Member Info for epiphany121

Chilt - most tech companies don't have much debt, if any. The vast majority of them have net cash on their balance sheet. The reason why they move inversely with bond yields/interest rates is to do with how Wall Street values the current value of their future earnings stream - AKA the Discounted Cash Flow (DCF) valuation. The more interest rates move up, the more they'll keep coming down. If the hard commodities like Copper/Nickel/Grains/Oil keep going on, Fed will have to raise rates and Tech stocks will fall. Good for us though ;-)

Laidback - There's a small matter of the big fat 40% cashflow that we're losing to the taxman until the day the transaction closes. Plus till the closing date, none of the GE production/sales/EBITDA/Cashflows are coming on Enquest's books.

These are good enough reasons to get the damn transaction closed ASAP in Q3 and with oil in the 70s soon enough, bank refinancing shouldn't be an issue.

Yh - try chilling with Covid - it's so much better than a Coke. It desensitises you pretty good!!!

OMG - this is for the 100th time on this board probably. FCF and Production will only accrue to Enquest from the closing date; the post tax cashflows (that accrue to Suncor) between the economic date of 1/1/2021 and the closing date will be used to adjust the final purchase price for Suncor's stake downwards.

Spot on, SaveMore. Products demand across the board is up sharply in the past week. Wait till May comes around though!!! Refineries utilisation is at 85% and climbing from circa 81% a couple of weeks ago. And it shows in the Brent/WTI price today. Hopefully, the current Covid eases some more in the next couple of weeks and sets up a great May for Brent. 70 incoming still. Enquest is still a bargain at these levels.

Hitman - "Almost everyone expects prices to rise with demand.. but it's always going to fall back once the bulk of OPEC+ barrels come back later in the year. Think we could see highest prices in June and July" - We differ in opinion here and I certainly don't believe that we'll see the highest prices in June and July of this year. Rapid global growth bounceback won't die down in Q3 - this is now a multi-quarter very strong expansionary cycle that could last 4 or 5 quarters starting in Q2 this year and this global growth uptick will mean oil will be in strong demand through 2022. I don't think that the OPEC+ and shale supply response will be enough to keep oil price shackled in the face of this incoming uptick.

The obvious risk caveats apply - Covid cases rebound needing additional lockdown measures, vaccine rollout hiccups, unexpected shale excess supply,etc - but the forward economic indicators are the best they've been for oil in years now, and oil producing nations won't squander it yet again - I don't believe.

$70 next month and hopefully sooner - IMO. And that's positive for ENQ.

R - Gas Equivalent of Bbl oil is 5.8 mill BTUs or 58 times Therm unit that's used to price UK Wholesale gas. At circa 47p per Therm today - that's approximately £27.8 per BOE or $38.4/BOE.

Nymex Henry Hub pricing for US gas is a lot cheaper $2.63 per mmBTU or $15.25/BOE - way too much nat gas produced in shale land drives down Henry Hub too..

KO - it pays to hone in on reality. December 2020 actual production was 11.1 mmbbls/day and January 2021 was 11.08 mmbbls/day (and Feb will be much lower because of the Ice storm). The EIA estimated production levels now are the same as they were in December 20 - I wouldn't call that growth.

And I concur with Savemore's point about Artie being hopelessly wrong with his call on a US production fall-off because of the shale well decline rates. I said here previously when Romaron quoted Artie's twitter post that I'd go with Mark Rossano's assessment of circa 11 mmbbls/day being easily sustained by the current Frac Spread and Rig levels - DUCs are being worked on by the Frac Spreads and this can keep the current levels sustained, while Rigs are being slowly being brought on to maybe nudge production levels up a bit higher from here on. Demand will start to pick up in the US soon and there'll be plenty of weekly draws to keep WTI/Brent buoyant through Q2 and beyond in 2021. $70 close incoming in the next few weeks - in May likely, but soomer is most welcome.

Small men like small numbers - no surprise there.

Looks like Saudis may extend cuts into May and June - https://twitter.com/LiveSquawk/status/1376650807790202885

The CF machine will keep churning out cash at these Brent $65 levels - I'm surprised its hanging around these levels, but patience pays off in the end.

Yep, ENQ guided to a $20 opex for Magnus back in 2019 and that's what I use for my BP profit share calculations.

You're missing a key difference though - Enquest has a tonne of carried forward losses that it can use on cashflows after the closing date and save on taxes. And this is important to remember and why we should look to close the transaction ASAP. Check the sceanrio below.

Say Suncor generates pre-tax cashflows of $76 million in the 6 months to end of June from Jan 1st, they still pay 40% UK corporation tax on this amount for a post tax cash flow of $45.6 million and Enquest's final purchase is reduced by this post tax amount. From the acquisition date onwards (assume it's the 1st of July), the pre-tax cashflows of $76 million in H2 for Enquest will also be the same post tax, because of Enquest's carried forward losses of $3 billion plus.

Get the deal closed ASAP, Amjad.. ;-)

Aloj - No, it is not. The closing date is when the transaction closes (after the OO presumably) and it's from that point that production and cashflows accrue to Enquest. 1/1/2021 is the economic date and is not the closing date. This was discussed and clarified so many times on this board last month. The closing price paid by Enquest is adjusted for net cashflows (after tax) received by Suncor from the economic date 1/1/21 to the closing date. Until the closing date, Suncor is still the owner and they pay taxes on net cashflows/profits generated on their share of GE.

Tom8080 ,

With the assumptions you've made for 2021 production 46 kboepd and an average oil price of $60, it's obvious you won't end up with the $600 mill FCF that Pelle, I believe, calculated based on GE contributions from H2. My FCF calculations are more or less aligned with yours at your pessimistic baseline numbers, and therein lies the upside opportunity for Enquest. There's a circa additional $14 mill FCF generation for each $1 increase in Brent for this year. H1 upside limiting hedges won't hurt too much and the lack of such H2 hedges is spot-on for Enquest.

At the midpoint of guidance range (49 kboepd) + say a 5kboepd additional GE contribution (assuming a 30/06/2021 closing) annualised for 2021, you're at $600 mill FCF if Brent averages $68 in 2021. I'm pretty sanguine about Brent getting there.

Ahem ... KO - did you expect after-tax profitability and decline in net-debt below a bill? We're a now an even lower cost leveraged play on oil - as goes Brent, so will Enquest. And that's a good thing in 2021.. ;-)

Opex projected at $265 mill, which at a mid-point production of 60kboepd, is circa 12.5 boepd or not - not too shabby. Hedges at 5 mmbbls - not much change which is fine. Cash Capex $120 mill - if oil goes up, a lot of FCF falls into the bank.

Kraken and Magnus maintenance work confirmed and now complete. More to follow..

Nice one. I expect it's a circa 60 to 70 range till end of April and then a solid breakout. Inflation incoming and oil is a solid inflation hedge as we found out in the post recession recovery of 2009 to 2013. I wrote back in January the day Biden was inaugurated that this was the single biggest factor for bullish oil and this will continue the case. No matter what little GKB parrots about red neck states suing the Dem administration, shiite will come from it and oil will continue on its merry path upwards. We now sit and wait out the near-term swings - patience is the word...

GL, stay safe and make money...

Chilting - These events must've been what caused the spike in Crude in 2008??? Bottom line - it's just M2 squeezing commodity prices higher..Squeeze Redux in 2021/22 incoming... ;-)

Lets see what ENQ results bring out tomorrow...

TSA Air travel numbers was above 1.5 mill yesterday for the first time since the start of the pandemic and the trend is still rising. If only the reactionary European nations had enough vaccine foresight/planning, we'd already be having a rip-roaring recovery in oil demand. It'll come around soon though.

You....