RE: L313 Oct 2021 11:44
Hi Londoner7,
Thank you for taking the time to share your calculations. I was going to reply with some calculations of mine but very time pressed at the moment, so it will have to be at a later occasion. I still think that GE's economic profit ought to be slightly higher than the figures JS has quoted. My recollection is that he might have stated that even with the increase of the poo the amount that would be subtracted from the purchase price ($325M) they were still guiding $75m (but I might be wrong). W/ regard to the fees, I thought $30M is related to the financing and acquisition, while the other $5M are the costs of the OO and placing.
Like you I will be happy if I can reconciled the YE net debt on the basis of working capital movements, so I am not wed to a figure. Yet, I think in terms of a figure net of working capital movements. And part of it is driven by Mr. Market's reaction to HY results, which were not a surprise to me. I had posted figures not very dissimilar to the ones that came out. And, I thought that if I was using only public info the collective wisdom of the market would arrived at the same figures, so the HY results would not have been a surprise (Of course, people inore info that does not confirm their priors, and to such people, the HY results might have been a surprise. Chilting echoed this at the time, when he expressed people were predicting different things).
Your observation on Kraken is well taken. The decline is now starting to show. I expect it to average b/w 31K and 32Kbopd until year end, if the offload cycle stays at 15-16 days. But that is within the guidance.
You mentioned underlift at Magnus. But none of what I saw out there in the public arena states anything about the production hub that drove the underlift.
Hi E121, thank you for the names of the companies that are service providers of the oil shale industry. I came across Liberty recently. Do you have any views on them?
I noted your comment on what will trigger the re-rate of ENQ and other UK based producers, so that they close the discount to North american ones. Wrt ENQ my bet for the catalyst of the big re-rate is not GE completion, or moving production up to the middle of the guidance by year end, but net debt reduction and bond repayment/renegotiation. and the HY results states they were not expecting it to happen within the next 12 months. But with higher oil prices it will, I think.
Funily enough, by the time GE completes ENQ does not need to borrow much from the RBL facilty, as it will have generated plenty of FCF to pay for most of it given the money that came in from the OO and the adjustment related to GE's economic profit until completion.
ATB
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