Member Info for hitman1a

I predicted yesterday it was AB and the RNS would be released at .. 10.16 ish.. and it came out at 10.07

Tune in later for tomorrows news today.

It’s a AB buy imv , RNS in am , about 10.16am ish

US CDC saying vaccine available to US public citizens late Q2/Q3 2021. Trump saying ready late October 2020 for early birds, as per Pfizer. UK saying trials continuing as the person who has an inflamed spinal cord probably already had it. Unlikely to be related to vaccine.

First impressions on the tax losses Enquest has accumulated over the years are they really don't know how to make a profit.. But with this industry it's normal to have first year allowances of 100% of your capex expenditure and then there might be specific field allowances eg: ultra heavy oil fields to claim.. $3b tax losses against a market cap of £200m. It demonstrates the magnitude of work they have done. The capex period has now come to an end.. so it profit time now with costs at $27/barrel . Excess funds to deleverage and hope there is something left for shareholders, so long as the remaining fields have a long life span.

The way I remember it was that a specific field can be sold to a new owner with its cumulative tax losses. but the new owner might not be able to use them in the future if the same asset never makes a profit: eg: low oil price or 2P exaggerated.
You can't just use those losses against better unrelated assets in the new companies portfolio.. so eg Chrysador might not value the PMO losses that highly today. I can see the stock market doesn't value the Enquest tax losses any more today than a multi pack of Thai Sweet Chili Sensations. They could have value in the sale of an asset if the oil price was much higher. I doubt Chrysador would attach an value to them today in making an offer.

This is from page 7 of 2019 results. Issued April 2020

Kraken, performance of the FPSO vessel significantly improved through the year as a result of targeted improvement initiatives, focusing on the main power engines, topside power water pumps and the hydraulic submersible pumps, combined with changes to the offshore spares management and FPSO maintenance processes. The completion of the drill centre (‘DC’) 4 drilling programme in March marked the end of the field’s original development plan. Overall
subsurface and wells performance has remained strong, with water cut levels stable and below the Group’s assumptions that underpinned the year-end 2018 2P reserves estimates, providing increased confidence in long-term production.

In May 2019, the Group sanctioned the Worcester development in Kraken’s western area, where drilling of a producer-injector pair through spare capacity in the existing DC2 sub-sea infrastructure began in the first quarter of 2020. Further areas in the western area, including the Maureen sands which lie directly beneath the existing reservoirs, are being evaluated to identify economic, drillable targets to develop its estimated 70 to 130 MMbbls of STOIIP.

My inclination is to say the Kraken 2P is slightly better than the official number.

Pfizer’s CEO says that its coronavirus vaccine could start to be distributed to Americans before year-end if the vaccine is found to be safe and effective. The company expects to have enough data from its late-stage vaccine trial for the Food and Drug Administration at the end of October. CEO Albert Bourla spoke to CBS’ “Face the Nation” over the weekend.

If Pfizer gets the OK from the FDA, the drugmaker is prepared to distribute “hundreds of thousands of doses.”
Pfizer’s vaccine candidate is being developed in partnership with BioNTech, the companies back in July received $1.95 billion from the U.S. government, as part of Operation Warp Speed, for the production and delivery of 100 million doses.

What if it works.. ? That sort of brings things back to normal for US airlines /Cruise Operators if US passengers obtain a ticket/visa and covid injection before travel.. and a large boost in oil demand. If we get $55 average in 2021, that gives us about $400m to pay off the 2021 RCF.. tight ....but we also have the non-ring fenced cash if needed.

I liked the bit in the accounts where they said the water cut at Kraken was lower than expected and supported longer term production. If we only have 150MM boe at the end of this year.. so be it.. perhaps only 7.5 years reserve life (it was 13 yrs at end of 2018 (17yrs at end if 2017)). We still have the low cost drill targets when needed. It's just that longer term Kraken production sort of implies they have increased the recovery factor ( RF) of the field.. could that be considered an increase in 2P. Maybe the Cairn accountants on the 29 Sep will carefully consider the issue.

Perhaps the company could buy it's own notes back. That reduces our debt quicker than repaying it in full and saves the interest charges. Forget about drilling for a while. Start next October once the rcf has been repaid.

Cairn have about 149 Mmboe 2P as of 31.12.2019. Only about 100MMboe 2C. Production much lower than Enquest, but stronger balance sheet for equity. $1.9b.. mainly investments in subsidiaries. In theory we should in the medium term have a market cap that trends towards Cairn. They had a full reversal of the Kraken impairment but I look forward to their half year accounts on 29 September and the write downs /impairments due to the lower forward oil price estimates. How about $1b write down. ? Our market value is higher than PMO , near TLW and I expect it to improve as deleveraging occurs to $300m . Ie 17p/18p as per Jefferies and Barclays. The market isn't ready yet to recognise Enquest yet, but it does seem undervalued when compared to Cairn.

https://www.onepetro.org/conference-paper/SPE-140800-MS

Bressay info. This field has the heaviest oil (110-120 API, 1000 cp
in situ oil viscosity) of all the fields discussed so far. It is in the
Hermod and Dornoch sands in the Sele formation, with about
265 ft maximum oil column, a small gas cap, and a potentially
large and effective aquifer. Fig. 12 shows the top structure
map. The permeability is in the 10 darcy range. Four
conventional appraisal wells have been drilled in the
formation. DSTs conducted in these, with ESPs for artificial
lift, had flowrates ranging from 200 to 2800 BOPD.
The thrust has been to demonstrate that an economic
development can be achieved with a cold water flood as the
baseline scheme. Simulation studies have considered long
(6000 ft) horizontal wells, bilateral wells and trilateral wells,
with water injection to ensure 100 % voidage replacement
from the outset. Well spacings from 30 to 60 acres have been
tried. It has been highlighted that the frictional losses along the
long horizontal wellbore is a factor to consider in the design of
the scheme. A further appraisal well or two need to be drilled,
and an EWT, on similar lines to those conducted in the fields discussed above, needs to be carried out, before sufficient confidence can be gained, to proceed to a development.

A range of tertiary recovery techniques have been
simulated with Bressay. These are the injection of polymer, hot
water injection, gas injection, steam injection and in-situ
combustion. Steam injection gave the highest recovery, while
in-situ combustion came next.

Bit of work still to do if tie back to Kraken is the best option. Definitely need to drill a few more wells in hot spots to make it worth while. No rush imv. If Enquest can use their experience to evaluate the data again and drill another set of wells with better flow rates, it could be worthwhile.

Page 9 of 2019 presentation breaks down the 213 MM boe mentioned in the Annual accounts, 11MM boe relates to Thistle. Net 2P balance 202 MM boe

202 MMboe excludes Thistle as of 31.12.19. Yes we have to deduct the rest that are being decommissioned, but based on their last production rates, it doesn't really matter if they are all unprofitable. IF it's now say 150 Mmboe, then that's say 7.5 years, so not that long if no more drilling. At some point in the future, low cost drilling will start again on our 3 key assets.

I wouldn't worry about the $65m 1 April 2021 RCF payment. JS already said its no problem. He doesn't have to pay it early.

It was 2P 202 MM boe at 31.12.2019, so perhaps 12MMboe produced for 6 mths in 2020, leaves about 190MM for as of 30.06.2020. IF we drop to 55k next year, say 20 MM boe, then that gives about 9 years. 2c above 250 MM boe but would require capex, so best leave until prices are higher, perhaps 2023. Best focus on getting debt down , capex maintenance only .

Think your right, it's a planned shutdown for a week on Kraken in the third quarter.

It's probably a good idea to focus on how robust our reserves are : ie 2P. A lot of the half year report highlights the 2C Bressay addition. It's quite shocking how much HUR has downgraded it's numbers. How do we pay for low cost drilling on heavy oil projects and when do we phase them in. I still think from 2023 once we have refinanced the balance of any debt left after Oct 2023. We can't be in a position where debt holders take the company because we can't pay back the bonds in full on time. So we need another facility arranged in 2022 to cover us for another 5yrs, large enough to cover any balance if Brent prices stay a bit lower for longer.

Our 3 key assets have been described as world-class by AB , so I assume our 2P numbers are accurate.

Victoria's Secret:
she hasn't got a clue what condident means but whispered "we should be deleveraging $25m/mth at the moment"

Lucky only 6 people in this chat bubble.

Does seem to be a very large number compared to our current market cap.. So look forward to continuing debt reduction to reduce the overall annual charge. That will offset the increasing decommissioning costs on various hubs.

I prefer to drill next low cost targets in 2023 , so debt reduction plan of:
$100m: 2H 2020
$350m: FY 2021
$400m: FY 2022

Maybe it should be spelt Tarmac ?

Wasn't Barclays 40p at the start of the year..? 18p is a measly £300m market cap.
£500m./30p would be a real Zinger. Maybe Dec 2021. ps: Brent seems to have lost a bit today..

All Fangs stocks down again. Schools are back.. furlough scheme ending....less time on TV/ internet/shopping.
Economic issues will emerge everywhere.. eg: Asda running out of school trousers and shirts. Maybe the boys can wear kilts instead.

Hi L7 , I thought many years ago Enq gave a money back guarantee to KUFPEC on the money they provided, even if it was a farmout.. so glad it's settled in full from the legal side. AB was asked before and replied , "the less said the better on this matter". Sneaky suspicion the hot stack EP will be sold and all proceeds go to KUFPEC to make good on the original handshake.