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MISER B

If you do not show us your numbers why should anyone believe anything you write?

Hi E121 and Pelle,

E121, many thanks for the reply. I will read the fine print. much appreciated.

Pelle, Your numbers make a lot of sense to me. Just not sure what the terms of the loan say. Do they also subtract CAPEX? If so, then you need average poo to be higher, perhaps as high as $65/bbl. On the other hand if you can repay the oz loan just from the cash from oil sales, then ENQ can channel funds from its other working interests to repay the loan.

Finally, looking at Fernan's old accounts plus my tweaks, I get that basically ENQ is paying out in interest close to $200M per year. If it produces 20Mbbls per year that means it needs $10 per every bbl just for that. That is what is dragging the sp given Kraken's production.

I would be delighted if net debt really came down a lot when the 2018 accounts are published. But I feel that there is not going to be much that changed in the last two months of 2018. I am curious to find out how much of the initial $100M BP vendor loan was repaid, and how much of the second BP $200M vendor was repaid as well.

TA.

Hi E121, Fernan, Pelle, etc.

You can repay the OZ loan of $175M in 5 years by paying about $45M (interest & principal) every year to Oz Capital, given an interest rate of around 9%. How do you get $45M out of the fcf of 15% of Kraken's production?

I remember you mentioning that the BP deal involves ENQ receiving $100M after some event? How does it work?

Thanks in advance.

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siri knutsen just a few miles away,
(from equest producer)
keeping the trolls at bay

hasta la vista!

just built up a small holding in the last few months. this is a gem of a company.

until february

MINERB,

Early January there was a load and the oil stored in AK by 31st Dec would count as "produced". So, 20 days or so of uncertainty since then. I am off until February.

corrigedndum:

Impact of this decrease on ENQ's average daily production in 2018 will be about 778 Bopd.

From Cairn: Kraken (Cairn 29.5% WI) averaged 30,300 boepd (gross) in 2018

Last TU by Enq in December: Average gross production in the ten months to end October 2018 has been 31,427 Bopd.

So in November and December, daily production was 24,665 Bopd.

Impact of this decrease on average daily production in 2018 will be about 778 Bopd.

Let us hope that increased production in Magnus and elsewhere will make up for that. Otherwise, ENQ will miss its 2018 guidance of 54k-56k bopd as stated in December.

Hopefully Armada Kraken is now performing better.

Minerb,
you write 60 days last time there was an offload by ENQ producer. when was it?

some of the drilled but uncompleted wells will never come into production because the leases with the owners expire.

Bloomberg is saying that China's oil demand rose 5.8% to 11.43m b/d in Dec., and that year on year, yearly oil demand increased +6.1% y/y to 11.62m b/d, even though the economy is slowing down. With an extra 600k bopd increase every year, it will have to import an additional 600k bopd (that is 9/10 Enquests), as its internal production is flat or going down.

https://oilprice.com/Energy/Crude-Oil/Huge-Backlog-Could-Trigger-New-Wave-Of-Shale-Oil.html

January,
I quoted the range provided by ENQ in December. From that range I picked the production level that at the moment I consider more likely in true Bayesian nature, given the issues with Kraken. Hopefully I will be wrong and you will be right, with 70K bopd in 2019. That would make me a wealthier person...
However, pls remember that as far as the 2018 production forecasts made in October, mine is the closest, given the data publicly available so far. So, there are no second intentions with what I predict...just a desire to get it right.
Anyway, I am holding off from making a prediction for 2019 oil production at this stage until hear what ENQ says when it updates the market in February.
Anyway, looking forward to see those Kraken offloads on a more regular schedule, like I see with Catcher's offloads.

Grippa, that is what we would like to know. we only know what ENQ expects the production to be in 2019 (from 63K to 70k), which can be different from the real numbers. I am betting on 63k given Kraken's under performance at the moment.

Pelle,

See my take on Enq's hedging earlier today. It is lumpy, and I infer they take bets on the direction of the POO. They will have hedged a lot when the POO futures were in the $70s, but as soon as they dropped, I bet they stopped for a while, thinking it would revert back. However, in early January they must have had to hedge for some of the early 2T 2019 period, as they need to send info to the creditors detailing forecasts of revenue/costs for the 3 months ahead, as I recall having read somewhere.

Hi Pelle,

I hope ENQ comes good. With that large holding you might be able to take leave of absence from work for a while.

Long term forecasts of oil demand are not very good. Example; In 1998/9 OPEC predicted that by 2020 it would be 95M bopd, while EIA predicted 120M. We are in 2019 and we are going to get to 2020 with demand of around 101 to 103 M. So, both wrong but the truth is somewhere in the middle, even if closer to OPEC's forecast. Very hard to predict what the oil demand will be in 2030, I would say!

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Hi Fernan,

Yes, that is true. But we have to be careful with that figure. The reason is that many majors (Exxon, Chevron, Conoco, Shell, recently BP) have/ are diverting their capital to the shale, so instead of growing production elsewhere they are producing shale oil. This is not to contradict you, but to say that once the prime acreage in the Permian has been explored, oild majors will go production elsewhere. In other words, I do not think that it will be impossible to increase non-Opec non-shale production, but it will be costly.