Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Nice spot. North Sea Atlantic is Lerwick bound as well.
https://www.vesselfinder.com/vessels/NORTH-SEA-ATLANTIC-IMO-9665073-MMSI-258955000
Here you go, "ii";
Nevertheless, the Company is entitled, on each semi-
annual period ending on 31 December, to pay up to 50 per cent. of any cash sweep amount
to (in the following order): (i) make a voluntary prepayment of any capitalised interest
payable on an interest payment date under the High Yield Notes and the Retail Notes which
is capitalised in accordance with their respective terms (the “Capitalised Interest”), in each
case subject to satisfaction of the Bond Interest Payment Condition; and (ii) any permitted
(under the SFA) distribution.
The “Bond Interest Payment Condition” includes that:
(A) the Leverage Ratio has been no greater than 2.0:1.0 for the four immediately
preceding consecutive quarters;
(B) the Company is not in breach of the Leverage Ratio on the day of, and taking into
account, the interest payment;
(C) the Company has delivered a Liquidity Test taking into account the proposed
Capitalised Interest demonstrating, to the satisfaction of the Majority Lenders (as
defined below), that the Group has sufficient funds available to meet all liabilities when due including all amounts on the SFA Final Maturity Date with a surplus to the
extent that debt service in each six month period is covered 1.20:1.00;
(D) Aggregate Commitments under the SFA are less than $500 million; and
(E) no event of default is continuing under the SFA.
A, check
B, check
C, No
D, check
E, check
Need to build a cash position that satisfy C. That's April/May.
Best, HMH
Pretty big ship (North Sea Atlantic) with a decent size crane at Thistle at the moment:
http://www.northsea.no/page/6312/Our_Fleet
Anyone know what a "500 Te crane" would amount to in lifting capacity? From what I recall the tanks were quite heavy. Deep Discoverer is still around and they both seem to be working together in the same spot.
Best, HMH
ZFG,
Selling Kraken straight into the shipping fuel market is the same as stating the both are substitutes. And if they are substitutes they will trade on par with eachothers.
The massive FCF of November and December ($150m) confirmed a very large premium in my book. Where else would we get the additional $40-70m as production was still hovering below 70kboepd?
A $20 premium is about $20m a month, and it's probably trading closer to VLSFO which catched $95-100/bbl for a reasonable long stretch of time with a $30-40 premium. Now trading at $76/bbl.
This also means that our hedges are only exercised for the other part of our production (Brent, Tapis).
2.9m should get us $65 to March 20th or so.
Best, HMH
NH,
From H1:
Entry
Net debt $1,774m, cash $309m = $2083m
Financial costs ex. leasing was $69.7m for H1.
(69.7*2)/2083=0.067. So we're paying about 6.7% interest on all our outstanding debt. That's not alot of money, and with $1bn of debt we'd pay about $67m of yearly interest.
Best, HMH
Hi ZFG,
That's the answer you get up til a second before the information was released via RNS. We'll not know prior to it happening, and I dont feel the Enquest board is one that would give us the heads up looking back in history.
Financially its looking like a good year to consider it, given the now $110m amortization ($45m payed in October last year). Could reduced debt significantly over scheduled payments and still distribute $100m or so total.
Hi romaron,
We're likely to do about $280m or so of earnings (before exceptional items). This number is however depressed by the write off of previous losses. So I dont believe it's a great measure in this case.
However, Tullow had an EV of $6bn a couple of months back with a tiny dividend. I'd take that every day. ;-)
NH,
December was a fantastic time to layer on some hedges (Enquest have hedged like 50% of the yearly production looking back). I think we'll have a good Q1 regardless of price of oil (we'll find out in the OU). Also, VLSFO is selling at $80/barrel so we might have some additional Kraken premium upside.
Enquest is targeting 1-1.5x. I can only trust the companies own words... If they said zero debt I wouldn't expect a dividend, but they didn't.
Also paying $1bn to get rid of $65m yearly interest is dumb. Slap on a discount rate to the payments a few years down the road makes it even dumber.
Best HMH
Company could reduce net debt by more than $500m and still do $50m + $50m according to the lowest of FCF estimates around here. I guess it's up to AB & Co. Other companies tend to be able to do both, and the leverage is within target range.
Back in the November 21th update Enquest cash position was $213m, RCF $530m, PIKs stood at $132m (should be about $140m now with last weeks RNS).
YE net debt expected to be sub $1.5bn.
Given the above info the $500m RCF threshold was met beginning of December, all else equal cash position should be around $245m year end. Depending on hedging ops and Kraken Premium I suspect another ~$200m ($65 realized OP) should be added to the companies cash balance til the end of April. That leaves us with a $305m cash balance (after $140m PIK is cleared) entering May when companies usually do the distribution for the previous year.
I don't see why a dividend of $50m would be an issue, nor why the company would hoard more cash than the normal balance of around $200m. A good start to a new chapter of Enquest.
Also, if Kraken premium is sizable ($15/barrel), that's an additional $60m to the equation.
Guess we'll know in about 7 weeks.
Also, highly doubt that 2021 RFC will be payed cash. It will be easy to refinance big chunks of it if not the whole block. Alot of people around here including the analysts seem to forget that banking is about extending credit to companies and consumers, charging interest. I bet big banks will jump at the opportunity to extend the credit line given that the company is now rapidly de-leveraging even at fairly low oil prices. Opex should be down $125m YoY (the cost of Scolty/Crathes pipeline) and Capex about the same (Dublin bypass was part of that chunk for 2019). With 3 wells total, capex should be sub $150m.
Paying $500m to get rid of $30m of yearly interest charges going forward is simply a bad deal if you discount the payments at a fair rate given Enquests prospects.
Guess we'll find out soon.
Hello Pelle,
Nice, thanks. Company should be in the clear for dividends somewhere around FY2019 report then ($138m of PIKs gotta go after RFC reach $500m). That's without including the potential Kraken premium ($20 equals to an aditional FCF of ~$20m/month) and potentially higher production rates since November.
Payable in June, $50m or so could really happen.
Best, HMH
Thank you Chilts,
Now we've got a chemical products tanker doing a STS with CSK Valiant, so guess we can confirm the blend is being done in CSK Valiant.
If ships run on this mix without refining we've got some really great oil!
Looking at CMD production profiles I believe no acquisitions will be probable prior to 2024-25. Near field is the way to go, and we've got Eagle to offset -21,22 declines and Scolty/Crates and Western flank should give us a nice upswing 2020.
Wouldn't agree with the "NO DIVIDEND TIL 2021 crew", AB understands that he could put about $40m in his own pocket this year and see capital gain of maybe 5x that if a $400m dividend would be payed.
FCF 2020 should be at least $700m. We had $300m last year, capex/opex is cut by at least $250m and production is up. On top of that $700m we've got a potential Kraken premium which would be a massive bonus.
We're bidding for licences, but that production is 6 years down the road and production could easily stay around current levels for the time being. We're in great shape.