Member Info for epiphany121

Hmm, where's the fun in asking them direct? This is the right place to air opinions as this site is where the management spends at least 5 to 6 hours of each working day trawling through messages and formulating appropriate strategies. And this way, we'd also know that the question was actually posed.

These MBs (us included) have the same recycled questions/opinions/views that go through the churner and gets spit out depending on what happens with Brent and the SP - particularly true on a no news day, which is say 98% of the time.

Get over it chaps. If you want real-time correlation with Brent/WTI - buy US/Canadian O&G shares. I have no doubt that value here will eventually show - when that will happen is anyone's guess. It's not just an Enquest story and regretably, all European O&G equities are in a similar boat - well, maybe there are some exceptions in the gas focused ones. Harbour is financially 'stronger' and they're performing even worse than us.

Until then, I suppose we need to listen to all manners of daily/hourly opinions/banter/analysis and the occasional breakthrough news. After all - we still have the same 3 choices we've always had - buy/sell/hold.

Good weekend all.

Hmmm jefff..before I go mental with the conspiracies that get floated about on these message boards. Can you even care to explain why you're conflating weekly jobless claims with monthly employment data - that's just a meaningless comparison to anyone who follows/tracks the US economy. The Jobless claims data has 2 components - first-time and continuing . First time jobless claims are running at 1.2 mill for October, you say? I'm not sure what that irrelevant stat is all about - first-time/new claims don't exist for a month - they're only relevant weekly. These 'new' claimants move into continuing claims category from the following week, if they're still claiming unemployment benefits and may drop off too if they stop claiming. You can't add 4 weeks new claimants data and say there are 4x average weekly new claimants. That's economics 101 - conspiracy free.

What is it about this month's report (October data) that's off? Are you saying that the Household survey data is off OR is the business establishment data survey off - how does net loss of 70000 relate to either of these survey data? Or is everything that comes from the Government, propaganda, that can't be trusted? I think I know the answer though.

YE - I can't agree more with you. More buys than sells and such trading stats are pretty meaningless and betrays a lack of understanding of the sector and the company. The key problem here, and it applies to almost every O&G company, is just European buyside funds aren't investing much, if any, in this sector because of the highly publicised ESG norms. You have a second problem with PMO creditors selling their shares as lockups come to an end - debt focused generally wouldn't want to sit in equity for any longer than they should and we have the aforementioned ESG issue that may be reduced to these creditors too. You finally have the bad hedging that'll mess with revenues/cash flows till 2023. These are the negatives.

Positives are many too -
1. Dividend/capital distribution strategy to be announced next month. This could/should include buybacks too. Every other US shale is doing this - HBR has no other choice.
2. Oil and Gas prices should be bullish in the coming quarters, and even with the hedging issues, there'll be plenty of FCF to cut debt in the coming quarters/half-years
3. Management that has solid equity holdings in their company and has a vested interest to make it successful.
4. Tolmount coming online soon (we hope)? Production should stabilise and ramp up into 2022 collectively across the portfolio
5. HBR does make a lot of noise around its ESG creds and messaging, and they should help going into 2022

It may take more time yet, and it may well be towards end of H1 next year that full potential may be realised, but there's plenty of cash to be generated in this sector and plenty of returns to be had to the patient.

It turns out that he called $100/bbl in 2005, not 2007. That inflation adjusted demand destroying/shifting price point, which was circa $105 about 14 years ago, is probably $125 now??

https://moneyweek.com/1348/why-oils-all-time-high-is-just-the-start

While we wait for $100 oil in 2022, here's a twitter feed from Arjun Murti about how Biden could own up to why oil prices are higher - there's plenty of facts in there. For context, Arjun was in the Goldman Commodities desk in London (this is where Jeff Currie sits now) in the late 2000s and he was the first to call $100/bbl oil back in 2007.

https://twitter.com/ArjunNMurti/status/1456417532504678401

Oil demand shouldn't be there, yes?

https://finance.yahoo.com/news/delta-bookings-soar-six-weeks-205932700.html

Cheers, R. Astrazeneca double-vaccinated - didn't stop the virus fully and it doesn't claim to anyway. It's like a very bad cold in my case - a couple of days of high-grade fever (circa 40) and it's getting better today already with the fever gone bust today. I travelled to Sicily a couple of weeks ago - either I caught it during my travels there/back or on a weekend golf trip to Wales 2 weeks ago. Either way - vaccines work!!!!

I have 100% conviction that there'll be real oil shortage in 2022 - late H1/early H2. Anything and evrything that Biden does from herein on - pressure OPEC or SPR release or Roll back oil drilling restrictions - none of this will matter in 2022. Transition that will lead to a drop in oil demand is atleast a decade away, if not more. Till then, consumption will grow and without supply, oil prices will grow up. I just hope the european ESG BS will not stand in our way - even if they do Enquest will have enough cash on hand to deliver large scale buybacks + divs. I know we want to see quicker returns, and I'm hoping that the high FCF will tilt the Buyside Funds' in our favour.

Yep - that may be a QAnon Green/renewables are useless type of propoganda.. :-) The truth is probably in the middle somewhere.

P.S: I did see a few hundred bright people in Dealey Plaza this week awaiting the arrival of Messiahs JFK Sr and Jr - with Sr handing over Jr to Numpty, to work with him as his VP. Sadly, the warp drive was just about sputtering and even the backup Mycelial Spore Drive wouldn't cooperate. I don't believe in conspiracies, but this one smacks of a big one.

You just made this up, eh? Wasn't this 11/11 update binned for the CMD on 09/12?

Lol - nice one, R. I loved the look on the Credit Suisse banker's face as he walked behind the celebrating GS/BARC/MS/DB bankers, wondering whatever did he do wrong.

I needed a diversion from being cooped up in bed for much of the past 2 days, although not looking at work emails is another plus. Flipping Covid is still a constant threat - just ask me. lol.. ;-)

P - My best guess is that Brent will average north of $90 in 2022 - Covid is the only wild card if you ask me.

Here's the Bloomberg link if you want to read about the origins of the Hacienda trade. It certainly served them well in 2020 when oil prices collapsed , but in a normal year with no big downside moves in oil prices, they'll just end up losing out on the option premium.

https://www.bloomberg.com/news/features/2017-04-04/uncovering-the-secret-history-of-wall-street-s-largest-oil-trade

Hi R - the Hacienda hedge is as straight forward as I explained it - it's a simple put option purchase strategy to protect downside and receive a minimum price and the upside is uncapped. Here is the quote from your Reuters link and that is the simple definition of a put option.
"Finance Minister Agustin Carstens said Mexico paid $1.172 billion for options that guarantee a minimum price of $57 a barrel for 230 million barrels of oil exports next year."

Bloomberg had an article on the origins of the Hacienda hedge and large sell-side banks are the counter-parties in that lucrative trade.Mexico is the only country in the world that I know of which uses large scale options hedges for downside protection and yes, they're unique in that sense.

You can buy options for any strike you want for 2022, but given oil's backwardation for next year, the premium will be exorbitant - maybe $10 or more for a $80 strike, depending on which month you look at. Deepending on how bad Covid gets, we may have a tough few months in the winter, negated by cold weather, if the temperatures do drop globally. Interesting few weeks ahead though.

Clueless writing in the article that you provided a link to, Romaron. They're in the oil business (Ok, logistics) and you'd think they'd know the difference between a Put and a Swap, and how buying a put doesn't mean you lock into a price.

The Hacienda trade is Pemex's hedging mechanism is known as is NOT forward sales/swaps based hedging. These are bought put options that give Pemex a right but not the obligations to sell at the strike price - in effect it locks in a floor price with no ceiling (upside is uncapped). The floor price something we also have as part of option collars that we put on.

You mean European oil majors? The American majors won't do renewables and they're doing just fine and their SHs support their strategy. SHs are telling them - you give us dividends and we'll invest in green companies if they're fit. Returns from renewable projects are terrible (versus oil at these levels), and there'll be more cost push inflation in 2022 because oil inflation affects every other sector and that'll drive up renewable projects' costs higher and IRRs lower.

Is it any wonder that there is a big valuation gap between European and US oil Majors?

Mriggy - how do you think you/we can to the bottom of those questions unless the company reports it to us - which they will, if its material. Unless you have these answers already to these Dire questions - we'd love to hear from you.

Sector focus/analysis/research/commentary is about the only thing we can do during this no news period and like it or not, there's some tieback to a company's SP.

Jan - the problem here in Europe is the rather short-signted approach that the EU/UK have taken - hey, lets get all these carbon mandates in place and lets move quickly/er to a lower carbon world - and oh BTW, we think there's enough supply and there shouldn't be price shocks whilst we're doing this - I wonder where the problem with that theory is.

You've started to choke off investments into the Hydrocarbon sector and slapped on various regulations on local O&G companies - develop transition plans by 2023 as our resident eco-warrior Chilting confirms. With all these headwinds choking off supply, they still expect energy to be cheap???????? Whatever happened to Economics 101?

Would the average man that's not on these boards discussing their share investments, give 2 hoots about green transition when their spare income is being eaten up by this energy inflation? That's what the Yanks responded to in Virginia (and NJ nearly too) on Tuesday this week.

The only thing that can put a pause on this large scale energy price inflation in 2022 is a recession and oil may need to be above $125 before that's even a thought. Chilting's myopic climate vision (no offence Chilting) is certainly befitting of the liberal elites - clueless about ground realities that impact peoples' pockets and grandiose about where they think their country should move to, without taking into account global realities like why wt this is where we'll get to, and no thanks to green warriors. I may drive an electric car, but I'm no eco warrior. ;-)

P - OK, I didn't fully read the question and my response was more focused on why US funds wouldn;t invest now in UK O&G companies. :-) I just don't see US oil companies go out of their comfort zone and buy UK companies, however cheap/compelling they are. In almost every case, there are no cost synergies to be realised and UK is not in their core operating model - Apache would be an exception though.

Also, as soon as a US company have recently announced an acquisition of oil properties in the US - Continental's 3.25 billion Permian acquisition yesterday was a case in point, Wall Street's been hammering their SPs down. With that in mind, why would any SH focused US O&G company try to buy a UK O&G company - there's only negative value for them in that scenario, at least in the near term.

Mriggy - almost every mid to large shale producer that I now is committed to capital dsicipline. I believe you've referred to Scott Sheffield from Pioneer in your post, but so has Devon, Apache, Occidental and more. I don't trust Harold Hamm, the biggest c**t and numpty brown-noser that's out there, but obalance this is not a 2017/18 redux. That could change if oil goes to 120 in H1 next year and they may start expanding drilling after layering on hedges, but that isn't happening now.

Spot on, P. But relying on Retail holders to hold the fort, let along build on it, is a tough ask - just ask KO and Btfath1. No doubt the sell button is pressed as soon as a 10-15% target is achieved. ;-) That strategy is indeed working, but makes a breakout to the 30s a hell of a lot more difficult than it should be.

Good morning Pelle,
"It’s one thing that European funds can’t invest, but why don’t for example US oil companies pick up these dirt cheap companies?" - a simplistic explanation is that they don't need to, when you have their home-bred companies focus in on a SH returns mantra, leaving the growth theme well out of the picture.

Take Apache - they've upped dividend from a cutdown 10 cents after Covid, to 50 cents and are buying back shares bigtime. https://investor.apacorp.com/news-releases/news-release-details/apa-corporation-announces-third-quarter-2021-financial-and

Devon is focused on biggst possible dividends - the most recent quarter is 84 cents dividend - here's the trend for the last 4 quarters - 30c/34c/49c/84c. And they'll keep going up with FCF from higher oil prices.

Romaron wrote - "They are contemptuous of climate activists " - emm, NO. They're not. Shale has quickly realised that they need to play the game right, have drawn up plans t satisfy ESG concerns and are not running wild flaring nat gas like they used to, even as recently as 2019. OK their ESG funds are not as Net Zero focused as ours.

I'm with you on partnering with someone else - that's not really a feasible option. My fear is that if Enquest doesn't at least pivot to SH returns soon, we may be stuck at these levels for longer even with oil moving higher.