Member Info for hitman1a

The note in the ST isn't part of any article. It really is the smallest comment as part of 5 risers of the day. The others are NMC Health,up 33.5% on "rebound after short attack", Lamprell up 15.3% "on further recovery", Renewi up 10.7% "on watchdog approval", Helios Towers up 10.4% "on sentiment" and Enquest up 10.4% on North Sea deal. Seems like the comment is genuine, but what deal.? None have been reported.

I’d say the ST journalist knows something positive we are not party to yet , given how much info they seem to get earlier than others eg in respect to GKP and Premier imv , there are other examples like Sky etc , Whatever it is , we were going up in price anyway , I’d suggest a 20% farmout on Kraken or contract sign on SVT with BP or a takeover by AB at terps. Can’t be bad journalism. Do Leaks come from MI5 ? Or is it a pint in the city overhearing the lawyers chat about the finer points?

That’s old news imv

Don’t forget what AB quoted ‘As we pay down the debt it should add the same amount to our Mcap’ .. very old textbook. Should say “as we pay down debt , we address our previous going concerns and move away from bankruptcy”.

Going back to Aug 2018, you’d have to see Brent in the $75 plus range to get this to 35p. . 21p looks cheap if we are only a week away from Brent $70 and Shale Tier 1 acreage running out of steam within 6 mths.

Interest and demand was increasing for a week into Xmas to 19.96p and with that recent Kraken offload, extra volume on Friday would indicate a little rush to get in before the train leaves, given Brent is $68. I bought a few extra at 21p not because it might fall to 20p on Monday, but because it might just open and blast off to 23.5p and higher. RBC does after all have a 24p target.

They could afford to underpin the share price with a maiden dividend of 3p (payable mid 2020)

Then 5p to 9p annually (2021 onwards).

Various amounts from 20.54p in morning to 21.10p towards end of day

30p target seems fairer.. Brent back over $68 and draw was good.. ( a bit earlier than expected)..

Have to say chances of exceeding $70 are quite good.. Yes it will get stretched higher and then settle down..

RCF in 2020 is $155m. less £45m already paid , less $60m able to settle by year end leaves $50m to pay in 2020, If they can generate $325 net FCF in 2020, then $275m to offset against 2021 RCF. Looks good. light at the end of the tunnel

We shouldn't be trading below the RI price of 21p.

but I still want to see the 2H 2019 accounts and see how many adjustments I have to make from EBITDA. ( lease costs, interest, capex, other adjustments).. I know they say there is a short payback period for new capex, but if overall production doesn't increase the following year, then our natural declines are significant..

1.7m traded in London via moneyam site. that shouldn't happen on Friday 27th Dec.. it should be a very low volume day.

But Brent is above $68, and if we see $70 plus in early Jan, Enquest will start to layer on hedges.
So long as more people each day believe Shale Tier 1 won't last forever.. Brent should stabilise in the low $70s.

Problems are: we are expecting slightly higher production next year, but the company feedback says to expect slightly lower. I assume that's because of Thistle and Heather, but also because of natural declines in the portfolio which we all underestimate. RNS says to expect Thistle back up and running in Q2 2020.. but ships are already there. will it really take more than 3 mths.

I expect market cap to be £500m so 30p/share.

Ok , actual debt 31.12.2018 was $1774 net debt plus cash of $309, $2083

Net debt at 31.10.2019 was $1561m , add cash of $213m , actual debt $1774m

movement of $309m plus $60m further debt repayment for last 2 months of 2019, assuming cash remains same , total $369m debt repayment in 2019,

Let’s say they pencil slightly lower at $325m , for 2020 actual debt reduction , way ahead of what’s due on the RCF for 2020, most of it will be going towards prepaying a large portion the 2021 RCF .

In 2019, they had a research analyst meeting, investor meetings event and a CMD to tell the market about the investment proposition, but omit what the returns are. ..?

They should talk about something at the full year results day in March 2020 to give an idea of what to expect, even if payable in mid 2021. Deleveraging should add 1p/mth as the months roll on.

Complete mystery why a UT trade comes in at 19.40p, when the last price was 19.85p. Even weirder how Barclays have the portfolio valued at 18.2p/share.

Will open above 20p on Friday given Brent strength.. but the movement from 18p to 20p could be just down to the Brent price, rather than anything the company has done: ie not improved Kraken offloads.. What have we got in the pipeline to give the SP a company specific boost, other than deleveraging.. ? It didn't add anything to the 2019 SP as I was just looking at some purchases I made in Nov 2018 at 23.85p.

30p target for me, with 1p/mth improvement from hereon.. Hedging at $75 in 2020 if possible would boost the Sp imv, with a floor at $70.

Nice. doing well as expected.. I'd expect it to hit $70 in Jan.. ( no point hedging)

No point chasing another large capex project either.. (Just like all other oilers).. let Brent do all the heavy lifting.. If we got a $66 average realised oil price on 2019.. and $70 in 2020 , that adds quite a bit of revenue.. say $100m.

I'm actually ok with it Squif.. if BP yields 7%, i'd expect Enquest to yield 10%.. so 5p annual div implies 50p/share..

The reduced annual interest savings and slightly lower capex finance the dividends..

It indeed also suggests production next year might be the same as this year, or slightly lower as Ajes said.

Our decline rates must be quite high in some parts of the portfolio.. so Enquest spending $200m capex on projects each year to maintain at 70k boped is probably near the correct figure.. If it can do this annually, repaying $250m debt each year , we should get to net debt $500m by the time the bonds need refinancing in Oct 2023. I guess I was contemplating to spend a lot less over the next 4 years and accept lower production (but be debt free).. where Enquest are planning to keep production at a higher level, whilst accepting a smaller level of manageable debt. I don't think $500m is that big a deal, if production is kept at a higher level given the Brent price might even be higher than $70 for the next few years once Shale production peaks, ......so lets see how much of a distribution Enquest can afford next year. I want 5p/share which is almost the same as the net proceeds of the last rights issue.. It's only fair they return it .

In many ways if you see the letter it implies net debt reduction slowing down in 2020 ( most here, including myself think it should speed up), I wanted to spend $100m less capex in 2020.. so even allowing for Heather and Thistle being out of action for 1H 2020.. something doesn't add up.. AB said repaid deleveraging, so if they repaid $274m net debt in 2019.. maybe they are looking at slightly less in 2020 , so a target of $1,250m as of 31 Dec 2020.. ie the mid point of the $1b-$1.5b guidance: ie only $250m net debt reduction in 2020, if we are at $1.5b today.

If capex in 2020 is nearer $200m.. maybe the rest of the extra money in 2020 goes to catching up with outstanding/overdue supplier invoices.. ie increasing the strength of the balance sheet further,?

Dear Mr X,

Apologies for the delayed response.

Many thanks for your feedback on the CMD – we would hope that this event plus a positive print at year end backing up our guidance on production and net debt will help get some more interest and will continue to work with various outlets to ensure our investment proposition is understood.

With regards your other questions:

- Guidance will be provided with our late January/Early February operations update

- For us IMO2020 is only really applicable to the Kraken asset as the oil here is heavy but very low sulphur. With some blending with fuel oil and diesel (no refining needed), we believe Kraken could be a source of IMO compliant fuel. We have sold cargoes to a number of shippers already for them to test so hopefully this is an avenue we can explore as IMO fuel has traded at a premium to Brent (indeed, we have sold some Kraken cargoes at a Premium as a result). That said, we have a strong market for Kraken oil anyway and so are not basing our assumptions on securing such premiums going forward but will continue to explore the potential upside here

- Our debt reduction will be shown to be strong in 2019. It slows a little in 2020 (Heather and Thistle outages, working capital, phasing of capex) but we will still see progress here. We are targeting 1-1.5x Net debt:EBITDA, the pace at which we get there is dependent on the oil price to a large extent.

-For refinancing, we have a few options that we continue to look at in terms of working on amore conventional RBL facility, for example. However, we are also comfortable simply paying down the bank debt, letting the bond maturity extend to 2023 and then refinancing the bonds at a later date with a mix of bank and bond debt. We will do what is right in terms of the best economic outcome for the company (and therefore shareholders).

I hope this helps

All the best for the festive period

Kind regards

Ian Wood

Yeah, I understood that meant without construction of another DC.. eg Drill Centre 5..

I was thinking about Maureen again.. Sulphur content 1.1% in Mariner.. will ours be similar or nearer 0.6% like the rest of the Kraken product. If 1.1%, I wouldn't be in a rush to develop it until the production rate from Kraken declined to say 30k boped gross. At what point do you add it into the mix and increase the average sulphur percentage..?

With other bits after Worcester, I'd say start Maureen in Mid 2021, but which DC do you connect to? It might produce 10,000 boped initial flush.. not bad..

Barclays valuing close at 18.20p ( i'm sure we were near 20p and Brent is performing well today..) 1p increase per month is what I expect here.

Yes your correct L3, AB said in October

"Again, this is a 20-year life field, there's significant amount of oil in Kraken itself, 400 million barrels; in the Western Flank, 100 million barrels; in the Maureen, we have 3 wells which has intersected tens of millions of barrels, it could be more. So I think I'm confident, with the infrastructure there, we'll be able to exploit significant resources." . Guess it might be similar to Mariner oil. ?