Member Info for epiphany121

Cheers, Chilt. As ever, your insight is most appreciated.

There's another Shuttle Tanker PetroNordic making it's way to Lerwick and due at 12:00 PM there. Could this be an option as well. MO/Chilt - The PetroNordic has 11.1m Draught whilst the Grena Knutsen has 9.3m draught. Does this mean PetroNordic takes on oil faster than the Grena? Cheers

Jan - EIA forecast was for a draw of 2 mill, but there were larger product draws (3.7 Mill Gasoline), and on balance you could say it was mildly POO positive report.

Cheers, MO. That was educational, to say the least..;-) Yes, PMO was priced to 'near perfection', i suppose, and only news of sufficient net debt reduction could've swayed the short term traders to keep adding to their positions. Again, with POO where it is, it's still a long term buy, but it'll probably drop a bit in the short term - but then, who knows..;-). It's bouncing all over today. I did have a small position, but I sold out in the mid 80s and moved to ENQ.

Yes, I'm with you, MO, on the excellent way AB structured this deal with BP. Contrary to what some people like Squiffy thinks about AB, he did play his cards right with Magnus and did a great job with Kraken with the project being 25% below original budget. He definitely has my vote of confidence. I'd like to look ahead 6 to 12 months ahead, and see where ENQ's price will land, given these elevated POO levels. I'll leave the arduous job of figuring out the day to day SP swings to the short term minded chaps on this board. IEA forecasts of a slight demand reduction for H2 2018, coupled with the API build last night has something to do with POO weakness today. But, these corrections are good, and a one-way POO movement isn't good, IMO. MO - with regards to LOAD 16, could the Nordrose be a possibility? It's stopped between the Shetlands and AK, but I don't know about Tankers and whether this isn't an option for AK. Best

The deal WAS already signed with BP back in December. As part of the deal, ENQ had the option to purchase the remaining 75% stake in Magnus (and other stakes in Sullom Voe, among others). This option can ONLY be exercised from 1st July 2018 onwards (within a 6 month window), not now. ENQ can choose not to exercise that option, but that'll be foolish with the current oil prices.

Great input. Thanks for the great input, MO. It's good to know that additional wells are being drilled and are successfully completed, and adding more output to the existing Magnus production. ENQ could exercise the option to take 100% ownership of Magnus on the 1st of July 2018, and for the cash payment of just $100 million, with the remaining $200 million coming out of the cashflows from the oil sales from those fields. Exercising this option is a no brainer for me, given that Magnus production has been 14K BOPD for the first 2 months of the year, and that adds a nice chunk of oil production under ENQ's belt. We're obviously only eligible for circa 3.5k BOPD with our current WI. GLTA..

September is H1 results..

Going by previous weeks' patterns, I'd say that a good build is in the offing. Circa 1.5 to 2 millions. A draw is what we're praying for, a build is likely though

Cheers, Chilting. Can you please keep us informed WRT anything more you spot/see? It's much appreciated and it is fabulous news if we do end up loading larger volumes in this upcoming load.

I do agree, Romaron, that $16 a barrel depletion/depreciation is a bit of an off the cuff figure, and that was based purely on the last 2 years figures, where there were lower # of barrels produced (38K or so), versus the circa 55K this year at the mid-point of the current guidance range. In reality, we'll likely end up with a lower depreciation figure per barrel this year. However, even though Kraken is a newly producing field, what matters from a depreciation viewpoint is the current carrying value, including capitalised costs, of Kraken on the balance sheet, plus the current expected reserves (210 million barrels) and the actual production this year, say a conservative 15 million barrels. I'm not 100% sure what the carrying value of kraken on the B/S is, but circa 7% of that value would be depreciated this year at the 15 million barrels production rate. I'm not too worried about depreciation, TBH, as that's a non-cash charge, but the key for us is the head-line revenue number (# of BOPD, as well as final realised price), as that'll deternine the EBITDA and the FCF that we generate. Yes, sure, as you've said ENQ price realisation is $5 lower than Brent, but that's certainly better than WTI pricing at this time ($7.30 spread to Brent) and is way better than the pricing coming out of the Permian midland region of region, where the differentials currently are at a horrible $12 - $13 to the WTI price. ($57 to $58 a barrel at this time). I'm invested in a few Permian drillers as well as some Bakken/Wattenberg drillers, but Enquest is by far my biggest holding at this time. All the best to you and the other patient holders..;-)

Penhaligan - So, profit is one story and FCF is another. ENQ doesn't make a 'profit' of $50 a barrel with Brent price at $75. We know OpEx guidance is circa $24 a barrel this year and depreciation expenses would probably be circa $16 a barrel, in line with 2016 and 2017. So your gross profit per barrel (Revenues minus COGS) would be circa $35 a barrel, if you ignore hedging. From this gross profit, you deduct G&A and Interest cost, you end up with the net profit figure. However, the key metrics that analysts/banks look for is EBITDA (for interest coverage) and FCF (debt repayments/net debt calculation). And this is what Shareholders should be most focused on!!!

Correct, Genius. Wow, that took very little time for you to figure out. What's changed?

MO, Yes, I do realise that 50K BOEPD is a very conservative production figure. I do also think that the high end of the guidance range at 58K BOEPD may turn out to be conservative, particularly if Kraken output does stabilise in the high 40s BOEPD range and that'd mean that ENQ stands to realise 30k to 35K BOEPD with their WI. And if the Alma workover in the summer does result even in a 5k BOEPD uptick, 60K should be well within range. And at that production levels, revenues could well be in the $1.35 to $1.4 billion range and an uptick in FCF to the $700 million range. These are optimistic figures, agreed, but these are by no means in the realms of fantasy if ENQ does continue to produce out of Kraken at robust levels and POO stays at around these levels. I've bet the house on ENQ ramping up substantially over the next 6 months to a year. I don't believe in fretting over the share price on a day to day basis. You just can't influence that and beat yourself up everyday as to why ENQ is not going up when PMO/SIA/RKH/TLW and the likes are going up. I know it's each to their own and to me, the likes of KO need instant gratification - read daily vindication of their reality that ENQ is under-priced, which may or may not come until we have another one or two positive updates from the management. And also assuming that POO co-operates as well. GLTA...

I'm giving you plain and simple answers. read below. If you don't think we have all the facts and it's overvalued, short it. If undervalued, buy it. Remember the old adage - that the market can be irrational for longer than you can be solvent!!! Enquest's management didn't do itself any favours by reducing guidance a few times in the past couple of years, but I'd explain that as them putting their eggs in the Kraken basket at the expense of other fields, and that did bite them. Now that Kraken is spewing oil and at the same time POO is on an upswing, that's just great timing for ENQ. Give it another positive news cycle like the upcoming quarterly update, and the price will re-balance.

Here' some pretty basic numbers. At the low point of the FY2018 guidance, we're at 50000 BOEPD - say that's crica 17.5 million barrels of oil. We know that as of March 2018, circa 7.5 million was hedged at $62 a barrel. Let's say they realise $70 a barrel for the remaining 10 million barrels - we're looking at revenues of circa $1.16 billion. Opex is projected at $420 million and Cash capex is projected $250 million. G&A is insignificant at less than $10 million. You're looking at FCF of circa $500 million, that'll go on to bring net down below the $1.5 billion figure. And mind you, the above revenue estimates are conservative , based on low point of the guidance range and a reasonable $70 a barrel assumption. What is your base case then, Squiffy? Bankruptcy in 6 months or a rights-issue?

Squiffy - I heard that they are doing so well that they will be retiring at least half of their $1.1 billion Multi-currency revolving facility from their FCF. Profit forecast cut for 2019 ??? Can you enlighten us as to what the 'profit forecast' is - just so that I can tally my numbers with your forecast? I won't be holding my breath for an answer from you though!!!

No point even trying to explain, is there. This is, IMO, classic accumulation. Bring the price down a bit and get holders to give up on good volumes of shares. Patience is paramount, KO. Until there's an update from Enquest with news of good output, we will indeed meander.

Watch the volume today - less than 3 hours into the trading session and the traded volume is already over 8 million shares,, on a upside bias day. That does bode well for a spring higher to the upside.

We 'may' only see 30p, if Brent gets down to $65, before the quarterly update in a couple of weeks and how likely is that - I see this as a very low probability event. The share will be re-rated after the update, keeping in mind the free cashflow that will be available for Enquest to pay down debt quickly. Higher revenues + lower capex = brilliant outcome for shareholders. Patience is all that's needed. I'm a newbie to Enquest, and I do have long positions in a few US based shale drillers. I've loaded up on ENQ in the past 6 weeks, as I believe the market hasn't yet re-rated Enquest, even in the light of higher Brent prices, and hence the price is undervalued. The market can be irrational for a very long time indeed and this is one classic case. KO/MO/Chilt - thanks for your posts/updates with regards to the tanker shipments/PPRS data. Very useful. @Squif - to each their own. It takes both a bull and a bear to make a market. Best all