Member Info for epiphany121

Oil - I'm very well diversified with much larger investments in Shale and Canadian oil equities and they have done phenomenally well in the past 18 months. They've not been subject to the same headwinds as European oil equities are, and that simple realisation has done wonders to my portfolio. I'm not as bitter as I would have been if was all in on European oil equities and I can see that unfortunate reality in posters like you and a few others on this board. At one point after mid 2019, I was almost all-in Enquest (say 70%), but I realised that wasn't good for my psyche and I had waves of feelings of bitterness on earnings misses - that I'm certain you're feeling now with HBR. I know Enquest well, I know the positives and I know the negatives, and I certainly know not to put most of your eggs in one basket.

Sure - anyone who's been in Enquest since 2018 wouldn't have made money, unless they bought a hell of a lot more at the bottom last year. The answer is simple though - diversification, diversification and diversification. If you want oil stocks that are better correlated to underlying commodities, give out dividends (some in this bracket even trade under book value like CPG), don't have ESG headwinds, not much buyside constraints - pick US/Canadian stocks. You'll be lot happier and less bitter.

OIl - "Psalms… the drop overdone? I thought ENQ would lose more than half of its value, with that dreadful update. Production 36% less than forecast?!? Debt same or higher than a year ago????"

Unfortunately, it looks like you're clueless about Enquest and what the guidance was. For the people in the know about Enquest, Production wasn't 36% less than forecast for 2021 - did you pull that forecast out of thin air? Last year's production actuall IS NOT EQUAL to this year forecast. We knew that plenty of high cost fields like Heather/thistle, Dons were being decommissioned and the guidance for range for 2021 was 46k to 52 kboepd. If I take the guidance midpoint of 49 kboepd, the 2021 projected production of 45 kboepd, including 2 months GE, is circa a 11-12% shortfall. And the SP was suitably punished. There was no 36% shortfall in guidance that would've let to the 50% SP fall that you dish out. With regards to debt, again most of us knew that with the GE acquisition cash outflow, a good chunk of FCF in 2021 would go towards winding down the RCF such that net debt is 2021 was about the same. THis was projected on this board many months ago and so wasn't a surprise to anyone.

I don't disagree that the recent update was bad and with oil being weak, Enquest is susceptible to more legs downwards. But, assuming that production comes in somewhere around the 50 kboepd number for 2022 and with a relatively low cost of production from the remaining fields, there'll be plenty of FCF, even with a $75 Brent average.

I'm hoping that HBR comes good - I have a few shares there that I got into recently and see they're undervalued. But, it's sill y to expect that HBR will perform like a highly leveraged PMO and go up to the old-PMO levels of 100p plus that you quote. HBR is a larger beast, like a mini-major, with known headwinds like the old PMO creditors, the ESG brigade and the buyside boycott in Europe. I'll be pleasantly surprised if it doubles from this level within the next 18 months - I really hope it does.

GL

Austria hard lockdown from Monday!!! Doh, Austria

Morning oil,

I have to agree with your thoughts on trading European oil shares, rather than they being LT investments, at least at this point in time. The only ones making money on this board and on ones like TLW/HBR are ones who're trading, Enquest and others have not really broken out of a trading range, even with oil at these levels, and that's very telling.

Maybe $100 will do it and push European oil shares out of this range, maybe 2022 will knock some sense into European buyside funds seeing high returns - I just can't predict. Till then, doing what FATH1 and Ammu do (on this board), is about the only way to make money.

GL.

Sure hope so, Jan. Sure hope so. We're either plain unlucky OR the gods of vengeance have a little something lurking for us in the background, many a time. It's now a prayer that 2022 can be a lucky year for Enquest.

I wish you the best, Chilting. Our paths may yet cross again, even if not on the Enq board.

Number crunchers - let's not forget the tiny matter that the BP vendor loan payment would now come under net debt and at a minimum the cash flow generation would be 280 mill (as L3 says) PLUS the vendor loan payment from the new RCF.

Like I said in the morning, I can't put a positive spin on today's update. The best we can hope for us
1. Fix magnus + PM8/Seligi
2. Hope Brent stays up (we've had bad luck with Brent in the past - this time around with all enormous liquidity sloshing about, we may have good luck with the lower hedging in 2022). I've always said that 2022 is the real year of high-price action for Brent, not 2021.
3. Pivot to share holder returns from Enq's management.

It's your investments, your call. None of the above would happen near term and for Squif, I doubt anything like you want or wish would come about.

Hi L3 and Mod - I started taking some profits in VET on results day and after as I wanted to balance the portfolio away from way too much oil. I have some Nordstrom, which you may know is high-end US retail. My only other Canadian oil holding is CPG and even with Canadian oil companies what is apparent is that companies that are returning cash to shareholders faster are getting bid up by the market. I don't agree with Mod on that count. With US producers, you take the likes of DVN and APA (ok they had an exploration stumble today) who're returning large amounts of FCF to shareholders, they have done well in the past few months.

The bottom-line is that the value of being shareholder friendly can't be understated. And it's especially more relevant in a UK market context when you facing large headwinds from ESG focused buyside funds. I'm hopeful that Ab and co can and will pull this off in the coming months. HBR is getting there next month with their vision.

oops, way too may typos in that post, Fath1!!! That should teach me not to post after 14 pints and a bottle of bubbly.

It looks some help is on the way with slightly lower gasoline prices in the coming days/weeks with this mini sell-off, but there is a big freeze headed our way next week. I say it's not over yet for the rally to continue in the coming. High 70s and low 80s heading into 2022 isn't a bad outcome.

FAT1 - I geniunely think that the problem on this board is that there are few genuine people like you around. Ignore the board, the world would be a much better place if only there are a few more of you. I'm glad that the board members were of help you in your trades and may you get your 31p buy price.

32p no doubt. Ammu can run this business like nobody can - no one comes close as he'll run it better than great and will do his best to take it beyond great to greatness. It'll be nothing like the world has ever seen - even Hokey Cokey won't cut it. Did you finalise funding with your American uncle, Ammu?

SPR releases to bring down prices won't work for more than a few days and the prices will come roaring back after a couple of weeks, if not a few days. I think that the US and China may do a co-ordinated release if oil goes up a few more bucks from these levels and that'll probably bring oil prices down 3 to 5 bucks in short order, but the inevitable pull higher will happen soon after.

The key driver for oil/gas these past few days seems to be what happens with NBP and TTF futures, which in turn influences Henry Hub pricing and acts as a pull/push on oil prices. A really cold winter can tip the balance and will push the US towards a large SPR release, IMO.

Let's face it - the SPR is now moot for the US with the volumes that shale land is producing. 18 year low ins SPR and such stats are pretty meaningless in a world where shale can drive US production to all-time highs if (when) there's capital available and there's no crude export ban.

Squif - to Romaron's point, it's pointless to compare Gulf Keystone and Continental to Enquest. The other 2 are in completely different boats with different challenges and opportunities. I can point to many other US Shale operators who have performed significantly better than Continental - examples - Callon (CPE) and Centennial (CDEV) are up 600+% since this time last year. As I said a few times on here, the ESG challenges to buyside funds in the US are significantly lower than here and that's hindering new institutional ownership in Europe/UK - just ask Harbour/Shell/Repsol etc.

I've come to the conclusions that until the tide clearly turns, and it will at some point in the near future when these European funds realise that there is no easy answer to get to net zero quickly without killing economic growth (through high prices), Eoropean oil equities will struggle. I'm hoping it lasts no longer than a couple of quarters of oil prices at these levels for the funds to come around to this view. In the meantime, we can only generate cash, pay down debt and get ready for that inevitable pivot (IMO) to shareholder returns. That's something I wanted Enquest management to focus on and that's something they have shown a near zero interest in thus far. It's just been vague comments and guidance - that needs to change. I still hope that they will pivot, but will want them to start making noises soon. This pivot is what is helping large companies like Devon and Apache generate outsized shareholder returns - which fund doesn't like dividends/buy backs.

I think it's Corona jitters - can't imagine that anything that's been said at COP26 will move oil markets. JB's been a godsend for oil investors - that's been my base case for investing in the oil sector in 2021 and it's panned out very nicely. I can imagine what numpty would've done if he was in the same position - push his republican oil buddies to drill like crazy, push MBS like crazy and threathen to expose his murderous shenanigans and arm-twist Saudis to produce more. None of this will happen with JB and however sleepy he is, he (democratic government) is just great for oil.

Mrc - that's probably the right investment strategy with UK/European oil companies - trading that is. North American oil companies have been good investments in the past 18 months - we've been great trading shares - yoyo-ing between a floor and ceiling. I'm still not sure what will tip the scales to lead to a breakout. Patience is a key word I suppose, and I can see there's a lot of that with the usual suspects - KO/Squiddy.

Nice one, Mod. I didn't know anything about Cobas asset management , but it does sound like they have a good track record.

CPG has been just about treading water, but VET has taken off, even without a dividend annoucement yet. I guess CPG has way too much competition amongst Canadian O&G companies, even acknowledging that they have a 2% yield. We'll see. I'm guessing you're holding on to those?

Hey Mod - are you firmly back in civilisation now? Yep, plenty of UK O&G companies are in the unloved category and I can't predict when things could change. It could be a month, a quarter or two OR whatever the timeline is. Cash flow helps and having enough of that at these prices levels to pay down debt is a big plus. Maybe that along with dividends being given is eventually what tips the needle?

Simplyme - I wouldn't touch KOS at all. Way overvalued, with huge amount of debt on their balance sheet. I've known of KOS for a while and I've never invested there. Enquest is a way better bet than KOS, but hey ho, KOS is on the NYSE and with a small amount of GoM production - that's all that matters to these fund managers from the US. They're valuing this business at more than $1.7 billion and that's a $bill more than Enquest.

I find that shocking and is emblematic of the sort of malaise that persists within the European fund manager community towards O&G companies.

Greta and pragmatic in the same sentence? That's fantasy territory.

Blah, blah, blah on the other hand - that's easy enough .

"Just reread your post a few times now ,to try and get my head around what your on about." I can't say I'm surprised. I'm sure you trade HBR like a pro with you laser like focus on the '10 yr yeild' and the high correlation it has to HBR's SP movements. There's no point in me launching a diatribe responding to your points factually - this could be a never ending story, and adds no value to me or anyone else on here. NYSE close in 22 minutes and what APA/DVN do is of far more significance.

Best

However good Ed Morse has been in predicting oil price trends recently, the jury is out on this theme (his opinion) that the US production will explode to the upside in 2022 - I can't currently see it.

https://oilprice.com/Energy/Oil-Prices/Citi-Oil-Will-Continue-Rising-This-Quarter.html