Member Info for hitman1a

Shame , add 24hours . Still think it's going there.

Yes I can recall the note I made E121.

Think we should count from #32 last load leaving to next #33 leaving, ie start from 10th, but next one #34 is probably the best guide.

That said, this is very good indication as per Cairn of Dc4 productivity and indeed some of the work we thought they might be making on one train.

Word is market will rerate after Thursday's presentation. Shorts will close tomorrow imv

It's a movie....

Come on , 21st... That's 40k bopd ..imv

last one left on 9th... so with DC4 add 15 days.

Perhaps Sunday 24th ( 35k/day).. is the earliest i can anticipate.

One tug now says Invergordon . assumed destination point for TL..

Hi E121, i agree with your assessment.. more Asda at the moment, but if not this year, then next year's AGM. Plenty of nice shops near Enquest HQ to spend money.

We should be celebrating the Kraken project is finished after all these years.. TL is definitely leaving the area at 1 knot.

I can just about see the light at the end of the tunnel and a new pair of Nike

16.06p / £2k..

Bounce to 18p/20p for a new pair of shoes.

GL.

I'm actually more pleased OPEC + have cancelled the April meeting.. No change in course until June.. If Trump tweets inbetween and causes volatility, then OPEC + won't bring barrels back on if Brent approaches $80. Plus they have said they are looking at actions to prevent a future collapse in price to inspire more investment..

Bloomberg commentators said Shale capex budget for 2019 is 90% of 2018. Large operators are still keeping full budgets, but med/ small have reduced.. If we say Shale would lose 4m barrels a year if there was no more drilling, then you could say US production at 12m bopd has peaked.. Loosing 10% of budget and drilling child wells, might mean 800k less production each year for the same money. Add back some cheap oil from DUCs, and you can anticipate US production tapering to 11.5m by end of year.. Hardly to 13m/14m that we were told to look at for.

WTi will definitely tighten up to $62, .. Brent $70 . plus. imv

Smaller US players are more concerned with not taking on any more debt . medium are concerned about shareholder returns.. Larger ones are just devaluing the remainder of their portfolios.. It's all one big ponzi scheme in the US.. just like mortgage backed securities.. Why, because the products cost more to make each year.. and the current debts can't ever be paid back.... unless you see WTi in the $70/$80 plus..range.. but your still only drilling child wells. and then after a while , your drilling grandchild wells.

From here on in, it's only real deleveraging that inspires confidence in future earnings.. and improvements in the SP.

Bigger amounts paid off inspire larger upward movements in SP.. so you could get 5p/ 10p movements, just like we have experienced on the way down.

Shuffling bits around has been necessary in the past.. Magnus is obviously the white knight that saved the company.

Kraken.... took too long to get right.. but it's good enough now..even with some work to do later in the year.

I'd be delighted to see 20p by end of week. Perhaps one optimistic broker note on Friday..?

67k at $68 produces $290m FCF.

Pay $200m ( of $785m) this year. plus some extra..?

Just need to know the capex spend for 2020. then potentially clear $500m next year.. plus some extra if Brent averages $72 in 2020.

Cashflow looks good.. just need some confidence in Kraken production numbers..and reliability issues..

Possible 2 pence bounce to 18p on Thursday..( results day, if the presentation doesn't leave any ambiguity)

All 3 still a bit out, but now all pointing towards TL..

Barge Trader looks like it's finished and moving away.

I guess there is always a chance that the analysts in Jan set their targets without understanding Magnus cashflows ..

Without Magnus cashflows.. i can understand 15p,

When Brent starts to move more meaningfully towards $75... they have to upgrade the equity valuation.. at least back to 30p,, assuming Cairn and Enquest are correct about 2019 production..

Enquest very quiet in this close period... not even a new youtube video.

Will AB buy 2m more shares on Thursday ?

250mb : Will he kick the April 19 deleveraging down the road.. or confirm it's already paid. ?

which then means Fernan is right and the RNS wrong. ?

Yes Squif , that could also be true.. if they carried forward invoices from 2017 into 2018 .. very likely.

We should take assurance that given all TL work has been carried out in Q1 2019.. there won't be any material capex carried forward into 2020..

Man maths say:

Actual invoices for 2018 : $220m , less paid during 2018 $120m.. balance carried to 2019 of $100m

Estimated 2019 capex payments: $100m from 2018 plus $175m, which includes TL work on DC4 ( $60m)

Leaving $115m to pay for Magnus ($27m) and new Scolty pipeline (not sure how much these cost at B&Q): say $20m until someone finds out..

Leaving $68m maintenance capex for 2019 to run the system.. cheap as chips for 70k bopd.

I agree with Fernan and Squif.. They had the cash to pay the 2018 suppliers.. but didn't because they weren't due..

If they had.. net debt would have been higher at 31 Dec 2018.

I think they called it window dressing in the old days..

Feb 19 ops update: Cash capital expenditures expected to be approximately $275 million; includes a combined total of approximately $100 million related to deferred payments from prior periods and phasing of spend from 2018

Hi Squif, as i undertand it, they don't include trade creditors in net debt. It's just actual debt (less cash).

Net debt on 31/12/2018 will be as the company has already stated.

We are just including the expense in the cashflow workings for 2019 to work out net free cashflow at end of 2019. The actual invoices for the postponed amount should be included in the 2018 accounts.

They don't include trade creditors, just like they don't deduct trade debtors.

Thanks for your notes Fernan

I agree with the $275m less $60m for 2019 : $215m, but i would deduct another $100m as per Enquest as these relate to suppliers invoices incurred in 2018, that haven't been paid at 31 Dec 2018.. I assume Enquest accounts will recognise these invoices in 2018 accounts..

I haven't got any breakdown of whether the carry forward relates to Magnus 2018 drills.. replacement pumps at Producer or works at Kraken but i don't consider them as recurring annual amounts.. From $275m, I had DC4 at $80m, and then another $100m b/fwd of invoices.. so $95m annual maintenance capex max. I now agree we can't chop it all out..

I'll accept $100m annual maintenance capex and use these in your excel workings This could be paid for by Brent moving just $4 extra. ( target Brent $71). so any drilling would need more capex etc. Happy to this this in 2 years time.

So I still want to be net debt zero in 4 years.. I also don't mind if we lose 5k/net per year and lower 20k to 47k in 4 years time, so long as we aren't paying $150m in interest every year... With some wells, the thought of spending good money after bad also comes to mind, so we should expect our annual average production to fall anyway..

We should be able to accumulate $200m each year from 2023 for 9 years (106p) and return to shareholders. Then i would leave the rest of the income ( last 3 years) for final decommissioning and close the business. Anything better than Brent $67 from today brings the net zero debt position forward and increases the annual distribution. 4 year to pay debt, 9 years of distributuons. 3 years to fund decommissioning.

I accept the returns above are too far away to be attractive today.. but when i read about US pundits recommending US oil companies/ service companies with net debt / EBitDA of 4x , then our ratios at the end of the year look good as we are aiming for only net debt / FCF of 3x or 3.25x for start of 2020..

All depends on the next few tankers. RBC. Jefferies and Barclays have been more than patient.. but given's Cairn testing models.. things will improve now DC4 finished. Opec has to help us out with Brent above $70 from April.. SP at 15p is hard to watch, but many can't wait for 9p/share annual returns in 5 years time.. they would rather accept the chances of it happening are rather remote... I'd rather accept Opec is waiting for Shale to calm down. plenty of US families aren't making money drilling child wells so are now concerned about wasting capital or not being able to repay the loans. They really need WTI in the $65 range..to justify drilling, but are still drilling child wells. so the annual costs keep going up slightly every year to replace the natural depletion.. Opec just need to be patient and regain market share over next 2 years slowly..

Enquest.. ? hardly compelling unless Brent moves up (say $5) and the Tankers get a move on. ( every 15 days)
Could all happen within a mo

Hi Fernan

I think from the half year results, the estimated capex costs on each new Magnus well later this year are approximately $13.5m each on Canute and T10. So that's $27m . I haven't found how many barrels they would produce a day, but the size is similar to M62 and M63 drilled in 2018. I can only estimate that the improvement of Magnus from 16k to 21k is mainly down to the new wells, and some top side work. So I'm happy to proceed on these types of drills for a few years until the debt is reduced. Any larger ones that require bigger budgets can only be financed via interest savings, but I wouldn't sanction any of those. I'm not sure there are any . Even Cairn weren't that committed on the Western Flank, but said there were a couple of spare manifolds that could accept some infield work when the time came.

I personally think paying 8% a year is too expensive. If it was very low rate , then fair enough, but it's time to change. If we also give Malaysia $23m each year, then we can get say 8,000 a year to replace natural declines from it and Magnus.

I agree the missing information is how much extra £ does AB need to keep maintaining 70k / year. I think Moody's pencilled in a number like yours, but I'm taking away the credit card. Debt repayment comes first for several years.

Look forward to the next tanker , but the one after is the important one for the all important new production rates.