Member Info for epiphany121

R - here's a link to a site that lists Futures by month and options price for multiple strike prices for the month/s in question. I can't say for sure that it is capturing all the options transactions in the market, but for June 2022 in this link, the open interest (net held) for call options is 121k = 121 million bbls and puts are 127k = 127 mmbbls.

https://www.barchart.com/futures/quotes/CBM22/options/jun-22

Hello R - there will be plenty of counter-parties who can be on the other side of the trade if Enquest (or any producer) wants to take on a hedge. Ignoring swaps for a minute, as that isn't Enquest's preferred hedging route (it's collars which are options), I'm pretty sure that the options market can be as active as you want it to be. The big as well as boutique investment banks' trading desks do a lot of those, as do trading arms of oil majors. I know a few shale/Canadian producers who've taken on collars for 2023. Harbour has plenty of 2023 gas hedges, but those are swaps. And we have started buying collars for 2023, per the last update - so this isn't anything new. If you seek it they will come to play. ;-)

Hey P - This is from the H1 results - "Revenue from the sale of condensate and gas in the period was $57.9 million (2020: $27.6 million), primarily reflecting higher market prices for condensate and gas. Gas revenue mainly relates to the onward sale of third-party gas purchases not required for injection activities at Magnus."

Gas and Condensate revenue for 2019 was $120.2 mill per below and the cost of Sales was $72 mill.
"Revenue from the sale of condensate and gas was $120.2 million (2018: $43.1 million), as a result of gas sales from Magnus, which includes the combination of produced gas sales and the onward sale of third-party gas purchases not required for injection activities, for which the costs are included in other cost of sales" -- "principally reflecting the cost of additional Magnus related third-party gas purchases not required for injection activities of $72.0 million."

I'm not sure what the actual gas production numbers are - Enquest doesn't break that out unfortunately- I'd just been assuming 3% of overall volumes in my calculations.

Hello L3 - in your note from yesterday about EOY net debt being higher than H1 net debt - that certainly is assuming the drawdown of RBL for closing the GE deal? I'll take you up on that if you want to have a bet - I'm sure we'll end up with a lower net debt number. It would've been ideal for the GE to actually close in Q3 and you don't want to really see slippages. I suppose that showed up in the price action today. I'm sure there are lessons learnt from 2018 and I fully expect them to take on additional hedges with Brent in the 80s.

US/Canadian oil stocks have bounced off the lows pretty well this afternoon - there seems to be positive noises on the debt ceiling front and after the profit taking today in Oil/Nat Gas, we can expect normal service to resume soon enough.

Poor Aloj is blinded by that $100/barrel in 2021 notion that he badly wants this to be a 4-month quarter. ;-) The oil gods don't giveth that leeway, I'm afraid. By my take, Brent needs to average $92 in Q4 to hit an average of $74.5 for 2021 - I've been saying that it's a very low probability event with all the surplus capacity with OPEC+ and even they don't want to risk 1. pi**ing off oil-buying countries in 2021 as a full recovery from Covid has only just began and 2. inviting shale back in the game by allowing them to hedge in Q4 at $75 - 80 floor for 2022, should Brent get into the 90s this quarter and stay there for a few weeks, allowing them to open up the tops for 2022.

I'd take a steady $80 average in Q4 with a resulting $72 average for 2021.

Nice one, H. Here's hoping we get back to following Brent soon enough

And NBP futures continue to roll along to all-time highs - at 256p/therm now for December futures = $202/BOE. Winter fuel switching to Fuel oil is a given at these prices - boosting crude demand. OPEC played their cards right and so want to see higher prices now.

And looking at Pioneer's recent investor presentation (link below), over the medium/longer, they're looking to return 75% of net FCF(via fixed + variable dividends) after capex/reinvestment, which they're projecting to be 50-60% of gross CF. if they hold the line on this, I can't see Shale oil production getting out of hand like it did under Numpty's presidency.

https://investors.pxd.com/static-files/38021c76-4891-4d34-953f-29dc5fd63eee

I can't see what the article says, but Scott Sheffield, Pioneer's CEO is a pragmatist and heads up one of the largest shale operations in the Permian. I'm not surprised if this is the same rhetoric that you'd get from most shalers.

I found a link where you can read the article for free.

https://californianewstimes.com/us-shale-drillers-cannot-contain-oil-price-rise-pioneer-boss-says/545743/

Devon's already stated that Shareholder returns and debt reduction is their top priority for 2022, not production growth. Pioneer's saying the same. Not many shalers have put out preliminary capex numbers for 2022, but Crescent POint, the Canadian producer has and even though their budgeted capex is much higher next year, that is to only sustain their current 130 kboepd run rate. I can't imagine this would change much for the US shalers too, unless oil gets to $100 and stays there for an extended period of time.

This was a most pointless opening post and that's with cherry-picking one detail - one month return. How uselessly desperate is that? And no details of what these countless other comparison metrics between ENQ and TLW are. 3M/6M/YTD SP performance for ENQ is much better than TLW. Please don't even try a 2Y comparison. Net Debt/EBITDA -- FCF as a % of Total Debt. They may have more 2C reserves, but I suspect they're in no position to sink in vast amounts of Capex to develop them unless Brent sits at 100+ for a few years.

Hi T - Not sure if you've noted the front month November contract price now - it's 245p/Therm - that's just over $190/BOE. That's pure insanity. If only we get a bit more off the ground from Magnus about now!!!

Savemore - no doubt we can make arguments that are convincing in our own heads with a bias towards where our positioning sits. ;-) In the grand scheme of things, US Shale isn't a large % of my portfolio. Outside of Enquest, it's a couple of Canadian producers and a Colombian producer (Gran Tierra) where my O&G investments are concentrated. I'm nibbling on Harbour now as that's undervalued too.

We all need oil to be up and that's in Shale's interest too. It's a known fact that they haven't been putting on rigs like they did in 2017 to 2019. They working through their DUCs and have enough rigs on to modestly grow production in 2021 and pulling back on Capex. That's good for them and good for us. Could they spend a tonne and grow production back towards 13 mmbbls/day - easy peasy - of course, they can. Will they do it, short answer is NO. They're focused on debt reduction and shareholder returns, and that's all that matters.

"I strongly advise" - that's certainly the case, Plebleens. ;-) LOL..

Top of the morning, HC. What people write on these board don't cause me concern - you need to have real thick skin and not take anything personally, with the exception of abusive language directed at you. I'm not here to make friends, but to pick up on inputs that I may have missed out on and where appropriate, point out gaps in certain points of view. None of this is personal. In your case, I was correcting a false narrative about Shale that you believe will boost oil prices and help HBR. You build an investment case in a company based on a set of known and unknown parameters and if there's undervaluation (or even overvaluation), you take a position - long or short. I was pointing out factual inadequacies in what you wrote.

Nat gas (Methane) leaking and flaring isn't anything new in shale land and has been happening forever. Henry Hub Nat gas WAS very cheap and it was produced alongside oil, which was more valuable, and any excess that couldn't be put in a pipeline was mostly flared. This is was is now been clamped down in 2021 by regulatory agencies like TRRC. There are no Greens running around the Bakken (ND) or the Permian (TX/NM) or the Eagle Ford (TX) shale belts and tieing themselves up to Pumpjacks to stop production. There's no mandated Methane capture in the US - thats blatantly false. If you're basing your investment thesis in HBR on such non-existent variables, then it can only wrong. Yes, there is vested interest in the oil market for US production to not overshoot like it did from 2017 to 2019, but Shale has learnt a lesson.

To me the investment thesis in HBR is based on a few key parameters

- Competent management with a large skin in the game (Big tick in the box)
- Focus on shareholder returns and not just on growth, either organic (horrible) or inorganic (a bit more palatable) - Tick
- Pull back from Greenfield projects (big tick in the box when they pulled out Sea Lion). THere are plenty of acquisition opportunties as Majors are looking to divest that HBR doesn't need to invest at this time in the likes of Sea Lion - quicker time to value
- Oil and gas prices - this upmove is being driven by both demand as we're coming out of this pandemic and OPEC throttling production along with US showing restraint. Check

The 'Cons' here is the high level of Swap hedges that HBR took out - without those, the current debt could've been wiped out sometime in 2022, any unannounved new acquisitions notwithstanding.

The day trading and long suffering PMO holders like Oil are frustrated because this isn't 10 quid already. Clearly, this isn't PMO and its a known known about the share overhang from the lockups expiring. I dont really care if this is range bound for months, but as long as oil/gas prices hold up, this will break out. It may well be 2022, C'est la vie.

SaveMore - it is a false narrative that there won't be more growth for shale because they're seeing cost side pressures. We've now moved into an inflationary world where yes, cost inputs are moving up but as are revenues as oil prices move up. E&G service companies are seeing cost increases and they may or may not be able to pass on these PLUS a margin on top to E&P companies. I own a rig providing company as well as frac spread providing company - yes, they haven't gone up as much vis-a-vis E&P companies. Why do you think that is.? The E&Ps are holding back on spending more than they should this year and taking those additional revenues from higher oil prices straight to the balance sheet to reduce debt and pay dividends to shareholders.

Another reason for lower spend could be down to E&Ps hedging a good chunk of their production in 2021 at much lower levels than now and they're waiting for 2022 before they really open up their wallets, particularly if there are clear signals in the market that there is a production deficit from OPEC that needs plugging. Too many times have pundits on here written off shale and they've come back everytime. They will come back when there's an ask in the market and that will be 2022, IMO.

"[I believe HMHn and E121 are fans]" R - no, I'm not a fan of oil producers from the Alberta oil sands basin. I own 2 Canadian stocks - CPG and VET, and neither of these have oil sands operations. VET has a decent exposure to TTF and NBP, as they also produce Nat gas here in Europe, and CPG is 80% light oil/gas and 20% medium oil. I don't think I'll buy any oil sands producers, TBH - there are plenty of other better opportunities out there in Canada/US.

Therapist, nice one. :-) - " Natural Gas - approx $152.61 boe - St Fergus and Kerteh
VLFSO - approx $88.90 a barrel - Singapore Lindt Chocolate Bunnies - approx £0.50 - Tesco
Just sayin'"
BTW - NBP closed up another 10% today. That's 215p/therm and $168/BOE. Brent is available for less than half price.

@Chilting - rest assured if demand comes back quicker than expected, and there are signs that it is, $80 will the new floor for the next few quarters. Like MRC and Jan have stated - we did cope and we will cope. Consumers, globally, are in a much better shape with their savings post Covid and may not be as badly impacted as otherwise.

"One thing to consider is the impact on the fracking industry in the US over the last few uears and certainly since Covid. US companies in this sector have dwindled in numbers most going bust because production cost per barrel is too expensive and they lost money. Remember when oil went minus $20 based on just storing the stuff. The fracking survivors in the sector have new tech that has dropped production costs massively but now the Greens are monitoring the greenhouse side affects with methane being the main problem linked to climate change. This could see the demise of fracking and if so the USA becomes a nett importer of oil again. If this happens oil like Brent will keep rising. Good for HBR given their NS presense."

HC - There are so many false narratives in that paragraph that I don't know where to start. Yes, many Frackers/Shalers have gone and done a chapter 11 reorg, but they are still around and producing. They're humbled and chastened, but alive and kicking. There have been plenty of mergers in the past year, but the assets are still there and producing. I can really think of only small listed company that had to go through a chapter 9 dissolution and sell their assets, but that's that. What the shalers have done though is cut capex big time and that's keeping a lid on production growth in 2021. The hit from Hurricane Ida is still impacting GoM production to the extent of 300kbopd and that's helping. Wall Street is pulling back from funding Shalers as much as they did even back in 2019. partly because of green pressures, and shalers are having to live within cash from ops to fund their capex. Many in the shale patch have recognised the need for handing out dividends as a major priority and ones that have really zoned in on that, have seen fantastic rerates from Wall Street.

There are no Greens monitoring greenhouse side effects. On a state by state basis, they have so-called monitoring committes who do jack sh**te tbh. Texas, for example, has a 3 man committee called the Texas Railroad commission that has responsibility for monitoring/regulating emissions, but they almost never do anything. They're only recently started clamping down on nat gas flaring and they'll do nothing of the sort that any Green would want them to.

US shale is not going anywhere and should there be a need for the incremental barrel in the global oil market, they'll produce. You did correctly point out that their cost of drilling has dropped dramatically in the past 2 years, but I see that more as a function of low oil prices. With oil prices on the upswing, so will their costs - but their netback per barrel is still pretty high at these price levels.

So far in 2020/21 - they been a friend to the oil market and that will continue, IMO. And that's good for NS oilers.

Yes, right. The matrix isn't easy for mere mortals to comprehend.

It's not the Fed that has the power to raise the debt ceiling - it's the US congress. Both the house and the senate need to pass it and then off to the Potus for the rubber stamp. The fed is but a mere spectator with a vested interest in ensuring their supposed max employment mandate is not rocked by the current political power interplay between the dems and repubs. ]

They will get there - it could be rocky, but they will eventually get there even with the repubs unanimously objecting as they are now. It's one of the many factors affecting Brent/WTI, but will be transitory. Oil's climb in the face of a strong dollar in the past few months is nothing short of remarkable and tells the tale of serious demand-supply imbalances in the global oil market. Ditto for Nat gas. OIl will go back up and so will HBR, in time.

$80 may not be acceptable in 2021 when there's plenty of spare capacity globally - however, there may not even be a choice in 2022/23 when this spare capacity is whittled down. $80 is not a magic number though and since that's been seen once thsi year, it would be a numbing when it does back there in the coming days. I can see a higher oil range from the 65 to 80 I was expecting - 10 bucks higher is my call in Q4, moving around between 73 and 90.

Let's not forget that Nat gas prices are an even bigger problem than Brent though. Demand for crude may go up more as substitution effect for nat gas to fuel oil kicks in.