Member Info for hitman1a

It's still not completely obvious that the company can fund another Magnus type deal from it's own cashflows without asking shareholders for a contribution.. New investors would look at the recent rights issue and see how little money was raised and the extra shares issued. Maybe next year when the 2020 RCF has been paid.. it becomes more visible.. but i think the substantial 2021 RCF gets in the way a bit of another large growth transaction happening..

I would suggest moving the 2021 RCF repayment to 2025, and asking for an option to drop the bonds into the same facility .

This would give a clear cashflow line to the company over 4 to 5 years to funds Magnus type deals. Layer them on, they can be with varying equity percentages.. By the time you get to 2025, your probably already earning $1.5b/annum. Best yet, because the bonds will be redeemed rather than rolled over.. some of that money would possibly find it's way into equity even before redemption date..

For a while, it feels like an equity holder is acting like a Lloyds Name, funding as and when the company calls upon it to fund syndicate expenses and claims..

A couple of phone calls to the bank ( one to say please, the other to say thank you) and a bit of paperwork for each acquisition transaction, and the large II's will come flooding back, boosting the share price..

GL.

Should get a trading update on Thursday am via RNS.. (AGM day)

Ammu123, why do you need Enquest to confirm what Cairn have already said? They can't lie about production numbers as it's not an estimate.. yesterday's production number is what it is.

I'm still in.. but I would prefer Enquest to confirm the original stock of some of the spare parts Bumi commissioned with the original FPSO have specification flaws.. but as they are so expensive, they will be used up first..

GL.

Cairn already confirmed 45K , but with equipment issues..

IMV, this reminds me of a car my father had, an issue arose and the dealer fitted a new part that just developed the same fault.

Seems to be Bumi spare parts have flaws, so we need to run out of those first before we can order a new batch using Enquest spare parts team sourcing from different more reliable suppliers..

GL.. .

Pareto sees net debt fall to $ 950 million by 2020, which also gives financial space and also dots AB's debt targets.
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I agree this number looks reasonable.. but Enquest would effectively have cash in the bank to pay the 2021 FCF earlier than expected. It has several options:
1: Start paying off the 2021 RCF early saving interest charges
2: Reverse out the OZ loan
3: Make another single field Magnus type acquisition.
4. Renegotiate and defer the 2021 RCF to 2023 bond date or later, and use the cashflow for 2 to 3 years to make a bundle deal acquisition of several assets from eg: BP. increasing production by 50,000 bopd to 120,000 bopd, They can use the "help to buy scheme" tested out with Magnus. Get 25% and then decide later if they want it all.
5. Purchase Cairn or Premier or both.
6. Purchase fields from Seapulse as and when they arise.

Whatever they do will be complex. Definitely no dividends until they make another acquisition.. AB might want a very big deal done.. which effectively generates enough production to compensate for all the old stuff we have and also generates enough profits to pay off the loans , eg: Something with a deal worth NPV $2b imv..

Probably still be 20p tomorrow.. lol.

AB already said in an interview earlier in the year that he thought things would look much better from a financial perspective/ratio analysis by the end of the year. I'm not expecting any earlier.

Maybe he'll talk about Seapluse at the AGM, as well as March and April production numbers. He could have bought the debt with immediate returns , so why choose the equity. ?

Thing is KO, it's only a few of us on this forum saying it's undervalued..

Need more evidence..

GL ( won at £25 premium bond yesterday)

Hi Pelle

I feel net debt around $1b is too high.. Yes the company can afford to pay the interest. and yes for $500m you can buy some very attractive cash generating assets.. but i'd rather see ACTUAL debt around $500m.. The board has years of collective experience.. and historically $1b may not be a large number for them, but we are now in an era of med to low oil prices.. and zero debt is the best protection from a fall in Brent.. I also don't like paying 7% interest.. It's like financing a car from a main dealer, when i could get a lower rate from Sainsbury's online. The old text books that mention gearing and putting your money to work may not be appropriate anymore where all sector markets are reaching saturation point.. so i'm inclined to pay down the debt further than the board have said..

If Saudi can persuade Russia to continue with the deal, until Shale reaches a peak or starts to tail off, then that's the best route i can think of for all of us.. Zero debt is best.. And then less pressure to chase production to service interest.. There aren't many US funds chasing investments in oil. so no one is really looking across the pond at Enquest imv. You have to bear in mind that Enquest specializes in late life assets that require extra maintenance. This original business plan was devised when oil prices were much higher, so it doesn't really look like a good idea when prices are where they are, even though you may have rebased your costs downwards.. You still have old assets that breakdown and need extra ongoing work..which may not be the first choice for many as an investment.

Fortunately Enquest has significant 2P and 2C reserves within the portfolio, (Kraken, Malaysia and Magnus)

It's now a cash job imv.. how much can it make.. doesn't matter where from, but more stuff like Magnus would suit us just fine in 2021-23. I'm not that concerned about dividends. They will have to make one more decent acquisition before that happens imv.

Give it a chance to recover over 12 mths.. but i agree with you it's been a tough year for all.

Next year in 2H 2020, it's what do we do with all this money.. ?. The RCF is only $155m in 2020.

Part prepay the 2021 RCF in advance of scheduled date, or reverse out the OZ loan. ?

For now, keep on paying down the trade creditors/ other payables and focus on Oct RCF repayment.

Look forward to my sandwich (?) at the AGM.. and let the balance sheet do the talking in Sep. Too early for analysts to upgrade , but AB will make a decent profit for his charity.. Under review from Numis sums it up. Even Cairn sort of admitted today the production was likely to be better than their original reserves write down suggested. RBC might want to take what they say with a pinch of salt next time..

Hi Auson..

I just don't get it.. this company is generating a huge amount of cash with Brent at $72.72.. but the market just can't believe it or give it the benefit of the doubt .. The market just thinks it's too small in relation to the debt and completely ignores 2P reserves, but it isn't.. We need some management accounts at the AGM for the first 4 mths. to show how much cash this company is making.. If analysts from Barclays. Jefferies, RBC and Numis can see this and extrapolate for the rest of the year..we might get some broker targets in the mid 20s..but i would have thought they would have go that info from the recent analysts presentation in May..

Baffled.. and still shopping at Asda.

Otherwise just quietly do another 18 mths and let the audited balance sheet do the talking..

Analysts at Cairn AGM tomorrow will be asking about Kraken performance and prior write down..

Will Cairn put the same knife in again. ? or use one from another supermarket.. ?

Need some major new positive evidence for a market re-rate , otherwise it's review again in 6 mths.

Hedging remainder of year above $70 would sit well with me. JS did say he would start to layer on as and when things looked good.

All they can really say is they are meeting RCF obligations.. and paying down historic trade/other creditors at a fast rate.. so my only Q is how much does the balance sheet improve on a monthly basis..?

Sorry to hear that Jan.. sincere condolences to you and your family..

GL

Hi Romaron.. remembering what he said at the last AGM, after it closed.. the SP suffers because there is a lack of II around.. and that was when he expected Kraken to be sorted by Q2 2018 , and then it got worse in Q4.

So i think it's deliver the results in Sep 2019 first.. and then let the II re-assess.. He knows how much revenue is coming in.. so it's load up while out of fashion and reap the rewards later, but as Squif says.. which year.? I guess the foundation also has funds to invest over the longer term.. 2 or 3 year or 5 year horizon or sale of company..

DOW 30 down 600 points.. enough of a message to Trump that his policy isn't popular..

i think we may now have to wait till Sep for the accounts to show the actual results.. before any re-rate..

Which is disappointing...

nice one.. change in the golf bag?

Surely when he goes home .. he too occasionally gets asked how are the shares doing? doesn't mention the extra purchases and just plans the next lot..

GL.. maybe he'll make the charity a profit.. (soon), with Brent as it is..

I'd also like to know how much the annual short cycle drilling plan adds each year to annual average production , and how much the company loses each year via production depletion/ natural tailoffs.. do they even each other out?

ie can we maintain 70k/ bopd for several years ?

They seem to be saying they can do a low cost annual drilling program on Magnus and PM8/Seligi every year for many years.. just like 2018 and 2019.. but have also now emphasized the attractiveness of the 2C reserves..

I mentioned the substantial 2C reserves recently .. I also want to know how 5G and AI can transfer the 2C to 2P before drilling. They seem to say the 2C gets converted to 2P post drilling..

Of course this means the annual capex spend for 2020 is at least $50m for basic maintenance plus 4 low cost drilling opportunitiies.. ( say $12.5m each ). so say $100m/annum. with 2 year payback period. Plus whatever they spend on Kraken , on Worcestershire and Pembroke in say 2021, as they can be cheaply connected up.. But wouldn't we need the Transocean Leader again for this and the much bigger Western Flank.. ? or could we get away with a lower-cost drilling unit.

Major missing info is financials: ie estimated 1H 2019 EPS: based on first 4 months of this year. but i guess it's a bit too early for this.

https://vkvc.com/products/pipeline-pigs/

Thought it was wax build up clogging the flow. Bit like fatbergs in london sewers blocking drains.