Member Info for L3Trader

Hello Jeffrey1979, the genuine answer is, I do. First bought in in 2017. Have added since then. Never sold one share. Thought I would sell a number equal I bought in the OO at 19p, when the SP crossed 25p, but in the end I did not.
What I write on the company does not negate the fact that the company is undervalued. It is undervalued in my view. But, I do not believe dividends are going to be paid until 2024, and I do believe than Jan will not be organizing a party in the next 12 months.
My goal is to predict how production and finances evolve as best as I can. I believe that the input of many posters (Therapist, Londoner7, Tarmak, E121, gkb47, Pelle in his good days, and a few others who no longer post here) along with the time I have spent reading the reports I have a decent grasp of the different moving parts of ENQ at the moment. But will need to learn more about GE.

At some point in the future I will sell the ENQ shares i have in my ISA. Ditto for the ones in my SIPP. I will post when I do. For the time being I expect the SP in the medium term to move higher.

ATB

Hello Onedb and E121,
There will be several moving parts to how net debt evolves. We know that $250M will need to be paid to Suncor after the deal completes as per the figure given today of $75M for the post-tax economic profit up to completion. We also know ENQ asked its shareholders to pay a dividend of $46M (after deducting the OO expenses). So, let us round it to $205M ENQ will have to draw from the RBL facility. Note also that the BP vendor loan is now classified as debt because its has been repaid to BP out of funds from the RBL facility. That is another $57M. For net debt to stand still ENQ needs to generate $262M in cash after subtracting all outflows.

ATB

Hi Tigar,
Hope the HY results were not a surprise to you. They were not to me.
In our last exchange, (RE: Brent is on the rise24 Aug 2021 21:28), I wrote something I had written several times before, "note , that as I wrote before I believe OPEX (excluding GE) will be higher than the $265M guidance. Oil is an input, and it is more expensive, dollar is weaker making sterling denominated payments higher." A statement confirming all this in in the HY results released today. Indeed they confirmed OPEX will be (w/out GE) $300M in 2021.

Production came slightly better than I expected (i was expecting a tad below 46Kboepd), because Malaysia in May and June seems to have moved higher a few months earlier than I anticipated.

My FCF was actually quite close. ENQ varies his definition (so they exclude interest paid on PIK but include interest paid in cash... which means that in H2 FCF will not be a like for like entity as H1 FCF just reported). If you include the PIK, then FCF as reported by ENQ would have been under $100, in effect being just the net debt reduction.

PYUECK and you had an exchange about the bonds. If I had them I would be selling them now. There is not much upside if they are trading b/w 93 and 95. You struck gold in buying them at 30p. That was very brave of you. Why did you do it at the time, if I may ask?

I believe a lot of posters are exaggerating the impact that GE will have on FCF. If it will add 2Kboepd to the yearly production, that means they expect it to produce 8Kboepd in Q4 (i.e., after the deal completes). That is much less than the 10 or 12Kboepd people have been posting. Note also that earlier info suggested $85M would be subtracted from the acquisition price of GE at completion. That has now been lowered to $75M. Either there are capital adjustments that were not anticipated, or production has dropped after June. I hope it is the former.

While Kraken delivered, as we knew from the data on offloads, Magnus is a serial underperformer (I had a few exchanges with Londoner7 several months ago. We had opposite views about how it). All one has to do is to read the HY results release and read in between the lines...

You got the increase of the cash balance right. It went up by $50M in relation to YE2020.

Hi Krakie, ENQ continyes its great tradition of sending the SP lower the day it releases its results. Obviously people had very wrong expectations about the HY results. But the trading updates and the OO Prospectus had most of the data one needed to get a very close picture of wht was going on. So, I am baffled that people are surprised. I thought all the info was already in the SP. So much for the EMH... I have no idea why people put out outlandish figures that have no bearing with reality...

Hi Jan, I heard you are headed to your local TESCO tomorrow for a performance. Therapist can advise and coach you. Perhaps Pelle will want to join you. He has a new rap song about "2024 utdelning"... LOL

ATB

As an infrequent poglodite, I would like to know if anyone has further insight into POG's sale of IRC... a money printing press...
As you will have noticed IRC in the H1 results press release revealed that it not only repaid the c. $10M of the GBP loan it was supposed to repay every semester, but $50 of the $80M loan that had a maturity of 2026 and a very high interest rate. I expect IRC to repay the remaining $30M by year end. This means that POG would be off the hook for that part of the loan, and the overall amount of the borrowed money yet to be repaid would have decreased by $100M in 2021. Only another $100M to repay in 5 years. I do hope the sale of IRC for $10M is aborted...

That is key for me I am to add to my 130,000 shares holding, having reduced it due to the lack of visibility of the direction of travel of the company over the last year....

ATB

Hi Therapist,
Great piece of info as usual. It should just have developed the field on its own and guarantee that the GKA hub continues to be viable. But now is too late.
Looking forward to those OGA numbers on Magnus on Wednesday... Good numbers and there will be hope... Bad numbers and Pelle is going to wash dishes in the resort in the Antibes to pay his bill, never mind the loan he got to buy more shares -:)

Is this the highest closing SP since Feb 20????

Hi Tigar, yes and no. Serious accountants do not fudge the numbers... But the increase of net debt in Q1 2021 is a bit of a mistery... Why 45p as the halfway exiting SP?

ATB

"During the period, IRC made principal repayments totalling US$10.3m to GPB in accordance with the loan repayment schedule and, in addition, settled guarantee fees of US$13.8m to Petropavlovsk PLC. Additionally, K&S made repayments totalling US$50m to GBP in July and August. Therefore, the outstanding loan principal amount as of the date of this announcement amounted to c.US$143.5m."

So US$20M in July and another $30M in August. Needless to say that by year end the outstanding loan principal amount will be les than $100M.

What is not to like about such news? One hopes POG does not let go its IRC stake for $10M. If it were to retain its stake by the end of 2022, its guarantee of the GPB loan to IRC will be a thing of the past...

ATB

Hi Pelle, you did not.... There won't be 2 RNSs in a row... Anyway, not the one you want... Where is gkb47?

The figure I had posted some time ago was also that POG's stake in IRC was worth more than $100M. I hope the sale of IRC can be stopped. If it is then expect POG to add more than 5p to its share price overnight.
I hope the current board is not colluding with a misterious 3rd party.

What I have known for a while is that POG is a basket case and a company that keeps on surprising you. I have lost count of the # of rabbits POG's management and its major shareholders have pulled out of the hat over the handful of years I have own shares...

Hi Pelle,
I think you have to stay in the Antibes until utdelning day arrives so that you can pay the bill at the resort....lol
Until then please stay out of the sun...
" Anyone else care for some hedging above 70 oil?" What do you mean?

Hi Tigar, you write " I can find no reason to where the money has gone we had positive inflow of cash during that period"
Neither can I, but we know a few things Capex/ABEX is lumpy, payment terms of several suppliers can be lmupy as well, and Malaysia repairs must have not been cheap (and yo pay first and then the insurance company eventually pays), also the annual report mentioned some litigation about some contract (it is possible it was settled in Q1), etc., etc.. All this in addition to the predictable expenses. Also note , that as I wrote before I believe OPEX (excluding GE) will be higher than the $265M guidance. Oil is an input, and it is more expensive, dollar is weaker making sterling denominated payments higher. Anyway, the bottom line is that in net terms there were outflows in Q1. And that is why ENQ did not publish the net debt figure.
Onto other topic, in my world FCF and net debt are different, but ENQ has its own way to operationalize FCF. see page 3
in annual results presentation:
https://www.enquest.com/fileadmin/content/Presentations/2020_FY_Results_Presentation.pdf
See footnote 1...
And in the past it has used other definitions...

Hi Janaury, One can drink alcohol in Morocco. Not everywhere, but in hotels and resorts you can. Morocco even has its own brand of brew. Yes, I know there they refer to it as Tanger. But when the British occupied it for a quarter of a century they changed the name to Tangier... Pelle seems to have found a good locaton for the party...

ATB

Hi Tigar,
We have had this discussion before... You can think that the cash balance at the end of H1 will be extremely high (above $300M) for you to get Pelle's $180M FCF figure, but the figures I alluded to that relate to net debt at the end od Q1 tells us all we need to know...
Why do you think net debt was 1323M at the end of Q1? Because the cash balance had dropped by a large amount. It had to have dropped $43M plus the $25M RCF repayment in Q1 minus the increase in the the bonds related debt (namely the interest that was PIK in February, i.e., f £6,443,198).
I won't try to convince you ,,,

Pelle, 56p is 4p short of your trip to Tangiers wearing a djellaba. i have had mine for years...
ATB

Hi hitman1a, I think you are spot on (and that is why when Brent dropped ENQ's SP showed resilience. As I said I do not day trade, but the resilience of the SP reassured my investment case...). Clearly IIs will now want a piece of the pie. Pelle cannot have it all...
ATB

Hi Tigar,
our numbers differ:
Total production more likely to be 8.25Mboe. So less than your estimate.
Your calculations guide an average price of $65/bbl. (no comment on that)
Now please look at:
https://www.enquest.com/fileadmin/content/Golden_Eagle/Golden_Eagle_acquisition_investor_roadshow_presentation_FINAL_1.2.pdf
Page 11, note 4, and remove BP's vendor loan.
Note PIK paid in February and April adds to debt. Not FCF defnition used by ENQ is about change in net debt.

Now, please read prospectus page 256, on net indebteness as of 31 March 2021, so at the end of Q1. It was 1323M, so $43M higher than at the end of 2020. Does anyone really think that in Q2 ENQ generated ($180M+$43M =$223M) FCF as per Pelle's estimates? Even my $120M+$43M is very optimistic...

Does this mean ENQ is not undervalued? Of course not. Just that the re-rating to 40p will take longer than some people think.

Anyway, the bets of some short-term posters that the SP going down to 20p were so wrong.... LOL...

ATB

Chilting, what do you mean by long term prospects? (not green energy, i hope...)

Hi Pelle,
He replied that it was not anywhere near that number, implyinh it was much lower.
You can read the prospectus and accompanying slides yourself. hopefully you will not dispute the info the company itself released.

Hi GoCPI, the point is that people are overestimating ENQ's FCF. That is why Pelle's estimate of $180M for FCF H1 better be correct.

My comments have nothing to do whether the SP is going to be 26p, 30p or whatever when the results are announced. That is for day traders who speculate. Good luck to them. Late last week they were saying ENQ was going to drop to 20p. They were dead wrong...
I invest with a longer horizon in mind.

ATB

Hi Pelle,
You were writing 40/50M per month of FCF in H1. AB smiled at such numbers... Now, that we will see how far away that was from reality you say it is completely unimportant... LOL...

Getting it as right as possible is important for some of us...

Has GE been added? No, not yet. The deal has not closed and it is the end of August. It will close sometime in September hopefully. So when that happens, and we are talking 3.5 months in 2021 "once GE is added I have 57m per month FCF with 67 oil." So, what is your H2 FCF projection?

ATB

Krakie,
As for the FCF numbers posted here, many ignore BP's profit sharing in magnus, that Malaysia is a PSC (thus, ENQ receives only part of the production... estimated by different people at different levels, but 67% sounds about right in the context of regular production.
Excluding GE, which does not enter H1's accounts, as I posted before FCF will come under $120M. All people have to do is to read the prospectus and the accounts from 2020 (posted in April 2021), and they will figure out that H1 from a FCF perspective will be a slow two quarters. I often wish that people spent more time going through the accounts before posting estimates. But as Londoner7 posted once, this is a broad church...

As for production, as I wrote before it will come a tad under 46Kboepd.

I am not pleased by either figure, but reality is what it is. My goal is to get those figures right, not to fool people by posting figures here that are unrealted to reality.
Now, if I am wrong, that will be good news for everyone. If people want credible estimates that look at a different scenario, then please read Tarmak's projections. HIs calculations are very credible under his assumptions.

I hope for a much stronger H2 in terms of FCF and better production figures (excluding GE) as well. But, Pelle's numbers are very rosy.

However, note the H1 profit (not FCF) figure might be outstanding, as a result of reversal of impairments, option value of GE acquisition, etc. All pluses, and it will add up. For those who like the profit metric, I expect them to be pleased.

ATB

Ok, then please show us your calculations that show a share price around 30p? what are the margins for such products? Where is the evidence profit will increase by a lot?

Therapist, Tarmak and others,

Thank you for the info and comments. As always, Therapist and Tarmak excel in their contributions to the BB. Much appreciated. Jan2 will give you the best seats at the table in his imaginary party.
We have to bear in mind that ENQ has the option to buy the FPSO, if I remember it correctly. The exercise date would be around 2025. So, it all depends on how debt will look at that time.

On current production volume let me add that I am assuming in H2 it will average 30Kbopd, to add a margin of safety. So, in a full month there won't be 2 offloads. It will need 33 days. That is line with the last two offloads. But note that previous offloads were shorter about 14.5days. In other words, production decline (which gkb47 had promised to model for us after H1 results) does not happen abruptly. So, I expect the offload cycle to shorten again to 15 days. The slowdown in production suggests some work is being done?

H1 results will tell little about the future, unless there is some discussion of future plans for ENQ.

ATB

I waited 3 weeks to reply to beatrice1428 to see if the market would help her case. it did not. I have no idea how one arrives at the 30p price target posted. THere are no calculations to back it up.

Iofina:
- produces 500-600MT year, sells for $35s/MT. Revenue is about $30M, because some of its products have more value added.
- EBIDTA $5M
But it needs to build a plant every two years to keep production steady perhaps with an increment of 10% of annual production... so that costs $3M.

So, how can what is left (after interest expenses, etc.) support a 30p valuation, Beatrice1428?

ATB

I waited 3 weeks to reply to beatrice1428 to see if the market would help her case. it did not. I have no idea how one arrives at the 30p price target posted. THere are no calculations to back it up.

Iofina:
- produces 500-600MT year, sells for $35s/MT. Revenue is about $30M, because some of its products have more value added.
- EBIDTA $5M
But it needs to build a plant every two years to keep production steady perhaps with an increment of 10% of annual production... so that costs $3M.

So, how can what is left (after interest expenses, etc.) support a 30p valuation, Beatrice1428?

ATB