Member Info for hitman1a

We know the oil market will tighten up.. just as in business when certain items are running low.. you start selling them only to customers that are prepared to pay full price, rather than those that always ask for discount.. the same will happen with oil supplies once Europe restarts and accelerates the vaccine programs.. After you get to 60% vaccinated with at least 1 jab, you avoid the large number of serious cases ending up in hospital.. and all the other problems like a lack of beds and oxygen.. US, UK, rest of Europe , Those that are in bubbles like NZ and Aus.. there is a way forward which will be reached this summer.. Those that are only at 10% vaccinated or less need to catch up quickly in 2H 2021 and beyond.. But beware of winter..

Few funds want to carry energy stocks into Winter if there is a third wave, so yes we might see Brent $75 and the SP return to say 25p, but many will use it as an exit point.. (as before). Enquest should be an exception as we have a very small market cap compared to the magnitude of the rate of deleveraging.. so let's see what happens by September.

The other day on Bloomberg a lady came on and said she was long on commodities.. except energy.. bit disappointed when I heard it.. so there is definitely a widespread case against energy despite the earnings. I guess they see it as a dying space. They prefer investments in sectors where they can buy and hold.. they can't invest in sectors they perceive as "buy and watch the sector erode".

The Mattel CEO was on yesterday.. brilliant numbers , but when asked about a dividend.. he said no , not yet , until they have deleveraged further and met some ratio criteria. Could have gone to the same school as AB.. but gave the impression they were about a year away..

Guessing Jefferies see $400m net reduction in 2021 (excluding GE) , so worth 17p, Add 50% to equity gets us to 25p plus a bit extra if the GE deal gets done and taking into account the OO dilution. Target 28p. Still seems low give the 2P , but like Mattel , we aren't meeting our ratios yet.. The market doesn't like debt.

Very low volume today.. almost nothing, so I think the algo has now turned off the negative direction radar beacon and gone neutral in light of Jefferies buy recommendation (target 28p). Brent should break out higher during the summer months to $68/$72/. Not sure we will see $75 , but if we achieve a $66 average in 2H 2021, that gives a good chance to get to 28p just based on actual earnings.

I was just thinking the same. Barclays are normally a couple of pence above Jefferies.. Isn't it Mark Wilson from Jefferies who asks a lot of questions . Maybe he has now received full replies via email over the last month to all his queries to justify the 28p target. I topped up a few just now at 15.90p ... only 9 weeks left until we finish 1H 2021 and can release a decent 1H results in September. Still a bit perplexed about how we have dropped from the 23p range.. but should get back there again by September, even with the OO, given Q3 Brent prices are expected to be in the $70/$75 range.

I'm not sure when Jefferies expect to see 28p.. is it over the month, Qtr or 6 mths.. ? Barclays 30p by end of year would be my guess.

https://www.rigzone.com/news/wire/oil_trader_sees_crude_in_70_to_75_range-20-apr-2021-165209-article/

Comparing to Tarmaks calculations, we have reached Brent $67 earlier than expected , He thought by 2nd week of June. Although his calcs suggest Brent will trend up , the forward curve suggests the opposite after July . So Houston , we have a problem , At the moment I assume GS and other banks are correct and Brent will rise further .

Why not just replace the FPSO with a newer one, if there is still plenty of oil left, e.g. Enquest Producer FPSO is sitting in dock, ready to go,..subject to finding a new buyer.

https://m.investing.com/analysis/its-time-to-make-a-play-on-oil-200573194

I believe we need Brent $75 to see 30p . (last year I thought $65 was enough). It's difficult to accept.

Recently Brent $71 got 25p. (but heavy sell for lots of folks). We need exceptional demand in the US and China to take this to $75 at somepoint in Q2/Q3. If China starts buying again in May, that may start the liftoff sequence.. as the US won't be able to supply it's own domestic market and keep up exports without importing lots more.. from people like us.. A bit of competition for loads between US and Singapore would improve the base price and premium further..

The Algo knows the current FCF.. The Algo knows the 2P. but every 6 mths Enquest have massive write-offs and have created titanic losses. The legacy of our previous business plan . These wipeout any benefit to equity from trading activities.. so the SP struggles.. Let's see these Capex addicts publish a set of accounts in September 2021 without a write-off. Haven't they run out of assets to write-off yet? I'm sure there are a couple of skeletons somewhere .. but you never know , they seem to emerge from somewhere. Bit like the ending from the James Bond film Live and Let Die, where that chap keeps popping up from the soil .. Bond shoots the top of his head, kills him, then another pops up.. Bond then trips the new one up and he falls into a coffin with snakes.. I assume he's dead. but no.. he reappears at the end of the film again at the front of the train... and says Ha Ha Ha Ha.

What we have a mixture of good and bad teeth.. the company presents the good teeth and the Algo says, ok, lets also look at the bad ones in the Balance Sheet. These override the good ones. SP flat. but it could all change this year..

We saw this before , even Brent $65 doesn't budge the SP.. it needs to be near $70.. When we were at 25p before , the WTi price has since dropped nearly $10 and is only now recovering.. I bet there were one or two little shorts that also helped it touch 25p too.. We dropped from 25p to 16p. We can push WTi to $65 by/before June, and the SP Algo should respond accordingly. We should now start to recover over the next 10 weeks with the earnings over Q2 underpinning the SP.

Q3 and the OO dilution will of course dampen the SP performance but we will have to shake it off and look forward to Q4 earnings to compensate accordingly.

1H 2021 accounts in September should be decent.. and some news on Enquest Producer would be very welcome in the meantime. Other than the above, staring at the SP won't make it go up. But if we all do it at the same time.. it might.

https://www.google.co.uk/amp/s/oilprice.com/Energy/Oil-Prices/Morgan-Stanley-Oil-Prices-Stuck-In-60-Range-This-Summer.amp.html

Plus we still have the bonus from Enquest Producer.. outright sale or lease ?

Maybe we can finalise a deal this quarter.

UK fully reopen by 21 June, (California aiming for 15 June)
International flights restarting at somepoint from 17 May ( US CDC thinking the same) to low risk destinations.

Seems like demand for oil will be increasing sooner than we think. The dates above are fully reopen so demand will start to increase from next week here in the UK and elsewhere too. Europe might be 50% vaccinated by the end of June now they have sorted out which ones they prefer to use. We can start to push WTi to $65 (Brent $68) from mid May with China helping with buying as well. July looks like a good time for higher oil prices and then taper back down once OPEC+ releases a little back one month at a time.

Can't really explain the SP, apart from the graph matches TLW and HBR(PMO). We have a clear path to full debt repayment by Q4 2023 and existing 189 x 2P . Maybe we can double up from here by July as confidence grows around the world and oil prices trend to Brent $75 plus.

The ROW is way behind the leaders but you only have to fully vaccinate the higher risk groups to reopen the economies. This might take a year or two... but on a brighter note.. no covid deaths in Scotland over the last 24 hours..

Think the market realised today that the Saudi Oil Minister is smart enough to play the game and get it done. If we see $70 earlier than expected and it lasts for much longer, then we do indeed have the right conditions. Enquest should improve to 30p, so let's see how quickly we see $70. I'm concerned about the current SP. I wasn't a couple of weeks ago , so will be pleased if we react positively like before to Brent climbing higher.

I'm not expecting the Biden infrastructure plan to make much difference to oil prices this year.. yes he wants to rebuild 20,000 miles of roads and repair bridges... but as the Guardian says, it's a 8 year spending plan..

Almost $1.5 up from when we closed at 4.30pm .. when one or 2 sold at 17.50p.

Think the Chinese will bring some of their May purchases forward into April..

Almost everyone expects prices to rise with demand.. but it's always going to fall back once the bulk of OPEC+ barrels come back later in the year. Think we could see highest prices in June and July. And also Enquest back to 24p..

GL.

As one pundit on Bloomberg said today.. there is so much pent up demand in the US , that pump prices today at $2.80 might seem high compared to $2, six months ago, but even if they were $4 in Summer , people will still purchase it and go on their road trips..

The market is undersupplied by 2m /day already.. I don't think the extra increase from Opec+ covers the increase in demand expected over May and June, let alone the existing 2m bopd. We will have a deficit at least until end of June.. which should support prices in Q2.

If it's for domestic demand ( Russia and Saudi), then the numbers look alright as they cover us for all of Q2

By Q3 , vaccinations should have caught up for those most at risk within countries that are behind the most..