Member Info for L3Trader

Krakie,
What is the point of your post?
2P Reserves are always estimates...
What they wrote has no interpretation beyond that they downgraded the reserves at the end of 2018.
Let us say things straight.
Like you I would be pleased if they were to upgrade the reserves again, but they have not done that.

Krakie,

You are being a de-ramper. Be more positive. Stop de-ramping.
Production is up, Catcher is doing very well. Net debt at the end of the year will be below $2B. All good

January,

My sincere condolences.
Try to remember the good memories you have of your mother, as that will give you some comfort at this difficult time.
ATB

This might still end up above yesterday's closing price. Price of iodine is going to increase by close to 25% as the tariffs on iodine imports from China is going to push up the price by close to the the amount of the tariff. The only option is for China to devalue its currency.

No, imports of iodine from China will become subject to a tariff! I regret not having bought more of these shares. Was just a punt....

Hi Pelle, E121, Therapist, gkb47, Chilting, Hitman, etc.

Can any of you make sense of the part that refers to Kraken on the presentation to the analysts? Many of the items have been ticked (so, I assumed those issues are no longer a concern). The ones not ticked are a bit puzzling, see below:

Main power engine activities:
- further offshore training – ongoing
- dedicated offshore support team - ongoing
Heat exchanger activities:
- reliability engineers supporting root cause analysis of losses - ongoing
Other ongoing activities include:
- supporting BUMI UK purchasing strategy
- EnQuest performance management team in place to support engineering improvements

I get the impression that BUMI seem not to manage its teams/equipment/operations well. BUMI seems to be bad at spare parts management, not have enough people trained, not having a team in AK to identify problems/losses. This is bizarre.

1) Does any of you have any insight into this?

2) I might have a chance to ask someone (not at the AGM!!!) very well informed about AK/K a couple of questions. Which questions do you believe are the best ones to ask to figure out future performance/no downgrade of the reserves, etc? Water cut projections? What about AK?

Assuming a depletion rate of 8% per annum (at current production of 70K boepd), roughly 6K boepd need to be added every year.

MO's valuable insight was that Scolty would increase production this year by 4K bopd.
With a WI of 50%, that is 2K bopd. Hopefully the other two wells in Magnus will add another 4K bopd, and we are level for 2019 2H/ 2020 1H. So, there would be a need to add 6K bopd in 2020 H2.

3) Do people know which wells will be done next year?

If I understood correctly Hitman's insight is that 4 wells will be enough to keep production steady, and they will have a total cost of £50M.
I am less optimistic that the cost can be so low, as there is a lot of preparatory work that goes on, such as acquiring and processing images. etc. I would be happy if it all could be done at a cost of $17.5 per well. So $70M capex to keep production going would be fine.

Eagle discovery. In the RI's prospectus Enq says potential similar to Gladwall which has 6MMstb.

4) Does anyone have any insight about this oil field?

Most of the opportunity areas identified in Magnus have 2M bbls of 2P reserves. These are profitable if the well and infrastructrute needed to link to any of the DCs comes to less than $20M per area, assuming OPEX is $30/bbl. The areas w/ 2M bbls should IMHO only be taken forward if they have a IRR in the high teens assuming POO at $55. Too risky otherwise, in my opinion.

Many thanks for feedback.

Great inside from you MO, as always in the past.

much appreciated.

indeed, as the northern monkey say you are the top dog here. A monkey knows best!

We need you back :)

What is going with Kraken? Was load #36 a fluke, or are we back to AK having trouble with its oil pumps?...

RetiredBanker

Can you shed light on where are the $57M that IRC paid POG in March? They did not lower net debt as reported at the end of 2019 Q1. Where have they gone?....
TA

i am going to quote what i wrote in previous posts.

On 22 April: "Nothing like a couple of days away for something to happen. The mini-spike in the oil price (i say spike because DT cannot be trusted, and in the end he might issue waivers, and/or Cina and India might ignore him and import more; my reading is that he is trying the same trick he used in the Autumn to crash the oil price; thus it is a MUST to hedge the downside now) has also lifted the futures market. All oil futures until the end of 2019 are now above $71 (see below). I think that ENQ should now buy more puts for another 6.5 Mbbls in addition to the other 6.5M bbls it already has hedged (plus the 1.5M bbls that corresponds to the OZ loan), and keep the upside open until it can get a good price for the calls it would sell, creating a collar with a ceiling of no less than $80USD.
https://www.theice.com/products/219/Brent-Crude-Futures/data?marketId=220842

last Thursday:
"A quick note on Enq: Hope they hedged a lot of production when the oil reached circa $75 last week. See the info that others have released on their hedging programs, e.g., Tullow is already hedging for 2021. Smart move if you can get puts for close to $70 oil at low prices. The day poo reached $75, futures were above $70 all the way to the end of 2020 Q1."

This past Saturday: "Please look at the graph for the poo over the last year, and
you will conclude that this drop (11 days) is the longest period of prices being lower than the
reference point apart from the time when the poo dropped last Autumn."

This past Sunday:
"POO: Anyone thinking POO will shoot up big time should be buying call options at higher prices of oil. DYOR and follow your beliefs. That is what I am doing short APPL."

Time will tell if ENQ was savy and hedged rather than believing in pie from the sky... A bird in hand is better than two in the bush...
Not looking good with SA Saudi stepping up shipments to Asia to offset declines from Iran. India may see an additional 200,000 bpd from Saudi Arabia.

All Oil companies are down, or at least most of them...

And where are the $57M that IRC paid POG in march? They did not lower net debt as reported at the end of 2019Q1. Where have they gone?....

Hello Chilting, E121, Pelle, Therapist

Chilting: If I understand correctly, load #36 was a partial load with only 15 hours. So, that would
limit the amount of oil offloaded to no more than 300K bbls, correct? It started at 6:00 am on 1 May and finished at 21:00 that same day, correct? Since offload #35 ended on 19/04 20:00. The offload cycle was 12 days + 1 hour for an incomplete offload.
From what has been posted, I gather that MA is waiting for more oil. If NH gets a full load (as that is possible, given that offload #36 was a half load and 6 days will have passed from May 1st, when the offload to NH ends), could MA get all of it? If not, as others have suggested then there must be another tanker waiting. The good news are that hopefully AK is still producing over 40K bopd. E121, like me, is wondering how long the increase in production as a result of DC4 is going to last. That will depend on the water cut across all DCs. A nice question for the AGM...

E121: Are you putting all your eggs in just one basket? You keep writing that you keep on buying more ENQ. May I ask why? Do you think this is the oil company quoted in the LSE that has the most potential (otherwise, you would invest in some other one or other ones ? And why to concentrate all the investments just in a oil company? No diversification? (I like other businesses too among them clothing textiles (JOUL, DNLM) and bricks (FORT). The bricks business model is easy to understand!!!)

Pelle: I am sorry that you are always missing a bit of vision in my posts. But I can only comment on 2020 after I know a bit more about ENQ's plans. Posting that I expect FCF in 2020 to be XYZ under the assumption that production is going to be 70K boepd with poo at $70, is not of much help if the poo has not been hedged at $70 and I have no idea of what the plans for ENQ's fields are. I can say more after I see Kraken producing at consistent rates for a few more months. However, let me add something. If production continues at current levels, it is possible that AB will do another deal that makes all the calculations pointless. I would not do any deal just yet, but that is my opinion... BTW, since you do a lot of spreadsheet analysis, let me remind you that if you use EV you might want to consider the value of the share options awarded to the board using B&S to determine their current worth...(I do not suggest anyone would want to do this, but it is useful bear in mind share options matter...). Yet, SP will go UP.

Therapist: Many thanks for your graphs. Given the many interest in the CNS and the NNS may I suggest you split CNS into two graphs, ditto for the NNS? That would be most helpful to track all the fields...

Finally, as you know the largest shareholder of Alba (Chevron) also the operator is selling it. Will Delek get it?

POO: Anyone thinking POO will shoot up big time should be buying call options at higher prices of oil. DYOR and follow your beliefs. That is what I am doing shor

Hi Pelle,

My prediction is still net debt at the end of 2019 equal to $1500, plus a decrease of $50M in "payables", the repayment of the 25% BP vendor loan and a balanve of $80M in the 75% BP vendor loan. Thus do not understand why KKoil is complaining...

The US Can bring Venezuela production up to 1.5M bbopd by the end of 2019 if Maduro falls in May. Of course that is only half of the £m bopd Venezuela was producing not a long time ago.

For one to ask ENQ not to hedge the downside one has to be pretty confident that the poo will rise. We will hold January accountable. Just look at the futures prices for September 2021 and after that. They are under $62, and are below the futures prices for the same dates when Brent was at $66 (March 8). Anyway...

Hi Therapist, gkb47, Chilting, E121, Pelle and Squif

Therapist: Many thanks for making the table with the production field by field available.
This is very useful. I liked that you commented on it using a color coding system...
Let me add a few questions/observations:
Could it be that the difference between the numbers you posted and the ENQ trading update
production data of circa 67K for Jan/Feb is due to the gas production in Magnus, rather than
being Malaysia overproducing?
Personally, I am disappointed that Alma is again under-performing (I know ENQ will always say that
it is above their expectations...) What a terrible investment ENQ
made. I doubt it will ever recover more than 15M bbls out of the 48M bbls of 2P reserves.
Many other fields not doing that well either. Deveron was 1K bbls lower in February than in December.
Fortunately Thistle is increasing at a single digit percentage every month, and Kraken North
did mich better in February. (So Kraken for Jan/Feb produced at 26.5K bopd.

gkb47: thank you for the link to the portal.

Chilting: If I understand correctly, load #36 was a partial load with only 15 hours. So, that would
limit the amount of oil offloaded to no more than 300K bbls, correct?
It sarted at 6:00 am on 1 May and finished at 21:00 that same day, correct?
Since offload #35 ended on 19/04 20:00. The offload cycle was 12 days + 1 hour for an incomplete
offload. Hopefully the next load would take place by next Wednesday if production has remained stable
at 40K bopd, and the short offload was due to other issues. Time will tell.

e121: I like your AGM tions on hedging :) :) Change in the number of rigs in the US affects
production with a delay of 6/7 months. Please look at the graph for the poo over the last year, and
you will conclude that this drop (11 days) is the longest period of prices being lower than the
reference point apart from the time when the poo dropped last Autumn. What does this tell us?
Not much. But If Maduro is ripe to fall from grace the US will restart production there as fast as it
can. It has plans in place to start the job as soon as possible. Hedge, hedge the downside now....

Pelle: Thanks for all the FCf, etc. calculations. To be blunt I believe that no dividends will be paid until
2022 the earliest, unless the poo shoots up to $85 and stays there for 6 months (the spike has to last a long time to
shift the forward curve for horizons of 9 months ahead or more)... or AB pays a token
dividend for the sake of it (but that can only happen with permission of the RCF banks... or Kraken
produces flat out at 50K bopd until the end of 2020. I do not envisage that any of these possibilities are
very likely

Squif: Enq is still a mixed bag. Sometimes things look good, but other times they look less good.
Hopefully the latter will become less and less frequent.

Fellow Enquers,
Has anyone been able to access the most recent production data for Enq in the UK continental shelf? If so, could you be so kind and post the details here. I am just curious how some of the fields are doing.
If you could post details on how to retrieve the data that would be much appreciated.

Hopefully the AK offload interruption is just a small blip. It is necessary to have a long run (say until load #50) of short cycle offloads for the brokers to up their SP to the 30s, if the poo stay at the current level. They might up it to the 20s, but I doubt they will go higher w/out a longish production record.

Some speculation on the POO:
i) you will have noticed that UK heavy crude is now trading at a premium. That was what I read online about heavy crude from other fields. And, most of it is heading to the US. However, if the situation in Venezuela changes, uncle Sam will quickly try to make Venezuela produce as much as it can.
ii) Shale oil production is not growing at the moment. Remember that there is a lag of 6/7 months between rig activity and bringing the well into stable production, or so I read. So, any recent rig count decreases will only result in production changes by the Autumn. That is when shale production will decline;
iii) parent-child wells issue: apparently this is only a problem in mature basins like Bakken. Not in the Premian yet, as there is still prime acreage yet to be drilled. Furthermore, in some cases the parent and chil wells are stacked, so are targeting oil at different depths, thus not pumping oil from the same rservoir;
iv) Majors move the shale is not good news. Why? remember they can access capital at much lower costs (e.g., Exxon can issue bonds with a 3-4% coupons, and so can other majors; thus their cost of capital is much lower than small E&Ps. So break evens are lower. They also drive harder bargains from contractors, also bringing down costs. However, f as a result of bidding competition they will have to pay high prices to buy smaller E&Ps this does not bode well for their investments. You will have noticed that majors are not replacing conventional reserves at the moment. This means that in the future their production will have to come down. I believe this is pushing them to buy shale oil companies to make sure their reserves do not drop much.

A quick note on Enq: Hope they hedged a lot of production when the oil reached circa $75 last week. See the info that others have released on their hedging programs, e.g., Tullow is already hedging for 2021. Smart move if you can get puts for close to $70 oil at low prices. The day poo reached $75, futures were above $70 all the way to the end of 2020 Q1.

no jam today, jam tomorrow as usual... always excuses with operational problems and promises of better performance in the future.
commercial discount on 65% fe increasing...
who is pocketing the money?

confirms $57M repaid to POG. the same $57M that did not lower POG's net debt upon being received. funny isn't it?

If one reads the 2018 presentation file you will see on page 11 that net debt went up by $57M as a result of the bridging loan to IRC in 2018.
Since the loan was repaid by IRC in March 2019, it would have entered into the net debt calculation at the end of Q1 2019. So, it is impossible to understand why net debt only decreased $18M in Q1 2019. And so far no one has provided an explanation of what happened to these $57M.

at the end of the day all the operational progress only matters if it goes into the bottom line, i.e., to reduce net debt / pay dividends. If it somehow disappears into a black hole, one has to wonder what happened in Q1? Did POG lose money in Q1 of about $40M? Did it have to increase it is working capital by that amount. The fact that the summary of Q1 provided in the 2018 results does not delve into this makes one wonder. I am afraid that I am in full agreement with the retired Banker.
Perhaps I am missing something.... but I am relying on a slide of the presentation file...
Anyone has any idea?
Many thanks.

ConocoPhillips UK last year produced 72,000 boepd and had proven reserves of 99 million barrels of oil equivalent at year end. They are being sold for $2.68 billion in cash to Chrysaor .

So, that is $27 per bbl of reserves, because they are in production mode. what would the fair price for ENQ, given its 245M of proven reserves and a similar production to Conoco UK?

Every case is different, but this reminds of the Magnus deal. Interested posters can do the comparison b/w the two.

Magnus: If the poo were to stay around current levels then not only the cash flow from it would be higher, but it would also be the case that as BP ends up collecting more money on its 37.5% "up-to-an-amount equity share", that the date when ENQ sends BP its last check gets closer and closer. I would expect that by now ENQ is collecting its $100M reimbursement, and at 20K bopd, 75% of this production is 15K bopd. A $40 per bbl fcf margin means $600K per day. So, the $100M might be collected in less than 6 months...

I would like to know how to get the production data from the UK oil and Gas authority. It used to be easy and simple to get recent production... I have not played with the new application becase I find it very user unfriendly. Does anyone know the steps to get the data from the most recent month, i.e., not 3 months ago, but two months ago (the hidden data)?

Hi E121 (and Therapist)

Many thanks E121 for the offloads data (it is a pity that the guesses for the load sizes are missing. I guess MO might have them?). Would be good to have the loads #27 to #32. Therapist, your graph is very useful. Many thanks. Do you happen to have any missing offload data?

Looking at the data I can see that b/w Jan and early March of 2018, there were 4 offloads with cycles of 12/13 days (reading the trading updtes around this time we can see that at that time it was stated that "Kraken gross production averaged 35,000 Bopd in January and has already delivered the targeted 50,000 Bopd (gross) as planned."; "Kraken gross production has averaged around 38,000 Bopd in the first two months of the 2018 year". That was good, but it is also a reminder that we cannot take for granted a run of 12 day cycle offloads from now onward, after having seen just two on a short cycle in the last month. That is why I want to see a run of offloads up to offload #40 on a 12 day cycle to be reassured that most of the problems are sorted. The production data in quotes mentioned above in the graph that depicts the watercut rate of the 15M bbls produced by sometime in February/March 2019 as per the presentation corresponds to the produced barrels b/w 1.5/2M bbls and 4/4.5M bbls. At that stage the water cut was between 30% and 40%. So, the question is: can production of circa 40K bopd be acheived if the water cut rate is b/w 50% and 65%, as it will be around those rates once the early DC4 production is out of the way.
I would like ENQ to be quite explicit about this when they update the market by the AGM. Otherwise, I hope that someone at the AGM asks such questions.

Based on the trading updates I remember reproducing the following: "For the first quarter of 2019, EnQuest has collar options for c.3.6 MMbbls of oil in place at an average floor price of c.$68/bbl and an average cap at $76/bbl. In accordance with the Oz Management Facility agreement, the Group has a further c.1.5 MMbbls hedged across 2019 with an average floor price of c$56/bbl and an average cap at $68/bbl.".
We know that an additional 2.9 MM bbls have been hedged for H1, presumable for Q2. "To mitigate oil price volatility,
the Directors have hedged approximately 6.5 MMbbls of collar options at an average floor price of around $66/bbl in the first half of 2019." So, price floor of these other 2.9 MM bbls ought to be at around $63, and if the width of the collar is $8, then the cap is around $71 for the Q2 hedges. 2.9M bbls/ 90 days (Q2) = 32K bopd on which the revenue will be on average $71 hopefully for that part of the Q2 production. Not bad.
We can also infer from the Oz loan related hedges thatc. 1.5 MMbbls across 2019 corresponds to 4.1K bopd. Assuming that Kraken's production will average above 35K bopd, there are still about 1.1k bopd unhedged that relate to the Oz loan related production.

I will sign off until May and keep silent about hedging...

Hello PVX233,
Perhaps you have followed the IRC bridging loans better so that you could explain why - net debt has only dropped from $568m at 31/12/18 to $550m at 31/3/19 even though we have been told POG received back $57m of debt repayment + plus the $6m in fees.
I have no followed the bridging loan, so I am puzzled as to why net debt has not changed, given what kenj wrote.
Many thanks.

kenj,

many thanks for the info. It is unfortunate that the accounts do not explain that, i.e., that the $57m were advanced in exchange for an equivalent amount of gold.
Yet, the loan of $57M in exchange for a later delivery of gold would appear as debt.
But, if gold was delivered in exchange for the $57M, then there is no need to also send the $57M in money. So, it must be somewhere on the balance sheet. Where is it then? Could you please shed light on the sequence of accounting steps that would have been the result of all this rigmarole?
Many thanks