Member Info for epiphany121

When we model revenues for H2 (and the future), we need to take the PM8 entitlement barrels into account and not the WI production of circa just over 8k boepd that we saw as a headline number in H1.

Spot on, L3. It'll be 54% assuming that all of the current 2P reserves are extracted over the next few years, and that's not accounting for additions to the 2P reserves as a result of new drilling next year (RI is funding 2 of those wells as we know).

Lol..yes, certainly does like BP has given a lot away to ENQ with the Magnus deal. I hope you make more out of your ENQ investment to compensate for that..;-)

Cheers for that reminder, MO. That's indeed good and way better than our other large assets.

From the earnings call, the entitlement barrels from PM8/Seligi is around 70% of our 50% WI, and that gives us a net 35% of PM8's production from a revenue viewpoint. That's not too bad I suppose, given that the investment wasn't humongous (from memory)..

Correction - as stated in the earnings call, the 57% RF is for Thistle currently, where the HIIP is 1 bill barrels. PM8/Seligi is 1.8 bill barrels HIIP, and hence Magnus is the largest that ENQ has in their portfolio

Pardon the bleeding grammar - not double checking after typing. ;-)

L3 - Commenting on the BP upgrade of Magnus in 2013 - BP has invested £300 million on upgrading the Magnus platform and relate dinfrastructure as well as the pipelines that feed it gas and bring back gas/oil back to SVT. We're getting all of this 'for free'. ;-)

HIIP in Magnus is 2 billion barrels and we know that the recovery factor (RF) thus far is 50%. For context, something like Kittiwake is at 57% RF thus far. Drilling programmes can be undertaken and this is how 2P reserves will be go up. When the Magnus transaction was first signed, the 2P reserves were 56 mill barrels, and presumably because of the recent drilling, the latest 2P reserves are estimated at 80 mill barrels. This number can/will go up as additional drilling happens and reserves are firmed up as a consequence.

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JP Morgan Cazenove and BofA Merrill Lynch are joint underwriters for the rights issue. AB's and the ENQ employee fund aren't subject to the underwriting as they have irrevocably agreed to take up their share of the rights shares - the remaining shares are underwritten, yes.

MO - I didn't quite read through all emails in this thread, but there'll be no 58.5% rights credit or anything like that. For the rights issue, a shareholder has the right to subscribe/buy 3 shares for every 7 held by them on the record date. If I hold 7000 shares, I'll have the right to buy 3000 shares at 21p.

I could either

1. Let it lapse and the underwriters would pick it up
2. Take up the rights and pay £620 for the 3000 shares
3. Sell my rights on the open market at the traded price, which is typically dependent on the difference between market price after the record date and the 21p rights price. You could sell part rights and take up the rest.

I hope this clarifies..

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Afternoon L3 - I'm not sure if you're aware, but August had 2 loads - the first load (#21) was an 18 day duration, whilst the second load (#22) was a 12 day duration. The pace of production picked up towards the latter part of August and is now continuing in the current/first load in September. This is the reason why I'm making an assessment that the current production rate is closer/just over the 40k boepd rate.

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This is what they say of their experience and standing in the listed companies world...

https://www.gaffney-cline.com/competent-persons-report.htm

Gaffney, Cline and Associates did the CPR. TBH, I don't know them - maybe you do or they're well known in the O&G sector?

:-) Yes, there is indeed, Rom. The CPR is 25 pages long starting on page 156 of the Prospectus.

MO/Chilts - it looks like HK is nearly there - under 200 metres away from what I can see. I suppose this is a clean 12 days from the last departure.

We can extrapolate production at circa just over 40k boepd - assume a typical 500k barrels load/12 days..The last 2 loads have been in this range.

Romaron - the link I'd posted was the upload of the RI prospectus document that I downloaded from the Enquest website. You should normally be able to click on the link and that'll take you to a download page from where you'd be able to download the prospectus.

If that's not working, maybe there's an anti-virus software on your PC preventing these downloads or it could be browser settings too.

Twalby, Rom - to help you chaps out, here's the link to download the RI prospectus directly from an upload I made. I hope this helps.

https://expirebox.com/download/be8719b0e71dab2d249c1bab379adf9e.html

Another point, L3 - with a collar the buyer of the call has the option to exercise the call and they'll only do so if it goes above the strike price. Let's say the strike price is $78 and the current brent price is $75, the buyer will never exercise that option and ENQ will be left to sell that quantity at the market price, which is 75.

Think of a collar as X and Y bands. ENQ will always receive the minimum of X price and a maximum of Y price. And whatever the sale price is between X and Y, they'll get that actual sale price, not Y...

I hope this clarifies, as reading your statement, it sounded like you thought that with a collar ENQ will always get Y, which it won't.

L3 - I believe that the SVT transaction was bundled with Magnus as a must for ENQ to take on Magnus. Many of ENQ's platforms use SVT anyway and hence, wasn't a bad thing for them to take that over.I'm sure they didn't take that on for the revenue aspect of it, although thet'd end up getting some.

Regarding the collars, the downside is that if brent does go up above the top end of the collar (above call strike price), then ENQ is back to taking on some hedging losses on the P&L. Hey ho - that'll be nice in that ENQ can then take on more puts for 2019 at a higher strike price...;-)

Speedway has started from Pembroke and AIS destination updated to Sullom Voe with ETA of 11/09 at 21:00..

Cheers, MO. The statement you've pulled out indicates that a collar is in place, but every other statement in the H1 results releases talks about only puts being in place for H2.

Notes in the results PDF does show the detail of the swaps that resulted in the realised $77 mill losses in H1 and as of June 30th there was an unrealised $2.5 million gain for H2. Probably it's fair to say that there won't be a net Hedging loss in h2

DD - you're extrapolating the 62K for H2 from the high end of the 50k to 58K range, presumably? Management haven't given any additional guidance beyond sticking to the range. That high end of the range, is IMO, a very conservative number, if AK/Alma/Seligi perform OK - ignoring for a minute the additional barrels that even the 25% Magnus stake would bring in.

Like I said previously, they'd likely wait till the November update before updating the range higher..

Afternoon MO,

I'm only commenting on ENQ having corresponding calls for the put options for the 5.3 mill barrels - I don't believe there are any for these barrels. Selling a call option to offset some of the put option purchase premium creates a hedge 'collar' that locks in oil sale price between a range - the put purchase price and the call sale price. The prepay arrangement with Mercuria is effectively a collar hedge arrangement consisting of a series of monthly call and put options that locks in sale price between $45 and $64.

In ENQ's case, like I said above, the only reason why they would sell a call is to get a bit of premium to offset some of the put premium costs - however, as it stands they haven't done so and that means should Brent go to $90 in Q4, they'll get the benefit of all of that pricing.

Best