Member Info for L3Trader

Hi E121,
Thank you for the info and suggestions. Very useful.
Hi January2,
Well, well, am I not supposed to be less optimistic than you? I am going to use Pelle's words... most likely it will touch 25p before I have to push the button.
ATB

Pelle, you give the answer "most likely" is not the same as with a 100% chance... I have never sold ENQ, but as you know I took up the OO with my purchase at 14p, so I am taking this trade as pure arbitrage. But first the SP needs to get to 25p...
ATB

Hi E121,
As far as I understand the issue the boulder is nothing to be worried about.
Any shalers in the US that are good bets at the monent? Thank you.
ATB
Hi Pelle,
I have yet to sell shares in order to take up the OO. i am waiting for the sp to reach 25p, thus pocketing a 6p difference on each.
ATB

PalladiumOne, Unfortunately, the reality of the city of London, is that the interests of small PI shareholders are very rarely taken into account. The sale of IRC for pocket change shows that a Russian company with a London listing and British NEDirectors/Chaiman is allowed to do whatver it wants. Were they listed in the US and SEC would be breathing down the neck of the British NEDirectors/Chaiman ...

Hi Tigar,
Thank you. Very useful info. I had missed that. Very lenient set of limits. And as Pelle believes Enquest will pile up an euphoric amount of cash it should be a breeze. I had no idea aumonts of cash could be described as euphoric. But, i would sign up to an euphoric SP level...
ATB

Hi Viable,

A lot of hedging coming shortly after drawdown of the RBL:
"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."

This one is for Pelle:
"24. Dividends
The Company has not declared or paid any dividends since incorporation in January 2010 and does not
currently intend to pay dividends in the near future. Any future payment of dividends is expected to depend
on the earnings and financial condition of the Company meeting the conditions for dividend payments which
the Company has agreed with its lenders and on such other factors as the Directors of the Company consider
appropriate."

There are provsions for CAPEX and ABEX to continue, which is welcome. I do not see Tiger drilling taking place.

Hi E121: Yes, ENQ has delivered on guidance since 2018. In 2017 it did not. I did not write they will be outside the guidance by year end (46 to 52Kboepd). I expected ENQ to (w/out GE) to produce more than 50Kboepd in 2021 when I posted my projections here in December/January, so before ENQ announced its guidance. In retrospect I was optimistic.
As you know none of us influences the SP. It will eventually go up when IIs decide ENQ is worthy of their money.
Now, on to more immediate concerns: who will replace Spinazzola in the semi-final...

Hi Chilting: if you trade a stock frequently you do not have to worry about the long term of a company. My tradition is buy assets and hold. Family bought JNJ several decades ago. Never added, never sold. Collected dividends since. Never followed SP closely. No one even looks at it...

Hi January: do not get the Threrapist going... He is has been silent on the EP's activities.

ATB

Hi THerapist,
Thank you. Much appreciated. Thank you on the update on the local boulder. I confess I prefer the view of the other one in Colorado, a nice place to visit and even live, having spent some time there.
Let me comment on a minor detail. Malaysia production will take longer to recover. The prospectus does not state that, but states that the procurement process for the pipeline has had to start from scratch after suggestions of bribery. These are risks companies have to live with: rogue members of the organization.

On the other hand, completion of the GE deal might happen sooner rather than later. See the prospectus. There was an early July deadline for authorization by the shareholders, which must have now been extended. I get the impression if could all happen by early August.


Hi Viable,
Do let me know what grabs your attention.
Here are a few things that grabbed my attention: "If the Bond Refinancing has not been achieved by 1 October 2023, the RBL will mature on 1 October 2023; moreover, the final maturity date of the RBL will only be extended to seven years after the date of signing the RBL (the “Signing Date”) (or when the reserves are forecast to be 25 per cent. of the
original reserves, if earlier) if the Bond Refinancing has been achieved prior to 1 October 2023.2"
So, I assume new issuance of bonds will happen late in 2022...
On the other hand, there will be a quarterly cash sweep: "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."
So, this is very different from the RCF that gave ENQ the right to repay when it wanted.
"Financial covenant: The RBL contains the following financial covenants: (a) the ratio of consolidated net financial
indebtedness to EBITDA is < 3.5x; and (b) minimum working capital cash balance of
USD75,000,000, in each case to be tested on each redetermination date."

More next...
ATB

Hi Chilting,
Prices have not been so favourable to ENQ for a long time. The question is: can ENQ get that oil out of the ground now that prices are high and hedge future production at good prices.

Have you read the prospectus? (C)PR provides production profile of GE and other details on ENQ, namely Malaysia.
ATB

E121, I have no idea what you studied at uni, but reading a bit of social psychology harms no one.
I have been invested in ENQ for a few years, and have now become used to the SP going nowhere... (other oil shares have also not moved much...) It is back at the level it was at in Q4 2018, when the RI took place. ..
I hope management grab the opportunity of buying lots of puts now for the 2022 production, so that path of repayment of the debt is clear. As you have read the conditions of the bonds, a question for you: can they repay the retail bonds in advance w/out a redemption penalty?
Thank you.
ATB

E121, I will repeat for the n-th time. I have never had a short position here , and have not shorted oil for a very long time. Last positions on oil were call options back in 2020. And portfolio has lots of oil. Jusr received divi from Suncor recently.

Krakie, no one here can influence ENQ's SP. Will people ever realize that?
I am not buying more, except possibly taking up my entitlement in the OO.
I agree with you: short ENQ and you might lose your shirt.

ATB to you both

Hi Tigar,
Yes, PIK (Additional Notes in an aggregate principal amount of US$27,971,792 were issued in April and f £6,443,198 (retail bonds) in February. Clearly the interest for the latter with be paid in cash come August, and hopefully the same for the other come October. Time to pay cash interest.
You asked about BP vendor loan. Balance on it was $72.2M in 31/12/20. At end of H1_21 is c.$57, so $15M repaid during H1. Why bother refinance this given the pace at which it is beng repaid??? To generate more ammortization an issuance fees? The fees that relate to the new RBL appear in the prospectus as being $29M! Ouch.

What is so special about the Tiger field? What are the estimated oil resources?

ATB

Hi January
$1.180M for full year w/out GE (lots of assumptions in there...). The odd problem here and there influences revenue and FCF. I always make an allowance for that.
Hi Tigar10,
your words suggest there is be lots of cash on the bank account. surely hope so, and that ENQ show us the money.
ATB

Hi January,
Good info. but, but how do you know Magnus has been fixed? (there is a boulder on the pipeline, so says Therapist, and that impacts gas being moved around...)
Plenty of people out there try to follow the shenanigans at Magnus, which is a factor preventing a full re-rate from taking place.
ATB

Pelle, you ask is there ENQ's idiosyncratic risk. Yes, there is, because ENQ operates a couple of assets (Magnus and Kraken) that comprise more than 2/3 of the production., even after GE. And both have had problems in the past for an extended period of time (i.e., Kraken) or continuously in the last year, i.e. Magnus. Until Magnus is sorted out, the full re-rate won't happen, IMHO.

the question is to what extent this is relevant to pfc's case... anyone?

for H1, i think it will come in at around 46Kboepd.

problems with ENQ since 2017 have always been related to execution ("stuff happens", etc.), not the POO...

I was in for a period of time, but got out at £1 before the collapse of the medical trial. Order book has shrunk, now £2M lower than before. Cash flow in H1 was negative (even operational cash flow was negative). Market cap of $36M with $7M cash balance but true profit for 2021 most likely will come in below $1.5M. So PER of close to 20... but the problem is negative operating cash flow...

Hi Tigar , How do you infer what you wrote, i.e., "I take that to mean our FCF has built up since Jan's 25m RCF payment, as a war chest..." ? So, no further repayments of the RCF have taken place??? Very strange if true...

Hi Pelle, I wold have to go over whatever little info we have on hedges, but eyeballing I would say about $65/bbl. Capex and ABX, I do not know. It could be very tilted towards H1. If split equally it would be $60M in H1. But I have no idea of what is going on in Malaysia.

ATB

Hello all,
Has someone gone through the CPR to have an informed view if this deal is good for CNE? (It certainly is risky. Egypt is not the North Sea). Is CNE going to actually make large profits from acquiring these interest in Egypt? I surely do not like the PSAs, as it makes it difficult for us to translate production figures into profit... what is the point of producinf 50Kboepd if you only get to earn 15% of the FCF such production generates?
Thank you for any feedback.
ATB

Hi Tigar10 and Pelle,
You are both correct. Tigar10's inference is valid. All things equal and Kraken would have generated $147M of FCF in H1. But, not all things are equal to start with as Pelle says. First, the c.$40M FCF that accrued to Sculptor take into account interest expenses on $67M of the Sculptor loan. Tigar10's calculation implicitly assumes that the part accruing to ENQ is servicing debt of (0.555/0.15)x$67M= c. $250M. But, ENQ's gross debt after subtracting Sculptor's loan is above $1400M, and the interest on that has to be serviced from all of ENQ's production. But since more than 50% of the production comes from Kraken (that is why the tanker watch is so important... short offload cycles and ENQ thrives, AK breakes down and ...), so ENQ's WI on Kraken has to service more than $700M of the gross debt. And there are decommissioning expenses, etc.
Anyway, I have always found the reduction of the Sculptor loan very useful in understanding Kraken's profitability. BTW, it makes no sense to use the new facility to pay for it, because at the current pace it would be repaid by October anyway. So, why to repay now and pay fees to do so. It makes no sense. Repay a loan in full for once for God's sake, rather than always repackaging debt...

Anyway, to me it is clear that H1 will not prove to be much of a success in terms of FCF, even though I would like to be proved wrong. That is why the prospectus came out before 1 July. Sometime later and ENQ would have had to disclose H1 accounts before issuing the prospectus. By issuing the prospectus before 1 July, ENQ just recycles its annual report on the prospectus.

Hi Sipp10, where do you get the data to state "Our net debt of circa 1.1".

I would be keen on hearing from posters how they see debt being repaid in H2 (for which there would be a lot of hedging in place) and in 2022 (for which some heaging is in place; hopefully more will be soon, because oil prices in 2022 are not guaranteed to stay at current levels, leaving the macro aside on which I never comment even though it is extremely relevant, OPEC+ might breakdown, and shale, as I wrote multiple times might increase production by more than we would want them to. As E121 pointed out, their working model seems to have changed. Were that change to be permanentt that would be welcome. But a growth story in the US always attracts money... and that is the concern. Anyway, let us hope E121 is correct and the shalers are well behaved going forward. )

A key element is to bear in mind that debt has to be serviced out of no more than 47.5Kboepd a day in 2022, as there is no drilling taking place for a while...

While I agree that the refinancing and debt reduction is going to make a difference to the FCF, we have to bear in mind that more than $1B of gross debt (the bonds...) attract a much higher interest rate. the RBL is basically replacing the RCF and both seem to have similar interest rates attached to them.
ATB