Member Info for hitman1a

I was wondering about the Maureen Sands formation. They mentioned at the CMD, but history shows it’s a bit hit and miss. So does it add any value? Given they have contracted a drilling rig next year for Kraken.. why not just drill a bit deeper if it lies underneath and see what’s there

Statoil have Mariner that gets it’s oil from the Maureen Sands, but Nautical Petroleum already tried to look at the Maureen Sands in Block 9/11c in 2007 but were disappointed. Apparently “water wet”.

As ours lie underneath Kraken Block 9/2b and 9/2c, I’d say there is no guarantee the Maureen formation is any good. It may be better not to invest and chase production this way. Stick to the easy stuff in Malaysia and Magnus/Kraken. I don’t think Nautical Petroleum knew about the Maureen formation underneath Kraken. Whether Enquest with better seismic today can tell whether a formation is water wet without drilling must be a question to ask someone at HQ. Indeed why not just drill it next year if the rig is already there. 90 day contract seems reasonable for 2 wells, but TL always did them much quicker. Stena should just drill an extra one/bit while they are there.

History from 2007
Nautical Petroleum says that the Mermaid exploration well 9/11c-13 spudded on November 22, 2007. 9/11c-13 is an exploration well on the Mermaid Prospect, which is analogous to and lies directly south of the Mariner discovery (Block 9/11a). This is Nautical's second operated well and initial results are expected towards the end of December.
The interests held in Block 9/11c are Nautical Petroleum 50%, Celtic Oil Limited (wholly owned by SK Energy) 40% and Silverstone CNS Limited 10%.
Commenting on the spudding, Steve Jenkins Chief Executive of Nautical said:
"Mermaid is the second prospect Nautical is testing in our drilling program, where the technical work completed to date suggests that best estimate prospective resources total 129 mmbo. If successful, this will represent a further material addition to Nautical's resources and reserves."

Results:
Nautical Petroleum reports the results of the 9/11c-13 Mermaid exploration well, the second well in the campaign after the highly successful Kraken appraisal well.
Well 9/11c-13 was drilled to 5113 feet and encountered excellent quality sands at Tertiary Heimdal and Maureen level. All depths were very close to prognosis, however, both the main Maureen target and the secondary Heimdal objectives were water wet.
Nautical will assess the data gathered from the well and integrate with the 3-D seismic to ascertain the future potential of the block. The interests held in 9/11c are Nautical Petroleum 50%, Celtic Oil Limited (wholly owned by SK Energy) 40% and Silverstone Energy Ltd 10%.
Commenting on the well result, Steve Jenkins, Chief Executive of Nautical said:
"This is a disappointing result, especially following the Kraken (9/2b-2) appraisal which proved a larger oil accumulation than our maximum case.

From CMD press release:

"Net debt further reduced during the period ? At 31 October 2019, net debt was reduced to $1,561 million (30 June 2019: $1,638 million) with cash and available bank facilities amounting to $213 million (30 June 2019: $249 million) ? Net debt:EBITDA1 ratio of 1.7x, significantly ahead of target to be below 2x by the end of 2019 ? The Group’s senior credit facility has reduced to $535 million following the voluntary early repayment of $45 million in October ? Net debt is expected to be below $1.5 billion at the end of 2019 "

$61m debt reduction over 2 mths.. so $30.5/mth.. but I believe it's higher, trending towards $50m/mth if we get Brent above $70 in 2020.

https://www.reuters.com/article/us-usa-oil-drilling/superior-energy-services-latest-casualty-of-fracking-market-downturn-idUSKBN1YK1VZ

Liked the bit about oil companies buying sand and chemicals direct from suppliers, making the fracking business less viable. Add in high rates of decline and the inflection point might be sooner rather than later. Bodes well for Brent $70 next year but I note JPMorgan and Goldman have about Brent $63/$64 average for next year. US peak production is very close. The big brokers think it's 6 to 12 mths away, but I think we might be here already.

Safe operations , no harm to people , protect the environment, (Can’t see anything in there about shareholder returns ), But if we can do 75k at $68 plus in 2020, I think the excess FCF will start to get added to the SP , It’s all lining up nicely .

Anyone with short interest has a turbo charged day. Enquest has no short interest so as the board might say “is performing as expected”.

Yes, because labour are anti oil but we may end up with a hung parliament Friday am , so back to square one,

5,373 , @18.40p. (£1k) happy to help where needed. …... will be at this level until New Year as volume gets much lower over holiday period.

I've looked at AB buys since the since the RI, his overall average must have come down quite a bit..
Wonder if it's now around 34p. (Terps). Think it will get back to this level over next 12 mths as a minimum.£576m MC

Allocating $200m a year to dividends ie :9p per share will fix the market cap of this company. If they are thinking about it from 2021 FCF and the banks just agree to turn everything into a standard overdraft once the net debt is $1b, things will look better here . When will the timing be right? 2021 half year results in Sep 2021 for 4.5p, then another 4.5p in 6 mths time March 2022.

On the basis E = MC^2, then the MC stands for market cap which should double.

Moving up as expected , heading into 2020 when the OPEC strategy to boost revenue and prices starts to bite..

I want to top up over the next 2 weeks in the 18p range.. but I guess we will be looking at 19p very soon. It's times like these that you have to thank the Kraken tanker analysts for the information provided and the subsequent follow up info on where it's going to. Proof that things are materially better. Given the quality of the product.. "the right asset in the right hands" is certainly the case.

Forming a nice base for a small look at the 20p runway.

Get that debt down , down down , deeper and down . get down deeper and down ,

Tullow scrapping the dividend shows how weak the company is and it’s reflected in the share price , Likewise for Enquest, but even a small dividend would show a lot of strength, and a large increase in share price, Keep on Trucking and accumulating , GL

That’s great news, Goldman just raised its 2020 average Brent price forecast to $63. Not much of an increase , but ample for us

Aramco expecting valuation to improve 15% over next few months. Opec ministers expect supplies to tighten and raise the price . High 60s in the near term Jan 2020 imv is what they confidently expect.

AB did say they could talk about "distributions and other things" after 2020..

(ie: when they are cash drunk and not cash strapped).

I agree HMH.. I only mention $33/mth FCF as it proves the bond can be repaid in full by Oct 2023 if JS extends the runway..

I agree the impression I got was 0% of paying in full, but like most Shalers, companies are coming up to renewal next year and assuming the banks with rollover into a fresh one.. it might be quite brutal for equity when they can't be fully rolled over. If Enquest can show it doesn't need the money, the renewal APR will be lower than today, saving us interest that adds to the bottom line..

From poster on the investing,com website.
"Zero US producer equity issues in Q4/19 + surplus DUCs soon depleted +declining US oil rig = US oil plateau in H1/20. The major theme of our recent Oct 7, 2019 webcast SAF Group 2020 Energy Market Outlook [LINK] was the math says Permian growth forecasts have to be lowered and lowered significantly. We just believed (and still believe) that every input into the equation to calculate oil growth are worse than a year or even six months ago. And if all the inputs are lower, then the answer to the equation has to be a lot lower, not just a little bit lower. Our webcast highlighted the key inputs of increasing Permian decline rates, decreasing capital for Permian and all US producers, US oil rigs still going lower, Permian well productivity down in 2019 and DUCs likely being overstated. In the past two months, we have seen a number of the major US sellside firms dramatically lower their US oil growth forecasts for 2020."

I was looking at a version of your excel spreadsheet. 81k production with $65 from Jan 2020. It says FCF $85m/mth.. are you still ok with these numbers or have your revised the FCF/mth following CMD.

Analysts have better sources in the Industry to base SP targets on.. They were all negative much earlier than us.. as their information was better. I had faith based on what I heard from the BOD and the RNSs that Kraken would be fixed much earlier. Analysts probably relied on it too, but after 2.5 years they lost confidence . Now those same analysts have sources within the industry telling them info we are not party to. All we know is Kraken is performing very well, and the temporary issues on Thistle and Heather will get fixed in 1H2020. Some like RBC have revisited the numbers.. Maybe they had another chat with Cairn over the last few weeks to gain some confidence before they issued the target.. I know I would given Enquest can't even issue the October production data individually. Why guess when you can make a phone call to Cairn.

24p looks like a sensible target.. for Q1 2020. and that's them being reluctant to do so. Other analysts might be nearer 30p in Jan 2020.

If Mark is right about the inflection point in 6 mths time , or perhaps later if the other analyst says is more likely, then we should see Brent $70 plus in 2020, whereas I think some analysts have it in the low $60s. This business should repair itself over the next 12 mths , and the SP should rise . But we really need 75k average in 2020.

I certainly have the expectation of higher production next year , say average 75k , take marketscreen 2019 of $338m FCF, add $20m interest savings, add $80m lower capex , add $100m extra revenue, assuming Brent average same , gets us 2020 FCF target of $533m , deleveraging $44m /mth , we only need to do an average rate of $33m over next 45 mths ,to be net debt zero , which leaves $11m extra per month in 2020 to repay OZ , and dividends to consider in FY 2021 with the benefit of more FCF due to lower annual interest payments.

Oz shouldn't be allowed to set the hedging price on 2020 production. Last year they set it very low and passed the loss to us for no cost. It's bad business . This year Enquest should insist they follow the Enquest hedging strategy . If they don't, it's time to look at repaying it in full over the next 12 months.

I'm ok with looking at hedging opportunities in q1 2020. I think the premium on Brent imo2020 probably is nil at the moment, but there is very strong demand for the Kraken product. If SAUDI want the IPO to gain 20% over the next few months, then Brent will follow. I'd sit on my hands and wait for $70 in 2020 so am quite content with being unhedged going into early 2020.

I really shouldn't be here, I should be on a luxury holiday,..... and I really would be if the share price was near Terps.

Many thanks , this company is now seeing the production increases we all expected many moons ago. Oct and Nov are much better. The large bond can be extended to Oct 2023, which gives us 45 months to repay $1.5b. Only $33.33m / mth , I think we are capable of doing that now out of FCF and maintaining capex spend as well. May the force be with you on our journey to the 60p party.