Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Realised hedging losses can be used to offset the EPL. Mark to market valuations will have no effect until they crystallise.
The UK Government has a policy (“HMG Policy”) on aligning UK international support for the clean energy transition, whereby in most cases it will no longer provide support for the fossil fuel energy sector outside the UK.
https://www.gov.uk/government/publications/guidance-for-general-export-facility-exporters/guidance-for-general-export-facility-exporters
Would the FI count as "outside the UK"?
How old is that article? 2017?
From page 31 of 108 from here: https://www.iog.co.uk/media/1419/2021-12-dec-31-annual-report-final.pdf
Options and Long-Term Incentive Plan Policy
The Board believes that it is important that all employees (including Executive Directors) are appropriately incentivised,
given that the Group’s success is highly dependent on their performance. Accordingly, it has in place a Company Share
Option Plan (CSOP) which allows the Company to grant options over ordinary shares to all employees, subject to
appropriate vesting conditions. The CSOP is administered by the Remuneration Committee and the maximum
aggregate awards, together with any other employee share schemes (excluding the Salary Sacrifice Arrangements
mentioned below), cannot exceed ten per cent of the issued share capital of the Company at the time of grant. Under
this scheme, a total of 9,425,095 long-term incentivisation options were awarded to employees in 2021, vesting three
years from the date of grant and subject to meeting various conditions including: a compound annual Company Total
Shareholder Return (“TSR”) of 12.5%, relative TSR against a basket of competitors, first gas and subsequent production
goals and FDP approval on future fields being achieved.
https://www.londonstockexchange.com/news-article/RKH/successful-arbitration-outcome/15599399
Woohoo!
https://www.londonstockexchange.com/news-article/KIST/rule-2-8-announcement/15578178
No bid from Kistos....
Kistos plc ("Kistos") is disappointed that, despite repeated attempts by Kistos, the Board of Serica Energy plc ("Serica") has failed to engage meaningfully either with respect to Kistos' proposed offer for Serica or the terms of Serica's offer for Kistos despite the board of directors of both companies acknowledging the industrial logic in combining the portfolios of the two companies. As a result, Kistos today formally announces that it will not make a firm offer for Serica.
The Board of Kistos (the "Kistos Board") remains confident in Kistos' strategic direction and positioning as an independent North Sea gas champion and proactive consolidator in the sector. The Kistos Board remains focussed on delivery of Kistos' strategic goals.
The Kistos Board will therefore continue to pursue other paths to deliver further on those goals, with the objective of enhancing shareholder value and driving scale and consolidation, as it has successfully done since the Company's inception in 2020.
Chrysaor Holdings Limited had 551 mmboe at the end of 2019 per page 12 of their 2020 accounts.
Premier Oil plc had 151 mmboe of 2P reserves on a working interest basis per page 9 of their 2020 accounts.
Operating performance
§ Average net Group production in the six months to end June 2022 was 49,726 Boepd, an 8% increase over the same period last year, driven by strong production efficiency across the portfolio; full year guidance remains unchanged
§ Kraken delivered average gross production of 27,698 Boepd, above the top end of full year guidance of 22,000 to 26,000 Boepd; planned shutdown on track for the third quarter
§ Infill drilling campaigns have commenced at Magnus and PM8/Seligi
§ Well work campaigns at Magnus and PM8/Seligi are progressing well, with two wells returned to service and three well workovers completed, respectively
§ Excellent progress in reducing absolute Scope 1 and 2 emissions, with CO2 equivalent emissions reduced by 16.8% from the 2020 baseline; since 2018, UK Scope 1 and 2 emissions have reduced by 42.6%
Liquidity and net debt
§ Net debt of c.$880 million at 30 June 2022 is down c.$342 million, inclusive of c.$10 million of foreign exchange movement, from 31 December 2021, driven by strong free cash flow generation
§ At the end of June, $115 million remained outstanding on the Group's senior secured debt facility ('RBL') following accelerated repayments totalling $300 million in the six months to end June 2022
§ EnQuest's net debt to EBITDA ratio as at 30 June 2022 is around 1.0x, down from 1.6x at the end of 2021.
§ EnQuest has executed $14.4 million (1.7%) of buy backs of the 2023 7% high yield bonds
§ For the period July to December 2022, the Group has hedged c.3.4 MMbbls of oil with an average floor price of c.$60/bbl and an average ceiling price of $79/bbl. For 2023, the Group has hedged a total of approximately c.3.5 MMbbls with an average floor price of c.$57/bbl and an average ceiling price of c.$77/bbl
Guidance unchanged
§ 2022 net production guidance of between 44,000 and 51,000 Boepd
§ Kraken gross production still expected to be between 22,000 Boepd and 26,000 Boepd (15,500 Boepd to 18,500 Boepd net)
§ Operating expenditure is expected to be approximately $430 million
§ Cash capital expenditure is expected to be around $165 million
§ Abandonment expense is expected to total approximately $75 million
The tax will take effect from today, 26 May 2022, and will be legislated for via a standalone Bill to be introduced shortly.
https://www.gov.uk/government/publications/cost-of-living-support/energy-profits-levy-factsheet-26-may-2022
Have we spent the full $200 million on buy backs already?
Q1 didn’t have any contribution from Tolmount.
Should also get a boost re impairment reversals and in deferred tax from previously unrecognised losses.
Oil price forecast at end of 2021 was assumed to be $75 in 2022 and $70 for the next 3 years (see note 2 - estimates).
“ The increase in oil prices in the first quarter of 2022 relating to the Russia-Ukraine conflict is a result of conditions that arose after the balance sheet date. As such, the Group’s future oil price assumptions used in impairment tests to assess the recoverable amount of assets at the balance sheet date have not been adjusted.”
From note 7….
“ (d) Tax losses
The Group’s deferred tax assets at 31 December 2021 are recognised to the extent that taxable profits are expected to arise in the future against which tax losses and allowances in the UK can be utilised. A $127.6 million tax credit has been recognised as an exceptional item, reflecting the reversal of the previous deferred tax asset derecognition. In accordance with IAS 12 Income Taxes, the Group assesses the recoverability of its deferred tax assets at each period end. Sensitivities have been run on the oil price assumption, with a 10% change being considered a reasonable possible change for the purposes of sensitivity analysis (see note 2). A 10% reduction in oil price would result in a deferred tax asset derecognition of $318.6 million and a 10% increase in oil price would result in an increase in deferred tax asset recognition of $107.9 million.”
Oil prices have surely increased by more than 10% (note there will be an offset with windfall tax which didn’t previously exist).
See note 27 in the 2021 financial statements re foreign exchange risk….
https://www.enquest.com/fileadmin/content/Annual_Reports/Annual_Reports/3 8107_EnQuest-AR21_03_Financials_WEB.pdf
I’d imagine they’ve got FX hedging in place to mitigate swings in rates.
It should benefit us with any Sterling decommissioning numbers, though.
Apologies if already posted….
https://moneyweek.com/investments/stocks-and-shares/energy-stocks/605116/five-london-listed-oil-stocks-to-buy?amp
https://www.londonstockexchange.com/news-article/SQZ/statement-re-possible-offer/15536639
Been on the cards for a long, long time.
Be interesting to hear Serica’s response this morning.
Should at least see an uptick in the share price this morning.