Member Info for epiphany121

expounded...

Cheers, KO. So much for a Zero chance that I exounded with such certainty.. ;-)

Zero chance of this!!!

Large draws are incoming after the TX/LS refineries open up fully in the coming days - these would show up in the data over the next few weeks. Gasoline demand is at post-Covid highs and will get stronger in the coming weeks as lockdowns are eased and vaccinations move up. Stay patient - 70 Brent is not far away.

Not really, P. That was for the 31st..

KO - I assume that this includes the pullback of the 1mmbbls/day voluntary SA cut in force till April? I havent seen this pop up on my IG feed - where did you see this?

Cheers

I'd doubt they'd fiddle with the already too high O&G marginal tax rate of 40%, although that can't be ruled out if the pandemic forces Sunak's hand. We'll know soon.

P - to be clear - those numbers I quoted was for their Permian production in the US. THey had better realisations in NS and Egypt, with slightly higher costs.

Firstly, Shale's cash opex costs per BOE are lower than ours, but their revs per BOE are way poorer, depending on the OIl % mix of their BOE. A company like APA has a really bad Oil % mix of their overall BOE (circa 35%), but this % is probably only a bit higher with larger shale producers I quoted previously. Gas doesn't generate as much revs as Oil and hence tracking BOEPD for shale producers is highly misleading - zone in on BOPD to get a better sense for how it can affect WTI/Brent.

Secondly though, if you look past the Opex costs, because of the enormous Capex needed to sustain production, their Depreciation/Amortisation costs even on a 10 year Straight LIne basis is still big when it then comes to the quarterly P&L accounts and the EPS they generate. This is another metric to consider. The message I want to drive home here is that Shale producers are and I believe, will be going forwards, highly circumspect about spending outside cash from ops and this bodes well for oil prices overall. After all, they're among the few producers that can turn the taps on quickly when compared to the likes of OPEC+. How they'd react when Brent reaches 75 and higher is a complete unknown at this time and hence why we need to track those numpties closely. Shale is not dead and will never be - it's more a question of whether they can be aligned to the greater good for their shareholders - higher margins versus production growth. I believe they'll lean to the former.

GL and excuse the typos.

$21 realisation across their BOE and $9 Opex = cash margin of $12/boe. We're much higher on all 3 metrics, but then that is not an accurate way of looking at it considering they have a wider portfolio spread across the globe

I've traded in and out of Apache a couple of quarters ago and don't have it as a holding. In the most recent quarter Q4 2020 - in the Permian, APA produced 74 kbopd (out of a total of 233kboepd) and with 35% of their $1.1 billion capex in 2021 going to the US (their Permian assets), they're projecting a 2021 production of 74 kbopd out of a total 225 kboepd, which is a net increase in 2021 of....wait for it ...... 0% for oil and -4% for their overall production (Oil+Gas+NGLs). It's the good old treadmill in the shale land - you need spend huge just to stand still. This is reflective of almost every shale company I track and many of them are way bigger in the US than APA is (OXY/FANG/EOG..etc).

Bottom line - Permian growth is shafted and onwards and upwards for Brent/WTI in 2021... ;-)

Evening R - yes, about right. 75.5 is what I wrote. Don't think the potential increase in general corporation tax will change the value of Enq's carry-forward losses - O&G profits are taxed at 40% , whilst the general corp tax rate is a lot lower.

Sounds good, P. We can toast a Mackmyra in Malmo. ;-)

Hello L3 - with regards to this point you wrote -
"What I wrote is that the supply curve is very different nowadays. Give shalers the opportunity to hedge their production 6 months from now at $70/bbl for a period of 9 months, and they will do it, and will increase their production considerably. (Their answers to the Dallas Fed survey are a bit of cheap talk...) In the US there is always capital available when one can tell a good story (sometimes even when the story is not that good!)"

The above may happen and that's a risk factor, but I'm for now going with what the shale patch is telling the market. Capex discipline by living within Cash from Ops and focus on bringing debt. They've never been ones to even ever focus on that metric previously across the board, but this is where they are. I can live with that for now and the market is pricing their US porduction estimates on that basis. US averaged 11.3 mmbopd production last year and may end up a few 100k lower than that average this year. That's still a net net positive for the overall oil market with OPEC+ filling the gap when demand recovers in the coming months/quarters in a post Covid world. The market is front-running this 'rapid' inventory draw-down scenario and further pushed along by the steroid effect of all the stimulus measures globally. This is why I'd be very cautious about using historical price data points to extrapolate what this year's price action may look like. If the US economy (and other global economies) absolutely takes from Q2 and onwards, then all oil bets could be off and Pelle may well end up winning. ;-) Oil may end up having a bonanza year or two if the stars align - obviously risks exist, but the markets always rides a wall of worry higher.

WRT further positive developments or otherwise, we should know more in the upcoming 2020 H2 report.

A possible, maybe a likely scenario here is that SA brings online half of the million bbls cut along with the 500k OPEC increase and that still won't be enough to plug the near term demand gap and Brent slowly marches towards 70 in the coming days - this could happen in Q1. With a larger OPEC+ increase, we should still see Brent in the 70s early in Q2 is my take.

L3 posted a link to the EIA site showing the average annual price over the past decade and a half or so. What was missed out in that 'narrative' is how fast Brent/WTI goes up when global economies come out of a recession or a large slowdown that directly results in large scale under investment in oil projects. Take post 2009 and also 2016 and see the jumps in the 2 years after. Take the recent under investment factor and couple that with the largest central govt stimuli in history in 2020/21, led by the US, which has and will result in an even more pronounced increase in money supply, you'll see a massive unleashing of commodity price inflation led by oil, copper and other industrial commodities dorectly correlated with increased GDP. The confluence of bullish factors for oil this year and the next are just great.

Most people on here and many analysts are looking at oil prices from the prism of what happened in the last 6 years and we do know there was massive over-investment in these years. The Green focus driven capex reduction among European + US oil majors and their commitment to shareholder returns rather than production increases, shale restraint with shareholder return also in mind, enormous fiscal stimulus, inventory drawdowns, hard GDP bounce-back - these will push Brent into the 80s - with possible spikes to 90s and maybe even the odd few 100/bbl days this year, IMO. I personally don't see a 80+ average this year - a likely range is around the mid 70s, IMO - if I had to put a number on it, I'd say $75.5/bbl ;-). Next year could be a lot higher average into the 90s. This is where I currently sit.

Brent won't go up in a straight line and there will be ups and downs - that's how it rolls and that's fine by me. What these price levels will do to a lower production cost Enquest will be a fascinating story in 2021/22. Watch that space and stay safe.

@Riskingit - it takes all I'm afraid - we'll have to live with that lot and soak up all the paranoia, negativity and BS as Brent inexorably heads towards 80 in a few months time.

Stay safe all - fab times are ahead.

Hi R - yes, to your point focusing on short %s is not on their radar, and that is the way it should be in the grand scheme of things. They need to focus on finding ways to expand their production profile and get the debt down a bit, and get that dividend sorted soon. ;-) That's all we want really and our substantial carry-forward losses do help in retaining UK generated cash flow firmly in our pockets - I do hope they have another non-dilutory acquisition in the wings and I'm keeping my fingers crossed here.

I've been very sanguine about the oil price outlook for this year and next. Some on here can't seem to see the forest for the woods with their hedge now mantra. My goodness me, I've read impatient shiite on here and elsewhere about Oil being unable to stay up this high for weeks now and that's been proven time and again to be wrong. When you're stuck in it, best stop digging. Read the tea leaves correctly and you'll see multiple bullish forces on the horizon. I've said it many times oil headed much higher in the coming months. THere will be swings no doubt, but the trendline is clear and it's up.

If I was the hedger at Enquest, I'd wait till Brent gets into the 80s and buy cheap put options for Mid to low 70s for the remainder of this year and next to protect the downside and ride the upside. Dividends in 2022 is a likely scenario then.

Bon Chance..

You touched a nerve there, SmokingAces. It happens all the time when the SP is going up and punters get left behind.

Here's another positive tidbit for those interested in shale's impact on overall US production levels. Diamondback is one of the bigger shalers out there and they're actually spending less in 2021 vis-a-vis 2020. Last year's Capex was $1.86 bill and they delivered 181 kbopd (300 kboepd overall). 2021 capex spend guidance is between $1.35 and $1.55 bill, and that's a solid $400mill reduction at the guidance mid-point to deliver 178 to 185 kbopd (308 to 325 kboepd) - that's roughly the same levels of oil production over 2020. Dividend increased a bit and more focus on FCF to pay down debt and pay more to shaleholders as appropriate. And a 'large' focus on ESG headlined by the fact that they only flared 2% of their NG production versus the 6% in 2019.

Whatever the oil price bears on here want to believe, higher prices will be upon us soon as OPEC+ will also play ball.

Keep the faith.

Like it or not, GS has a better pulse on the oil market than the other sell side firms. Arjun Murti called $100/bbl in 2007 before that was even fashionable and Damien Courvalin called negative WTI a couple of weeks before the April meltdown. As oil goes up, so will Enquest, if not in a straight line. Patience is good.

Hold your horses till the $1.9 Trillion stimulus is out of the way - maybe early summer?

Inflation incoming - Copper hit new highs, oil won't be far behind. GS has finally caught up with the Brent $70 Q2 target that we've dicussing for ages. $75 in Q3 - that's likely a highly conservative target. Damien's a smart chap and makes good calls. The bullish factors have only been too apparent to see for anyone who really follows the goings-on in the world economy.

Did I hear 55 on here though? Crikey - not sure if they got caught short.