Member Info for epiphany121

Jan - that won't be Swinney, but Edwards, the IR chap.

Poor GKB's shorts are eating him from inside out!!! Whoever bet on a Brent $60 2021 average I wonder???

Evening R,
IMO, You're spot on with where oil will trend in the coming years. I don't buy BCG's assessment that this will be the last oil super-cycle. That's too early to predict, but higher prices could spur a medium term shift to renewables in the developed world. India, China and other growing Asian/African economies will still need copious amounts of oil in the coming year. A turn down in annual oil demand may be more than a decade away - that's good enough for us.

Brent/WTI are hitting daily higher highs for the past 13 sessions or so, and is a bullish setup heading into Q3 demand peak in the US/elsewhere. Jeff Currie (GS) is on CNBC right now and he reckons that oil has the best potential for a higher upmove in the near term. The Re-opening commodity demand baton has been passed on from the US to Europe and now onto the Emerging Markets, India included. India's May demand for oil was a million bbls/day lower than 2019 and on that front demand will come back in the coming months. But, the markets are still not positioned for a bullish setup in oil and he reckons that trade will catch-on, if not in commodity itself, but certainly in these stocks. Demand is now at 96.5 mmbbls/day from 95 in just a few weeks, and will trend higher. And he reckons there's an upside risk to GS' $80 Brent target in Q3 because of all these factors. There will be bumps and moves lower in the coming days, but the trend is inexorably higher on the back of re-openings this year (and the next).

I just hope that Enquest finally gets their focus right and balance shareholder returns with growth. All of this focus on growth in the past years has resulted in nothing but shareholder wealth destruction. It's time to pivot their focus to shareholder returns and I'm still waiting to hear the right noises on this front from AB and co. The GE acquisition was a very good move, no doubt and was much needed to halt declines in our portfolio. No doubt these high oil prices will help right the Balance Sheet and set us on a fiscally sustainable path towards regular dividends. Will AB oblige? I sure hope so...

https://www.bcg.com/fr-fr/publications/2021/preparation-for-last-oil-price-boom

It's a good read - not that I agree with 100% of that, but a boom that lasts through 2022 is certainly welcome. Just how far up can oil go is a big question mark, but we'd love for Enquest to hedge into the 80s/90s when we get there.

Yes, Therapist already pinged us this detail yesterday afternoon. Cheers

Well, the G7 has come to their senses perhaps? It was never realistic in the forst place.

https://twitter.com/staunovo/status/1404086235845599237

Focusing on oil supply reduction without commensurate demand reduction is a recipe for hyper-inflation.

Poor GKB's glass half empty views have been wrong for so long that the only way I'd take him seriously is if he gets bullish on oil - I'll consider profit taking on some of my oil shares at that time. Till then, follow the money flows - GS' prop trading desks dealing with commodities as well as their clients are no doubt positioned for $80 Brent in Q3 and so would many oil traders and investment banks. The M3 money supply is still pretty strong, strong summer oil demand will be back and US domestic air travel count continues to improve - the 2 million passenger count was crossed on Friday for the first time since the start of Covid. Long distance travel will take time to come back and hopefully, US/UK travel will kick off in earnest after the Delta variant is brought under control here in the UK.

I'm not predicting $100 in 2021, but they 'could' happen in 2022 if demand does come back strongly, goes past the 100 mmbbls/day figure and there are supply issues like we saw back in 2011/12. Enquest will eventually come good after the uncertainty around the OO is out of the way OR if Brent gets into the mid-70s soon.

Correct, Jan. It will happen and is certainly not needed. Special dividend, Pelle?

Excluding the $150 mill LCs, the refi component of the new RBL faciity is $600 mill. RCF was $350 mill at the end of Feb (don't know about additional payments between then and now) + Sculptor (likely around $30-35 mill + BP Vendor Circa $50 mill + GE acquisition of between $250 and $275 mill. The gap between the remainder RBL balance and GE Acquisition price could be plugged with cash on hand - it'll be good to see if the equity raise is indeed required - maybe it's a requirement of the new RBL facility.

P.S: I've given up on Enquest's ability to communicate clearly and concisely to the market. With Brent in the high 70s, maybe the market won't even care.

To me, the only unknowns are the interest rate and if the equity raise is still needed (maybe it is needed and it is still a condition of this RBL that isn't called out). Does anyone really think that this new facility won't paid down by June 2023 with Brent above $65 - the whole June 2023 repayment clause is moot - the repayment will be well before that time.

Doh..should've known that it's Kraken news.

What..smashed down by 5 cents. What did I miss?

Lol..a fertile imagination there, Squif. ;-) No one's screwed yet, although your point is taken that the equity has been a dog.

Romaron - A simple explanation for the uplift in the HYN price is Brent - overlay Brent price vs the HYN and you'll have the answer. At least someone in the market is acknowledging Brent's impact on Enquest's finances.

Don't give too many facts, P. The Glass half-empty view may be jolted.

This is a European oil stocks story rather than a company specific story, IMO. There are a couple of uncertainties around GE acquisition closing and the refinance of RCF that could be temporarily impacting Enquest in particular, but European oil equities have NOT done as well as the US/Canadian ones - FACT.

The huge financial muscle of Wall Street is a big factor and that's outweighing some of the ESG concerns. The fact that US production is not growing and Capex is for now being held back is viewed as a big plus over on Wall Street and equities are responding accordingly. The overperformance is significant. Take the performance of Majors like Chevron and Exxon since November 2020 and overlay that with BP, Shell, Repsol and you'll see the obvious.

At some point the tide will turn and these shares will bounce..And so will Enquest. I still would like them to do more and I'm not fully convinced that the board's interests are fully aligned with Shareholders, but a higher Brent price and the resulting FCF will do just fine for me too, even if it takes a touch longer for there to be a substantive break-out.

Looks positive.

5.1 mmbbls crude draw.

Production down to 10.8 mmbbls/day from 11 mmbbls/day

15.6 mmbbls/day Refinery inputs - up from last week. Tiny Gasoline and Distillate builds - well below last years and the year before levels. Should get more bullish in the coming weeks.

Slow and steady does it...

Good morning P,

I was only referring to 'radical' US led initiatives like variable dividends based on a % of FCF (after capex) and tying exec stock options compensation to actual shareholder returns. If oil prices stay in the 70s and 80s for the rest of the year and into 2022, then the usual dividend is on the cards, unless they make a decision to spend this FCF on more acquisitions, and that would be disastrous, IMO.

I sure hope they do right by the long suffering shareholders...

We must also greatly thank pessimists like Slift, PYUECK, L3, GKB and countless more OP well-wishers on here and elsewhere (Green brigade/ESG) for the continued strength of OP in 2021/22. There wouldn't be a oil bull market without them and they're certainly my contrarian markers. The longer they keeping regurgitating their $50-$60 price in the next 2 years thesis and the 'you so can't predict oil prices' BS, the more convinced we can get that oil is breaking out to new highs into the 80s. ;-)

Great 2021 and 2022 for Enquest even if they can't/won't implement additional shareholder friendly initiatives like the US oil companies did. That still isn't a bad place to be.

Mod - I sure hope so - although European oil equities are just not responding as well to higher oil prices as Shalers are - the numbers you quoted for the likes of LPI is just phenomenal. Enquest has had a great run today and that's fantastic, but has lagged since hitting 25p in March with a lower average Brent in Feb/March. Here's keeping our fingers crossed for a strong run into the 20s and a breakout soon.

@L3 - your glass half full view is shining through rather brightly I must admit. ;-) What I'm seeing is a pragmatic hedging approach in 2021, after missed opportunities in 2018/19, and a useless hedge in 2020. They now have a solid number hedged with a downside protection in the Low 60s for the rest of 2021 - that's a positive. Not many have got their hedges right in 2021. The hedge masters in shale land have got it mostly wrong and are more than 50% hedged in 2021 in the low/mid 40s on WTI - we're not in that unenviable position (yet). I believe they've learnt their lessons the hard way and will layer on additional hedges for 2021 with more favourable terms. I won't be surprised if they'll start downside protection hedges for 2022 after Brent breaks out into the mid 70s/80s soon.

I'd definitely like the management to do more for Shareholder returns like the US producers are, but I don't have much hope on that front - this isn't just a Enquest issue, but rather a larger European corporate gap. We're firmly a Brent price play and as I said previously, that's a great place to be for 2021/22. An inevitable Brent bull market was set in motion when democrats came into power in January and this is still in the very early days. Oil markets will climb a wall of scepticism/bearish outlooks from the likes of you and your partner, GKB. Lol..;-) That's just the way it goes and Enquest will benefit irrespective of what happens with marginal production from high-cost fields.

It may or may go to 20s today/tomorrow - but value will be reflected in the SP after debt reduction becomes obvious and in the medium term, plans for dividends are laid down. This is the investment case for Enquest...

Stay patient all - rewards will eventually come.

Kam,

Those precise numbers are not my numbers - I'm quoting them from the SA article - that was a gist of what was in it. Personally, I don't see massive breakout into the 100s this year. There's still a pandemic raging in Asia, vaccination rates are low there and for now OPEC+ is in the driving seat. That surplus of 6-7 mmbbls/day quoted in the other SA article will come down more in the next few months and will create a price pressure upwards, even with Iran potentially coming back online - but I don't see a move into the 100s. Happy to wrong here, but maybe that's a 2022 story if underinvestment does cause supply issues when demand normalises next year.