Member Info for L3Trader

RetiredBanker,
Many thanks for the excellent summary.
However, I hope IRC's SP to start going up slowly over the rest of this year. Price of iron ore is going up and so is IRC's production, whiles the costs are going down.
So, POG might see some cash repaid to Gazprombank by IRC sooner rather than later. Do you agree?

Since I do not trade in the background I am interrupting my self-imposed silence to announce that I have started a small (5 digit) short-term trading holding of ENQ earlier this morning. I hope to hold it just for a few weeks, as I expect the share price to move above 22p. I plan to sell it then, and just retain my LTH. 16p is cheap even in the face of Kraken adversity. DYOR
I have no plans to change my mind on the case for long term investment in ENQ until there is clarity on Kraken, and Alma and Crathes/Scotty deliver higher production.
GLA for tomorrow.

my last post until the 21st. guaranteed.I would send the snapshot just to bransonbuls emaill not to the board.
To everyone who thinks this is oversold buy as much as you can.
bye,bye.

i can send you a snapshot of my holdings just for you...

gkb47,
I agree that you are not a troll. this is a funny BB. people get carried away. ENQ's full year 2018 results will be fine.
we already have the net debt figure, so we know what to expect. the big story is the falling out b/w CNE and ENQ.It is clear they are now at odds.
Perhaps it is a good entry point. but i am not adding more.

Yes, God is on ENQ's side. We know...
Reputations to protect? Like Carillion's directors...
Give me a break.
One thing I can safely say: I am not paid by anyone to post what I post...

Romaron is as much a troll as anyone here he calls a troll. Always engaging in creative writing. Now he is saying that CNE's impairment is related to the tax case involving India... I am sure the judges when they announce their ruling are going to add a footnote about Kraken's impairment having been an indication of rectitude of CNE... What a joke.
CNE only did what they did today because they want to be mean to some nice people on this BB...
Anyway, let people think that denial is a river in Egypt.

But relax next week's figures will be good: ENQ is receiving 100% of Magnus's FCF at the moment and for whole H1 2019. So, who knows? Net debt by March 15th could be $100M less than 2018 year end.

Never lose your hope. Your 60p party will eventually take place.

KK,
The deramper is AB. His behaviour de-ramped ENQ 13.85% today.
So he is worthy of all those names as well?
ENQ now has a market cap of 270M. So much value creation AB has achieved.
Good luck to you.

NPV computed with oil starting at $70 this year an going up. that is not what we see. fortunately, the production is higher than predicted. so, sometimes good things happen. unfortunately, just very rarely...

hitman,
Not automatically. It depends on the agreement that was made. the 15% is collateral. So, it could be theirs. And it would never be a cheque for the balance... They will make ENQ pay as much as they can. That is how they make money...They are Oz Capital not a charity.

DK, the operator is ENQ. It has nothing to do on how to extract oil and which pump system is used. ENQ's management were not forthcoming and ENQ's credibility is in tatters. That is all. Nothing more nothing less. If they cannot start pumping oil from Kraken at 35K bopd soon Mr Market will really go for it.
A lot of good luck with Magnus will be needed to stabilize the company...

Squif,
Oz capital are in the charity business. So, if their loan does not get repaid they just give the 15% of Kraken back. The 15% of Kraken is the collateral. No repayment, the creditor gets to keep the collateral. AB needs to start to nod off less and get AK to reach its production potential...

Fernan,
If you write such things, "Another issue: If, as a result of higher water cuts than expected, production plateau could not be higher than 40.000 bopd, then Bumi could be tempted to renegociate their tariff again. I undestand that ENQ applies the discount on the leasing rate based on the difference between potential production from the reservoir and real production. If the potential production is lower than expected, then the discount should be reduced too. " you will be called lots of names by the ENQ fan club.
The truth of the matter is that in any other oil company AB would be collecting his P45...

Perhaps you can explain to some people here that from today's perspective £1 next year is not worth the same as £1 today, and that is part of the reason why CNE took a non-cash charge today. And so, even if reserves were not to be downgraded their value would have to be.
All the best.

E121,
I know, from your point of view I am just speculating. The same I was doing when a few months ago I wrote on this bb about reserves downgrade worrying me, and was told by others than you I was de-ramping. With this ENQ's management who needs derampers? All that Fernan wrote today is spot on. Since none of us works for ENQ or a party w/ material interests in ENQ we do need to defend wat is indefensible: ENQ tried to hide the problems. Fortunately, CNE do not go along with porkies and did the noble thing.
What you do not want to admit is that the credibility of ENQ's management is in tatters, and that they will need to over-deliver to recover some of the lost credibility.
Oz Loan: I do not care that other oil companies will earn less if poo is low. I care that 15% of a $2.2B investment (Kraken, excluding work on DC4) was loaned for $175M. So $330M of investment was traded for $175M. ENQ will only get the 15% of Kraken back if it repays the $175M in full out of 15% of Kraken's FCF (post Capex). If it repays only $150M, they can say bye bye to the 15%...

The elephant in the room is here for all to see. Kraen needs to produce oil at consistently higher levels than 25Kbopd + poo needs to be high enough (both, not just one of the two conditions) for the loan to be repaid. In the past when I did my calculations I wanted the loan to be able to be repaid at $55 poo to give some margin of safety to the shareholders.
I won't say more. The accounts in 2019 H1 will tell how much progress on repaying the loan has been made...
I am not implying that this loan is critical to ENQ as a viable company Just saying that if they do not repay their market cap will be hit by losing 15% of Kraken. Hopefully they will repay, but lower production makes the repaying less easy to achieve...
Anyway, I will take a break from posting until the 21st. GLA

colebrooke1972,
oz loand is ring fenced to 15% of Kraken. Other monies cannot be used to repay it...

You need to clear $45M a year from the FCF (after deducting CAPEX) to repay the loan. With the production lower for the foreseeable future (Assuming FPSO is fixed, it will average 30-35k Bopd this year, and no one know about next year) ENQ will have to hope the POO stays high and that BUMI does not fail to deliver. Do not you agree?

Jan,

Yes, that is correct. They could prolong it further, but most likely some of it will be lost.

Now, CNE also mentions that there are infield well and near field opportunities (all involving further CAPEX) that they might explore in 2020 and after that. Some wells could be drilled from existing infrastructure, thus implying the associated CAPEX will be lower than otherwise.

The elephant in the room is the Oz capital loan, and no one is talking about it...

From IC: "EnQuest said it does not intend to impair its valuation for Kraken when it releases full-year results on 21 March. The shares are off 7 per cent, and something does not add up: sell". They were already on a Sell.

Peel Hunt cited in Alphaville agrees with CNE's downgrade and says that there are several reasons proposed for Cairn’s downgrade, the most significant for us is the occurrence of increased water cut which points to subsurface challenges that can only increase the risk associated with the recovery of oil.

GLA... anyone invested in ENQ will need a lot of it...

Jan
No, you do not extend the life by 20%, because below a certain threshold of production, the oil pumped off the ground does not generate enough revenue to cover the variable costs of production (FPSO, etc.). So you are better off switching off the button and decommission the field. A FPSO is different from a fixed platform.

The 19% of downgrade of the reserves is based on NPV. If you produce your oil tomorrow rather than today and you have loans on which you pay interest then the value of your reserves is lower. If ENQ had no debt, then the cost of capital is just what shareholders' cost of capital is... But that is not the case.
So, bye, bye to anything above 40K bopd, and that is if BUMI's AK was reliable.
My reading is that RBC and the other brokers were right in their call of the lower value of reserves.
If you read Ft Alphaville, IC and so forth you will realize the credibility of ENQ is in tatters...