Member Info for L3Trader

osaka1-san,
i simply wrote that IC was negative about all oil E&P. i think that all the people i met in my weekend nights out in shinsaibashi and dotonbori would understand what i wrote...

May Kraken fill up your pockets

Relax people, the IC pieces on ENQ were part of a series of pieces on other not so mu leveraged and others highly leveraged E&P companies that had similar bear views. I believe that all of the one I read during that period were either Sell or Hold. The rationale was that the writer in charge had a very bearish view of the POO. Given that, it is natural that the IC writer was negative given how leveraged ENQ is. (We also have to bear in mind that some of the analysts & journalists are treating the Magnus's BP stake as a loan rather than a provision. We have already discussed why that is not such a good idea).

Londoner7 has written absolutely outstanding posts since joining this board. We should be thanking him rather than criticizing him.

We also should be grateful that Mr. Market is still aloof, given how well Kraken is doing. That will have a given a chance to some of you to buy more at bargain prices. Would you have preferred to buy at higher prices?

As Londoner7 writes if Magnus's production in June is back to 18Kbopd and if we get another 11 Kraken off loads by year end, and the poo gets above $70, and the Hedger in charge at ENQ finally starts doing his job, we are up to a good surprise.

May Kraken fill up your pockets

A lot of speculation going on here.
The rise of the SP is only meaningful if it gets the SP above 25p. Anything less than that could be explained by algorithmic trading, etc.
SP has been 22p 23p in the recent past only for it to drop.

As far as ENQ being a bid target, who knows?
Why would anyone pay 50p for it given that the POO is very volatile at the moment, and not clear that it can be above $70 for long. At the moment I would be happy to sell all my holding for 50p.

May Kraken fill up your pockets

Hi Pelle,

so, the figures posted by svensk are yours? where does the $91M from Kraken that svensk writes about enter? adding or subtracting from your figures?
my best guess for production is 71K boepd. why? because i am worried that many small fields are producing quantities that are decreasing more and more. that is what the graphs posted by Therepaist kind of suggest (would be good to have a table with the exact numbers), and Magnus was down to 16.5K bopd in April. londoner7 expects it to go up again to 18k bopd, but until i see a figure for may and june, i am being cautious.

premium that kraken oil is getting over brent coud be good surprise.

who knows what the sp will be in the next 60 days. retate only after H12019 rsults show good progress on net debt reduction.

Prodopt, that you for your insights.

May Kraken fill up your pockets

svensk,

thank you.
What is meant by"Author said Kraken -91m should be added"?
The first 4 months are very plausible, since net ebt reduction was $50M and unwinding of working capital was another $50M.
But, the secenaros desribed for the rest of 2019 seem to optimistic both in terms of production and poo (eg May and June woukld bring a reduction of net debt of another $100M. I doubt it will be above $70M).
We know that average poo in June was $64, and Enq does not get all of it due to gas being sold lower, etc.
gla

hi londoner7,
Many thanks for your updated insights.
yes, dc4 is kraen central. if you look at the predicted production profile it would start very close to 20K bopd in the first year. so, perhaps is going to plan. let us hope it stays that way. yet, one would still want to know how kraken south is doing separetely from kraken central. not clea that in the future production data will be given by oga separately. at the momentjust kraken and kraken north. and the latter is underperforming in relation to the FDP in the presentation file i sent you the link for, 3k actual vs. 11k boepd predicted.
i do not understand the gas/oil used in the fpso so well, but i assume that whatever little gas it produces is all consumed by fpso. prodopt's post reveals he/she know what actually goes on about this, unlike me.

i hope you are right about magnus's june production. going back to 18K bopd for the rest of the year is useful to deleverage.
also, to get enq's overall production above 70k bopd.

IRR becomes meaningless after capex is made as you say, but a company's reputation in future projects depends on past successes, and that is why i would like to see that predicted IRR given what has occurred so far is above cost of capital, otherwise questions will be asked by the analysts .

heavy oil premium. i read somewhere it is around $2. not clear what it is for kraken but i believe enq/cne commented on it.
does anyone know? this would help, because it would mean an extra $2 per bbl in kraken would equate to $16M extra net debt reduction, assuming enq's WI in 2019 is 8Mbbl.

the average poo in may was $71. this for sure would have helped the cash in hand at the end of H1, even if in june it was lower $64. one can only hope that it will be better in july. so far it seems no pik for interest payments, which i think would not be helpful.

gla

gkb many thanks for the info.
therapist, many thanks for the charts.
yes, alma not so good again.

but with production above 70kdopd enq should be fine until year-end.

i hope heavy oil premium is mow $2 above brent...

Hi Londoner7 ,

Much appreciated your production data. Where did Cairn's CEO mention production above 50Kbopd in the last week or so?
Please see page 26 of the following pdf file:
https://www.enquest.com/fileadmin/content/statements_reports_presentations_and_general_PDFs/131115CapitalMarketsDay.pdf

It mentions the 10Mbbls in fuel.
The fdp had 1 year of production in the 40Ks bopd, followed by 2 years in the 50Ks bopd and followed by another one in the 40Ks bopd, after which it would decrease fast. Given the record so far it might be that there are still three years left above 40K bopd after 2019. That would do wonders to net debt reduction .

I am not worried about Enq's financial performance in 2019 as much as I was two months ago, given how Kraken is doing.
I believe that the challenge if the POO were to go lower would when the RCF is supposed to be fully repaid, 2021. In 2020, RCF repayment is $155M, doable with high production and low POO. If the POO stays low interest will be PIK, and that gives ENQ some leeway.
Interesting that Kraken had IRR in the high teens, but since project CAPEX was $2.4B rather than $3.2B that was good. However the high IRR was based on a much higher POO, around $90. So, not clear what the net effect (lower CAPEX and lower POO) is. But, I bet that id the production stayed high as now, then the net effect might be only slightly negative, i.e., the IRR would drop only a few percentage points. It needs to be above cost of capital for the project to come out good in the end. All eyes on the tankers...

Any idea of Magnus's production in the last two/three months?

Much appreciated.

Hi Londoner7,

Many thanks for your super useful insights.
What monthly average productions do you have for Kraken for each of the first 6 months of 2019, please?
(One thing to bear in mind is that, if I recall correctly, in the FDP 148Mbbls would be extracted but the FPSO would consume 10Mbbls during the lifetime of the project. That is around 6.8% of the oil extracted). What is offloaded is net of AK's consumption.
I agree with all that you say about being uneasy if the POO drops a bit below $60. As we know only 24Kbopd (excluding the OZ loan) were hedged with a floor in the mid $60s. Despite ENQ's mediocre hedging tactics, 2019H1 will still be good in terms of net debt reduction (i still think that $1650M net debt is a very likely number).
For that we have to thank Kraken's excellent production in May/June. Now, we have to wait if they can keep their 12 days offload cycles going forward. Probably 2019H1 daily production might get to 72Kbopd with Kraken's good numbers.

Hi Therapist, In case you have production data for April by field could you please post it? I am curious about Magnus, Alma, Scotty/Thistle. Much appreciated.

Finally, from the WSJ,
https://www.wsj.com/articles/a-fracking-experiment-fails-to-pump-as-predicted

GLA

Hi Pelle,

I had already written that net debt at the end of 2019 H1 will be 1650M.
I am happy that you agree.
Do you know what is going on at SVT?
https://www.shetlandtimes.co.uk/2019/07/03/eighty-jobs-to-go-at-sullom-voe-terminal

members,

Very well written.

Romaron sometimes acts as the BB's vigilante.

He sometimes acts as if this BB is a fan club, rather than an investment board. Would any rational investor want to invest her/his money on the basis of censored information? Of course not. I always like to read both sides of the argument. Why? Because that brings different perspectives as long as the information is being presented in a clear way. One thing is clear: if this share was the deal of the decade, it would not need ramping up by the likes of Romaron.

Instead, it is a company with some potential (a few very good assets), but with some weaknesses as well (the ability to being down its net debt quickly enough, and faster than it depletes its 2P reserves)

Let us hope that Romaron sticks to his better posts and drops the vigilante behaviour.

GLA,
L3

p.s.: Bear in mind that Romaron always praises AB as this or that. He has also admitted that AB is such a good person that even offered to help out one of his relatives. Such things often cloud people's views.

The Issuer currently intends to redeem such Bonds in accordance with their terms and to pay to each Bondholder the amount of U.S.$1,080 per U.S.$1,000 in outstanding principal amount of such Bonds

The Issuer currently intends to redeem such Bonds in accordance with their terms and to pay to each Bondholder the amount of U.S.$1,080 per U.S.$1,000 in outstanding principal amount of such Bonds

They are using others' predictions, EIA, API, IEA, OPEC, who knows.
And by the way, they were going to lower earnings to $0.10 per share for the year, but then they realized that Pelle wanted a $0.01 dividend per share, so they added it to their forecast.
No reason to say bad things about this or any broker, especially when the SP and oil are having such a good day, and my Brent September call option (strike price of $55) is doing well... :)
It is also time to thank CNE for having pushed BUMI and ENQ to finally sort out K/AK!!!

Now, let us hope that if the POO 1-year ahead futures reaches $70 again that ENQ hedges at least 50% of its 1 year ahead production. That would do wonders to the SP!
GLA

Hi Chilting, apologies for my re-posting. I already read your answer, but i hit the reload button on the browser and accidents happen. apologies to all posters for the unintended repeated post.

Hi Chilting

Many thanks. Very good production data, in particular in the last month. Staying close to 45K bopd for the rest of 2019, apart from the shutdown period would be very much welcome.
The dates you indicate are the day when AK started to offload, not the day when the tankers left, correct?

Have people read about condensate? lease condensate (crude by EIA) vs plant condensate (not crude by EIA definition). Apparently, this messes up the EIA figures...

Hi Chilting

Many thanks. Very good production data, in particular in the last month. Staying close to 45K bopd for the rest of 2019, apart from the shutdown period would be very much welcome.
The dates you indicate are the day when AK started to offload, not the day when the tankers left, correct?

Have people read about condensate? lease condensate (crude by EIA) vs plant condensate (not crude by EIA definition). Apparently, this messes up the EIA figures...

Hi Chilting

Many thanks. Very good production data, in particular in the last month. Staying close to 45K bopd for the rest of 2019, apart from the shutdown period would be very much welcome.
The dates you indicate are the day when AK started to offload, not the day when the tankers left, correct?

Have people read about condensate? lease condensate (crude by EIA) vs plant condensate (not crude by EIA definition). Apparently, this messes up the EIA figures...

https://www.wsj.com/articles/a-leader-of-americas-fracking-boom-has-second-thoughts-11561388670

Hello Chilting,

Could you please re-post the times of offloads #38 and #39? Much appreciated.

Yhoh, I believe the last offload at Alma/Galias before April 20. So, 65 days and counting now.

Therapist,
When, you have a chance and after you add the data from next week's release (another month's data), could you please produce your nice graphs from the different fields? Much appreciated. I wonder how the ones with less production are doing.

Delighted to see Barclays increasing their SP. I posted some weeks ago (and referred to it again more recently) that reaching offload #40 before the end of H1 would be key to re-rating. Assuming there will be 6 days to spare in H1, and even though the shutdown will be three weeks, if DC4 (and the watercut from the other DCs is not too high) stays productive, H2 will see another 10 offloads easily, possibly 12. That would mean Kraken would have produced 25MMbbls by the end of 2019.

I am expecting net debt reduction to $1650M by the end of H1 even though hedging has been a disgrace again (they will never learn, will they?). This will be driven by Capex being tilted towards H2, as the wells in Magnus will only be drilled later, and most of Scolty/Crathes pipeline's related invoices will for sure fall in H2. With Enq collecting 100% of revenues from Magnus at this stage, and the poo only having dropped at the start of June, May and June will have been very generous to the bottom line. In H2 I am expecting much less net debt reduction, as production will be lower due to Kraken's shutdown and more CAPEX, and of course poo will dictate profits. Only 24Kbopd are hedged for H2. The other 40+Kbopd are not, so Enq is at the mercy of the poo.

BTW, were K/AK to have produced at this level (>40K bopd) b/w April and October of 2018, when the poo was in the $70s and $80s net debt would have been lowered by close to another $100M easily. Unfortunately, the timing was not perfect. But a productive K/AK brings MO back to the BB, and that is worth a lot :)

retiredbanker,

So they are repurchasing the old bonds above their face value, at a premium of 8%?

"Holders whose Existing Bonds have been accepted for purchase by the Issuer pursuant to the Repurchase will
be eligible to receive U.S.$1,080 per U.S.$1,000 in principal amount of the Existing Bonds (the “Repurchase
Price”)."

How can this be a good deal? They will have to pay $108M for $100M they had borrowed to redeem the bonds early (Plus accrued interest, as it should be).

How can anyone think this is not bad for the PIs? This is a this is a bung to some of their buddies....

Any thoughts?