Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Good posts Squid,
One can also add that last time OPEC let loose the production oil had averaged well above $100 for a lengthy period. Alot of projects were comming to market, supply was high and companies were well capitalized. This time it's the opposite - companies have invested only to keep production flat over the last 5 years and the coffers are empty. When shale is crowded out there's not going to be sufficient supply with OPEC spare capacity at zero and half a decade of low investments from the entire industry.
This is a potential oil shock in the making imo, and when the world get a grip on Corona you've got monetary stimulus, fiscal stimulus and stimulus from low oil prices that will drive some big demand numbers.
OPEC + can add what, 4mbopd till they're pumping full out? At $65 world didn't add any non-shale supply and with 13mbopd/year of global natural decline we're in for some interesting times.
Best, HMH
Thank you Therapist,
I've said this before: the 61-68k guidance is wierd.
I'm thinking 10-12kbopd upside just from fixing Thistle and Magnus. There's also the new wells, should add some good numbers to Magnus assuming the injection issues get sorted.
Kraken, anyone dare guessing what addition we could expect from there in a few months? I'm thinking that some rather big number may be possible with all the spare injection capacity we hold.
Interesting months ahead. Also excited about news on whatever is in scope for Enquest Producer, that will "move off station shortly after shutting down production".
Best, HMH
With natural declines of 40%+ cutting Capex cannot be done. If you cut capex this year in half, you end up with a 10% loss of revenue for the current year and you will enter the next with a production 20% lower YoY, that hit to revenue will bankrupt the companies as money is made on the margin. This time around OPEC will make sure they get to full production by keeping the price in the $60s for the next couple of years really wearing them out.
So basically, the only thing the shalers can do to save themselves and their rotten business model is to pump more oil. As we've seen they keep on adding enough barrels and interest costs yearly to prevent themselves from ever making money, and less so paying down their debt.
Expecting some massive defaults the comming years. When credit goes it's over, bankrupt companies will let wells produce the last oil which is done in 4 years, sell the assets witch all consists of wells carried on the balance sheet at far higher values than they would ever fetch today and then be done. And that will be the end of the shale gold-rush, an era that will cause some big supply disruptions down the road.
Shouldn't IR be able to answer specific questions since we pay Moody's for the analysis?
Expecting flat to slightly declining reserves this year, we needed 70kboepd+ and 10 years of reserves to move up one step on the junk-ladder if I remember correctly?
Best, HMH
Hi L7,
"Net debt reduction" should be FCF, my bad. We payed $100m of 2018 expenditures and deffered $50m of 2019 expenditure.
Net +$50m, add that to the net debt reduction and you get a neutral FCF of $411m for 2019 with no working capital movements.
Full year report will be interesting.
Best, HMH
L7,
If you're going to reflect on the phasing of capex entering 2020 you better do it for 2019 as well.
"Approximately $100 million of 2019 cash capital expenditure relates to a combination of deferred payments agreed with suppliers in prior periods and phasing of cash payments from 2018 to 2019 (primarily relating to DC4)."
So your "real" net debt reduction is $411m, double your forecast. Also means that FCF-generation should top next year, not the other way around.
Best, HMH
I'm at $225-250m for the year after the Nov/Dec FCF bomb (probably Kraken premium cash, should still see all loads from december in the working capital so Januari should be the same).
PMO has an EV of $3.339bn while Enq is at $1.992bn. Need a 200% hike to MC to trade on par, probably more given our rapid deleveraging. But hey, Tullow is at EV $4bn so pick whichever you want. The companies are starting to look pretty similar regarding production with Enquest not having massive Capex and debt repayments down the road but instead alot of cash to toss around within 12 months when all debt ex bond is gone (unless its refinanced earlier).
Here waiting for the fireworks. $200m of dividends and we should smash right through the EV of Tullow.
This company is grossly misunderstood by Mr. Market. He's manodepressive so he swings from deeply depressed to euphoric in an instant.
Best, HMH
Crew was 151 at evacuation according to this.
https://mobile.offshoreenergytoday.com/serious-problem-at-thistle-platform-rmt-says-after-workers-evacuated/
Statfjord is out there as well, I guess we will have to wait and see.
X mark Thistle, this helicopter is just returning:
http://www.bilddump.se/bilder/20200215124805-2a02:aa1:161c:67e6:1:1:6b2:2e9d.jpg
Nh,
Its all Bristow Helicopters, and Bergen service Gullfaks, Statfjord and Snorre that are essentially all within 20nm or 37 km of Thistle.
Therefore I don't see why you couldn't shuttle people from Norway? Check the Flightradar sequence. Maybe Statfjord replaced 340 man crew (19x18) in 24h but if not, the choppers went to Thistle.
Best, HMH
Morning lads,
Found a past track function on flightradar.
Starting yesterday morning 15 heli-buses out of Bergen, Norway was flying in the exact direction of the Thistle platform. This wasn't happening Thursday - there was non.
Catch is that the radar doesn't cover the last 50 km or so, so you may just observe the coppers disappearing and then returning a while later. 4 more helicopters made the journey this morning and the standby safety vessel is sticking around the Thistle platform.
I believe we're good to go.
https://www.flightradar24.com/61.14,2.24/8
Best, HMH
Spotted 2 heli-buses heading from Bergen Norway in the direction of the Thistle platform. They won't show destination, but one just went black near Thistle so it probably landed (or crashed). There's alot of platforms out there so let's not jump to conclusions.
Good stuff, guess last weeks operation was indeed the removal.
On a side note, we've got a Research/Survey vessel at Magnus probably doing sonar runs by the look of it using "past track".
Ship is named G.O.SARS lol
Best, HMH
Hello romaron,
Enquest is now a really solid company. Break-even including capex is about $40/barrel for the year (68kboepd). But we also hold about $300m cash so that would extend any worries far into 2021 if $40 average happened.
We also have the Kraken production at a premium, which probably trades around the price of VLSFO currently at $78. I base this off of the Nov/Dec FCF and net debt reduction, which was massive.
We sell production forward som Jan/Feb should still see very high Kraken prices in my opinion, well above the VLSFO front month pricing.
2020 just begun, Chinese workers are returning to work tomorrow and things are likely to start stabilizing going forward. Corona is a *****, but we need to put it into perspective. 35k sick is big, but the counter-measures with locked down cities should start showing in the numbers this week.
China communist party really engaged well in this manner, and I bet this lockdown will make the impact of this flu flattening out over the comming weeks.
Personally, I would refinance next years debt maturities, and pay them over a longer period with 0 restrictions. Banks should be lining up by now, since lending is their business and Enquest is solid with Kraken, Magnus and PM8 to lean on.
Wouldn't be surprised if next months update brought us something on the debt repayment profile. Our current interest rate is about 6.5% which is no problem for a company of this stature and refinancing at a lower rate should be possible given out current balance sheet and FCF.
Market will notice all of this going forward. As always, value investing takes time. All we need to worry about this year is uptime, Kraken and Magnus specifically.
I think we can all lay back and enjoy from now on. Company is safe and with farm-out Kraken as a last resort at VLSFO pricing we're not going under any time soon.
Best, HMH