Member Info for epiphany121

I don't quite know how they keep doing it, but production's now hit an all-time high of 12.8 MMbbls/day. Talk about shooting yourself in the foot - oh well, the shalers!!!

They shrink to survive - good for WTI/Brent (Finally). 8% budget cuts this year and apparently trending towards a 15% cut next year.

https://www.houstonchronicle.com/business/energy/article/U-S-shale-sector-shrinking-to-survive-14833356.php

It's the same day

I remember KO writing that ENQ took on additional hedges after the September attacks. Isn't that right, KO?

PMO did everything that the useless TLW couldn't do in the first 4 months of the year.

Production = High end of Guidance
Debt target = Already reached
Hedging = Really fab. ENQ would be proud of their hedging. $70 floor for Q4 2019 - 40% is a good cushion
Capex = Lower than original guidance

OK, Zama sale moves out to December, but wasn't a surprise given no news recently. That should bring Net Debt/Ebitda metric to below 2.

I just hope ENQ can do just as well as PMO in their update next week.

It looks good. Debt at near $2bill - the $300 mill target is already reached. Catcher is still firing. Production at nearly high end of guidance range. Capex is now reduced by $30 at the mid-point of guidance range.

Hitman - "Almost feel they lied to the bankers about production capabilities.. Tier2 and beyond can't be profitable if Tier 1 hasn't been.". The question is not so much about profitability - on the P&L, the vast majority of shale has been profitable over the past few years. The big problem for them is cash flows - can the required capex for simply sustaining production actually be lower than the cash generated from operations. This is now the key metric that Wall Street is looking at and has started rewarding companies that do so by pushing up their SPs. This message is now getting reinforced amongst the wider shale companies, and as a consequence if you look at the Q3 earnings reports, everyone projects that with golden headlines, well maybe not golden. Capex is being chopped, rigs are coming off and if WTI doesn't go up into the 60s soon enough, I think there will a YOY production fall in 2020, maybe towards the back-end of it.

OPEC can't be too unhappy with this price range for WTI, as that's forcing shale's hand here. We'll keep tracking what happens on the trade front.

https://www.cnbc.com/2019/11/13/opecs-barkindo-us-shale-oil-producers-are-concerned-about-slowdown.html

H2 estimated production now revised to 87kbopd, versus the guidance 89 to 93kbopd - that's a reason enough for the share to get slammed. ;-) And not to forget the 2.8 bill debt overhang.

TLW - Operational issues in Ghana and guided FCF in H2 lower than in H1. A 22% share wipeout is what it's currently at.

Cheers, KO. That makes sense. Looking back at Alma's production increase after the workover in August 2018, production did go up from circa 1.9 kbopd to 5.3 kbopd for a month and dropped off after this initial flush to the 2.7 kbopd range. The monthly average production since then has been 3.7 kbopd.

Enquest currently holds 50% of Scolty/Crathes, not 40%. After first oil was produced in November 2016, December 2016, Jan 2017, Feb 2017 were the only months ever where > 10kbopd was produced (14.5 kbopd, 10.5 kbopd, 10.4 kbopd). Given this reality and given what Enquest has guided regarding future production from these 2 wells - "Improved performance at Scolty/Crathes following the pipeline replacement project offsets expected natural declines across the portfolio", I can't see how these wells will start performing at projected peak FDP rates now. At best, they're probably neutralising (on a WI basis) the loss of production from Heather and Thistle.

Hi Hitman - Yes, agree on the capex guidance for 2020 being an important driver for the SP. If they cut that down to say $150 mill from $275 mill this year, that'll be a plus. I don't know if ENQ will provide an 'early' guidance with regards to 2020 capex, but that will be very metric useful to telegraph 2020 intentions to the market. I see lots of shale E&P companies do exactly this with their Q3 results, just setting the scene to Wall Street as to what their 2020 thinking is. The US oil companies are a lot more adept at managing the Wall Street sell-side expectations, however, I can't really see Enquest do such a thing, TBH.

I firmly sit in the camp that there must be more engagement with the sell-side and more clarity, both on projections and operations is never a bad thing. I lean more towards Pelle's side on this - if there is a good story to tell, it must be told. Enquest needs to get the sell-side firmly on board and bring more investors on board. Time will tell.

Hitman - i don't track Apache too closely, but they have a lot of debt ($8.3 bill vs a similar market market cap), huge Permian capex and their cash from ops doesn't cover their capex. These are all flashing red signs for me. They're cutting capex 15% next year at the mid-point of their guidance, that'll be down from $2.4 bill to $2 bill, with minimal growth forecast for next year - the treadmill needs a lot of cash to keep going. I read that they've dropped 3 rigs in the Permian in Q4, and when bigger players are chopping hard, I can only imagine the plight of the smaller ones. Rigs will probably continue to drop too in the coming weeks - I suspect they'll bottom out in Q1.

If only Numpty can now get a deal with China!!!

Londoner7 - A couple of points for me. I doubt that the Magnus 2-well capex will results in cash outflows this year, not fully anyway. It's very likely that the bulk, if not all, of cash payments for these wells will happen in 2020, given that the drilling would've only commenced in Q4. By my calculation circa $21 mill interest accrued ($69mm vs $48mm cash paid) in H1 was deferred for payments in H2 (inline with what you have), likely the RCF interest. If I remember right, management did state that interest payments will be higher in H2 - thus, we're likely to see interest outflow of $80-90mm in H2.

Brent's averaged $61.5 thus far in H1. The 4MM hedged barrels at $66 would help cash flows, and so would any upside over the next 45 days of the year, although they wouldn't matter from cash inflow viewpoint for 2019. With the above, I have my base case for a circa $150 mill FCF for H2 at 69kboepd. We'll know next week what they guide for the first 4 months.

Evening P - I caught the headline, but didn't read the detail this morning. Whats your Green neighbour doing out there in enemy territory? Spacing issues, a bit like what Concho had in the Permian in Q2 lol...?

This one is talking about the growth factor in the US, and Markit's projections are similar to what Mark Papa said earlier this week - growth down to 400K from his previous 700k projection. The falling rigs are pointing the way.

https://www.rigzone.com/news/us_daily_oil_output_growth_could_fall_from_440k_to_nil-06-nov-2019-160259-article/

More good news again. Permian's down 4 - that's the sweet sound of Permian drillers shutting shop for now. Eagle Ford down 3 and Williston off 1. These stats make it even nicer.

OIl rigs now 684 versus 886 last year, and I think they actually peaked in December last year.

Good weekend all and let's wait for higher oil prices - that'll do us good.

HMH - No, I've not filtered you. There are one or two things you and I don't agree with, ENQ's cashflow numbers mostly, and I didn't want us to get into an endless debate about accuracy of numbers and argue over who's right, and dive into profanities. That's why I didn't respond to your last question about cash flows.

Yes, partly agree about shale. The gas oriented/dominant shalers are in trouble and bankruptcies are in order there. CHK may be the first of the dominoes to fall. Some of the oil majority small caps shalers are also in trouble as they have too much debt on the balance sheet, and Wall Street is scrutinising them a bit too late. Their only hope is for higher oil prices to come around (and persist), thus save them. These companies need huge capex just to sustain production at this year's level, and that won't happen for all companies with the recent focus on capex from cash from ops. They're a true swing producer - give them higher prices, say another 10 bucks, capex will slowly start to increase. Whether or not the Tier 1 locations have all been used up, and if Tier 2/3 sites can provide as much oil as Tier 1 locations, that's up for debate. All in all, I'm loving the slowdown in the shale patch and it's welcome news for ENQ to be generate large amounts of cash from higher prices.

NO is still around there somewhere loading up. Just like the hedgies loaded up on oil when it hit the lows at 60.50 or so, a couple of hours ago. Brent's the highs of the day, up about a couple of bucks from that low point.

Rigs count due out in an hour - after a 20 rig drop last week, will be good to see how they trend today. Anything lower in oil is good.

All,

This is from Diamondback's results a couple of days ago. It's good reading of the problems in that patch. We just need to look forward to 2020 for a nice Brent rally into the 70s (or maybe we'll get a taster prior to Christmas).

https://finance.yahoo.com/news/diamondbacks-fang-q3-earnings-miss-130101425.html

Not to forget - look forward to 2 weeks' time.

Give it a rest eh, KO. ;-) Let him/her be and there's nothing gained poking a sleeping dog. They'll come back to gloat tomorrow if oil heads down and PMO drops even a bit as result. That resulting tripe doesn't help anyone. lol..