Member Info for hitman1a

Bloomberg reported last night that Goldman Sacks had been asked to review the Saudi budget numbers all the way to 2023
Saudi had used $50 in the budget..

Guess Enquest would be ok at $50, but $55 makes a huge difference. Perhaps the headline was released to encourage more compliance as I'm sure all Opec+ members and US producers would be quite demoralized to live with $50 for another 2 to 3 years.. Trump is proving with the right combo of drugs, recovery rates are quick.. so it's just left to airlines to start up again.. next year post vaccination.. Surely they can release the drugs to all hospital patients worldwide.

AB already confirmed no cash .. ie very limited upfront cash available.. no doubt Enquest can provide capability to deliver better results.. so if the other 2 offer make a low offer , the Enquest "Magnus"model excluding cash upfront might succeed.. or Enquest takes them under management for a fee.. Add 2 or 3 together and you end up with $30/mth which helps us deleverage much quicker. Sell and get paid for your knowledge.. don't buy the asset or take on decom liabilities.. I said it before and I believe AB and JS think the same.. In fact it was sort of confirmed by the AB response posted earlier. ie Focus on Fit.

Let's not underestimate what 2 Hobbits can do . AB and JS have designed a new business model but have a huge burden to carry. We can't carry it for them.. but the mthly management fee business model will deliver huge positive cashflow without debt. Just need one deal and then the market can revalue us because after the first.. you know Enq are looking for the next one..

The old business model of purchasing assets and relying on higher prices is now dead, but the expertise/intellectual property lives on and can be more valuable to shareholders going forward on an exponential basis.. there are so many fields that could benefit from Enquest capabilities. Enquest can be the "Apple" of the North Sea.. and beyond.

FOCUS ON FIT:
“We continue to look at opportunities,” says Enquest CEO Amjad Bseisu. But he stresses that any acquisitions must be similar to when they have bought producing assets in the past—or indeed the firm’s July deal to take part of the stake in the Bressay heavy oil find held by Norway’s Equinor—in that they must fit with Enquest’s existing portfolio.

“We are only looking at deals where we bring something to the table” Bseisu, Enquest
Deals will be “capability driven” and with “hopefully very limited upfront consideration”, says Bseisu. “The key is we are only looking at deals where we bring something to the table… That would be the first port of call in terms of looking at the assets in their portfolios that the majors are offering.”

The message seems clear: any buying is on Enquest’s terms and is unlikely to be on a portfolio-wide basis.

There was US pundit on CNN the other day who said US investors were liquidating positions in real estate: ( shopping centres) and energy : eg Exxon. Most had average annual 15% returns to obtain so were looking for places to invest , partly sitting on cash, partly buying dips in the favs like Apple etc when the opportunity arose.. Some pundits only keep 2% Energy in the portfolio. Most of all its negative sentiment on Energy and no earlier than 2022 to 2024 when airlines might see some boost in international travel.. post vaccination.

AB pulls a rabbit out of the bag, gets us Exxon NS assets with NPV of say $800m for $250m. (uses his credit card with 2% cashback)

https://www.google.co.uk/amp/s/www.bbc.co.uk/news/amp/uk-england-birmingham-54375643

Good news Romaron

https://theconversation.com/from-adenoviruses-to-rna-the-pros-and-cons-of-different-covid-vaccine-technologies-145454

I don't see any need for a restructure via equity injection.. as JS has already said another RBL could be raised based on the strength of our reserves. AB is focusing on net debt reduction for 3 years.. Cairn production is much lower than Enquest.. so it's mainly debt and interest payment keeping the market cap down. I think Enquest penciled in $40 for remainder for 2020, $49 for 2021 and $60 thereafter.. so lets wait and see. Moderna vaccine we know works , but has to be more widely tested at higher doses which may not be needed.. like many many others. How come Vietnam. NZ and Aus have low cases? Where is Wales going wrong.?

You might as well approve Moderna type vaccines for emergency use to prevent deaths in high risk categories.. just like the flu. there might no need to vaccinate everyone. ....albeit make it compulsory for people travelling abroad.

Maybe we can exchange some of our equity for Exxon UK and Malaysia assets. It’s dilution , but the market cap would be much greater , and debt repaid quicker from combined cash flows . Assuming Exxon don’t laugh at the suggestion .

https://www.worldoil.com/news/2020/9/1/schlumberger-s-north-american-frac-exit-may-signal-the-end-of-the-us-shale-boom

Example of when small company takes on stuff from a larger co , ie if Enquest gets Exxon assets for the right deal , the SP goes up .

US oil production has fallen from 13.1M bpd (March 2020) to 10.7mbpd ( Sep 2020)

With a frac spread of 101 today compared to say 325 plus earlier in the year, US oil production will decline over the next 6 mths to perhaps 8,400 k.. if the frac spread stays at 101 units. The US supply gap could be made up with stock drawdowns and imports, but I agree with the graph.... the big production tail off happens next year and Shale operators won't bring frac units back like before unless WTI is $50 plus.

So we wait for the multitude of Vaccines next summer. a quick snap back in demand, a more noticeable supply deficit and higher prices to encourage production.. just like Goldman Sachs said.. Brent Q3 next year say $65 and then tail back down to say $58. I had wondered why OPEC+ just don't dial back to 9.7 cuts rather than continuing with 7.7.. so I guess they have positioned themselves next year to fill the gap left by Shale.. Moving to 5.8m cuts from Jan 2021 to April 2022 still looks like it should start only once vaccines are widely available.. so perhaps Opec + could extend the 7.7 cut to June 2021. I would like to see them announce it within the next month given the current price.. Enquest target market cap $500m Q3 2021.

An alternative suggestion is to copy what people do with shops and small business's when they get to retirement or just want to spend their time on other projects.: they put it under management. Enquest takes over operator role for a monthly fee and uses it late-life asset expertise . The monthly fee is linked to performance so whatever extra Bob gets out of them, also improves the return to Enquest's bottom line. $20m/mth get gets us a nice annuity for no risk. Also improves the SP alot.

Multiply it lots of projects with larger companies like Exxon/BP/ CNOOC and all of a sudden , the monthly income just like a portfolio of buy to lets adds up to a nice monthly income.. This new way will be the new norm especially if your Company is a late-life asset expert in North Sea oil. The man in the pub did say "what if".. well why not try it.

We have until 28th October to submit a bid on the Exxon North Sea production. I guess much of the info released last week is "estate agent" leaks in order to boost interest from various parties. Lots of interviews i see on Bloomberg mention "what makes you tick".. and I think the Enq Team look at deals all the time.. that's what makes them tick..

Looking at spending $2b plus to purchase the Exxon North Sea and Malaysian assets would be a good deal..so long as it didn't require an equity raise. The project has to fund itself just like a buy to let.. but without the deposit.. Finance via Exxon saves interest and boosts the offer price to Exxon.. If we need a deposit it needs to come from existing cashflows streams..
With a margin of say 30% , we would gain NPV of say $800m moving the SP from 11p to 30p overnight. (say 50% of NAV gets added to Sp), then much higher next year as the oil price rises to say $55. Fauci says a vaccine might be authorized by Xmas.. so 6 mths to vaccinate in US , the ROW won't be too far behind.. indeed Brazil i believe has purchased the Chinese vaccine and will get it done in Q1 next year. I think they will submit a bid if Exxon supply the low cost finance.. otherwise walk away.

Scott might have a NPV of zero at the moment , so why bother.. We just need $55 Brent average for 2021 and 2022 and then look at other projects.... like our own 2C low cost drills. IF Exxon want to give us base plus 1% on a $1b purchase price, then that might work on a mixture of new and older assets.... perhaps that's the only way large companies can now hand down the smaller assets/end of life assets to Enquest type operators in the North Sea.. The economics don't work if we have to pay 7% finance .. and hope for the best as no one expects $80+ oil prices any more.

A few US analysts expect oil demand to increase as people go back to normal.. whilst the vaccine program is implemented in the US. I'm not sure if another relief package will be forthcoming.. If it does, it won't be as generous as the last one so will incentivize people to return to work where possible. I feel the new UK replacement furlough program will get people back to work much quicker.. whether they like it or not.. the new scheme isn't as generous as before.. people will have to justify their jobs and add value or its redundancy.

Everybody waiting for a handout from Rishi , Seems like end of life assets in North Sea have no value once you take into account decommissioning expenses. Maybe Enquest can avoid the traps, tempting as they are .

See news tab , Enquest mentioned

https://www.upstreamonline.com/production/opinion-exxonmobils-project-longbow-may-not-hit-target-with-uk-north-sea-buyers/2-1-8

https://www.rigzone.com/news/wire/exxon_north_sea_retreat_could_yield_gain_for_sinopec-22-sep-2020-163362-article/

It does seem like Enquest are also interested.

Cheers for the update Romaron , phase 1 is always safety , so I think you’ll be ok entering at phase 3

https://www.forexlive.com/

nice summary points from Opec meeting..

Albeit not quite the RNS I expected. nil-cost options .. i was expecting a straight forward purchase RNS.