Member Info for January24

AB and his charitable foundation hold around 250m shares combined. That's a lot of shares !
From a sale perspective I really can't see him doing any deal other than an outright sale. He is unlikely to do one of those deals where you get shares in the new business. (Like PMO). He would surely want to control over the business due to his large holding. Can't see him letting another CEO having control of a business where he holds so many shares. So a sale must give him and us an exit ! I posted a month ago that I thought he could be ready for this. We are both 60 years old, however he owns a couple more shares than I do !
As for a purchase. Unless some sort of deal can be done (like before. BP ) that does not involve us coming up with shed loads of cash, then it is possible. However this would surely mean AB would have to give Enquest a few more years of his life taking him to mid 60's. This is also true of any "cash raise" to go shopping with.
My call is, that after 13 years of commitment to Enquest, he could be ready for a sale !
Asking price $1 billion.

Mmm, Why do we need 3 directors to go to make room for romaron ?
Does he cost 3x more ?

Hi romaron,
I feel positive in our management teams ability. AB has done a better job than our piers. Look what happened to Tullow and Premier oil. The problem is circumstances outside his control.
As we all know oil producers are "unloved" and are not attracting investors. We are taxed to high heaven on any profit we do make. From this angle the future looks depressing. Even our net debt will take around 2 years to totally clear at the current "run rate" (thanks to the EPL).
I know things can change quickly, however at this time I can only see the possibility of high POO as our saving grace !
The quicker oil gets to $100+ the better. Thankfully it is the one positive that I think will happen in the coming months.

On Enquest in the first 20 minutes of market open.
Have we moved onto the AIM index.
Sums it all up really, no demand for oil stocks !

I wonder IF Jeffries made any money on the move this morning. Just a thought. I am sure that they would not trade off their own price target movement, would they ?

Hi Bullseye,
Agree, we have the same problem over on Enquest.
2 things will cause a huge re-rate for us all.
1) Positive changes on EPL, like a decent floor. ( I don't hold out much hope for this in 2023, however I could be wrong )
2) POO climbs to over $100. ( This is the one I am expecting to happen, by summer)

POO will be our saviour, IMHO

No, the ratings have everything to do with the price action !
They also gave Enquest a reduced price target and they have also suffered this morning. However Harbour are not affected as they did not receive a present from Jeffries !

Yep, jeffries do not have any price target changes to Harbour, so they are not affected this morning. Just us and Tullow.
Definitely Jeffries the cause of our SP fall this morning. However these price targets only tend to affect the SP for a day or so, then normality returns.

Yep, Oil up in the last hour and a half -
News out "Opec production in March fell by 680,000 bpd"
market surprised by this and oil price rallying !
hopefully as sign as to what is coming down the line.

Cheers Tarmak,
I was only looking at Easter travel for airports and ports.
thanks for the data, all the best
JAN

Just read that UK airports have been the busiest they have been since 2019. The same is true of UK tourist ports.
This to me is a window on what should be a very busy summer for worldwide travel. My bet is the US driving season will see record travel.
With all this inflation and negative news around the world, human nature is to get away and have a damp good holiday to leave all this depressing news behind. Easter is proof of that. Summer will be very busy.
If true, then Oil demand should be huge !
$100+ POO Incoming surely ?

Remember though.
For 2023 the EPL tax is only payable on UK production. The 6,000+ bpd from Malaysia is EPL free !
If we achieve an average of 45k bpd total for 2023. Malaysia then gives us 14% of our total production free of EPL.

Hi KO,
Hope everything is great with you and the family.
I agree with your $56 . it makes sense historically.
I am useing $60 for 2023 taking in higher costs due to inflation, wage growth etc.
$60 seems right for 2023.

Yes Pelle,
I think it's a first.
I have been invested since 2015 and do not remember any event for retail.

Just to add ,
For those wondering where my FCF came from. I took $70 as full cost, then took profit above this times production to get total FCF for the year at each POO price point.
Stevo do you agree with my numbers now ? Cheers.

Hi Stevo,
Thanks for your reply.
I will take your All-in cost of $70 for 2023. Although I do think that it is a little too high. But let's use it anyway.
Qtr1 production was 47k bpd. However, let's use 45k bpd for the full year average for 2023. Kraken is NOT being fully shut down for maintainance this year, it will work on one train while maintainance is carried out on the other train, then vice versa. A few drills for 2023, so I think 45k bpd is a fair forecast.
That then would give production for 2023 of 16,425,000 barrels.
Now Kraken sells at a premium to Brent , "for a few dollars more". (Sounds like an old Clint Eastwood western) but relevant when looking at Enquest realised prices. It helps negate any lower hedging commitments.
Therefore it seems fair to conclude minimum FCF for 2023 as follows;
Enquest's Average price of POO for 2023
$80 = FCF of 165m
$85 = FCF of 250m
$90 = FCF of 333m
$100 = FCF of 500m
$110 = FCF of 630m. Debt free

I hope some of the US analysis are right and we get $100 oil
All the best
JAN

Have had a few glasses of wine, however Stevo's cost of $70 per barrel seems and is too high !

Surely if you take total 2022 revenue of $1,839.1 million Then minus EBITDA of $979.1 million = $860 million (costs)
Then divide it by total barrels produced of 47,259 per day x 365 = 17,249 535 barrels for year

SO $860 million divide by 17,249 535 = Cost per barrel of $49.86

Therefore cost per barrel is $50 (excluding interest and tax)

Now that seems more like it !

Cost per barrel

Hi Pelle,
My thoughts are;
AB is the same age as I (he is 60). What does he want to do with his remaining years ? I don't think it would be run ENQ until the end. So he will exit, but when ? He will want time for his next project (charitable foundation is my bet) , so I see an exit between now and the next 2 years.
The best times for oil producers will be the coming few years. Later renewables etc will takeover and world oil demand will fall drastically as it is replaced. We all know the world will not continue on fosil fuels for ever, eventually it will be replaced by "clever" energy. Split atoms etc, however that is a long way off. I do believe Oil is entering it's last cycle of very high prices !
The best time to sell is on "A high" , you get the best price - So I am forecasting a sale between now and end of 2024.
I think his plan is - get debt down (so no real debt for new owner) have another great year in 2023 and effect sale in 2024.
In the meantime in 2023 , if a buyer comes along with big pockets he could be tempted !
All IMHO of course, just my thoughts !

34adds,
The 40% corporation tax is offset by previous loses (tax credits). We have 2.5B to use up.
EPL for Enquest is the 35% , that is the tax we pay. 65% is left for Enquest.
Many oil analysts (Jeff Currie, Amrita Sen) are forecasting Wti oil to go over $100, that's $105 for Brent. If this is sustained for a period then all I have posted is possible.
FCF circa 50m per month at $100 oil. And 100m FCF per month at $130 oil. POO Is very relevant for 2023 performance.
One thing for sure ! POO will NOT stay where it is currently for the whole of 2023. I am expecting a re-test of 2022 highs !

Excellent results in the face of EPL.
following HBR in declaring a net loss for 2022. Politically, the right move at present
Superb debt reduction for 2022 and so far for 2023. January saw 19m debt reduction 717m down to 698m. However February saw net debt go down from 698m to 624m and huge 74m reduction. I would guess that we will average monthly debt reduction rate of somewhere between the two. Debt reduction of 42m per month is an average of the first 2 months of 2023. Would give a net debt of only 200m at year end.
Looks like shareholder returns are penciled-in for 2024. We could get news near the end of this year.
If Brent oil price goes over $100 during 2023 for a period of months, then we should be debt clear at the end of 2023.
I wonder what the talk of M&A was about in the RNS. Sell or Buy ?