Member Info for L3Trader

Perhaps others would follow the lead of this investor. But it remains to be seen who have an incentive to do so? Perhaps the funds linked to UGC, which would not be good news!

We need the results of the audit. I look forward to know where the IRC helicopter is flying to!!! Why was the $125M convertible bond issue with excellent terms to the $100M bondholders, and another $25M were added to the bonds? Etc.

In the meantime the cash balance of POG should be increasing everyday. Let us hope more info is provided.

Dear all,
The key thing is for you to contact your broker so that you know what you need to do to vote. I suggest you contact POG's IR too.
In many ways, this situation arises because Hambro and Maslovskiy have not been very open about POG's accounts and plans, and seem to favor some stakeholders over the PIs, i.e., the convertible bonds being replaced by dearer ones. In addition, it seems that cash generation and thus cash holdings are always low regardless of the price of gold. There was a reference to future transfer pricing by UGC. I am afraid some transfer pricing might already be something of past and present, otherwise cash holdings would increase.

UGC might also be fed up. Had they been more forthcoming ahead of the AGM, and they might have support among PIs. Since that was not the case we might be better served by Hambro and Maslovskiy, but only if they change their ways.

Someone was collecting a list of the holdings of PIs. Here is my number to the list: 172500 shares, most of them on the RI at 5p.

I have no intention of selling below 50p. If UGC are defeated, the price of gold will do the rest, as long as the margin on the third party refractory ore are high. Let the money printing by POG continue.
GLA from a LTH

LTH here, from right before RI. I posted I was voting against AGM resolutions b/c I want more transparency (see my post). In the next vote I will vote against the coup leaders. I suspect many PIs, like me, will change their vote. So, expect a different outcome. I have an II account and I was able to vote.
POG is on the verge of becoming a major "money printing machine". We, PIs have to fight for this company. So, I urge everyone to contact their brokers to finf out how they can vote, if they were not able to do so last time.
GLA

Hello Londoner7,

First things first. My dog has never bitten anyone. She sometimes behaves randomly, and that is why she would do better at hedging than Enq. She is not overqualified. Her area of expertise is not even commodities, but FX. Her favorite currencies are dog dental sticks, bone chews, duck fillet treats, etc. Her exchange rates vary a lot and she has lots of stories to tell about her trading!

Moving on, as Pelle stated several times, the problem with ENQ is that whenever the price of oil went up it shorten the hedging horizon. If you go through their TU you will see that happened in 2018 then early in 2019 and once again at the end of 2019/start of 2020, when there was no hedging done for the following quarter. Whoever is making the hedging decisions is biased and acts as if the path of prices is driven by momentum. Thus, when the poo keeps on going up, ENQ believes that it would keep on going up and so does not hedge. There is a lack of understanding at ENQ that the costs of missing out on a $10 increase of the poo due to hedging limiting the upside equal the costs of not being hedged when the poo drops by $10. Of course that is not true when a company is leveraged, because in the latter situation (poo dropping) there are financial distress costs. E121 hopes they will get it right next time. I would like to agree, but we shall see...

I have no idea why anyone would argue that the costs of not hedging are insignificant. It remains to be seen how much the hit will be in Q2 and Q3 in 2020. For the two previous events (in 2018 and 2019) mentioned above the cumulative cost of shortening the hedging horizon was significant. I might have posted my calculations at the time. Considered together, the amount might have put Moody's concern about repaying RCF to rest.

Regardless of this, I like you, believe the $65M April 2021 repayment will occur before the next TU. If I recall correctly
RBL has to leave out the 75% of Magnus. But ENQ will find a way out: I foresee cash in advance from an oil sale to Mercury, etc.

You write that ENQ is not a forever holding for you. I do agree with you. But before I exit, it would be nice to hear of Pelle being paid a dividend (he has been so upset that he rests on a mat with spikes..) and Jan holding his party. We shall see, if we will all see that.

Kraken & AK have really done well. I am only sorry that ENQ is selling its 2P reserves at low prices.

GLA

Pelle,

I hope swaps were not taken at $31. If they did that then let me tell you that my dog would do better at hedging than Enquest's hedging team.
So, they did not hedge their Q2 and Q3 production when oil was around $65, because they expected oil to go up further, but then they went for swaps at $31? That was a very smart move.
If the swaps are true I really regret having added 18000 shares in the last 2 weeks.
If it is true they did take those swaps at $31, that reminds me of a relative a few generations back that along with others started a financial institution. Mindful that was a line of business that had never been much popular throughout history their business model was based on being understanding of others' misfortunes, and being ruthless with others who were greedy. It is up to each of us to decide which category Enq's hedging would fit best.

Pelle, GL with your fishing... You are in charge, and do not depend on others' choices...

p.s.: I read the earnings transcript quickly over the weekend (had not read it yet), and realized how unclear AB's answers on hedging were ... Now, it makes sense.
Londoner7, in the earnings transcript I found the answer to my Oz loan question/projection. It did go down $15M in Jan and Feb. That is where the other $15M in debt reduction I was not able to track in the first few months have gone. You have mentioned RCF's Oct2021 deadline twice. I shall add nothing but... but... these swaps if true are not helpful. Fortunately, they can do a deal with mercury again and sell oil in advance to deal with RCF, if the need arises. The RCF is not an issue that interests people whose enthusiasm for ENQ knows no bounds...

GL

it is time the board stop the obfuscation: convertible bonds w/ all kinds of handouts to the holders, cash that always finds its way into the pockets of some bank/creditor, etc.

Contnd.

Hi Londoner7

Ditto for the Tanjong Baram's related loan. My impression is that ENQ would only repay this loan once production ceased, which was in March. So, SVT's loan's creditors and/or Oz&Sculptor got the other $15M.

In Jan/Feb 15% of Kraken's production was 0.15 x 39900 bopd x 59 days = 353K/bbl. Round it down to 350K/bbl, about 175K/bbl each month (I would give you a better figure once Therapist uploads and shares his lovely file, with numbers not just the graphs, please Therapist read this thread!.) I would not be surprised if by the end of February the Oz loan was
now below $100M (including the $7.4m capitalized interest).

L7 I am not disagreeing w/ your calculations which I understand and agree with. It would be good if ENQ provided more information on the past Kraken premium etc. Since it does not, I have to resort to simplifying assumptions (which are just that) to get some figures so that I get a sense of the direction of travel and a very rough idea of the speed. Your calculation of the Kraken premium using CNE's figures is more accurate because they sell just two grades of oil, while ENQ sells more, and their relative weights in the overall yearly production might change. The bottom line is that the Kraken premium was in the double digits for a while.

I do not think ENQ can predict the VFLSO pricing in the future. ENQ's hedging shows that predicting prices is not one of their differential capabilities...

I also agree w/ your point on the implications of ring fencing on debt calculations. Some companies do state how much money is being ring fenced for the different creditors, etc. ENQ does not, so one has to make simplifying assumptions, which for sure will not be exactly correct.

Moving on to the AGM call:
- Did AB/JS saying anything about the repayment of the outstanding $440MM (incl. $15MM PIK) October 2021 Senior credit facility?
- B/w now and 01Oct21 there are 16 months. At a constant repayment rate you would pay down $27.5M a month, along with paying the interest the loan will accrue b/w now and then. ENQ does not need to generate $27.5M/month, because the interest on the bonds is being paid in kind (w/ Brent below $65). The interest on the bonds will amount to c. $70M, an amount that can be used to reduce the RCF, even if FCF (including interest expenses) was equal to zero over a period of 12 months. (The TU shows only a $3M net debt reduction in March and April.)

Are there any news on 2021 CAPEX from JS/AB?

Pelle: You must be joking that there was just 1 question at the AGM. Have you kept on selling/buying over the last few days?
W/ such volatility that it surely is the way forward if you have time...

E121: Have you sold part or all of your Enq's shares?

Chilting: I am not expecting Brent to be back at $60 in the short run. I am also under no illusions that many oil companies'
shareholders will see their positions diluted by the creditors if the POO stays below $50 until 20

Hi Londoner7,

Yes, it is possible that some of the gross debt repayment could be due to a release of ring fenced funds. If some of the repayment was related to any of the loans (it could be the Oz loan, or SVT's related loan), that would be good news.

I agree with you that there was also a c$8m PIK which is added to gross debt, which I overlooked, but makes the calculation harder.

You ask why isn’t the H2 repayment of the Oz loan 165-122.9 = $42.1M, and not $55.6M, as I stated. I incorrectly used the 2019 Oz loan repayment, rather than the 2019H2's Oz loan repayment, which indeed is $42.1M. (As an aside I note that I believe interest was added to the "loan" in Jan/Feb 2019, when the FPSO had the hiccups, as a result of lack of FCF to repay interest in a cash sweep period. You will have seen that $122.9 million of the Sculptor Capital facility at the end of 2019, comprised amounts drawn down of $115.5 million and capitalised interest of $7.4 million. This capitalized interest was already showing up in the 2019H1 accounts: $165.0 million in respect of the Oz Management facility, comprising amounts drawn down of $157.6 million and capitalised interest of $7.4 million. This leads me to believe that there is a PIK element to the loan. When FCF is not enough to repay the interest in the cash sweep period it is added to the loan attracting a higher interest rate than the loan, and can only be paid at the end. This is an inference I make from the accounts.

As you might recall I posted my H2 Oz loan calculations back in 2019. Here is my updated version, that originated my previous post.

Brent monthly prices
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
$63.92 $59.04 $62.83 $59.71 $63.21 $67.31

Kraken premium= $14 in Q4
Kraken premium= $14/4 in Q3

Monthly
Production (bbl/d) and revenue:
Jul 19802 41.3742988M
Aug 25183 48.7920625M
Sep 28399 58.3684647M
Oct 27278 61.730114M
Nov 32479 75.02649M
Dec 29413 73.856043M

Total 4978296 $359.147473M
Oz loan related revenue (15% of total): $76.41435596M

(figures below in $M as well)
OPEX ($8/bbl) $-8.312085106
Oz loan interest (8.8%)  $-7.26
Oil transportation cost ($4 bbl)  $-4.156042553
Lease (FPSO) ($80M per year) $-8.510638298
Kraken FPSO leasing. Interest $-5.85106383

Amount repaid $41.05150851

Related issue:
Restricting attention to Enq's net debt, the decrease from December to end of Feb was $50M, $35M of which was a
repayment of the RCF. Who got the other $15M? My money is on the Oz loan, probably because the Kraken premium
was still quite high in Jan and Feb. (E121 wrote something about the pricing of IMO2020 compliant oil/fuel, if I recall.
Does anyone have any idea at the moment of what the premium of such oil/fuel is in general?).
If there had been a further repayment of the RCF besides the $35M that was announced, AB would have stated that during the results conference call. Ditto for the

Hi Londoner7,
Yes i have a very modest holding, close to 15000 shares. It is part of my "bricks and cement" portfolio, which also includes very modest holdings in FORTERRA and MICHELMERSH. I will reply to your posts on ENQ hopefully by tomorrow. Last few days have been very busy work-wise.
ATB

If anyone knows what is said at the AGM and would be willing to post that would be much appreciated.

All,
Let me start by saying i doubt the TU on Thursday (if there is one at all) will be much of an update, in the sense that
it won't tells anything that is useful. Since the results and annual report were released with a delay this year, I expect AB not to share any new relevant info with PIs at this stage.

Londoner7,

Thank you for the very comprehensive reply to my post. what you wrote is very helpful. Before, I delve into the Oz loan's details let me just refer two figures that got my attention in the recent accounts.

i) In 2019 finance lease payments (including interest) were $135.1M, so $10M(?) less than in 2018. Have no idea why! Could it be that the breakdown in Jan/Feb 2019 resulted in lower payments in 2019 than in 2018? But, in 2018 the downtime was longer than in 2019. Any thoughts?

ii) In 2019 Enq's payment to BP of the $1B contingency consideration was about $25M, if I recall correctly. Even if I were to add half of the fraction of the $100M cash back that Enq got back in 2019, that would have been paid to BP if the 50/50 FCF split had been in place the whole year, we would be talking about a contingency consideration related payment to BP of no more than $70M. At this pace (and oil prices were higher than today), ENQ will be receiving only 62.5% of Magnus's FCF forever. The payment horizon would be shorter if ENQ could increase Magnus's production, but your posts (which I did not fully understand) suggest there are issues with the kit being used. Your comment on the two new wells replacing older wells is helpful as you rightly point out that the relevant figure is the net increase (net off the the production of the two wells that will stop producing (temporarily or forever?) of the production those wells bring, not their gross production.

I am still going over the posts on ENQ over the last few months. Thus, it is possible I will miss some relevant information either by missing some by accident or by immediately forgetting some of the details of what was written ( -:( ).

Chilting, thank you for sharing your thoughts on how you see the prospects on being invested here. Congratulations on your
outstanding performance of your investments in the three companies you mentioned. Ocado's valuation is a bit of a puzzle to me, but I accept Mr. Market's verdict that it is worth many billions.

Pelle, I hope your new strategy to collect "dividends" pays off. Be careful, when the market turns, and the SP rises you might
get caught having just sold your holding.

gkb47, I am delighted to read your posts again.

E121, may I ask you if you are still holding on to your late 2019 ENQ's holdings? Or have you done like other LtHs, like many LTHs, Spindok and Disco included. (btw I am not surprised itsaponzi sold his ENQ shares. His username suggests he would do that at some point.) Congratulations to these three LTHs.

Overall, it seems many LTHs have liquidated their positions in part or in full.
GLA

All Enquers

I am still mostly away from these matters, but here are some comments on the accounts.

On 31/12/19
$1413M net debt
$289M cash and available facilities
$218/220M cash and cash equivalents
Note the difference b/w the latter two is the open drawdawn facility with the RCF's banks. It is around $70M.
Note gross debt (on which interest is paid) was c. $1631/1633M

On 28/02/20
$1367M net debt
$268.2M cash and available facilities
$197.2/199.2M cash and cash equivalents (my calculation)
Note gross debt (on which interest is paid) was c. $1564/1566M

This means that from 31/12 to 28/02 gross debt decreased by c. $65M. Since there was a $35M repayment of the RCF,
the question is who received theremaining $30M?

The candidates are:
- Tanjong Baram Project Finance Facility $31.7M (on 3rd march Enq states it intends to repay during 2020)
- SVT Working Capital Facility $31.9M
- Sculptor Capital facility $122.9M (Enq repaid $55.6M during H2 2019 ) 165 on 30/06/19

This brings me to my next observation, which is that Enq. repaid a lot of the Oz/Sculptor loan in
2019H2. By my calculations it repaid $55.6M of the principal in 2019H2. Now, try to run the
Kraken production figures and costs of production for H2 to get a re-payment of $55.6M and you
will realize that unless the Kraken premium was higher than $10/bbl over Brent in the last 3 months
of 2019, you cannot reconcile the figures, or at least that is what my 5-min Excel spreadsheet calculation
came to. Prior to this calculation, my views on the Kraken premium coincided with E121's, i.e., premium was
single digits. Now, the "facts" have changed, and therefore my views have to change. (In fact,
the premium explains why net debt at the end of 2019 came way under my projection at the time after adjusting for
the lower CAPEX in 2019, in relation to the intial estimate.)
Thus, in Jan and Feb 2020 I believe that if Kraken premium stayed at similar levels as in the two months
before the Oz/Sculptor loan might have decreased by another $20M or so. That would explain the net debt reduction
in Jan/Feb.
Unfortunately, the IMO2020 premium effect is much smaller since March. Thus, Kraken premium must be now single digits.

Londoner7, my condolences on your loss earlier in the year,
Pelle, no dividends for you my friend, either this year or next year. why did you sell ENQ? are you now buying and selling on a daily basis? why have you changed your strategy?
Chilting: i read that you are no longer fully invested in ENQ. Would you mind telling us why and when you liquidated 2/3 of your position?
gkb47: pls come back to the board.
therapist: can you please post your most recent graphs/tables.

general question: is the Dunlin pipeline of any use w/out heather and thistle? have these two been put down for sure? or is there hope that they will return to production at some point.

i have kept my position, but will now want to reassess my investmen

RetitredBanker, PVX233, rustybucket, kenji, jrc1000 and others.

Here, LTH, having first bought into POG at c. 30p+, followed by taking part in the rights issue at 5p. added more last year. reassessing investment now.

I am trying to get a sense of cash flow in H2 2019? Anyone has any estimates of it? (I was not impressed with cash flow in H12019.)
I am going to assume AISC of $1000 (too optimistic/pessimistic?). Given production of 162,6(000oz) sold at $1395 in Q4 and 126.4(000oz) sold at $1388 in Q3, cash
flow from operations (before interest and taxes) from should be around $113M. Assuming interest and taxes as H1 the figure goes down to
c. $60M.
There are lots of cash related items in the accounts that pertain to cash flow movements from investment and financing activities, mostly related to IRC (let us not forget the helicopter purchase!). Any other items?

Do others have different estimates?

A couple of questions:
- anyone has any idea of the margin on the production of gold from third party refractory concentrates?
- anyone has any idea of cash flow estimates for 1Q 2020?

Thank you for your answers.

p.s.: auditors need to visit mining sites / production sites to check inventory, equipment is as in the balance sheet. This might have been impossible since the end of March.

gkb47,

Very kind of you to think of me and my long posts with lots of figures.

I am not planning to touch my spreadsheets for a while.

I am having to deal with the same situation that lead January (now 60pParty) to not to post for an extended time. If you have been a long term holder and poster you will know what I am talking about.

I will read others' posts now and then, but i am having to focus my attention elsewhere, like January, and anyone in the same situation, would have to.

I have not sold any Enq share. The lack of posting since 25/01 is due to the above.

Good luck to all the LTHs.
ATB

Therapist: Thank you for the extra information you posted about the Oct OGA figures. Very helpful. By next weekend the November figures should be out. The removal of Thistle's tank will take time. I am not expecting any production from Thistle until the Spring.

Hitman1a: In my post on 21Jan I provided some figures on debt and cash in light of posts you and others exchanged in Dec. The goal of my post was to highlight that ENQ has reduced its ongoing cash balance in order to repay its gross debt faster. But I think that the October figure will be the lower bound for the ongoing cash balance.

Pelle: Yes, I cannot rule out that it is the prospect of...that led to the re-rate of the SP. But that is, in my view, not close at all. From the last TU, we know that ENQ needs to clear $75M of RCF by April, and it cannot pay... w/out repaying the $135M PIK. So, we are talking about $210M that needs repaying before something can happen. And, it will take at least 6 months for those $210M to be repaid, because in addition to that amount ENQ has to repay some of the Oz loan (the cash sweeps take place monthly - as stated in the RI file), so add another $20M of principal repayment every 6 months for that, plus $12.5M repayment of the principal of the 75% Magnus BP vendor loan. So, those c. $240M could be repaid by the end of May (AGM) the earliest. An announcement would probably not be made before then... Personally, I do not want them to pay.... I received some from PMO many years ago, and now PMO is being forced into a bad deal to buy some assets...

As far as projections for 2020, I am still expecting ENQ's production guidance to be 67K to 74Kboepd for 2020. I still do not see how OPEX could be lower than $550M (reduction as a result of Alma/Galia's decommissioning, but increase of OPEX as GBP has appreciated).
I see CAPEX at $200M if investment in Malaysia's happens quickly, and SVT's revamp (including a wind farm) also moves at fast pace, along with work at Eagle, and the postponing of 2019CAPEX at Magnus. Given the uncertainty about the poo (and having no info on Enq's hedges) hard to know at which price production will be sold. To be honest unless the average POO shoots up above $65 or the Kraken premium is well above $10/bbl I am not expecting net debt to be below $1B by the end of 2020. Decomissioning of Alma/Galia will have a non-negligible cash impact.

Kraken premium: We should be able to rule out that it is something above $15/bbl by looking at net debt when the FY2019 account are released. If that were the case then in the last 2 months of 2019 there would have been a cash windfall from Kraken that would have reduced net debt in that period by an amount that would be at least $30M more than we were expecting... If the figures do not show that then we know that E121's view of the premium is spot on.

ENQ is in a better position now than it has been for years. SP will keep on going up. But patience is needed...

GLA

https://www.youtube.com/watch?v=61ptMBP-cFU

Gd morning all,

I expect CNE to say that Kraken 2019FY production was above guidance, so above 35Kboepd. I expect it to be 35.6Kboepd.
Guidance for 2020 will be between 36K and 40K boepd.
Kraken premium: Like E121 and others I expect this to be in the high single digits. Suppose it was $10/bbl. Given
Enq's WI and the upper range of the 2020 guidance above, that would lead to an extra $100M in FCF accruing to ENQ.
Not bad at all.
I am not expecting CNE to reverse its decision on lowering Kraken's reserves for now. They will want to see at least another
semester, of good production. We have to bear in mind that in relation to Kraken's FDP production in the first two and
half years of production was lower by more than 10MMbbls. And that gap was what originated the reserve writedown.

In December, there were some post about cash available and net debt.
Let me add to that conversation, as upon reading it I felt that the TU had some relevant info.
At 31 October 2019, net debt was reduced to $1,561 million (30 June 2019: $1,638 million) with cash and available bank
facilities amounting to $213 million (30 June 2019: $248.5 million)

Net debt Cash and available bank facilities
$1637.9M $248.5M
$1561M $213M
(so cash holdings decreased $35M)
$77m net debt reduction + 35 (reduction in cash and available bank facilities) = 112

Paying down of RCF from 30June until 30 October was $10M+$35M+$45M = $90M

To whom were the other $22M cash paid? About $12M was to BP for the ret of the 25% BP vendor loan. The $10M could have gone to anyone, from Working capital movements to
the Oz loan, etc...

SP: 15 p in March 2019. Will it be 51p in march 2020? Mr&Ms. Market are very moody...

p.s.: Pelle, the increase in the SP shows you do not need ... for it to go up. Keep adding to those fines. Gkb47 and I will come to collect them.
p.s.: Londoner7 and Therapist. In my previous post I had a question for each of you about October production. If you could answer that would be great. If not, I understand. Minutiae on my side.
p.s.: Gkb47: the 75th load time target needs to take into account that one of the recent loads was a half load (or less), so we will have to take that into account :)

Happy new year to all.
A few questions/comments for some of you.

SP: Since my last post, Dec 15, the SP has moved from 19p to 23p. A gain of 20%. I expect it to keep moving up. At 23 to 25p, and within the next month, I see any increases related to the POO movements, and, more importantly, on any hedging done for 2020H1, rather than anything else. Further significant increases will depend on production guidance and net debt production guidance.

HEDGING: In my 15Dec post I wrote ENQ needs to be opportunistic with its hedges. At the time I wrote that the Oz loan related production should be hedged. I hope ENQ has used last week's *temporary* increase in the POO (why? unless there is disruption of production or supply which has yet to happen, most of the increase will just vanish) to hedge all its 20Q1 production and at least 50% of 20Q2. I read plenty of posts (by E121, Squif, itsaponzi, BananaJoe, and others) suggesting hedging to be done now . I agree with all of you. Incidentally, I read this while I was in the US,
https://www.oxy.com/News/Pages/Article.aspx?Article=6195.html (part on hedging showing how it is done!)
As E121 wrote, the US producers are using the current prices to hedge, which has 2 effects:
i) gets rigs back in action;
ii) makes it harder for Brent to stay above $70.

PRODUCTION: Therapist, thank you for your great graphs and numbers. Do you have figures for gas? I also liked your financial modeling, which helped me fine tune my revenue figures. Londoner7: Thank your for your insightful views on the October production. I was surprised that it was so low, given what the September data implied about it, i.e. it would be 83Kboepd. The missing production given the October figures is over 1Kboepd over the 10 months. You write that ENQ revised up their production figures for the early part of the year.
Do you know the kind of adjustments they did?
I am baffled by this, because the TU should have explicitly mentioned this.
Well, based on the September production data, I had projected that ENQ's production in 2020 would have no trouble reaching 75Kboepd (see my post 15 Dec 2019 11:18). I am now convinced that won't be the case (in part due to Ajes's post and Pelle's post from IR, both indicating a lower guidance). why? Kraken has only produced above 40Kboepd 4 months in 19 (including Nov and Dec in 2019). Hard to see how it can average 42Kboepd in 2020. Magnus is underperforming, though the CMD presentation projects 18Kbopd for 2020. Malaysia production will only increase by 250Kboepd. Unless Thistle/Heather get back to action by Q2, I doubt 75Kboepd would be achievable. So, I am expecting ENQ's production guidance to be 67K to 74Kboepd for 2020.

Net debt: In March 2019 Ajes posted $1499M net debt for year end. I believe he nailed it down then. CAPEX will come in under $250M in 2019.

GLA

Hi Londoner7,

Yes it is positive.
They say that the previous acquisition has resulted in cost savings over the estimated amount, and that hopefully can be repeated here. $130m of synergies have been identified.
After the acquisition Netdebt/ebidta will jum to 4.0, but with plenty FCF it will be brought down to 3.0 by 2021.
Thank you very much for all your outstanding posts this year.
Wishes of a good festive season and best wishes for 2020.

It is obvious that ENQ needs to diversify its asset base. As I wrote on 24/11 and yesterday, the priority should be to increase the footprint in Malaysia. In the North Sea, getting involved in the South North Sea (not part of Scotland) should also be a priority, even though most fields are gas fields. According to the current border Alma/Galia would be in English waters.

POO: E121, you are more confident than I am about the POO reaching $70 and staying there. I have exited all my call options as I am not confident that the POO will stay up long enough. Russia has been a trojan horse: keeping its production up and helping Iran and Venezuela circumvent sanctions. Ditto for Iraq. And, as you rightly say once the POO gets to $70 (WTI to $65, the shalers will press the "resume production" button).

2019 EARNINGS: A pointless headline figure. Why? Because this semester there will be plenty of remeasurement and exceptional items, many of which are non-cash charges.
We have:
- Unrealised mark to market movements on derivative contracts and other financial instruments. Who knows how much has been hedged ahead of 2020. With the POO going up, the derivatives that protect the downside are worth less.
- Next, you have items related to Magnus's contingency consideration. Here you have (i) and (ii):
(i) the unwinding of the (time) discount of $28M
(ii) the change to the fair value, which has the following components (1,2 and 3):
1)if the POO is up, payments to BP in the next few years will be higher than estimated in H1 - thus fair value goes up - and that is surely the case in H2 as the POO at 31/12 will be higher than it was on 30/06;
2) if the production profile for the next few years is higher than it was projected in H1, payments to BP in the next few years will be higher than estimated in H1 - thus fair value goes up). Since I do not know if the production profile had already been used in H1, I do not know if the increase in the fair value had already been recorded then;
3) if the cost of production (OPEX) (and CAPEX as well) in the next few years goes down, payments to BP in the next few years will be higher than estimated in H1 - thus fair value goes up.
(1+2+3): I expect the change to the fair value to be positive, but hopefully lower than in H1, i.e., $27M.

We also have changes to the the Decomission provision
- It will increase in value due to any pipelines/wells drilled, in addition to which there is the unwinding of the (time) discount of at least $6M per semester.

So, the earnings figure is of little significance.

AU REVOIR: This is my last post for 2019 (unless there was a major development), and I would like to wish a joyful festive season and a wonderful new year to all those polite and courteous posters with whom I exchanged messages with on this board in 2019.

p.s.: Pelle, what will you answer your parents when they ask you about ENQ's "utdelningsintäkt"? :)