoyant yet..;-)

I meant to say - in early October, who'd have thought we'd be at these Brent levels so quickly.

It's down 3.5 now, Chilts...

We're now at the price levels where interest payments on debt will be PIK. Who'd have thought we'll be here in Early October?

Maybe Dow coming off more than a 1000 points these past 2 days with force Numpty's hand on Tariffs and that will be a positive for demand going forwards and of course, the OPEC supply cut would help.

Shale will be hurting in the sub 50s at this time - they just can't be FCF generating with their huge capex bills. Canadian WCS (Tar Sands) is around the $10 Barrel mark and they're suffering massive losses every day. It would be good if their hand is forced and they start cutting production.

Brent down 3 and half bucks now..

And Brent drops two and half bucks..not nice.

You talking of a sense of humour and that's coming from you, LMFAO...

If you did actually bother to 'read' WEny post - they mentioned oil stocks being undervalued in 2004 and snapping back 275% in the next few years in the runup to 2008. And that AB did well with the acquisitions like Magnus in the past few years when Brent was in the pits.

I suppose we can cut a non-english native speaker like WEny (Swedish if I remember right) some slack for not posting in 'proper' English and if that was indecipherable to you, then I'll put that down to the kind of 12 year old derampers like you employed by Marshall Wace for £5 an hour.

I'm mighty fine with my large position in ENQ and if you're invested in the stock market, you need to have an extra pair to take the ups and downs. Not that a 12 year old would understand. Lol...

Hostile - is that all you can come up with?

You asked WEny - who was quoting his/her positive views of ENQ and how they managed to increase production through the past few years and thinks that AB did a good job - if they're working for Enquest Investor Relations. Looking at your very insightful historical posts about ENQ, I was making an equally commensurate ask if you work for Marshall Wace. Why is that hostile?

Who are Enquest Investor Relations?
I'm an extra humble oil investor.

Do you work for Marshall Wace, TripleC?

We should get it before the end of November. That should give us additional colour on Debt, Kraken, Magnus Closing status. And Hopefully Brent would be stable too soon..

Chaps - based on feedback from IR, I'm expecting nothing more than 5 kbopd from Alma at this time. These are sunk costs and whatever ENQ can get from it, that's all we can expect realistically. The ENQ investment thesis is certainly not based on Alma, but with Kraken and Magnus. Let's move on from there shall we?

L3 - Nope, the $270 DOESN'T include an Magnus related $100 mill vendor loan repayment out of cash flows. Moody's have clearly stated in the upgrade report that the Magnus is assumed to close on 1/1/19. So, this is a 'clean' FCF based debt reduction for ENQ in 2018, from the assets that are currently on ENQ's books.

"Looking ahead, Moody's projects that incremental contribution from the 75% interest in Magnus (assumed to
be acquired on 1 January 2019) combined with the continuing ramp-up of Kraken should lift EnQuest's
average production by around 20% in 2019."

Pelle - Let's see in the Ops update as what volumes ENQ has hedged in 2019. Assuming a conservative 24 mbbls produced in 2019, even if they'd hedged around 5 mbbls in H1 2019, that'll be very nice. And if average price realised can be around 75, that'll be fantastic for ENQ. FCF at that price would be closer to $650 mill rather than the $450 mill that Moody's is forecasting.

Talking of Dividends - Brent at $100 next year and you may get your wish in 2020, but this is not likely.;-)

Best

Evening Pelle - If you've noticed in the Moodys write-up, they've included BP's vendor loan and cashflow settlement/profit sharing NPV in the total loan figure, even though from a real balance sheet debt viewpoint for banks/covenants, this amount won't be included in debt.

They've also said the following to state that debt would be reduced by $270 million in 2018. And yes, they're being conservative with production numbers at around 66 kbopd from what I can surmise.

However, this adjustment to debt will be partly offset by the reduction in adjusted total debt of around $270 million (net of the new $175 million Kraken financing) that Moody's expects EnQuest to effect out of free cash flow (FCF) in 2018

Right, Moody's expected net debt to be reduced by $270 million in 2018, and that would indicate a circa $240 million in H2. it'll be great if ENQ can get to that number in H2 and it's imminently doable with higher revenues.

Moody's have modelled a Brent price of 65 in 2019 resulting in a $450 mill FCF that reduces net debt accordingly. Oh. what we wouldn't do for Brent around 75 in 2019..

GLTA..

http://www.lse.co.uk/AllNews.asp?code=k2av67q8&headline=Moodys_Upgrades_EnQuest_Ratings_After_Magnus_Field_Buy_From_BP

Just like that, Brent is down a buck and a half in an hour. There's just no point second guessing these movements.

Enjoy your weekend all..

Evening MO,

I've just seen that HK is leaving AK for Scapa and the draught is now updated to 12. This one is a good 32 hour load, which is a bit more than usual, but I'll leave it to you to extrapolate the load, maybe after the STS is complete?

I hope you are holding up OK and not too shaken up by this sudden downturn in Brent/ENQ. I sold some of my loss positions in US shale and took an additional position ENQ yesterday at 24p. It is painful to see red all over my portfolio, but I suppose we just put our chin up and trust our judgement.

I can't fully understand why PMO is down 9% today, although I've noted that they guided to the bottom of their range for the year. I'm tempted to nibble a bit there tomorrow - I won't be surprised to see it open higher though. Do you have a position there?

Alma/Galia is probably chugging along at an average 4 to 5 kbopd rate, as indicated by IR. I won't be holding my breath for anything higher, TBH.

Best

Afternoon Romaron,

Yes, most of us do agree that Kraken is underperforming and I can only but speculate the reasons behind Neil and Richard leaving/shunted out, and it's possible that Kraken was a big factor behind them leaving. Is it possible that DC4 won't have any impact on additional production that Hitman speculates? - I'd rather that ENQ IR or Management tell us that. If there's a concern about this - someone should ask the question.

I concur with your assessment about AB and him having a lot of skin in the game. I'd speculate that a lot of his assets must be tied into ENQ and hence it's in his interest to ensure the long term performance of the company and the SP go in sync. There are a few things that out of AB or any other CEO's control and that's Oil price. They can only but hope that it co-operates with their profitability and debt reduction plans.

All of us do need to realise that the likes of ENQ/PMO/TLW are leveraged plays on Brent and as long as oil prices stay at these or slightly higher levels, then debt reduction will come about through higher production/execution. At this time, the fear of lower oil prices is drowning out most of the fundamentals for all these players. The carnage is worse among the medium/small shale players - many of them down over 50% over the past 6 weeks. They are getting way lower revenues than we are..