Member Info for hitman1a

With AirBNB showing a massive premium on top of its IPO price.. I guess many are expecting a significant recovery 12 mths out from today. Everything is aligning correctly with 2H 2021 oil demand expected to be strong following a V shaped recovery in Q2 2021. Our SP is yet to react.. ( weren't we 13.60p not so long ago ?)... Perhaps the US stimulus will get WTi to $50 in the very near future.

Pfizer vaccine is exceptionally good. Roll out in US imminent.

Secondly Shale operators in US can't survive on sub $50 oil moving into 2021 on Tier 2 acreage with child parent issues. Many will try and hedge what they can at $50, but WTI at $54 seems like a good target by end of Q1 2021.

Had a chat with the Doctor yesterday. I said I expected a recovery over 6 to 12 months with an exponential take up of vaccines. The reply indicated a much quicker recovery timeframe was needed, so I expect the vaccine roll out to be delivered with military precision very quickly. I think I'm underestimating the roll out.

Think we will see Brent touch $50 today and close above $50 tomorrow.

I also agree the Far East is reporting healthy demand for oil and this will increase next year.. Slower recovery in Europe and US, so perhaps 6 mths behind.

Think we need Brent $51 to cover the debt repayment and meet it on time in October 2021.. but listened to the Sep 2020 webcast and agree with AB and JS,.. the banks will likely offer to extend the date for any balance remaining..

Secondly JS was asked about the Oct 2023 $1b total bond repayment and he replied he anticipated half being refinanced by another bond and the other half by way of another RCF.. He was confident based on the strength of the assets Enquest now has that the banks would agree. BUT what happens to the $1b FCF Enquest earns from Nov 2021 to Oct 2023.. what are their plans.? I would expect to build up the cash and be debt free by Oct 2023, but Enquest clearly have other plans. They will always have some debt on the balance sheet by choice.. which releases a large amount of cash for acquisitions and developments like Bressay.

So we need above $51 in 2021 to show the equity is making something.. $58 average would give $7/barrel. 54k. maybe £100m/ say 6p. times multiple of 3 or 4, gives a SP range of 18p to 24p once confidence returns in a vaccinated world. This debt is an anchor on the SP for remainder of 2020 and perhaps most of the first quarter of 2021.

I haven't got any info on the Western Flank and Enquest doesn't like to share info.. but I'm grateful for the tanker watching which seems implies gross production is consistent.. ie the extra from Western Flank offsets the small natural decline for 2020.. I think Cairn indicated Kraken gross production would start to decline next year which means drilling in 2022. Estimate WF at 3k. ? AB in the 2020 Sep Q&A confirmed Kraken remains consistent: ie high water cut , but percentage not increasing.

I just listened again to the Sep 2020 results Q@A: Mark Wilson asked a question on Abex ( abandonment costs on oil wells): JS replied about $50m/annum would be a good estimate for next year and each year thereafter. AB at the end of the Q& A confirmed Capex maintenance costs would be also about $50m/year .. so yes I agree the 2021 targeted FCF at $27 should already take into these outflows.

Good point L7.. thanks for pointing it out..

"As previously disclosed, the Group has taken decisive action to lower its cost base across the business, with
significant reductions in its operating and capital expenditure and remains committed to targeting free cash flow
breakeven of c.$33/Boe in 2020 and c.$27/Boe in 2021"

"Oil prices are set to see a meaningful recovery in the second half of next year as the worst for producers, and the market is behind us, Amin Nasser, the chief executive of Saudi oil giant Aramco, said at an industry event this week. "
“We are still in the tunnel, but I believe we can now see more light at the end of the tunnel,”

Guess he read the report from GS and is thinking $65 area too: FCF big WONGA in Q4 2021 for Enquest.

We may have lost production on the high cost fields, but this will be replaced in 2022 with low -cost drills.. plus we have the major annual cost savings benefits of moving down from $33 to $27 next year..
If we average $58 with 54k production.. that's $611m FCF..in 2021... many times the current market cap.. but people do worry how many years production the company has left after the debt has been repaid..

Take off $40m maintenance capex, $40m decom , leaving $531m..for deleveraging in 2021. not bad ballpark to be in.

PIK interest gets rolled in (non-cash) , Ignored Premium on Kraken and the discounts / missing barrels.. WTi at $55 and Brent $58 seem like sensible places to settle at. The OPEC+ monthly thermostat reviews are very welcome.

I'd like to see the following debt repayments made in 2021
1: $120m April 2021
2: $120m July 2021
3: $120m Oct 2021

Small balance $25m paid in Q4 2021 via extension. but i'd rather borrow the balance rom Cairn in Oct and give them the next load or 2.

I agree MrCx3/d

30p is more realistic.. We should see Brent at $51 in Jan 2021.. and then wait for the J&J one shot wonder vaccine in Feb 2021.. It works off the shelf from the fridge.. GS have a $65 target pushed now to the end of 2021.. so that gives an average of $58 for 2021. Perhaps Brent $55 plus by April 2021 and the 2P starts to get added back to the share price if you think $60 in 2022 with some sort of commodity cycle squeeze in Q4 2021. I know WTi at $45 today isn't enough for Shale, so with Chevron and Exxon also indicating capex cuts next year.. I expect WTi to get pushed to $55 asap. ( perhaps Feb 2021) depending on the J & J results.

Looking forward to a hybrid vaccine next year that has the best bits from all of them.. and of course some sort of cure for those already infected.. not sure blood plasma really took off.. I was expecting it to have more use by now to prevent deaths.

Hi Pelle
Enquest have $49 penciled in for 2021 and $60 for 2022.

I'm pleased with the OPEC+ deal.. I like the monthly reviews that act like the thermostat in the hallway.. We also still have a couple of aces to play next year 1: Biden says "less" fracking on federal lands and 2: Shale production tail-off at somepoint in Q1 2021. This together with vaccines, capex cuts and increased demand in Q2 next year will see oil prices rise further..

We need to hit Brent $55 to $62 range to see a better share price here, and BoA say $60 cap next year. GS $65 max. So I agree with others. "More Patience".. but it will be a long wait.. perhaps 2H 2021 to see the share price above 21p. They need to trade another 6 to 12 mths.. bank the profits and repair the balance sheet.

Also meaningfull debt repayments in 2021 save annual interest charges, which releases extra positive cashflow for low cost drilling in 2022... and every year afterwards.

Pioneer and Parsley are a father/son relationship.. as my cousin in Texas pointed out to me.

They use Excel analysis from Goldman Sachs.. so $65 Q3 2021 is the target.. BofA at $60.

Jump to $55 as the stock market tends to look forward.. with more vaccine news and Biden Presidency..
Iran ? .. risk factor after assassination.. might add a couple of bucks to the price by end of next week depending on what they say.. .. and of course demand.. should start to increase by Q2 next year. A slow release of oil in Q2 2021 is all that's needed from OPEC+ this week..

Well done. Google showing 13.30p at 16:35 hrs

if we get $60 plus by mid 2021 , then they could hedge 2 years forward to guarantee all the debt is repaid before Oct 2023 , if they issue an RNS conforming it, then the revenue for all years after goes to equity and decom , the sp would jump quite a bit on the news . How much by ? Not sure but it would compare to Bugatti performance data .

Day 2 on the road to recovery : I'm reluctant to push the market cap beyond £250m at the moment. (15p)

Earlier this year in March , I think Brent was about $49 and all OPEC+ had to do was act together.. Instead the opposite happened. So this weekend I expect a positive OPEC+ meeting to drag Brent back to $50.. The SP should be nearer 19p but we have closed down a few weaker hubs and lost a little production.. That said we are compensated next year with lower costs , but higher decom costs.. I think Enquest have penciled in $40m capex and $40m decom per annum.

So SP at 19p in Q1 next year looks about right to me. (market cap £325m).. But I'd like to see $500m plus by end of 2021 (30p). I think that's achievable with Brent average $55 for 2021.

So much of the extra value Enquest has is trapped in the ground and will need capex, so larger gains are limited at the moment, but it's the same for everyone. For example Bressay.. unless Kraken is producing only a few thousand barrels a day, it might be then worth sacrificing it and blending it with Bressay to make it more palatable. So we are many years away from FCF.

Aviva and others last night on Bloomberg expect oil prices to move higher next year.. Let's not underestimate the vaccines and the better testing equipment.. these things didn't exist 6 mths ago and the next stages of development will be even better. Eg Tesla Batteries : Long Range maybe now 600km, but Elon says he might be able over time to get them to do 700km..

Brent currently $48.35 which bodes well for $50 next week.. I note J&J are behind everyone else. Expecting results at the end of Jan 2021, even might be mid Feb.. Who knows.. it might be the best one ?

Bloomberg headline just mentioned Bank of America thinking Brent $60 next summer.

eh? day 1 of the road to recovery..

Must admit I thought the RNS would be this Thursday.. Points to remember.:
1. AB isn't afraid of debt
2. What's the rush.. have you run out of ideas.. ? They have bought some rights to Bressay this year. Pocket tap time.
3. If your up 30% plus sell.. but many of us have higher averages.. mine are still in the mid 20s..despite the occasional top up. I do recall in February being at 22p and brokers anticipating 40p by the end of this year.. so I can wait another year..

Brent at $50 by january2 2021 would be fine if we are also grinding upwards in 2021.. Saudi want a fair price for producers and consumers.. It's nearer $60 , than $50. No doubt Saudi take advice from GS.. it can only be one thing.. wait for prices to exceed $60 before thinking about bringing back more oil. When you see newspapers thinking $80 is coming.. then start phasing back in more oil.. I'm also a Clint Eastwood fan.. great actor and producer/director. Talent seeps out of all crevices all the time.. hold and don't miss the re-rate .. The Saudi Minister sees himself as Dirty Harry.. doesn't really want a partner and works best alone.. that means everyone else doing what they are told, and he will do rest.