Member Info for Fernan10

Hi Redon:

I consider the US$ 8/b value as representative of the NPV of after-tax future profits to be generated by the field.

The exact value is anybody´s guess

Regards

Fernan

Hi lsetown.

The drilling cost could be considered as part of the spending necessary to prove the amount of contingent resources (2C). So I´m not sure it could be claimed in addition to the amount of oil already identified in the field.

Regards

Fernan

Good moning.

I´m new to the board, trying to analyze the company before deciding to invest in it.

In the case of the Ombrina Mare field arbitration, I found a very interesting analysis here:

http://arbitrationblog.kluwerarbitration.com/2018/01/27/rockhopper-vs-italy-weighing-legitimate-expectations-investors-due-diligence-ma-deals/?print=print

Excerpts:

"Since by the time the Claimant (RKH) made its investment (by closing the acquisition of MOG in August 2014), the government had already enacted, in June 2010, a decree banning oil concessions near the coasts and an Administrative Court had already intervened in April 2014 by upholding the Government’s refusal to grant MOG the relevant concession (because further environmental assessments were necessary due to the complexity of the project), RKH’s expectations with respect to that oilfield definitely could not have been as high as those of MOG when it first discovered it in 2008."

"In this respect, it is reasonable to draw a distinction between the transfer of rights from transfer of legitimate expectations from the selling company to the purchasing company: whereas the former is automatic, the latter is subjected to the circumstances in place and information available by the time the acquisition is executed."

(Most likely) Outcome: 50% off

"In cases where the respondent proved investor’s lack of due diligence or failure to minimize losses, tribunals often made the Solomonic decision of reducing by 50% the amount of damages awarded (e.g. MTD v Chile, Award § 244–246; EDF v. Argentina, Award § 1302-1312), by holding the claimant accountable for half of its own losses and the host State liable for the other half."

So, a calculation of the amount to be received by RKH could be as follows:

2C Contingent resources of the Ombrina Mare field: 26,5 mmboe (see RKS´s news release on May 23, 2014)

Value of oil in the ground: US$ 8/b (estimated)

Total claim: US$ 212 million

50% off: - US$ 106 million

Amount to be awarded to RKH: US$ 106 million

Success fee: 1/3 of the amount awarded (estimated): US$ 35 million

Net to RKH: US$ 71 million

In addition to that, I think that the net amount to be received by RKH will be subject to income tax in Italy. So, probably an after tax amount of around US$ 50 million will be reasonaly to expect here.

Just my oppinion

Fernan

E121:

I didn´t leave the oil and gas arena. I´m playing the rally in Brent through other vehicles, that I´m more confortable with. And all of them have seen their prices increase in recent days.

Regards

Fernan

Here is an excellent analysis from Rystad Energy, the consultants that in my oppinion have better forecasted US shale production growth in the past:

Excerpts:
______________________________

Private operators and majors expansion

Another production trend that emerged in 2018 was the rapid light oil output expansion demonstrated by majors and private operators. We have recently analyzed the outstanding progress achieved by majors among unconventional US plays, yet a staggering 63% year-on-year average production expansion as of November 2018 was not matched by any pure-shale public E&P player last year, as shown in figure 2. Private operators increased their combined unconventional output by 44% year-on-year as of November 2018, twice that of the average public E&P (excluding majors). This production outperformance by private operators and majors largely explained a significant mismatch between market expectations on the US oil production forecast and the actual 2 million bpd addition over 2018.

Steepening base decline

Finally, a significant surge in the activity level from the second half of 2017 resulted in more pronounced base decline, i.e., the pace at which production falls if no new wells are completed. The wells completed in the two years up to and including November 2018 accounted for 72% of total light tight oil production. Therefore, base production today is significantly less mature than it was in November 2016, when the last two vintages accounted for only 62%. In fact, it is almost as young as it was in November 2014.

If no new wells are completed in 2019-2020, light tight oil production is projected to decline by 62%, or 4.5 million bpd. It is evident that without an increase in activity levels in terms of new completions, or further increases in well productivity, the pace of growth will decelerate in 2019-2020. In fact, if the activity and productivity levels seen in 4Q 2018 prevail, US light oil production will increase by less than 1.5 million bpd between 4Q 2018 and 4Q 2020. This corresponds to a 50% lower growth rate than what was achieved over 2018.

_______________

https://www.rystadenergy.com/newsevents/news/newsletters/UsArchive/shale-newsletter-february-2019/

Regards

Fernan

Hi L3/Pelle:

If you are interested, I cand send you by private email my spreadsheet on Enquest

Regards

Fernan

Hi Beatley.

I will send you by private email my spreadsheet and comments on Premier Oil

Regards

Fernan

Pelle/L3 trader:

thanks for you kindly words. It´s people as you, Matrix and E121 that makes this board an interesting reading, even if I´m sold here (but still invested in oil related themes, as L3 and E121 know).

In relation to KO, well, I think that by now everybody here has his/her own oppinion about his intelligency (or lack of). I don´t think I have something significant to add in that regard.

Fernan

From page 109 of the Magnus 75% acquisition prospectus:

The Group is currently engaged in a dispute with KUFPEC, the Group’s field partner in respect of Alma/Galia.
KUFPEC has commenced a court action in the High Court of Justice claiming an alleged breach of one of the
Group’s warranties provided under the Alma/Galia Farm in Agreement and seeking damages of $91 million (the
maximum breach of warranty claim permitted under the Alma/Galia Farm in Agreement), together with interest.
The court proceedings are on-going and the Directors believe that a considerable period will elapse before a final
decision is reached by the courts. The Directors consider the merits of the claim to be poor and the Group is
defending itself vigorously. The Group has not made any provisions in respect of this claim as the Directors
believe the claim is unlikely to be successful; and in any event the Directors believe the chances of an outcome
exposing the Group to material damages are remote. There can, however, be no assurances that this claim will not
ultimately be successful, or that the Group would not otherwise seek to enter into a settlement or compromise in
respect of this claim, or that in the event of any such circumstances the Group would not incur costs and expenses
in excess of its estimates.

Hi L3.

I know I will be under attack for this post because I´ve already sold here.

But there is a claim of the kuwaities against ENQ in relation to a supposed "breach of conract" in the Alma Galia project (the kuwaities invested a few hundered million dollares here)

There isn´t any provision in the balance sheet, because, according to Enquest´s board of directors, the claim is without merit.

But if Enquest Producer has been failing since day one, and knowing that it´s owned by ENQ, if I were a shareholder, I would ask management about the basis for the claim.

Regards

Fernan

Hi L3.

I´ve sent you an email with the financial model for PMO and a few comments on it

Regards

Fernan

A few monthst ago, I asked MO about the implications of an increased ownership interest in the SVT terminal and pipelines, from an earnings point of view.

He explained to me that a great part of the revenues will have to paid by Enquest as an oil producer and user of the infraestucture. So he didn´t think that it will have a great impact from an economic point of view

Regards

Fernan

Hi L3;

so, the email is:

l3trader@gmail.uk

Please confirm to send my email

Regards

Fernan

Hi L3

yo need to send me a private message here with an email address

Regards

Fernan

You´re welcomed E121.

regards

Fernan

Hi E3.

I have my model for PMO too.

I can share it with you via email.

Regards

Fernan

Hi L3

E121 said that my calculation of FCF for core business FCF close to cero should be due to "spreadsheet issues". So I presented my numbers with some level of detail

But apart from that, there is a problem in relation to MAgnus OPEX, as follows:

According to management, all the increase in annual OPEX (from US$ 470 million to US$ 600 million) was due to the acquisition of 75% of Magnus.

That means that, on a 100% basis, annual OPEX for Magnus will be around US$ 173 million

That number is substantially higher that the one presented in the prospectus.

There is difference of around US$ 77 million that needs to be explained, according to my previous calculations

On the other side, you have management talking about Magnus expenses going substantially down.

so what is the real situation?

Regards

Fernan

E121:

it´s good for you to check the situation about Magnus OPEX with IR.

Management have been boasting about Magnus OPEX substantially reducing as of late.

If, according to your criteria, all the increase in annual Enquest OPEX (from US$ 470 million in 2018 to US$ 600 million in 2019) is due to the acquisition of 75% of Magnus, then it means that Magnus OPEX have been INCREASING instead of DECREASING since the date of the GC&A report, as per my calculations.

Regards

Fernan

HI E121:

Regarding OPEX, I really don´t think that all the anticipated increase in annual OPEX (from US$ 470 million to US$ 600 million, for an annual increase of US$ 130 million) will be related to the acquisition of 75% of Magnus. That would mean that the third party auditor of the project (Gaffney, Cline and Associates) was completely wrong with their estimation of 74,6 million pounds for the 100% of Magnus (see pages 202-203 of the acquisition prospectus).

According to you, there will be an annual OPEX for Magnus of US$ 173 million on a 100% basis (US$ 130 million / 75%) versus US$ 97 million according to GC&A (74,6 million pounds X 1,30). As I said before, I don´t think that GC&A was so wrong in their calculations.

If that is the case, and OPEX for Magnus will be that high, then the US$ 500 million of NPV to come from the acquisition of 75% of Magnus (informed by management to get shareholders´approval for the rights issue) will need to be revised lower.

In relation to Malaysian taxes, average Brent in 2017 was US$ 54,2/b. Higher average prices expected for 2019 should increase the amount of income tax to be paid. Maybe not as high as I estimated, but it should increase somehow anyway.

Regards

Fernan

Hi Pelle. I run my numbers considering all the info provided by the company.

But yes, based on the info on the prospectus, OPEX for Magnus will be substantially lower than the US$ 25-30 range that some posters mencioned (see pages 202-203 of the prospectus).

Regards

Fernan