Member Info for epiphany121

Hello Riskingit,

Were you the shareholder who was at the AGM yesterday - the one I spoke with who said they follow this board closely, but doesn't comment much? I couldn't quite remember this gentleman's profile name.

I need to tone down my previous comment where I said 250+ mmbbls of 2C at Magnus. It's not quite 2C reserves, but known in situ barrels based close to where lots of drilling has happened, and are recoverable. We may end up being able to extract a lot of these barrels. You can see in slide 7 of the analyst report on the 7th May (effectively what was presented to us yesterday) - that talk about 270 mmbbls of potential future upside that could be converted to 2C and 2P reserves with additional drilling. We know STOIIP is pretty huge at Magnus and opportunities are there.

https://www.enquest.com/fileadmin/content/Presentations/Sell_side_meeting_slides_-_May_2019.pdf

With regards to kraken, the 2C related updates are on page 9, and they're circa 160 mmbbls and that's a good upside for ENQ. What will the eventual RF be - I don't know. Even if it's a conservative 60%, that's a good 100 mmbbls over time.

The Eagle future development with 62 mmbbls STOIIP, and a circa projected 80% RF - that's also a future drilling opportunity.

Best

To Romaron's point about Shale - WTL is quoting 2 to 3 bucks below WTI - and that's all the Permian oil floating about. Who knows the spread may have widened more recently. Bakken shale is a good 8 to 10 bucks lower than WTI. These shalers just can't get any FCF with oil at these levels. More debt has to be taken on, if only just to keep production at these levels.

I discussed with the O&G industry shaleholder "K" that Romaron mentioned and we both talked Sanchez energy - 2 billion dollars debt and located in the Eagle Ford shale region of Texas. No FCF at all - and they're practically bankrupt now, and they produce more than ENQ in BOEPD, 80 kboepd and about 60% oil. They realise $210 mill per quarter in revenues now and their production is now down about 10% from this time last as they had to suspend drilling as they had no cash and no one's lending them. Their SP which was $5 in July last year is 12 cents now - that's a 98% wipeout. I know of AREX - Approach Resources in the Delaware Permian belt that's also bankrupt, just like Sanchex, although AREX is much smaller. There are lots of such stories.

Hence, you can see why Saudi may not be too reluctant to let oil drop a touch like yesterday, although I believe that is really out of their hands. It will give them ammunition to say that market is still oversupplied, price has come down and so, let's continue with the cuts. With all the excess light stuff the US is producing, WTI brent dfferentials will widen more, IMO. That was my first reaction when I saw the EIA builds on Wednesday. This may now be the second large downfall of small/medum shalers, only this time Wall Street will not be around to bail them out.

Hello L3,

No, I didn't ask any of the questions you've listed. I'd asked quite a few already and I didn't have these on my list, I'm afraid. With regards to Alma - forget any dreams about 12 kbopd. That's just not going to happen given that may be wound down sometime before mid 2020s. The painful reality is the ENQ is not cut out for new development projects , sadly. They should stick to their core strength of exploiting late cycle assets and producing oil at low costs from infrastructure already in place - the likes of Magnus and even the Kraken flanks, for example. And not to forget, Seligi too.

I suggest you write to IR with your questions and Ian will do his best to get you the answers. Who knows, you may even like them. ;-)

Best

Morning DD,

Reading between the lines from our discussions yesterday, it looks like they're targeting net debt of circa $1.5 billion. EBITDA should be comfortably north of $800 million and so, yes we can end with your projected ratio or less. The commentary in the last FY report was very conservative in terms of approaching 2X, when it reality it should nicely under 2.

Best

Morning Runner,

It was good to meet you yesterday and that you had a good time in London. Look forward to your notes as well on Sunday. Maybe the next time around when the SP is in the 40s ;-), you could also join us for a few celebratory beers (or champagne).

Stay in touch.

Best

Hello MO,

Prima Facie, I think this report has great detail - a great find. I'll check this out in tomorrow in the morning.

Cheers

AB is the consummate technocrat and a really likable guy. Whilst this is not enough to guarantee a company's success, he's looking at this over the long run. He puts his money where his mouth is, as we no doubt know. There are bits like Brent he can't control - but in terms of operations and getting AK all the technical help it needs, he's doing his best. I still think that ENQ truly getting past the 40 handle sometime in H1 2020, assuming Brent is in the Goldilocks $65 to $80 range - I'll be a patient bloke till then. GLA..

If I remember anymore, I'll post later on.

KO - Lol..First time you sounded like you were upset and Romaron tipped you over. " I take it you we’re that posh, smartly dressed kid at school who thought he was a cut above the rest but unfortunately got bullied by the scruffy hard nuts." The Romaron I saw today was anything but your presumed description of him, but that's a conversation for another day. ;-)

Back to the AGM and to add a bit more to what Romaron wrote - here goes.

As already pointed out, the direction for ENQ that was laid down in the AGM is incremental investments in additional flanks at Kraken/Magnus/Seligi. As per their exploration modelling Magnus still potential 2C reserves of circa 250 mmbbls - not all easily exploitable, but that's the scale you're talking about. AB would not drawn into exact production number at Kraken, but he did confirm what CNE said about Kraken hitting 45 kbopd rates after DC4 went online and as recently as in the past few days. He wouldn't say sustained though. I did question whether they were under cooking the guidance range for Kraken. They're just being very conservative, IMO. They've been bitten in the past and they're trying their best not upset the market/sell-side any more than they should. I think they'll have a to see a few more months production, maybe even after the shutdown, before they issue formal revisions to that production. He did confirm that they've had a marginal premium to Brent in the recent load or two, and that trend could continue given the supply issues in Iran and Venezuela.

With regards to hedging, most if not all hedges, are collars. It was nice to hear that the actual cost for these hedges are cents per barrel, rather than anything more. They really want to get Net debt to Adj. EBITDA down below the 2 mark by the end of the year. From a sell-side viewpoint, they wouldn't really look at us unless we improve on that metric - that was a key message. Dividends could looked at once net debt is brought down to more meaningful levels, and we knew that. I did say to the BOD that I don't personally see dividends being dished out unless the RCF was paid down. I did ask JS if he saw the possibility that we could get rid of the RCF by the end if 2020. He danced around the topic that the City analysts were modelling in circa $1.55 to $1.60 bill net debt at the end of 2019 - but he didn't give any guidance on where we could end up at the end of this year on this metric. Pelle - as ROmaron said, maybe your dividend wish may come soon, and soon enough should Brent get to the 80s and stay there for a period.

Regarding the DC4 and early flush - I did ask the question. AB said that because of the nature of the heavy oil reservoir, you typically don't see the high flushes initially and a taper down. With regular offshore fields, this may be the case, not so much for heavy oil fields.

TBC...

Hi MO,

When we reflected on the LSE boarders, we agreed that we missed you there and also Pelle. I know it's been painful for you, and it has been painful for me too, and even with cost averaging when ENQ went down, my average is still over 27p. I'm still keeping my faith and I'll report back later. I have a few errands to run now, but maybe in 3 hours or so.

Thanks

P and Ajes,

Met up with Romaron and a couple of others - one was a fellow Swede of yours and another chap who is in the O&G sector and knows that business well.

It was great to meet up with a few more long term holders - the others were a good 4 years long holders, similar to you, P.

I don't think F_AHL showed up today, as this was another bloke. I'll post later some highlights, but I didn't take any notes and il post whatever I can from memory.

AB is a lovely chap and I spoke for a while with Bob Davenport too.

Laters...

All,

They're now selling Kraken at a premium to Brent..isn't that nice??

Thanks for the update, Hitman. Sorry you couldn't be here.

Amjad is presenting now and I hope to ask questions later on.

Whereabouts are you??

No, not in the slightest. I didn't have any overly optimistic/unrealistic expectations for this update. I'd have loved to see a year end net debt projection, which wasn't there, and I'll ask that question today.

I'd have liked to have seen a Kraken production range upped a bit, in light of what we're seeing now, but like I said yesterday, they're erring on the side of caution and probably want to see a couple of more months output, before upping it.

Other than these, what;s not to like??

Pelle - if everyone is as stable as you, this board will be a different place. ;-)

Too many light weight panickers, I'm afraid. Complete light weights..

Nice - we have an upgrade..finally!!! Lol..

If all the panickers on here properly read and digest what was said regarding hedging - it's a $66 floor. Not a swap transaction at that price where a price is locked in. It provides downside protection and retains upside to a certain limit, assuming it was a collar. Else only the downside is protected.

It's mind boggling what a 10 or 15% sell-off can do to peoples' psyches..Lol.

This is in-line with my expectations. I didn't expect any miracles, but steady performance and that's exactly what we got. There were no mis-steps and as NSeaOG just stated, the overall net debt reduction needs to be viewed in the context of the favourable working capital movements that had to wound down in Q1 19. I don't understand why there was larger net debt reduction expected by some on here, particularly in light of the commentary we had in the AR around this very wind down.

It's good that ENQ is listening to the market (and us) and is layering on hedges. Production at Kraken is improving and hopefully, will continue to do so. The major debt reduction will be in H2 as is typically the norm. We'll continue to ask for better hedging..

4.7 million Crude build.

3.7 million Gasoline build

0.8 million distillates build

100k production increase,

I can only see differentials increase with these type of numbers...

IF the trade war gets amicably resolved, and we're a long way from there at this time, we should see a good rally in Brent. Here's hoping...