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Hi Pelle
1. The new RBL have not been taken up yet.
At 30/06 had not been taken up.
2. When new RBL is taken up they will need hedge accordingly up to 2-3 year horizon.
Yes, JS is going to do as he is told by the banks. Also, conditions on the way hedging has to be done.
3. RBL will sweep all FCF regardless of the amortisation schedule?
Yes. but money can be kept aside to pay for CAPEX and ABEX. Also note is only excess of $75M that is repaid. So you have some freedom.
ATB

Hi Therapist,
Thank you. I thought perhaps there would be ships around Magnus to do some work there.
Hi Tigar,
In the prospectus; "As at the date of this document, the EnQuest Group has not drawn down under the RBL." So the answer is the HY accounts will only show whatver cash ENQ generated via operations, which some people think will be a lot, and that is the reason why there not have been more repayments of the RCF.
Hi Pelle:
Note that the conditions of the RBL are about the main bond being renegotiated/replaced. No conditions on the retail bond.
Also note; "Cash Sweep: Following the Completion Date and prior to the Bond Refinancing, any cash (excluding
cash held in joint venture accounts pursuant to joint operating agreements, cash balances held for
operating, investing and financing the Magnus profit share arrangements with BP, SVT working
capital, cash balances held in escrow accounts or in the eligible letters of credit cash collateral
account) exceeding US$75 million at the end of any quarterly period (ending respectively on
31 March, 30 June, 30 September and 31 December) must be used to prepay the outstanding loan
amount under the RBL within 30 calendar days following the end of such period."

on Hedging: "RBL Borrowers will hedge by way of straight puts, collars and/or swaps: (i) a minimum of 60% of
volumes of net entitlement production expected to be produced in the 12 months following the
relevant quarter date, on or from the first Utilisation Date (unless the Bond Refinancing has occurred,
in which case such percentage shall be 50%;); (ii) 40% of volumes of net entitlement produced
expected to be produced from the date 12 months after the relevant quarter date to the date 24 months
after that date ; and (iii) 10% of volumes of net entitlement production expected to be produced from
the date 24 months after the relevant quarter date to the date 36 months after that date. In all cases,
minimum floor protection will be equal to or above the lower of 90% of the prevailing bank price deck
and 90% of the forward price curve at the time of hedge execution"

But hedging at prices above $65/bbl not trivial, given steep backwardation. 12 month oil future c. $6 below front price...

ATB

Hi Therapist,

How do you get that $10//bbl premium over Brent spot?

We have to bear in mind that w/ about 2/3 of the production from 01/05 to 31/12 being hedged, and some of it will have been hedged against the VLSFO benchmark price, the only part of Kraken's production whose full price accrues to the bottom line is that part of the production not hedged. So, suppose ENQ hedged 400Kbopd VLSFO per month, and its entitlement per month is 0.05 x 30 x 33Kbopd = c. 700Kbbls, then that premium will show up in the accounts in net terms (i.e., after hedging losses) on the 300Kbbls. That is why when prices are high, increasing production above guidance used to hedge is so good for the bottom line.

Any news on Magnus? Any ships doing any work there?

Tigar: Your conjecture "it seems they are borrowing the full outstanding amount and keeping FCF available? presumably to cut the outstanding Bonds latter this year, They have new facility of $600m with no repayments till after 31st Dec." makes a lot of sense to me. But will it make sense to the people in charge?
(but note as you found and brought to our attention:
the utilisation limit for drawings in loans (not letters of credit) is as follows:
From the Signing Date to 30 September 2021 USD600,000,000
From 1 October 2021 to 31 December 2021 USD600,000,000
From 1 January 2022 to 31 March 2022 USD500,000,000)
So, they need to repay $100M by 31 Dec. This will leave some money to buy back bonds but not a huge amount. It all depends how much they need to draw from the $600M credit line to pay for GE, repay the RCF & BP's vendor loan and Sculptor. It could be they only need $500M. Wishul thinking, I know...

Pelle; gkb47 keeps the score on you misses. You have been reeatedly saying dividend will be paid next year since 2018.... It is a lot of points you give away to your opponent -:) (as far as the 2-0, you are forgetting the 4.25% is the spread. Which is the base rate???, and this one could quickly change to be above 0.75%.) Can you please email E121 that we need his weekly oil news briefing -:) ?

viable: So, what is your verdict on ENQ as aninvestment case? What about the prospectus? Found anything worth paying attention to?

ATB
Jan2: Tomorrow I will take up the OO, but might not sell anything, unless I get a price I want. At 21-22p I am not selling. Can wait a few weeks...
I do belive the GE acquisition is even before completion generating excellent FCF at the moment, even if the taxes paid on profits make a dent on it.

Seav, Thank you for your figures, "Cashflow from Operations (CFFO) contribution: average CFFO[1] for previous three reported years (2017 - 2019) was ~US$140 million net ." Not bad, but not great amount of FCF would be left after needed CAPEX.

I voted against the acquisition. The reason is that Egypt choose the price it pays for the hydrocarbons it buys from the consortium. So, where is the upside when the prices in the interantional market go up? Does Egypt pay more, as well? I doubt they will up the prices in the same way.

The sale of Kraken and Catcher also is looking a very, very daft decision. In H1, Sculptor's loan balance went down by $40M. And that loan is repaid by ENQ out of a a WI in Kraken. Since CNE's WI is 29.5%, that means $80M of FCF in H1. In H2 prices will be higher, so make it $100M easily. And $180M for the FY. Ok, CNE had hedges at lower prices, yet, I would expect the FCF to have amounted to $150M in 2021 just for Kraken.

CNE's board is not that brilliant at making deals, at least at the moment.

I also hope they do not settle the India court case for anything less than the full amount. Do not sell the shareholders short. We have lost lots of money because of India's government's illegal taxation.

ATB

Hi Pelle, I did not say the two are the same... I just said do not be surprised if the numbers are different. Anyway I am holding you accountable to the $180M FCF in H1. Wait and see...

Hi Tigar, excellent point. A couple of comments: by June 30th they had not yet completed the placing. This might not interfere with the drawing of funds, but why would they draw the funds then to replace the RCF at that stage? To keep as cash w/out immediately putting it to use is far from ideal because then ENQ will be paying interest on the c. $377M RCF balance and the funds drwan from RBL. So, I would be surprised if that were to happen. But, as long as they could draw the funds everything is possible.
ATB

Lets us get this clear:

H1 results state the accounts on 30 June. They will neither show the economic profit of GE nor the debt position after the acquisition. The GE acquisition won't complete for a while ( August or September). The RBL facility won't be used until that time. We know it has to be used before the RFC maturity date, i.e., 30th September, if I am not mistaken.

H1 net debt won't be anything like what people have been saying (Tullow's projected debt figures just announced came in above lots of posters' expectation). Production figures won't be pretty. I would not be surprised if it comes in just slightly below 46Kboepd.
On the positive side, by my calculations another 5 offloads of Kraken oil and the Sculptor loan will be history. Would it not be funny if the RBL facility is not drawn before the loan has been repaid. -:) if there is no maintenance shutdown we could be talking late September...

end of lunch break...
ATB

What is going on with the tanker spies? All, including Chilting, asleep at the ship's wheel?

Petronordic left AK 2021-07-14 18:59 (Draught:12.8m). Had arrived on 2021-07-13 13:02 (Draught:8.6m).
Amdusen Spirit had left on 2021-06-30 around noon.
So, offload cycle was 14.3 days
Usual load of 500Kbbls means daily production of 34.9Kbopd. If that is the case, that is very fine indeed...

I repeat: production figures is what matters. Poo not so relevant as long as it stays >=$70/bbl, although this is not a given.

Has anyone heard from Londoner7? Not commented on the prospectus, etc.

ATB

Hello Tigar,
If it is 1p a day , will the share price on 12/07/22 be 385p (365 x 1p + 20p) ? I will sign up for that.
ATB
p.s. HiJanuary, EIA numbers might be good or bad. I will ewait until then. ATB
p.s.: Pelle, Yes, on july 2nd I wrote $120M. In May I wrote $135M(???). Minor changes, but the message is the same. Show us the cash , ENQ...

tomorrow at noon. so, if it al goes well it will be 14.5 days. so, production aroumd 34Kbopd

https://www.marinetraffic.com/en/ais/details/ships/shipid:374982/mmsi:311502000/imo:9233806/vessel:PETRONORDIC

no moaning about football, please...

Lawrence,
"With regards to your question, as I wrote to you previously, once Gazprombank gave consent for the IRC-Stocken transaction, the agreement entered into in March 2020 became binding for Petropavlovsk."
Who they think they are fooling? It is obvious there is a stitch up here. As we know Gazpromabank did not give consent when iron ore has a low price, but once it has trading close to $200/MT sudddenly gave consent... In other words, once POG's IRC stake became valuable...

Completion of GE. Unlikely before early September. Se all the steps that need to be accomplished (page 118 of the pdf file "note, EnQuest Heather must use reasonable endeavours to ensure that the Purchaser Approval Condition is
satisfied as soon as practicable and in any event no later than 3 July 2021.".

This is not like buying a piece of furniture from some web-site... Pelle, i hope you are a better grouse hunter than you are a divi hunter...lol

Pelle, $120M FCF in H1 was something I wrote sometime ago. Perhaps I would provide a lower number if it was today.

Krakenoil, asked FCF for the whole year: Exclude GE, and of course exclude BP's interest in Magnus and Pertonas's in Malaysia, and I doubt it will be more than $320M.

We have been told OPEX will be $285M for the non GE portfolio. But, oil is a production input. W/ poo up costs go up. So, I am using $300M. W/ 46Kboepd, this gives me $17.9/bbl for OPEX...

ON GE, ENQ states $75M is the post-tax economic profit of GE up to completion. Londoner7, who is always right guided $111M - CAPEX. I presume CAPEX will be less than $36M. So, the $75M might reflect working capital adjustments.
Have a good weekend and ...
ATB
p.s.: has anyone seen the new oil tanker coming to AK (10 days have passed since last offload)?

All,

1st things first: Jan2, deadline for me is 23:59 19/07/2021. So, plenty of time for me to get those 6p per share. But as we approach the deadline I will settle for less, if I am not close. One thing to bear in mind is that people doing the same as some of us are planning to do have now sold an # of shares equal to their entitlement, so less pressure, if any, on SP as time elapses...

I am glad some people are actually reading the prospectus rather than commenting on the change in the POO by the minute... I had overlooked the news on Eagle (thank you TimTimeBomb). I do hope ENQ can find a way to extend the licence if it cannot be "Hibiscuited". After all, 6MMbbls of 2Pves at $70/bbl would make it a Silver Eagle.

I have no clue how Pelle is getting those FCF $800M for 2022, bearing in mind that WI generating FCF will be no more than 47.5Kboepd (always exclude BP's stake in Magnus and 1/3 of Malaysia production), including GE in the figure.

Finally, why do people react so much to the change in the POO?
In 2021, and excluding GE (not closing until late September), production will be 46Kboep. Exclude Magnus and Malaysis and you are down to no more than 39Kboepd that matters to 2021 FCF. 365x39K = 14.235MMbbls. Now, we know that ENq Hedged c.9.0 MMbbls of oil for 2021. So, only 5MMbbls are not hedged. But, actually, we know more... "As at the end of April, c.6.2 MMbbls of production has been hedged with an average floor price of c.$63/bbl and an average ceiling price of c.$72/bbl." So, we have the production of 8 months, i,e,, 240 days x39K = 9.360MMbbls in the rest of 2021, of which 6.2MMbbls are already hedge. Thus only the other c. 3.2MMbbls is unhedged. So, POO going up by $5 or down by $5, only moves revenue by $15M in 2021. Of course, all this assuming price stays above the ceiling of $72/bbl (which might include VLSFO hedge prices), so that any movement does not affect the revenue of the hedged production.
In short, the changes in the POO are worthwhile following not because they will change this year's revenues, but because they will allow ENQ to hedge more of its 2022 production at good prices. And let us hope it does so...

ATB

a monkey eating 4p(eanuts) in one go. well done...

CNE accepting that the Indian government does not pay the interest and penalty is a very bad decision. A lot of money was been invested by CNE in trying to sort out this thing. India lost so it has to repay everything. if the board wants the support of the shareholders it needs to accept nothing less than full repayment. CNE suffered a lot from the seizure of the cash and assets by the Indian government.

Let me add that the key is seizing assets that will be hugely disruptive to India: airplanes and vessels, and goods bound to them. The indian state procures lots of things abroad. I am surely these experience lawyers know what to do bettern than me. If they went for thse assets it is because they could not get better ones seized so quickly.

Pelle, no way... but I hope E121 gets it right. However, ENQ could make most of this irrelevant by hedging the rest of its 2021 production...

the indian government is not going to pay just because $20M in assets were seized. Compare that to their bill just for Cairn $1.7bn. Also, if they paid VOD and others would follow suit.
At some point in the distant futue they might, but not in the near future.

Krakie, if you are worried do consider buying some oil puts. But DYOR

asleep at the wheel...

although Reuters says they did not...

https://www.reuters.com/article/us-oil-opec-shale-hedging/u-s-shale-firms-hesitate-to-pump-or-hedge-more-despite-oil-high-prices-idUSKCN2ED0BA

If ENQ secures to hedge GE's production for 2021 until end of 2022, the acquisition will be a success. A considerable fraction of the 18.8 MM 2P reserves will be produced in 2021 ad 2022. (3.6MMbbls in 2021, and close to 3MMbbls in 2022).

As soon as the OPEC+ agreement looked shaky the shalers got ahead of the game. One would hope ENQ is not asleep at the weel again, as in 2018 and 2019...

https://www.bloomberg.com/news/articles/2021-07-06/shale-rushes-to-lock-in-oil-s-rally-as-opec-rift-roils-market