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why £28m net? what is the effective tax rate? TA

Hi Wigwammer,

Many thanks for replying 00:19 today, Tuesday.
Apprarently some people believe all the production is hedged at $1250, but we know it might be no more than 1/2> and the price of gold is fast approaching $1400. The difference on 250000oz, of $150 is all FCF! $37.5M almost enough to cover all of the interest on the bonds. I expect gold to approach $1500 this year.

SmokinAces,

How were you vindicated by Fernan's assertions?
He represented some of the smart money on this board. And he is gone. So is MO's money.
Should not smart investors reflect on that?
I do, even though I have been a LTH, and I am not planning to sell at the current price. At 32p as I wrote sometime ago, I will sell some.
And keeping the EV constant, I will leave it to you to figure out the reduction of net debt needed to get to that sp.
I said the sp would go above 20p today. How is that instilling doubt? The reason why I was posting at the weekend was that I has a bad cold and could waste time reading the rights issue prospect, and post answers to questions I had asked on the board, for which i found the answers. I was sharing info.
I stop posting because I like to engage in substantive exchanges, and since I am better from my cold, I have better things to do. There is nothing substantive to discuss until the next offload.
When I mentioned the hedging I gave a solution to a particular kind of math problem. It was not hedge all at $65. Read my post. You optimize dynamically. Although you are invested in an oil company you might not even know that over the long term the mean rate of change of inflation-adjusted oil prices has been zero and that the volatility of oil prices is higher than that of returns to the stock market, with the latter explaining why the share prices of oil companies are more volatile than the broad market indices. Perhaps you should, and that would lead to think about money invested here in a different way, regardless of your investment strategy.

Btw, when Romoron posted info and discussed Enq's bonds that was useful. The repetitive stuff on Ratcliffe is off topic, unless Ineos is buying Enq.
Arrivedeci.

SmokinAces,

Thank you for the compliment. Now, I know I have a soul. For sure arrogance is not one of your traits. So, why your username?

Looking over your post history, it is very clear that this account in the last 4 months or so has only been used to criticize Fernan and myself, because we are number crunchers and not pied pipers of Hamelin. Apparently, investing has nothing to do with number crunching, but instead is about taking a punt.
Good luck with your investments.

Please let me know what my motives and agenda are.

Anyway, enough said. I will take a break from the board.

p.s.: At the weekend I did not inject doubt. I wrote the SP was going to jump above 20, which it did. However, I also wrote that bringing net debt below $1500M this year would be a tough task unless poo averaged $70, etc., etc. That is what the numbers say and I am not going to write anything different from that.

Squif and Pelle,

I bet Jim Ratcliffe would recommend that you read the following piece:

https://www.carbontracker.org/reports/paying-with-fire/

Nothing like number crunching to put silly myths to rest...

Let us hope that AB does not go for growth or reserve replacement. Milk what ENQ has for the next few years that us shareholders will be just fine!

Hi Pelle,

I do not read his messages, only glance through them to find the quote about Jim Ratcliffe. Caught the mention to Darwin by accident. My shares are also available for the former or his agent here for 100p.

Hi Squif,

It is time for you to read today's rambling about Jim Ratcliffe. It is already out.
As I wrote we have a new Minerb. This one posts off the subject here. Today, he also talks about Darwin...

Kenj,
What do you mean by $170m in interest payments? Obviously loans pay interest, and this year they have to pay about $50M in interest, but that is all. I still think FCF will be over $100M. So, loans can start to be paid down. Russia is keen to encourage production of gold and countries, including China, want to diversify their reserves away from the USD.

Hi E121,

When the AR is released i an going to look at the cash, and ignore the profit figure (a lop of option values and provisions here and there, and as we know these do not always materialize).

I assume you have not heard anything about EP being for sale, as someone had posted on Friday.
Your calculations assume all the increase in OPEX this year is driven by the additional OPEX related to Magnus, as your interpretation of the TU. I am not going to argue with that.

I am actually pleasantly surprised by the amount of oil being oflloaded from Magnus. Will it last?

Do you have hard data on a variety of shale e&p oil companies putting the breaks on drilling?

While many of us are focused on the issues that matter, we have someone constantly rambling about Jim Ratcliffe... A MINERB of a different kind.

Pelle,

the rfc is the debt that has compulsory repayments twice a year. bonds can wait until 2022 to be repaid. Oz capital loan has the highest interest rate, after Mercury loan's.

Magnus: as per your calculations the $600M that BP can receive on its 50/50 stake, will take until 2025 to be repaid, so I am taking the view that for the foreseeable future BP is entitled to 37.5% of the FCF from Magnus.
the moody's approach of taking provision as debt is unhelpful at best, because effectively BP is entitled to $600M, not $418M. My understanding is that the provision's figure was arrived at using some discount rate, and it is there because Magnu's value is an Asset on ENQ's balance sheet. Calling the provision a debt in this case is bizarre.

Hi Fernan,

many thanks. that would be appreciated.
i am still thinking that enq at 19.8p is a short term (30 day horizon)trade opportunity, w/ a higher expected return than some other oil companies.

hi Pelle,

The production numbers from Magnus in the last two months are quite intriguing. Anything I found in the prospectus pointed to a much lower production in the mid case prediction. The big lift would occur only after the two wells are drilled this year. And even those were supposed to bring production to a number below 20k bopd. It will be thus important to keep an eye on the monthly production from Magnus to understand if the profile of production from Magnus will be different from what was assumed in the GC&A 's report. An uplift of the production profile of Magnus would do wonders for ENQ, even if it only gets 62.5% of its free cash flow in the years ahead. I hope the annual report provides enough detail on this matter.

I did not understand the questions you ask: " Is it around 400 milj Enq own BP for vendor loan + cashflow deal?
I calculated roughly that would take 4 years to payback."

Early repayment of debt by ENQ should follow the principle of repaying higher interest loans first. I have been reading the prospectus, and I cannot find anywhere that ENQ cannot buy bonds in the open market and keep them until maturity. Early repayment of the bonds is allowed and after 1st April 2019, the penalty for early repayment goes down.

interesting story:

https://www.bnnbloomberg.ca/the-opec-oil-deal-is-standing-on-one-wobbly-leg-1.1215614#_gus&_gucid=&_gup=twitter&_gsc=mVxOMlT

ENQ needs an average poo of $70 to lower its net debt to $1500M by year end, assumptions: Fernan's OPEX analysis; discount of oil sold in relation to brent goes down to 3%; production of 70k bopd, underpinned by 20 k bopd from Magnus. so, a lot of things need to happen, which makes its likelihood lower than I had anticipated.

btw: 20k bopd by Magnus is way above what CG&A assumed. if production stays at this level during H1 this makes me wonder if the two producing wells drilled in 2018 have uncovered a couple of Mbbls to add to 1P reserves.

just my personal opinion. no need to label me downhill skier.

In the past others and I had asked how much money would ENQ make by running SVT. Finally found the answer, by reading the rights issue prospectus:
"The SVT operator is EnQuest NNS. Subject to the overall supervision of the terminal management
committee, the operator has the exclusive right to carry out all operations and activities relating to
the operation, maintenance and decommissioning of SVT and receives a small management fee for
providing its services, in addition to amounts received from SVT owners to meet operating costs."

The answer is zero! The main benefit is indirect. By reducing the operating costs the tariff to use svt will be smaller. suppose 200Mbbls a year pass through it. If the running costs are £200M, then the tariff per bbl is £1. I do not know how many bbls a day pass thruogh SVT at present. At its peak in the 1980s, it was 1.5M bopd. I suspect that now it will be less than 0.5M bopd. So, the cost per bbl after ENQ has reduced the running costs to £150M, will be less than £0.75 per bbl. Since ENQ has more than 10M bbls passing through it every year, it is going to save £2.5M. Not even enough to pay the remuneration of the board. As far as I am concerned SVT is a pointless subject...

The Group has also established an in-house trading and marketing function to enable it to enhance its ability to mitigate the exposure to volatility in oil prices. The Group’s policy is to have flexibility to hedge oil prices up to a maximum of 75 per cent. of the next 12 months’ productions on a rolling annual basis, up to 60 per cent. in the following 12 month period and 50 per cent. in the subsequent 12 month period.

Hi MO,
hope your health has recovered, and that your are wealth is moving in the right direction. time to dip into ENQ? the nominal sp is quite low...
many thanks for info on taker and support vessel watching. we all look forward to first oil from DC4, and the use of a sledgehammer to fix AK.
All the best

mytton,
the bottom line is, as we all know, our returns depend a great deal on Kraken's performance. That is what the analysts are keeping an eye on. We now know that Oz capital' loan comes with strings attached (i.e., hedging; we do not know what else; when the AR is published i hope to find out more about the loan).
We need someone with expertise to keep us updated on Kraken's situation. MO, are you there???

itsaponzi,
you write that the poo will fall a minimum of $3 next week. that you for letting us know. i shall buy a put option monday early morning, all laugh all the way to the bank by friday...

mytton,

the question you ask has no straightforward answer. what we know is that for every $1 the POO goes up ENQ's free cash flow will go up by $23M, (70000bopd x 330 days left in 2019) if we ignore the hedges in place. assuming EV stays constant the market cap would go up by $23M. Now you can do the rest of the calculation... Of course, assuming EV constant is a big, big assumption... so, the answer is: impossible to know the effect on SP.

DK,

The hedging has been explained by the others. The reasons the sp does not move higher have been discussed here before, Kraken's performance, high net debt, uncertainty about price of oil in the medium future (say 2020/2021), etc.
Can it go higher? sure. will it go higher? sure, the last chance to buy below 20p was yesterday. well done to all who bought at a price in the teens... Sales are over. DYOR.