Member Info for epiphany121

I'm just happy that Brent is where it's at now and that Enquest will be generating solid FCF at these levels. I'm happy, personally, to let the company get debt down next year to levels where we'll get a serious look in from IIs.

We will be loved, maybe just not today.

Potentially the worst showing for Labour since 1935, if the exit polls pan out in the final results. Presumably, Corbinator would go after this sh**show...

Another booster for Brent tomorrow. The stars are aligning nicely indeed.

GLA

Let's call it caving, if indeed the headlines turn out to be true. But, that's the best for the global economy and Brent, of course.

I like this headline...

https://twitter.com/DailyFXTeam/status/1205141720477917184

has put a big bid under oil. Says 'very close to a big deal with China'. Hope it's not another one of those head smackers...

Getting close to the magic $65 now .

L7 - in the same 2015 CMD deck that you refer to, please look at slide 54 and you'll get your 50% WI answer.

Slides 70 detail the Revenue over Cost PSC, which is what applies to the PM8/Seligi fields' revenues, as opposed to the smaller Tajong field, which follows the Risk Services Contract model, as detailed in slide 75. The R/C PSC calculation is an example provided on slide 71, but is not an absolute % and can vary.

This link below describes the R/C PSC in some detail, but here's a summary. "In 1997, a new PSC based on the “revenue over cost” concept (the R/C PSC) was introduced to encourage additional investment in Malaysia’s upstream sector. The R/C PSC allows PSC Contractors to accelerate their cost recovery if the contractors achieved certain cost targets.

The basic principle of R/C PSC is to allow the PSC Contractors a higher share of production when the Contractor’s profitability is low and to increase Petronas share of production when Contractor’s profitability improves. The contractor’s profitability is measured by “R/C Index”, which is the ratio of contractor’s cumulative revenue over contractor’s cumulative costs. "

https://pdfs.semanticscholar.org/fc18/d793212db6aa41a885de4ac5755ffd20f790.pdf

GL...

GKB - I meant to write 'PM8 gross WI production of say 8.x kbopd (to Enquest)'. PM8/Seligi gross overall production is over 16 kbopd, with 50% straight away accruing to Petronas.

The 8.x kbopd PM8/Seligi number is what shows up in our total production statistics, but we only receive revenues for say 65 to 70% of that 8.x kbopd. I hope this clarifies...

Hello L7,

The production you're seeing on slide 23 is indeed the gross production from PM8/Seligi and that's probably running close to 16-17 kbopd at this time and Enquest gross share based on our 50% WI in that field (plus whatever we get from Tajong ) is the circa 8.6 kboepd figure that's quoted in the CMD.

On the PM8 gross production of say 8.X kbopd, the PSC formula gets applied, and we end up with saleable oil somewhere in the 65 to 70% range of that gross production figure.

I don't believe I've seen anything like this happen to a FTSE 250 company in a single day. 67% down as I write. Holy cow!!!!

Any dividend announcement should be as a show of strength with gross debt below $1 bill, otherwise it'll be just a display of meaningless bravado, as Tullow found out today. Knowing how conservative AB and JS are, they won't be looking at dividends till 2021 at a minimum, IMO. And that's exactly how it should be.

Yes, saw that, GKB. It may well be, unconfirmed at this time. Slow and steady it is for us - execute, execute, execute and hope that Brent plays ball.

TLW's bad news is reflected more on PMO - that's off 10%. Crikey - it looks like TLW may get to the 50s shortly. Down 55% as I wrote.

It looks like PMO/ENQ have been marked down by the Tullow disaster. From a £2 bill market cap on Friday and under a billion now. The failed TLW dividend experiment is a good reason for me to steer clear of dividends and get gross debt down below $1 bill, before any divs are considered.

Maybe some of the TLW money will come our way soon.

GLA...

'Shouldn't it be down' 50% - it might be yet today...

In the meantime, we're sailing along nicely..

Oh dear - Tullow is an unmitigated disaster and some from that board were on here 'feeling for us'. PMSL.

2020 production guidance cut, CEO gone, dividend suspended. FCF of $150 mill after $350 mill capex - And they're at billions still. Shouldn't be down another 50% from these levels? Oh well..

Yes, same sort of ratios for new wells too.

GKB - the recent ops update had Malaysia production volume at 8,390 BOEPD. This is gross and the PSC with Petronas is at a high level as follows. First 10% is royalty to Petronas. The 90% oil is subject to 'Cost oil' where all ENQ's costs are deducted (from gross revenues) and the remainder is then considered 'Profit Oil' , which is subject to a supplemental tax. This supplemental tax moves up or down with the price of Tapis.

At $60 a barrel, the projection from the CMD 2015 report was that ENQ will have entitlement of 70% of gross barrels and 60% of barrels after supplemental taxes. The whole Revenue over Cost (R/C ratio) PSC model is a bit complex to me, but suffice to say we should model circa 60 to 70% of the 8,390 BOEPD as revenue producing barrels for Enquest.

To be remembered that Malaysia produced $28 mill segment profit in H1 2019 on $78 mill revenues.

P - Enquest is still viewed as risky by the markets and is a straight play on Brent prices. I'm also of the opinion that no distributions are considered until at least 2021 H1 results, unless Brent dramatically over-performs in 2020. Net debt needs to get down below $1 bill at a MINIMUM, before any divs are considered. And that is exactly what your snippet from the 2018 report clearly says - sustainable debt levels before returns to shareholders are considered.

@Romaron - we need to be at much lower net debt/EBITDA levels than BP, before we're considered safer by the markets. I'd say that metric needs to be somewhere closer to 1, rather than BP's 1.4. We could get there by the end of 2020 and that's when a true re-rate could happen. With $65 Brent, I believe that we'll get there in a year's time.

GKB - it's not that Malaysia crude is being sold at 65% Brent price; I'm sure that the per barrel price for Malaysia crude is more than Brent as we know. The nature of the PSC with Petronas means that Enquest is entitled to circa 65 - 70% of the Malaysia barrels produced. The actual % can vary a bit, depending on the price of oil, but a circa 70% net barrels entitlement is what Enquest has to Malaysian production.