Member Info for hitman1a

If Thistle and Heather repaired by April 2020, then we should be hitting 80k / day which at Brent $70, bodes well for a rerating, Bound to get more stories later in Q2/Q3 2020 how the best Shale DUCs have run out ,.helping Brent stay around $70.

Rome wasn’t built in a day , but probably quicker than Kraken .

$64.17. Nice , Keep an eye out for the next tanker

II find it easier to ask people in the industry how Enquest are doing , hence why when Brent went up before , Enquest didn’t as much as others, This time it might be different , the tanker watching has become more important , ‘Don’t sweat the small stuff’ is perhaps the zone we are in now , But I guess even Enquest didn’t know how long Kraken would take to get right. Almost as if someone got confused with inches and centimetres with the designs. how could that happen?

Nice summary Pelle
I'm not concerned about the debt any more.. As JS said, any more projects will be on a no cash upfront basis.. so our existing business is more than capable of driving down debt to zero if need be..

Not a fan of hedging today, given we might get a premium on some loads.. Jan 2020 contracts $63.75 so nice enough.. so if it trends to $68 in Jan , then $72 in Q3 when the quality of Shale DUCs changes from stock of Tier 1 to bits of Tier 2, our revenue looks stable enough next year.

Not enough to encourage investors to purchase, but if the rest of the market goes up, Enquest will gain a few pence.. which is a good percentage from these levels.. I'd agree with Squif and others than the 2H 2020 is when the sp has the best chance of improving by a substantial amount.

Hi Squif, my thoughts are more or less aligned with yours.. and many others here.. We are at average 68k so far upto Oct 2019.. and i'd expect more in 2020.. The thing is guidance next year will have a wide range , so if we take your number of 72k as beating the midpoint, then Enquest will give guidance eg: of 68k to 75k for 2020 . Starting guidance at 68k won't impress the market, but we are all now used to how they think.. Maybe AB is training us to think like CEOs rather than micro-managers.. it might be nearer 75k ave for 2020 , but let's see how quickly they repair Heather and Thistle..

Weirdly more valuable when going concern issues and RIs were applicable. I'll assume the 2H is similar to 1H 2019... so no big profit.. hence lack of SP drive... but 2020 with higher revenue, lower interest charges and lower capex, will see more profit on paper, which Google will be happy to advertise for free. but it's a very long wait.. for March 2021.. to see the full year results. Shame the 1H 2020 numbers will be similar to 2019, given the shutdowns.

And investors who believed the industry’s ceaseless hype are now grappling with reality – that their money was drilled into the ground and is gone. Yep, I truly agree that about Shale.. and could say the same for Enquest Producer as well.

2020 timetable
Heather: repaired Q1, Magnus new drills online Q1
Thistle : repaired early Q2
Kraken Worcester online Q3
More Pm8 and Magnus to offset declines.

Some would say the new NPV figures as of 01/01/2020 are wonderful, esp Magnus which is now $700m. buy why omit the Kraken NPV. Even so, production should start to taper upwards in 2020 with Brent rising .. and maybe the SP too.

But Enquest follows the scavenger model.. others might talk of it as a graveyard caretaker.. and sometimes you have to accept Enquest has no duty to tell you where the extra skeletons are buried.. that's why IIs don't like it. There are always one or two cropping up every now and then.. as we see with Heather and Thistle. ….Kraken issues were similar to an unmarked mass grave.

Merry Christmas.

https://oilprice.com/Energy/Energy-General/Why-The-Latest-Shale-Bust-Is-Different.html

They did tell us the extra juice from Kraken and Scolty made up for Heather and Thistle , so call it 8k in total , Scolty 5k and Kraken 3k , (effect on average).

Hi L3T,

You may recall AB said they had beaten the midpoint guidance for 3 years, so I guess part of the remuneration bonus is based on this criteria being meet. There is no incentive to change the range guidance but they could have given Oct production in total like PMO. I really don't know why they can't keep it normal. I think a couple of years ago, they told an analyst he had to work it out himself, when he needed a bit of help. Yes the board are concerned with the bigger picture, but some of like the smaller details.

Hi R, I think decommissiong for third parties is the wrong end of the business for shareholders. Great for employees and securing jobs, but given the whole industry works on tendering out jobs, there's probably only a small profit left . Call it 10%.

The CMD showed Enq wanted to bid it the next bidding rounds. I think I heard AB confirm it in such a way to the audience to say this is what we do, why would you be thinking we would do anything else. We are ahead of the repayments , so leave us be . We have plenty of cash flow and will run the company without any reference to anyone else. Bidding for new licences, low capex drills plus additional capex to total of $150m /annum , delevering, perhaps another Magnus type acquisition and then if you want a pesky 3p dividend , fair enough, but it's not what we want to discuss.

Evening R, I confirm I never got an invite, but when I saw the RNS in the morning, it did say open to analysts and investors. I considered it a late invitation given it started at 1pm. That said as a shareholder i could have phoned in , but didn't. I would have asked a question on AB purchases and whether he intended to buy more and his opinion on the SP and when he thought it might improve.

3Tcf is a lot of gas. I was an early investor in Sound oil and meet GO at an event many years ago. Only about 4 people wanted to ask him questions after the event, the other 296 people who attended were only interested in GKP. I lost money on Sound , but it subsequently rose very high based on bullish ramping even by the board . At least Seligi exists, and Enquest could help produce the gas for a fee. Not sure what agreement it would be, perhaps like GKP where they don't own the oil, but take a fee. My impression is Malaysia don't need the extra gas at the moment.

Re Kraken , if they can drillthe deeper Maureen in 2021, I think they said that would be very valuable, but the Worcester next year looks very good as well.

Overall I'm content with the direction the company is going in, NAV is increasing daily even though there is no dividend yet. I still think AB will make another Magnus type deal for no money upfront within 2 years, and the div will only come after that transaction. That's what I would do anyway.

Yes we have large decommissiong projects to do at some point, but I believe Enquest can manage those for lower costs than anyone else and for lower than the provisions in the balance sheet

https://seekingalpha.com/article/4304752-shale-production-decline-probable-within-12minus-18-months-based-duc-data

https://www.eia.gov/petroleum/drilling/#tabs-summary-3

https://www.google.co.uk/url?sa=t&source=web&rct=j&url=https://www.eia.gov/petroleum/drilling/pdf/duc_supplement.pdf&ved=2ahUKEwjntNDdvoDmAhWMI8AKHRq1CncQFjAJegQIBBAB&usg=AOvVaw2Pv5HJRjL0dihn8O8y0iPn

Hi Squif
If Tier 2 wells are 50% less productive than Tier 1, and the Tier 1 are running out for many Shale operators, if the US wants to maintain production levels, it may have to deploy more rigs . To justify the expense, WTI will gradually go up to encourage more drilling. Over next 2 years, i believe wti is going up quite a bit , but the next 6 months might only see a slight increase whilst we wait for stocks of DUC s to be utilised. At least the larger hedge funds know the shale ponzi scheme of unlimited Tier 1 has come to an end and the US shale bankers don't believe the b.s. they have been told previously either.

Enquest will be more comfortable paying dividends in 2 years time, but could inform the market of its intention this time next year. As you say, the net debt will be nearer $1b, so the interest savings of $70m/$1b could pay for a div of 3p/share.

I'd agree with most on here we need to wait another 6mth to a year for the SP to improve. Feedback from IIs is "lay the tarmac first and we'll then test our cars on it , but don't tell us it's ready and then take another 3 years to smooth out the bumps". "We are there to test the cars, not the tarmac "

Makes sense,.

Just saw a brief clip on Bloomberg. Panel were discussing Shale lending reviews going on at this time of year with local banks. Looks like the funding is being squeezed a little which should see those rated at CCC being quoted more expensive overdraft rates. Nothing massive but steers WTI to $60 in New Year imv. Opec and a Trade deal could see it move higher with Brent more or less at Saudis $70 target pretty soon , which could see Enquest at 24p too.

It's a much better company now , so people should be mopping these up for the easy returns from here to 24p.... But I guess it's being boycotted for no immediate returns, When people see proper accounts over the next year, I agree with you this SP will improve much further.

Victoria's Secret have cancelled their annual fashion show

We don’t have rights on the gas, but it’s ideally situated for Enquest to extract .

Hot air at the moment.

We would have got back to RI 21p if Thistle and Heather were working.

Black Friday event , only fair Enq shares join in too??

Today showed how much expertise Enquest have and their ability to gain extra value from assets that others don't see. I know from the 2018 AGM , AB admitted the signing of the Kraken FPSO came just at the wrong time. They couldn't get out of it. They did well to get the overall total capex budget down to $2.1b, but going forward, it's only smaller projects with quick payback. If we maintain 75k from 2020, and Brent trends to $65/$68 on an annual basis , they should do very well. $700m FCF might just be on the table every year.

Hi R, in a nut shell we all bought too early., newbies with the patience for 6/12/24 mths should do very well from a capital gains aspect. No idea if waiting till next year would be better for newbies , but given Brent strength, and IMO 2020, it would only take one II to spend say £10m and the SP would gain quite a bit, as 50m shares is about a months turnover. I agree there would be a shortage of shares to fill the order at today's price..

We know JS said DC4 has a 12mth payback, which I think bodes well for Worcester next summer and Maureen in 2021. All others have short payback periods too. Can't really comment on the payback period , given its a 20 year project with a lease on it.

Thistle we know is 6.1% of total Decom cost capped at $99m.., but we got $50m to handle the project. I'd agree with AB that the clearance cost of the 2 storage tanks is peanuts.

Very impressed with 3TCf of gas in Malaysia. No rights to it, but just image if Sound oil had the same asset and just needed paperwork to produce it with infrastructure already in place.

Yearly capex to reduce to $150m , but given short payback periods of less than 12mths, you get $100m back after a year.

I actually think Enquest is a better company now, 2H 2020 is when everything is fixed and new Kraken wells come on line, we could pencil in 2020 75k yearly ave at $65, and the free cash flow would get the net debt near $1b near Dec 2020.

We are all baffled by the low SP because we incorrectly consider it in relation to the magnitude of the large assets, but should in reality check it to the profitability of the company in the last set of half yearly accounts. Google says they didnt do very well. But I think we have now turned the corner. Lay down 12/24 months of decent numbers and the brokers will positively revisit it.