Member Info for epiphany121

Malafuster - debt repayment will obviously seen as a positive, particularly if it is reinforced by ENQ meeting production targets. It'll at least set the SP on the road towards valuation based on financials, rather than doubt and disbelief that is prevalent at this time.

The reality is that both Mercuria and Magnus matter for FY 18 from a cashflow perspective, because neither will generate cashflows from sales for ENQ in 2018. You haven't built that into your revenue model and so, your headline cashflow is inflated to the extent of Magnus' 25% production share, as well as the circa 1.3 million barrels overall over 18 months and 850K barrels in FY 2018, that will be delivered to Mercuria to repay the 80 million pre-payment for the crude deliveries.

The net effect is that Circa 5.5 K BOPD revenues will need to come out of the cashflow statement and hence, cashflows from the remainder of the sales will be important for ENQ whilst looking at the overall net debt reduction. And the result is that the Mercuria pre-payment is no out of cashflows. Your calculation takes into account

I'm not debating whether hoarding cash has the same effect as paying off debt with that cash - on the balance sheet date, we know it would be. My point was if ENQ was to pay down the $320 Mill RCF debt this year and cash balance is still at $175 mill at the end of end, then net debt would be down by $320 mill, and that's not taking into account the debt reductions for Mercuria repayment via crude deliveries. It's a very simplistic statement, but that's the point I was making.

I know we could go around the houses on this one, but we should get a better sense from ENQ in the September update. ;-)

Morning Fernan,

Thanks for sharing your detailed breakdown of expected revenues and potential cash outflows during the year. That's probably more detailed that anyone has produced so far, including throwing light on the PM8/Seligi only revenue sharing agreement with Malaysia.

There are a few discrepancies in your details that I'd like to point though, and these would positively impact cash outflows in your breakdown.

1. The RCF size on the balance sheet as of 31/12/17 is $1.1 bullion and not $1.22 billion as you show in your breakdown. You've bundled Current and non-current liabailities, and you've arrived at this figure for RCF, which is not correct. The right number as per the balance sheet is $1.1 bullion - and the interest rate on the first $890 Mill is Libor + 4.75% - say 6.75% and on the remaining $210 mill is Libor + 5.25% - say 7.25%. Let's say 7% on $1.1 billion and interest on the RCF is likely closer to $75 mill (considering $50 mill paydown in May 2018 and the $270 mill paydown in October 2018) and not the $92 mill you have. A small difference, but a difference nonetheless.

2. Prepayment (Mercuria) - there is no cash repayments for this transaction and interest is capitalised and set off against crude oil deliveries. Certainly the interest would show in the finance costs on the P&L, but not in the cashflow statement. However, your exercise is to assess cash outflows and not P&L costs and hence, the $4m prepayment interest cash outflows isn't correct.

3. About PM8/Seligi production share, the production volumes now as an overall production figures is lower than they were in 2016 and 2017, however considering that Kraken oil is also sold at a small discount to Brent, your circa 11% may well be a good overall discount to work with.

All other things being equal, net debt should fall by at least the RCF repayments this year (assuming that cash balances hold up near the $175 million in place at the end of 2017) of $320 million. Hopefully more...

For 2019 - likewise, assuming no further repayments, the RCF size will be $780 million versus the $950 million you've surmised.

Just my tuppence.

Best

A bit more detail here...

https://www.zerohedge.com/news/2018-07-13/trump-may-tap-30-million-barrels-spr-halt-rising-gas-prices

Ahh, but these are desperate times calling for desperate measures..What wouldn't numpty trumpty do before his Novermber mid-terms..blimey.

https://www.forexlive.com/news/!/trump-administration-considering-releasing-oil-from-the-strategic-oil-reserves-20180713

Up 2 and a bit dollars from the day lows this morning. I'll be happy as hell if the bloody POO lingers around these levels till December..;-)

Cheers, MO. Assuming that AK's chugging along now at circa 35K BOEPD rate, net to ENQ of 24.5, say 25K BOEPD and to your point yesterday, that'll be a 60K BOEPD run rate for ENQ at this time.

This is given that ENQ was just over 56K bOEPD till April 2018, with AK averaging 21.4K BOEPD in that period, and 25K now puts ENQ now at 60K BOEPD. That's how I can derive the 60K figure at this time.

Even with AK at 40K BOEPD plateau after final acceptance sometime between now and September, ENQ will be at a comfortable 62K at the end of Q3, and that is without accounting for increases from Alma and Seligi. There's strong upside ahead and now, we need the POO to work with us. ;-)

GL..

for ENQ oil delivery to a Port Arthur Refinery in the US. The Draught is now at 11.9 from 8.5 prior to when NO started the load transfer.

MO/Goldiger - your assessment of the load based on this info?

Romaron - I agree with your Trumpty assessment. All things being equal, oil should go up from these levels with the myriad of supply disruptions, but we're now in the age of an activist US president who believes that markets and economies that need the US should kowtow to his wishes, and however unprecedented this may be, this is working out to an extent (more so in his eyes). In that sense, it is not a bad thing if oil hangs around these levels for a few more months, giving US consumers time to get used to these levels, before demand/supply fundamentals take over and oil moves higher from these levels.

These oil levels are good for Enquest and other producers, and ENQ will be generating good FCF with oil at these levels, even after accounting for drilling spend on Magnus/Alma/Seligi. I'm more than happy to wait for next update (H1) to confirm, IMO, a small production range upgrade and further on in the year, additional output from Alma/Seligi fields. And oh, not to forget Magnus and the 75% stake option. A bright future awaits those who are patient...

I'd suggest a couple of more reasons - the market finally admitting that Trumpty means business when he says oil prices can't be too high and he'll force the producers to maintain high supplies. And finally, the strong dollar catching up with oil prices (inverse relationship).

I'd love to see POO break 80 solidly, but it's probably not doing anytime soon. Let's see...

Cheers for that too, MO. The conclusion there is that TL should be wrapped up at Alma by the first week of August at the latest...

Maybe, just maybe, we may get early indications of Alma's workover results in the H1 update? Maybe it would take more than just a few days for them to come up with a reasonable assessment of how Alma's producing though..

We can hope

Thanks for that heads-up, MO. This kind of information is indeed what's needed.

We now wait for TL to go away from the Alma fields...;-)

Best

Ros1 - my bad, I mixed up Tullow's heding with PMO's. your hedging figures are spot on, and 40% hedge is a relatively low number and bodes well for price upside participation, if Brent holds at these levels.

ROS1 - it's not as simple as $65 Brent being the point where they start paying off debt. PMO had more than 50% production for 2018 hedged at just over $50 and that's standing in the way of higher net cash realisation in 2018, and holding back higher debt payback too. Roll into 2019, the scenario looks a lot different and as you can see from today's update there's lower volumes of hedging and at higher prices ($60 plus).

This is one reason why PMO won't see bigger debt reductions in 2018, but 2019 is a different story though with lower hedge volumes in play.

Downside action is with PMO today. It was an inline update with a 70mill debt reduction for H1 and SP is falling right now. It's the usual sell the news price action with profit taking on..

ENQ management - keep executing on projects/workovers. The debt will take care of itself in the next few quarters if POO stays at these levels..

All the best for tomorrow, chappies. It'll certainly open low, but end up a bit or near flat at the close tomorrow. That's my prediction for tomorrow..;-)

Global growth fears and commodities get slaughtered, with oil the most pronounced of all..

https://www.zerohedge.com/news/2018-07-11/bloodbath-oil-plummets-amid-biggest-commodity-crash-july-2015

Absolute slaughter...Down to 73 now.

Ignore Brent today...Enjoy the footie - what more can we do with the price slaughter today...

Go '3 lions'...

Chilts - NO is now away - so make that a 26 hour load and a draught of 11.8. Circa 500K barrel load, I'd suspect??