Member Info for epiphany121

Romaron - you're correct. The leverage ratio you're quoting and as referred to in the recent FY release is indeed the Net Debt at £1775 mill to EBITDA ratio. This is the target ratio that AB suggested would come in close to 2 at the end of 2019 and longer term to sit between 1 and 2 . I'd suspect that this will end up closer to 1.75 at the end of 2019 - if Brent averages 70 for 2019.

Best

Broad set of draws today. I expect EIA to show a bigger draw tomorrow - 5 million plus draw won't be a surprise.

API

Crude -3.096mm (+2.3mm exp)

Cushing -1.561mm

Gasoline -3.561mm - 9th draw in a row

Distillates +2.33mm

Lol..L3. As if the world was that simple enough to write off management that they have failed badly because they failed to hedge on the first pass last autumn. The argument you're making is rather one-sided and I don't buy what you're saying. Have you forgotten that it was a hedging decision back in 2015 by AB/his team that led to ENQ making $255 million and saved ENQ's bacon, literally?

I partly get Romaron's argument that it's worth holding on to money, rather than buy options. But, there are ways to go about it, via collars, with minmum cash outlays. As we know, ENQ has hired a resource whose focus is on identifying opportunities to hedge and that's a big tick in the box for me. To me, they've identified a deficiency and worked on a solution, rather than panic. And anecdotally, that person has been proactive in putting on collar hedges. Yet another tick in the box.

Backwardation doesn't mean that a price of an asset will fall - that's just a plain wrong way of looking at it. It only points to the fact that there are near-term supply issues and that the market is saying that there is a good chance that supply may not be that much of an issue in the future and oil prices would be lower at that future point, as a consequence. However, there's nothing stopping the entire curve - both spot and futures rising up in unison, and still maintaining a level of backwardation. So, Brent spot could be at $80 a month from now and futures next year could be at $75. Your interpretation of backwardation is factually incorrect. However, I'm not for a minute suggesting that Brent prices could fall a few bucks from here. But, I firmly believe they'll bounce back from any corrections.

Gasoline has been moving up sharply and I believe it's a given that Numpty will open his gob yet again again, but in a more forceful manner and that'll bring down Brent by a few bucks. But in the absence of a sharp OPEC+ reversal, Brent will be at these or higher levels for the rest of 2019, on an average. Recession fears have all but dissipated and the trade war issues will soon be resolved, amicably.

More likely candidates are Scott Spirit or Amundsen Spirit - both a few days away. If we get a tanker in before the 20th, that's great. HK on the 16th is highly unlikely, as that's a way too short interval (9 days).

Good news, YOY. Cheers

Gas down 5 and oil up 2. Net negative for oil, I'd say, given that Permian is up 2.

This article suggests that there'll be major volatility next week in WTI, based on open option positions in the market. We'd dearly love for this to be on the upside though.

https://www.zerohedge.com/news/2019-04-12/volatility-dead-ahead-oil-market-gamma-goes-vertical

Slippery squid loading up - the only thing I can see squid loading up on is a lot of Sh**te..Oh well, that's still loading up though.

These shareholders have a long term view and are not an impatient lot. That's what ultimately will get them the returns they're expecting over the next couple of years, assuming a base case Brent $70 for the next few years.

Hi Pelle - yes, we're going to have hedge losses on the OZ hedge as the collar ceiling was 68, but that's a nice problem to have. ;-) We still have a fair bit of the portfolio to hedge this year and of course next year. Hence, the higher now in 2019 the better it is for 2020. For me, the bigger upswing for ENQ will come in 2020, after debt has been sufficiently reduced.

I'm not predicting 60p and the likes in 2019, but certainly in 2020. Brent is already up nearly a buck today - I'm not following the news, but maybe it's the Libyan general story?

P.S: I'd never been in Norway till last week, but Stavanger last week and now in Oslo. A pint of beer, or a bottle of Trappist beer or a glass of wine gives you a perspective of how cheap ENQ stock is .;-)

L3 - yes, I really am throwing the kitchen sink at ENQ. I'll only give myself a less than 10% probability of ending up busking.Lol
;-)

GLA..

Pelle - I'd agree with you that I'd wait till Brent is at least $75 before going forward with hedges. Perhaps, L3 meant PMO.

I'm adding more ENQ tomorrow in my ISA..;-)

After a 5p downgrade in February, it's now put back up by 2p today. I still can't see any their rationale for the downgrade in the face of rising Brent..

Thanks, Svensson. Much ado about nothing after all??

Nice one, Romaron..

Please try this, L3.

https://www.cmegroup.com/trading/energy/crude-oil/brent-crude-oil_quotes_globex.html?optionProductId=2924&optionExpiration=2924-J9

You need to click on Globex Options tab and then change to the desired month/year. That gives you the WTI options costs. It doesn't seem to be working at this moment.

Best

In all seriousness, I did switch most of my PMO to ENQ in my SIPP and trading accounts, starting in late Jan to as recently as after the results. I wish I had some more powder dry to buy more, but as it stands, i represent the classic definition of an investing idiot - almost all eggs in the ENQ basket. But, I still think this will come good in 2020, if not in 2019.

One day does not make a trend - but this is a good day nonetheless.

I'm also gutted as I wanted to buy 5 million shares at around 15 - 16p. Then, I looked at my bank account and realised I was only dreaming.

275k at 19.6 - announced today.

Yes, that's about right, Pelle. However, what the FCF metric is, that's the key question. Ideally, because you're talking Enterprise/Equity valuation, this should be based on FCFF (Free cash flow to the Firm), rather than the simplistic FCF that we work out.

Please see this link for more information.

https://corporatefinanceinstitute.com/resources/knowledge/modeling/unlevered-free-cash-flow/

Hi Pelle,

I haven't done this, TBH. I haven't as yet gone into cash flow calculations for 2020 and beyond. Maybe at some point soon.

Best

L3 - I can't see how finance expenses will be a big deciding factor in determining how much net debt drops in 2019; in reality, they're not signficant.

The three 'large' finance expense components are RCF Loan interest (RCF) - 93 mill, Bond interest - 64 mill and Charges on Lease payments 56 mill. The RCF interest component is about the only interest component that is variable for 2019. RCF + OZ interest will be circa 67 mill down from the 93 mill in 2018.

The key for net debt reduction for ENQ is what Brent averages for 2019. As we know there are the large accrued expenses repayments that'll be repaid in 2019 and that'll limit how much net debt will fall in 2018, unless Brent over performs.