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I meant "The sum of these figures is slightly higher (by about $0.7 M) from what appears in current provisions ($69.68M)."

This is info for people who like to model the cashflow / debt/ etc. of Enq. I was searching for it myself, having asked questions about it here a few days ago. So, here is what I quickly found. Others might correct anything that is wrong:

BP Vendor loan for 25%: Debt outstanding classified as current provision: $33.9 million, which is expected to be paid during 2019 (classified as current provision)

BP Vendor loan for 75% ($200M vendor loan adjusted for working capital, etc): Contingent consideration of $116.5 million as at 1 December 2018. The $16.5M refer to the first $100M of the $200M vendor loan. After these are repaid, which for sure have been already, perhaps as early as February, ENQ will now receive the next $100M of cash flow from 75% of Magnus. Of the $100M you are left after subtracting the $16.5M, Enq will pay $20M this year.

So, ENQ will pay the sum of the amounts above ($33.9M+$16.5M+$20M) (plus interest) to BP to reduce debt/provisions this year. The sum of these gigures is slightly higher (by about $0.5M) from what appears in current provisions ($69.68M).

Interest on the $33.9M is paid at 5% (so assuming that payment is done evenly over the year, interest will be less than $1M)
Interest on the $116.5M is paid at 7.5% (so will be under $8M, as part of the loan is being repaid throughout the year)

That is all I could find on Magnus's BP vendor loans. Anything incorrect, do let me know.

E121, I am curious to know what you make of ENQ's results and prospects.

Pelle, The results mention net debt to target b/w 1x and 2x EBIDTA. (This is a moving target hard because the POO goes up and down. If the POO goes up EBIDTA goes up and therefore net debt might be below 1x EBIDTA if you have repaid a lot; on the other hand if the POO goes down, net debt might be above 2x EBIDTA, if you have not repaid enough). Personally, I would like Net debt to keep decreasing to just below $1B, to be on the safe side. But this is AB's company, so we will do as he wants.

RetiredBanker,

Many thanks.
W/ regard to the profit warning, this is what I found: "The expected substantial decrease in profit is because for the year ended 31 December 2017
the Group recorded a substantial gain from an impairment reversal in relation to the K&S
mine amounting to US$129.6 million, however for the year ended 31 December 2018 the
Group is expected to record an impairment reversal of approximately US$90 million. The
impairment reversal is mainly due to the successful operation of the mine and the increase of
the market iron ore price, which leads to the recoverable amount of the asset value of the K&S
mine exceeding its carrying amount as at 31 December 2018."

If it is an impairment reversal... then... Perhaps you can explain, please. I read as the profit being lower than last year, but still will be a profit. So, what am i missing?

Hawkeq,

Since you are a new poster let me welcome you to the Enq fan club,

I am not comparing pears and apples, but oil produced in 2018 with oil produced in 2019.
It is impossible to do a like-for-like comparison b/w the same time in 2018 and 2019, even if availability rates were available, because new wells were drilled at some point in 2018 at PM8/Seligi, Magnus, Heather, ESPs replaced at Alma and there is also natural depletion at a rate that is not known. And when the 2017 results came out in 2018 , no production figure for the first two months of 2018 was provided.

My aim was only trying to figure out where the extra 5K bopd is coming from: either from Magnus, or from the rest of the portfolio apart from Kraken. This will be impossible to know until production data is released in a few months time.

If you do not like what I wrote then instead present you informed views.

weather is better today than yesterday, so hopefully HK on the way?

Kenj and RetiredBanker,

with iron ore' s price going up, hopefully IRC will start paying down its debt, in which case whatever the guarantees are they would not be needed. agree?

Hi Hitman1a,

My comment is that it matters where the extra 5K bopd is coming from. If from Magnus, then Enq gets about 3/5ths of the FCF that oil generates. But if from all other assets the FCF is all Enq's. For a whole year the difference b/w the two might be $40M.
Also, bear in mind that for the 5K bopd to have been coming from Kraken, the FPSO would have had to be producing an additional 5K/0.7=7K bopd on top of the 20K bopd I used as the base case. Not likely that the FPSO averaged 27K bopd so far as it was just running one train and there were also outages.

I will still be curious to find out which assets performed better in 2019 so far than in 2018 to better model cash flow.
Comments welcome.

Hitman1a,
In 2018 average production (excluding 75% of Magnus) was 54K bopd, and the WI in Kraken produced 21K bopd in 2018.
So, all the other assets (including 25% of Magnus) together produced 33K bopd.

I (and others here) have suggested that so far in 2019, Kraken has averaged 20K bopd, so that leads to Enq's WI being equal to 14K bopd so far in 2019.

We were told that in 2019 so far production has been 67.7K bopd (round it to 68K bopd).
Subtract 14K bopd (from Kraken) and you get 54K bopd. Now subtract 33K bopd if the rest of the assets (but leaving out 75% of Magnus) was delivering as it did last year.

So, we need to find where the 21K bopd comes from...

If Magnus is producing 20K bopd at the moment, 75% of this production is 15K bopd. Subtract 15K bopd from 21K bopd and you get 6K bopd, which are unaccounted for.

Some of Magnus increased performance would lead to a larger number than the 33K bopd from the other assets that includes 25% of Magnus.

Suppose that in 2018 25% of Magnus contributed 4K bopd to the 33K bopd above. But, if Magnus is now producing at 20K bopd, the 33K bopd figure that accounts to 25% of magnus would become 34K bopd.

So, 5K bopd are unaccounted for, but they are being pumped from one or several assets apart from Kraken.. Where from? from Magnus? or ???

5K bopd is no pocket change because it will have marginal cost close to zero per bbl. So, 2Mbbl could add $100M to FCF...

hitman,

Yes, but they might explore Kraken West in 2020, as stated by AB, and they need to drill a couple of wells every year to deal with depletion of production.
At any rate, repaying what is due of RCF in 2020 is a trivial task, assuming poo stays at $65 or higher.
Do you have any answers to my questions earlier today, please?
TA

Hi Pelle,

I would say my realistic view... I would have not bought at 16p yesterday if I did not think that the SP was way too low, given that HK was heading North. That told me that Kraken's production would ramp up now. It was confirmed today in the presentation. That being the case 20p is still cheap. Therefore, I will not exit my short-term trading position below 25p. -:)
I have posted a few questions earlier today (see my posts asking you, MO, Hitman1a, Fernan and E121) for which I need answers before I can say anything else. They do not imply anything bad per se, but I would like to have a better view of Magnus' production (could it be that is producing close to 25K bopd at the moment?) and finances, and Alma/Galia's production and its initial FDP. Once I have answers I will probably have more to say. Will want to run numbers on Fernan's spreadsheet.
GL

Pelle,
61.2 usd includes the hedging (there were hedges at low prices put in place in 2017), if I read it correctly. For example Mercury loan oil is sold at a price no higher than $64.
I was expecting a higher price as well.
Kraken discount is down to $2, and might start attracting a premium shortly.

E121,

All about Kraken and AK, really.
Takeaways from Q&A:
- Had been running only one train since late 2018(?). Since 2/3 days ago are now running both Trains with DC4 in action.
- There was water in the reservoir that was not in the FDP, and not modelled. That water is been extracted, so water cuts will improve;
- ENQ is unwilling to go into details as to why their view of Kraken is different from Cairn's.

I would have wanted analysts to ask about Magnus in greater detail, but they did not. Ditto for Alma/Galia and other assets.

Look like IC will upgrade ENQ from Sell to something better: Hold/Buy. Many of IC readers are PIs who act on their recommendations. Every little helps...

Hitman1a,

1. The costs of the FPSO are not linear on the % of production. AB said that the revised full rate is paid if operational availability is b/w 50% and 100%. But downtime results in 0 payment to BUMI. Transcript will convey this better. However, he said that one could assume linearity of payments. He did mention the 63%, but it must be based on the revised daily rate. BTW ENQ has a credit on its account from downtime of AK. So, at some point it can settle it, by paying less. It could be this year.
3. Magnus's production at the moment is?
4. ENQ is avoiding telling much about AK and Kraken current production. Personally, I would prefer that they just say it as it is, to placate the analysts. If they do not say anything analysts are free to say what they want. Any, I always prefer disclosure from the companies I am invested in.

Hopefully 25p in the not so distant horizon...

Pelle, E121, Hitman1a, Fernan, Squif, etc.
1) I was unable to find how much of the initial loan to acquire 25% of Magnus is still outstanding. Did you spot/hear this figure somewhere?
2) Ditto for the outstanding amount of the $100M vendor loan to acquire 75% of Magnus. (Apparently, the cash flow waterfall pre repayment of Enq's $100M consideration has a profit sharing of 50%/50% in there. So it does not all accrue to repaying $100M Enq. This is a minor issue but will spread net debt reduction more evenly across 2019, rather than it being done upfront and all in H1).
3) I read that Magnus has produced above 20k bopd so far this year, but have not seen by how much. Assuming net Kraken production at 14/15K bopd so far, could it be that Magnus has reached 25K bopd to give the 67K bopd production so far across all the assets? If not, which assets do you think are making up for Kraken's shortfall?
Many thanks.

MO,
TA for your input.
Do you know where we can find the FDP for Alma/Galia?
Many thanks.

the 60p party should take place in the Magnus platform. E121 your production forecast of 66k bopd was quite good. Congratulations. Obviously Magnus overdelivered.
The following is music to my ears; "In March, the Group reduced its credit facility by $55.0 million to $730.0 million, ahead of the scheduled amortisation due in April, which now has a balance due of $50.0 million."

Squif,
Making the repayment early (i.e. before the results release) would put to rest the analysts' concerns about the RCF repayments.
GL to you.

Pelle,
I will but only next week. good luck.

What the results release should address today:
1) Production so far in 2019 (e.g. like Premier Oil did "Production guidance of 75 kboepd, a 5% increase after disposals; 89 kboepd year to date ")
2) Net debt at the moment
3) Whether the April RCF repayment has been made.
4) Explain the hedging plan better (so that we understand why they made a mess last summer by not hedging)
5) Works done in Alma last year did not succeed. What will be done next.
6) Oz loan: give more details about this. It seems to have hedging obligations, etc.
7) Kraken: a detailed explanation of what happened and what is going on (6 months of exchanges on this BB have shown that we do not really know what is going on) and what happens if BUMI go bust.
GL to all who do not filter my posts!!!