Member Info for epiphany121

Hey R - "Didn't COP26 do wonders for Biden and the Democrat's poll ratings.". The reality is a bit more nuanced than that. I remember quoting something along the lines of "with the Biden Administration in power and their greener views compared to Numpty, the oil market is set for a generation shift in returns". The now defunct GKB 47 with his $55 Brent average for 2021 is probably licking his wounds somewhere.

Biden and the Democrats have done wonders for oil prices and every oil company should be praying for their reign to continue past 2024. However, what they can't do is influence the ESG investment norms of the useless European funds. Just like at this very telling stat of US oil majors Vs European oil majors and this tells a better story than anything you'd get in our media.
https://twitter.com/JMahony_IG/status/1455915098938224642
US funds aren't as focused on ESG as the European funds are and hence the undervaluation %s in the US vs UK/Europe. I can't for the life of me see how that's a Biden/Democrat issue. I said to the Uber oil bulls on here that I don't a move to $100 in Q4 and that's still my view - it's all playing out as should be expected with transatlantic flights pushing jet fuel demand from next week by an expected 250 kbopd. A really bad cold spell OR a massive attack on SA facilities could change the dynamic - but that can't be a base case.

Shale giants like Pioneer, Devon and Apache have all committed to 60% or more FCF diected to shareholders and current oil prices do allow that. Unlike us, these pretty large shalers DO move with spot oil prices - they have no ESG cobcerns holding them back. Apache is probably the first shaler to stop routine flaring of Nat gas and hopefully they won't be the only ones - but that's just them waving their ESG creds.

I just don't know what will change the European funds views on investing in O&G companies, but I can't see any outsized moves until more insitutional investors buying, rather than jusr retail investors.

An O/T topic - At the 2019 AGM I got speaking with Bob Davenport and he said to me came from Apache and a left field thought is whether he can firm up a deal with them - maybe along the lines of a FCF share for their North Sea assets. They paid $90 mill tax in Q3 and that implies a pre-tax profit of $225 mill - that's something we could shield with our tax losses and worth an banker's while to sit with Bob and an Apache counterpart to look at? ;-)

The current oil sell-off can't be a surprise and neither is the SP movement in Enquest/Harbour - it's the same old ESG issues. We can and must focus on communicating about the SH returns side. And not to forget, invest in the right US shale companies if your view is that oi is heading higher .. ;-)

Chaps - conspiracy theories from Squiffy aside, I believe there are a couple of issues that's holding us back even with Brent in the 80s.

1. European funds pulling out of O&G investments in the past 2 to 3 years - this, to me, is the biggest issue impacting us and the likes of stronger companies like HBR. With these pension funds latching on to the Green/ESG bandwagon, it's been a struggle to get enough institutional ownership to push the SP up meaningfully. This army of retail traders just wont cut it I'm afraid. HBR has its own peculiar set of issues like the creditor share selling overhang and bad hedging with both oil and gas and that shows in how we have outperformed them in the recent past.

2. Enquest's shareholder and market communication is p*ss poor, IMO. I certainly don't agree that Ab & co are doing nothing wrong and doing all they can to provide the right visibility levels to the market. We only need to look at the recent GE closing RNS - there's no mention of what the final cash payment was and we had to look at Suncor's Q3 report on Wednesday to find out what it was -
"Subsequent to the third quarter of 2021, the company completed the sale of its 26.69% working interest in the Golden Eagle Area Development for after-tax proceeds of US$250 million net of closing adjustments and other closing costs, and future contingent consideration of up to US$50 million. The effective date of the sale was January 1, 2021."

With the ESG overhang, Enquest needs to sharpen their shareholder returns strategy messaging to the market. HBR has promised to do this on the December capital markets day and maybe that'll turn their fortune around. Enquest will need to come up with something similar to this - we'll initiate dividends and share buy-backs when the Net Debt/Ebitda ratio falls below 1.2 and we'd funnel say 20% of FCF (prior to Capex) towards these SH return mechanisms.

US/Canadian O&G companies are all going down this route and have vastly outperformed us since they started doing this from Q2 2021, of course noting that the pension and buyside funds in these countries haven't hitched onto the ESG bandwagon like the European funds have. We have a battle on our hands with these European funds; we certainly don't need another to ensure there's a clear strategy and communication to the market. Without this, we'd probably be languishing at these levels for an extended time period.

Never say never in the oil market. In October 2018, in the run-up to Iranian Sanctions bein imposed, oil ramped to $85 plus and tanked soon after sanctions were actually imposed. The opposite could happen this time around. The EU and the US may be desperate to get Iranian barrels back on the market and all the time the market could be discounting this additional supply and will resume normal service once that's fully digested and priced in the coming days. We're then only left with OPEC+ as the swing producers that can bring in additional barrels over 2022. That's a bullish setup for oil heading into spring 2022.

Bottom line - we could easily get to Brent $75 in the coming days/weeks.

Excellent. :-) Cheers, P.

The market will eventually recognise value in Enquest, even if means that we need to wait for a few more months. Next month's update will be interesting and could be the initial trigger for a move up, particularly if production is trending well.

Excellent. :-) Cheers, P.

The market will eventually recognise value in Enquest, even if means that we need to wait for a few more months. Next month's update will be interesting and could be the initial trigger for a move up, particularly if production is trending well.

Yes, 27.3 mmbbls stock isn't much for Cushing and WTI/Brent differentials should keep narrowing. We should get the inevitable bounce in WTI/Brent tomorrow with HBR following suit. This is a still a traders share, IMO, till at least the December update iis out of the way.

Chilts - I really won't engage with you on the rights/wrongs of renewables/nuclear on this board. It doesn't help other Enquest holders come to an informed decision about a share that they're invested in when the discussion veers to renewables/nuclear. There's certainly a very large ongoing demand trigger for oil and gas, and peak demand won't likely come till at least 2030, whether you or other deep green believers think otherwise. I'm really looking at an investment horizon of 2 to 5 years in oil and that's plenty long timeframe for me (and most others I suspect). If Enquest hits 75p or 100p, everyone is happy and I believe in cab get there in the current cycle. I'll worry about my oil investments if there's a recession incoming OR if a radical technological innovation results in oil demand quickly dropping off (Bl**dy unlikely).

Best

P (and Tarmak) - from what I can see you're still ignoring the 3 to 3.5 kboepd that goes to Petronas (assuming a 8.5 to 10 kboepd reported Malaysia number) via the PSC, even though this production is reported in the headline production number. It's not big in the grand scheme of things, but you won't arrive at the correct FCF if you keep using the gross reported production.

Best

Here's a good write-up in Reuters about the attitude of US oil majors versus European ones and how they've outperformed the European ones. I suppose the simplistic message is that the US funds are a lot less hung up about not investing or even divesting from O&G companies, whilst European O&G companies are not exactly getting the same love from Euopean funds. Could this be a simple explanation why we just don't track Brent prices on the way up and the retail horde gets nervous and sells as soon as oil drops a buck or two?

https://www.reuters.com/business/cop/investors-board-us-oil-majors-dismiss-wind-solar-projects-2021-10-27/

Chilting - the problem with renewables being the answer to the climate problem is that they're just reliable at this time (as we're finding out this year) nor is there the right storage medium to store and use generated power when it's needed. The sooner technology can get us to that state of utopia the quicker we can wean ourselves off fossil fuels for power and transportation. However, that is still years, if not decades away from a commercial viewpoint. And as human population grows and more get into the middle class, oil consumption will keep growing.

I suppose I'm a consummate hypocrite. I drive an electric SUV, but circa 85% of my investments are in the O&G sector - I just compartmentalise my beliefs vs my investments. Humans will need more Oil and Gas for the near future and a recession may be about the only thing that can drive down consumption to some extent. Wait till Trans-atlantic flights are back in November and you'll see all-time highs in O&G consumption soon after. It is against this back drop that I say that oil prices in 2022 should be back in triple digits. And the resulting FCF's uses is what AB's (and any O&G CEO) eyes should be on. Debt reduction till H1 2022 and pay out to shareholders from H2 onwards.

Unlike in 2018, Hedge funds are not as net long with oil and bearish factors aren't too many. The key couple of bearish factors are Covid and Iran supplies, and possibly China crackdown, although that's unlikely with their poweissues. With additional US stimulus incoming, that sets up a bullish platform for oil. We just need to wait for the next update in November and see the commentary from AB and how production is tracking before we see a meaningful breakout, IMO. I've long said GE closing was baked into the market and our SP shouldn't react by breaking out to 30s - that's indeed the case. Brent 90s may well do the trick though.

European/UK institutional support for UK O&G shares like ours is a big question mark and that's part of the problem. I suppose the best we can do is generate FCF and whittle down debt quickly and position ourselves well for shareholder returns in 2022 (Dividends h2 2022?). Guidance on that front will help - as I've long been saying. The US/Canadian markets are rewarding O&G companies that have pivoted to SH returns and they've had much higher SP appreciation over the past year. We'll get there, IMO...

FFS HC - I'm not sure how you pluck these kind of figures out of thin area. " Lenders across the world would then get zero with the estimated debt bubble of 70$Trillion, a lot of money. By comparison the crash of 2007 from US sub-prime debt was 23$Trillion so one third of the Chinese Ponzi Scheme. " Lenders outside China have exposure to $70 trillion debt in the Chinese property market??? Is it any wonder that your world view is so dour with numbers like these? The entire Chinese debt outstanding isn't that much - let alone western banks exposure. China will manage their internal debt as they are what they are - authoritarian. Western banks have but a few billion bucks exposed to the China property market and they can absorb that easily.

Just ignore the noise around profits - look at FCF generation. That's key. And HBR will generate a good number for H2 and 2022, even with their dubious hedging.

Chaps - lets get a basic fact right - UK Corporation tax for the O&G sector is NOT 19% - it's 40%. and FFS, they're repaying the Shell debt due next year with the longer dated new bond with no covenants attached. It's not like this 27.5 mill interest payment is net new. That covenant fact alone is good enough to do this refinancing.

Lets keep it simple - UK will not bring on oil windfall taxes and neither will the US. The rest of it is just noise on these message boards. As Jan and a few others have stated, this is indeed the revenge of the old economy for an ill-thought through transition plan. Carbon investors will have it good for a few years.

Chlts - completely disagree. Economies could afford $100 back in 2011 to 2014, and I can't see why they can't now. Demand is growing as economies get back to normal and supply is curtailed. Yes, there'll be higher inflation and that's an unwanted outcome, but the world will deal with it. As long as oil doesn't go crazy and go to 120s in a short span, and I think there's enough supply buffer to prevent that, the world will adjust and move forward. Gas substitution incoming.

I don't buy mrc's view that peak oil investment has happened. If there's demand, investment will happen. THe key is for there to be no over-investment, and that's near impossible to manage.

And NBP is back well above $200 BOE today - the oil susbtitution effect for gas is well and truly in play and alive. That'll push crude demand up more.

Helikon's doing what BTFATH does, albeit through their derivatives trading. SHouldnt matter - get the GE deal out of the way and we're in a good place.

From a supply viewpoint, OPEC+ and Iran are the key swing factors and there's currently plenty of spare capacity available to bring prices $10 to 15 should OPEC wish so and if Iran signs a new JCPOA. However, OPEC is not releasing the spigot and Iran may take a few more months, well into 2022 I suspect. If there's anything that driving up oil prices (and other commodities), then that's the M3 money supply. There's plenty of liquidity sloshing about the banking system worldwide. Fed is only just tapering from Nvember and there's more fiscal stimulus incoming from the US. There's only one way for this to go - upwards.

Shale may bring on some more production in 2022 - it just won't make a difference.

As of today, at official Brent closing prices, the average is 68.63 and was 68.40 last Friday - it's increasing at say 7.5 cents a day. There are 56 trading days by my count and if Brent stays at this level 83 bucks till 31/12, we have an average of circa 72.90. Maybe 90 isn't an bad bad place for Brent to be in the coming days. ;-)

If these numbers are backed up by EIA tomorrow, that's bullish, IMO. Cushing whittling down is a good sign for overall consumption around the world - after all that's the storage base for crude before exports. And products have big draws too - note distillates include heating oil and can be substituted for nat gas at some power plants.

@P - R had a 72 average I think and I had 74.5 average for 2021. He'll end up bagging the bragging rights I suspect. Weren't you high 70s?

KO - diversify and buy American oil shares then. They're high beta shares and rest assured they'll move with the market - up or down and maybe give you peace of mind. They've certainly given me some. ;-) The market may yet take more time to put Enquest in a solid investment category and that's when debt is a few hundred million lower than now and the scene is set for shareholder returns to be prioritised. Till then, I'd wager that ENQ will be bobbing along until GE close news is out.