Member Info for epiphany121

When ENQ took out hedging in 2015, that was in the form of swaps and not puts. Those 10 mill barrel swap hedges is what gave them an additional $255 mill revenue in 2016 and basically, saved them from an even more dire state and a certain covenant breach/possible bankruptcy, considering that EBITDA that year was $460 mill. So, swaps helped ENQ in a dire situation previously and even they were less than helpful in H1, the 'setback' was better from a timing viewpoint.

I'd rate the CFO/AB very highly on this basis of how they went about the hedging programme.

Yep, puts are the best form of hedging, in my mind, even the premiums are a bit more expensive. If we consider for H1, Brent average $71 and we realised $68 (before hedging). For H2 so far, brent is averaging $74.5 and if ENQ say realises $71, on their H2 barrels, they'll keep all of it (less the premium, of course). I'd love to see JS go and take some put options for next year as well to provide floor pricing and retain all the upside.

I'd have loved to see narrower production guidance too for H2 - that would have set a better tone for the SP, instead of the overwhelming negativity that we saw on Friday. I'm convinced that they could easily do 60 - 65 kboepd in H2, excluding the 75% magnus effect. Kraken should add 4-5k, Alma maybe 3-4K (if not more) and Pm8 maybe 2K more, and this should push us past 60K for H2. I can only surmise that they want to be absolutely sure how AK/Alma are tracking by the time they get to the November update.

L3 - only from an angle of possibly lower costs than at Scapa. That's all I can possibly contemplate, TBH.

It has to be HK 100%, Chilts. Not sure if you fully followed this thread, but as Day Angler first pointed out, HK would be hooking up with Speedway at SVT, as a first. This may probably be a blueprint for how future STS' wouldgo (avoid Scapa, that is) - we'll know after this load is complete.

Cheers, MO. Rest well with this new info. :-)

Speedway is at Pembroke now, probably will start heading to SVT tomorrow at some time. AK's tracking at about 40k BOPD if your expectation is good..

Cheers, both. I missed AB stating using SVT for STS' going forward. So, HK should be heading to AK, after a pit-stop at Macduff, presumably.

Fingers crossed for #23, MO. There's crude tanker Marbat sitting off Orkney - could be a candidate for STS with NS (hopefully) or HK..

MO - I understand this should be in the Prospectus. Gaffney, Clien and Associates did the CPR.

Perfect, MO. I'll delete this link and I'll post a couple of other documents - one detailing the Magnus call option signed on 1/1/17.

Here's the Magnus option deed document

https://expirebox.com/download/9e3edd44183c0b92cc11d4f121656338.html

Fernan,

From yesterday's call, here's the Q&A exchange between Mark Wilson at Jefferies and JS that discuss the OZ transaction as well as the next RCF payments..

Mark Wilson

It's Mark Wilson from Jefferies. I'd just like to understand some of the moving parts before we lay it on the Magnus option. You gave your net debt figure, Jonathan, and also this $256 million of available facilities in cash, and that there's an amortization of $195 million in October. I'm assuming that's out of undrawn facilities because if I take that off, and then I layer on the additional Kraken facility, I've got your net debt going up. Just discuss that, please. And does the Kraken facility sit on your balance sheet? Will you show that reflect off them?

Jonathan Swinney

Yes, the Kraken facility will sit in our balance sheet, as debt obviously, we will add cash when we draw on it. And then we will repay the $195 million out. Obviously, we've got cash available, and we'll also have the cash from the drawn facility on the $175 million. So that's how we will repay the $195 million.

Mark Wilson

So that's been paid down out of the drawn facility then?

Jonathan Swinney

Well, it'd be paid down out of the $175 million, plus our cash that we have as well. Obviously, it's also significantly more than the $195 million.

Mark Wilson

And what would be the next material amortization?

Jonathan Swinney

The next one is in April next year, which is another $175 million, and then there's another $100 million in October next year.

MO - Below's the download link to the ENQ prospectus document. I've used this free site and I hope this works. If yes, I'll upload a couple of more supplementary documents and send you links.

Do let me know.

Best

https://expirebox.com/download/839de2b3c639eb09886e998e58ce6d84.html

L3 - JS confirmed on the call that the OZ SPV transaction will show as debt on ENQ's B/S; it's not a off B/S transaction. Also to an earlier question, ENQ does get Tariff income from their share of the SVT/NLS and related assets, and this should go up a bit after the Magnus transaction closed on 1/7/18, as a larger share of those assets come on ENQ's books. I'm not sure what the amount could be though.

MO - I have managed to download the prospectus. Let me see if I can place these on a public download from where you could download those.

Afternoon MO.

Yes, you're spot on about the net cash flow split between ENQ and BP. Yesterday's SP moves were a knee-jerk reaction to a lack of updated production guidance/ net debt movement/ RI. I didn't think there would be much movement on debt in H1 and not a surprise there. But there was no clear steer on Alma, given the workover was completed last month, maybe they didn't want to do so right away. But we'd get a good sense from tanker watching for both AK and EP. The SP may come down a bit more, but the market can't ignore the positives for too long though.

NS or HK it is for Kraken, likely NS. Even though we refer to the next load as Load #23, in reality it is #21, as confirmed by both this update as well as the May update.

I read through the earnings call transcript (single page link below), instead of listening to it. Yes, I agree that this could've been funded through FCF before the options expiry date of 15/1/19 and so, I'm not convinced about the need for a RI, but will take it up nonetheless.

Best

https://seekingalpha.com/article/4205046-enquest-plc-enquf-ceo-amjad-bseisu-q2-2018-results-earnings-call-transcript?part=single

Evening L3,

It was a abnormally hectic work day and I haven't even finished listening to the earnings call yet; that's a weekend chore for me. But, I did listen for the first 6 minutes or so, and as MO said, AB did confirm that $100 mill out of the $200 mill vendor loan for the 75% stake has been paid down with cash flows (after operating expenses) over the past 20 months. With Brent where it is currently and assuming it stays around these $70 levels, we can expect the remaining $100 mill BP 'vendor loan' to be paid down sooner. From that point onwards, we'd have recourse to 50% net cash flows with BP taking the rest.

For context, average brent price from 1/1/17 till 31/8/18 is around $61.5, with brent average $54 for 2017 as a whole. With Magnus now producing say 15K BOEPD, we're looking at 5 million barrels a year (with remaining gas) and I won't be surprised to see net cash flow of $25-30 a barrel at the current Brent levels. That's telling us we could whittle through the remainder of the vendor loan in an year or so.

It's good to know that the OZ transaction is going on an SPV's books and not on ENQ's B/S. Thanks for letting us know. I assume this has been stated somewhere in either the RI prospectus or in the H1 release? I'd like to read details of the OZ transaction and if you can give us a link, that'll be smashing.

Kraken is very important, but let's not forget the value of Magnus too. HIIP of 2 billion with approximately a 50% recovery factor. Current 2P reserves of 80 mill and likely to climb after the 2 new wells are drilled. Magnus could be getting to 20k boepd soon and that's more than half of Kraken's ENQ share, even after AK does ramp up to 50k boepd after DC4 comes online in Q1 2019.

P.S: Let's keep an eye out for Navion Scandia that leaves Scapa on Sunday morning - hopefully headed to AK.

Best

Cheers, MO.

L3 - MO's point answers your question. As AB confirmed on the call this morning and explained by MO, BP vendor loan balance is now only $100 mill and remember that this isn't included in 'debt' on the balance sheet. This is only included in the provisions on the B/S.

Best

I agree with your assessments, Fernan. I'd have liked to see them give more concrete info on how the wells are producing. Alma is of interest to all of us and we'd like to have more colour on that. I don't think we'd get that though, given the production target range is being stuck to and at the high end of the range (58K), ENQ needs to produce 62K boepd for H2..

Did any of the 'analysts' ask this question on the call? I haven't got past 6 minutes of the recorded call yet..

Well put, Jan. it's painful in the near term, we can't disagree, but we'll get there.

I had sell some this morning in my ISA to pay for the rights (and maybe more). I'll look to add more in my trading accounts in the near future. I'll look to shift some from my US Permian holdings to ENQ shortly.

@MO - I'm listening to the call now. AB stated that 5 Alma/Galia wells are now back online, versus only the one that was online before the workover. No doubt you'd be pleased to hear that.

Magnus' 2P current estimates have moved up from circa 56 mmboe to 80 mmboe, presumably after the recent drilling. That's another positive.

I'll report back if there's anything more I hear that's interesting.

Best of luck, well not today, but in the future..

Cheers for the info, Romaron. We'll have the opportunity to track AK loads through Marine Traffic and we'll start to get a sense for when activity picks up at AK.

Also, the RCF repayments next year are in USD ($175 mill in April) and not GBP.

We'll get there eventually..

Best

Squif - I've been in bloody back to back meetings this morning, and so, can't listen in. All your optimism has seeped into this share, no doubt. Lol. Again, look you called it right - it's one of those things that I and other longs have to live it. I'll listen to the Audio cast and see if there's anymore 'light' that can be shed..

L3 or anyone else listening to the call? What sort of questions are being asked on the call?