Member Info for epiphany121

Magnus 21k in December..Nicey...Net Debt $1774 - In between the $1750 and $1800, I'd predicted.

Capex next year $275 mill, including $100 mill deferred. Need to model this impact.

More posts later..

We have a refreshed website and a formal notice to pay cash interest on the GBP bonds has been issued, but that wasn't a surprise though. See the link below.

It'll be good to see where we end up with the April payment on the USD bonds, which carry a circa $26 million half-yearly interest. Brent's averaged $66 in the 4 months since October and we're close to the $65 threshold that could trigger a PIK. I'll be happy if ENQ pays cash interest anyway....

https://www.enquest.com/investors/corporate-actions/retail-bond

A typo in my post below - I meant to say that RCF can be paid down in '2020' (not 2019), if Brent stays in the 70s. That will leave us with just the Bonds to be redeemed in 2022, and the OZ debt.

Evening Romaron - I see where you're coming from and that's sensible. However. at times, I do fall into that trap even though I know it's futile to second guess either Brent's daily price swings or even ENQ's. This is why I don't really bother thinking up and posting Price targets on a daily or weekly basis - there are way too many variables to contend with and most are out of our hands.

Directionally, we know Brent is itching to go up. I'm sure we can see from available data that Hedgies who rode Brent down from 86 to 50, are now taking up long positions. We also know that ENQ is not being valued rationally at this point in time, but we will have cut debt in 2018 and with oil in the 60s (at a minimum), we'll cut it even more in 2019. I can see all of the RCF being paid down in 2019, if Brent stays in the 70s. The market will eventually take notice though and assign a 'fair value' to ENQ. Till such time, we're at the mercy of PIs and market makers, and our time is better spent in not predicting daily/weekly moves.

It's difficult to drown out all the noise around us on MBs, but I agree that we're better served taking a long view and ignore short term moves.

Best

Lol....I'm seeing a fair bit of Red too, Romaron. ;-) Just as not much as you. 57 filtered posts today - that has to be at a minimum a combination of MinerB and Krakenoil, if I look into who could've posted that much. KO is not on my filter list, but sometimes I wonder....

Pelle - Cash flow from ops is different from revenue booked it's all about timing there. Timing of cash inflows would be later than the sale date, as we no doubt know. And capex payments + Galia work over opex could've been front end loaded (till October 2018 - certainly would be for Alma). We do know that in November $65 mill was repaid early (from cash generation). Put all these together, I'd wager that Net Debt would come in between $1750 and $1800 million as of 31/12. I won't be too surprised if we end up a tad lower than $1750 mill.

Morning Pelle,

EBITDA and that translating straight to FCF is indeed a challenge in 2018. We know we won't get the Magnus 25% revenue as FCF and also not the Mercuria sale volume (most of it anyway), and all of the interest/finance charges impact on FCF.

For 2019, EBITDA to FCF translation should look better though with higher FCF from all 3 components listed above. If we can pay down more of the RCF earlier, then that's good interest payment savings..we shall see.

Pelle - with regards to EBITDA for H2 - that should end up being north of $400 mill for H2. Realised oil prices for H1 was $59.5 in H1 (including hedging losses) and Brent average in H2 was $72.2. With the effect of Hedging in the last 2 months, I'd wager that ENQ will realise circa $74 or so for H2. A $14 to $15 increase per barrel in H2, and assuming a similar cost profile as H1, we can see EBITDA in the $430 to $440 mill range for H2.

We could get to the $750 mill EBITDA number in 2018 fairly easily.

I made a mistake when I said earlier that November WI was 42k. I didn't include Alba's 8% ENQ share in that and if we did, November WI production is 43kbopd and the average till November drops only by 180 bopd from October. Assuming Kraken is at 25 kbopd in December (and everything else the same as December), that'll be a tiny bit under 54 kbopd - Not the end of the world...

L3 - undoubtedly, we're where we are because of Kraken issues. In the upcoming update, if they can talk about how they're doing better with Magnus, Alma, and hopefully that Kraken is back to the 30Ks without DC4, that should give a positive push to the SP. Malaysia will be a key investment area for ENQ in 2019 and it'll be good to give us some colour on that. I'm not counting on additional hedges after Q1 to be honest, but surprise us, Jonathan.

Pelle - I'm not sure that there will be additional opportunities like Magnus, given where Brent has been over the past year and given that Brent was only in the 50s for a couple of months or so. AB may surprise with a smaller transaction with BP, but I don't see any cash investments in 2019.

I know this has been said many times - Bottom line is we're a Brent play and the sooner that recovers to $70, the better it is for us to repay debt and boost our valuation.

In light of what we've seen in November at Kraken and extrapolating December, I'd suggest that the 2018 production will end up closer to 53 kbopd, without adding the 75% Magnus share that we should have in December.

It's probably on this 100% Magnus basis that Enquest guided to a range of 54 - 56 kbopd as recently as in the December ops update

Lol..yes, Pelle. We're now officially working with the Saudis.

When Kraken comes back and Brent does its bit soon, we'll get into the 30s. Getting there in Q1 or early Q2 isn't unrealistic..

Yes, Alma has had the best month since the work over. Kraken is a disappointment as we know at 26.5 kbopd. November Working interest is 42 kbopd vs 45 kbopd in October. Average for the year only moves down 300 kbopd though.

If I had to be cynical, it was better that Kraken underperformed in November/December when Brent averaged $60 and $57 respectively. ;-)

Onwards then...

Morning - HK is headed to Captain and due in Orkney in a week. NH is MacDuff and so possibly a candidate for #31? i'm sure Chilts and MO will be tracking closely. @Chilts - the last load started on the morning of the 24th and left AK on the 25th. It would be good to see #31 commence by Friday the 8th.

MO is very clue'd up on the TO end and maybe knows the latest there? However, the guidance was for DC4 to be done by the end of Q1.

Finally, OGA stats aren't out yet. Let's see what we get for November, hopefully at some point today.

Let's just say that certainly wasn't aimed at you and leave it at that.. ;-)

One last point on this, Pelle. I don't know if you've noticed recently, but RBOB gasoline futures haven't moved up at all in the past month, even after WTI/Brent have rallied 20% or more. This is partly down to Winter where demand isn't great and gasoline inventories are increasing because of all the surplus crude oil from the Shale patch.

Numpty wlll have nothing to complain about (for now) as Gasoline prices aren't hurting US consumers' pockets at all even with higher Crude prices. Refiners are the ones that are being impacted negatively by this phenomenon. Refining margins on processing heavy crude, for example, are down to $2.50 a barrel from circa $12 last year. They've had it great for the past few years and now they're getting a bit of payback. This actually would work out well from Crude prices as it'll make Numpty sit on the fence for now. That's my take.

Evening L3 and Pelle,

Yes, ENQ seems to be held down in the short term by the Kraken issues that the market knows about. Similarly, PMO is also being being held down by speculation over their investing in some of North Sea assets that Conoco is looking to sell. I won't ask/wonder why you wouldn't invest more in ENQ - investment decisions are personal and based on one's risk appetite. I guess I can stomach the additional risk that goes with a risky player like ENQ. Execution is an issue that I won't sweep under the carpet and it'll be because of Magnus that our production levels are where they would be and we would've cleared a fair bit of our debt, if Brent stays in the $65 to $75 range. I'm optimistic on that front and if Kraken can roar (to borrow MO's words), then we could break out nicely.

Pelle - what we do know is that the FPSO lease liability (Present value of future lease payments) was circa $750 mill as of 30/6/18. Current liabilities (out of this) were circa $100 mill. $77 mill was the cash payment in H1 2018 and $28 mill was the interest/finance charges recognised in this period. I'm not sure as to what the cash lease payments may end up being with the final acceptance happening in September, but the lease payments being variable based on production targets. We'll have to wait for final 2018 AR commentary before we know more. It's probably OK to assume for now that H2 FPSO payments would line up with H1.

L3 - I'd filtered MinerB as I can't be bothered to respond to his/her drivel posted without backing facts. And he/she keeps baiting Pelle to give out spreadsheets, without putting up theirs. Give me facts/numbers based negativity and I can put up with that. I also don't buy into the incessant positive drivel by some of the posters on here too. There needs to be a balanced view of why we're languishing at these levels and positive only posters don't give that.

Here's hoping we start doing better with AK and the SP moves up with Brent.

Good weekend all..

Cheers, Dol03. The internals are even better ---- 15 oil rigs reduced (+1 gas rig - we don't really care). 3 rigs reduced in the Permian. Every little helps!!!

L3 - purely the interest on gross debt doesn't come close to $200 mill. As of the December update, we had the RCF at $785 mill (Circa 7.5% - Libor plus 4.75%), Bonds $975 mill (7%) and $175 mill OZ (say 7%). $175 mill of the RCF gets repaid on the 1st of April.

I'd that we should have a circa $130 mill interest on these 3 key debt components. If you've added the Kraken FPSO interest to the debt interest, then we'll get close to $200 mill, but that shouldn't be the case. If Brent co-operates and moves closer to/above $65, then we'll be in a good shape to repay the RCF debt sooner.

I can now see that Brent has broken through the $62.5 resistance levels and is closer to $63 now. Every little helps. :-)

I only wish I had more spare cash though to buy more ENQ..

Yes, the good job numbers pushed up the stock market, whilst keeping the dollar low because of a dovish fed. All positive for Brent/WTI..