Member Info for hitman1a

more likely a drop.. and a merger announcement with PMO in the morning..

From memory the share repurchase scheme is limited to $50m / annum.. so if you wanted to spend the same on annual dividends, I think Enquest could afford it.. about 3p/share.

SP would improve to 30p/50p range. (lower end).. I just don't think Dividends are on the thing to do now, but an indication of when they might do so, would improve the SP.

Hi KO, returns to shareholders should be discussed at a CMD tomorrow but the answer on dividends will be the same.. once the covenants restricting distributions have been removed, and that can only happed once the debt is cleared. I think 2022 sound reasonable.? Otherwise it's special permission from the banks to deploy the share repurchase program or pay out a dividend. I once asked IR about the share repurchase program and whether AB could act in the same way whilst we waited , and he seems to be doing his bit.. so lets see the SP tomorrow.. nearly always the SP declines after a major speech.. even during the speech itself form memories of the 2018 AGM. So its major upgrade on financials and guidance for 2020 tomorrow .. otherwise why not have a CMD in Jan next year.

One thing that could take us by surprise is from JS.. refinancing. Cashflows are clearly better and refinancing everything excluding the bonds at lower interest rates for slightly longer with no restrictions on distributions could be a quick fix to restoring the market cap.. IIs would be happier with a initial small dividend progressing upwards as annual interest costs decline as debts are cleared.

Hi E121, you might be right about 2020 guidance. but they should like PMO , give Oct 2019 production by itself, plus the annual average.. so we can make a best guess for Q4 2019..

Surely they can talk about expected EBITDA for 2020 of over $1b.. ( nothing to be embarrassed about), Happy to be corrected tomorrow. ( nearer $1.25b) if 75k at say $66. Baffles me why we are below RI price of 21p, unless no II expects any of this money to go to equity over the remaining years, or all has to get spent on replacing reserves.. so no returns for ever, but plenty of jobs created and sustained over many years..

Hi R,

if your thinking of running Enquest until the oil runs out, I think the Opex figure of $20 could be considered break-even, but if you want to continue the business, you'll need to replace reserves.. I would think the cost of sales figure ($588m) in the last set of accounts is a good starting point. Page 8, Deduct the operating costs ($248m / $20) from total COS and you get about $27.. so i'd say total break even is about $47. Naturally Enquest can develop new wells in Magnus and Kraken and PM8 for much less than $27.. I think it's less than $15.

Not that these new drills are super brilliant.. but they do replace the ageing ones, until such time Enquest want another project.. anything up and running for $15 and opex at $20 sounds alright.. free is best.. given how aged some North Sea assets are.

Me too, but with all the fixes, they need to give current production and first guidance for 2020.. some on here think 80k/day … i'm inclined to agree , Thistle is fixable , so lost production over 6 mths can be made up later on..

2020 guidance of 75k to 80K.. would impress the market.. ( actual near higher end of range)

if you go back to page 47 of the 2013 CMD.. you'll see the production profile data expected from Kraken for 24 years.

Now things looked fixed, I'm certainly expecting 45k plus /day over 3 years.. Original data say 50k plus.. average for 2 peak years ... so perhaps next year once Western Flank drilled. There is some Tanker speculation which suggests it can already produce that..

We all remember when they announced a 2019 range of 30k to 35k and everyone including the IIs were disappointed.
Congrats to Bob D... he said he would sort it and he has. New start tomorrow and put this nightmare behind us.

Thanks KO.. I do remember the effort your made.. they have managed to hedge a bit more in Q4..
Pelle, I think it would be similar to before.. $66 and not much cost to do it.. We don't know how much PMO paid to get the higher prices.

We know they read this board so I still would like to see the cashflow forecast for the next 12 mths, so we can see the debt reduction and one more Magnus type deal from BP announced tomorrow... to really ensure the smaller contributions from the older fields are replaced over time. something that produces 10k/15k /day. No money upfront either..

Thing is Pelle, PMO get up earlier and take up all the available ones at $70..

Enquest ? lets see how much they got ? $65/$66 etc . I expect lower than PMO average.. but better than $61.

Also I know Trump wants to look good in front of the US voters, and threatens more tariffs if China don't sign.. but at the moment, given how long they have been talking about phase 1, it looks more like Trump isn't able to conclude basic deals..

Brent back over $61 , i'll accept that plus the premium for a couple of years to allow the stock of US DUCs to draw down and Tier 1 to decline. Maybe improve $5 more once phase 1 signed as that involves the trade and movement of physical items that require transport.. not to bothered about later phases on IP.. or cloud computing.. as these don't involve oil.
Certainly not interested in the last phase where the US wants to turn parts of China into America..

Phase 1 is important for oil.. so hopefully sign off on something before Dec 15.

What are the chances they announce another large project, they are already in the 1-2x debt/ ebitda ratio zone , so what’s stopping them trying another . If the project or acquisition is significant enough, and adds many years of reserves , then it could be a good thing that improves the market cap and SP, Is AB smart enough to pull a rabbit out of a hat? I’d say Yes !

Thanks Pelle, plenty there to get to $700m, but with 2020 scheduled debt repayments of $150m, what do they do with the rest.? I assume they will prepay on the larger 2021 amounts and save even more interest, so the CMD may announce a surprise given Enquest think a few years ahead of us.

Thing is gross Kraken daily production is say 45k rather than 32k, so extra in Q4 makes up for weakness elsewhere including Thistle.

FCF of say $280m in 2020 plus another $150m from extra Kraken , plus lower capex savings of $150m gets us close to $600m . Higher Brent would have to help get the rest to $700m. Be nice to get some idea of what they are thinking for 2020 at the CMD.

https://www.telegraph.co.uk/business/2017/06/10/enquest-looks-cut-debt-700m-year-new-field/

Old article from June 2017. But perhaps the $700m FCF /annum mentioned has a better chance of being achieved with Kraken fixed , albeit more than 2 years later. Perhaps we are entering the zone and CMD will highlight it.

IMO 2020 always adds a little more to the headline rate. Hedging is higher, but if we take the US for example, those companies at risk of debt default, may go under wiping out the equity.

I'm sure we have brighter days ahead given the debt repayment in 2020 is a mere $150m . I anticipate they will pay off double that, making 2021 easier at $250m net (400-150). Will we get some guidance on Thursday. Probably not.

Thestockmarketdoesnttoleratebull****

18.9p

And another thing , PMO slice of Catcher was cashflow neutral after 22 months according to energy voice , what’s the monthly count with Kraken , when ? Do I really have to go to HongKong and demonstrate to get a answer?

The balance sheet was always too complex, no one really understood the Magnus deal first or even second time round, and Kraken was only fixed after 1.5 years because Bumi sent in new engineers who understood things better , previously we really had washing machine mechanics trying to fix a FPSO in the North Sea . GL , maybe Enquest can make the presentation simple enough to understand .

They need to present a 12 mth excel cashflow forecast at CMD , it either confirms what we think about large debt reduction in 2020 or corrects us for reasons they have not told us about. At the moment IIs think there are plenty of things they are not aware of .