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DD,
I am not trying to play down how much debt has been reduced. Wait to hear confirmation from Fernan or Pelle.
As far as I am being oil user, that is as much true as me being you...

E121,
Many thanks for being always considerate of others. We might disagree on Enq's performance, but we always respect each other. It is true I am seeing the glass half empty. What is stated about Kraken is a big shock to me. I was expecting much better, such as hearing that in 2019 they would be above 40K boepd.
What will the lower production imply as far as repaying the $175 OZ loan on time if the POO stays low.
all best wishes.

Chilting,
Calling people stupid is not acceptable.
Your attempt at excusing bad performance "in hindsight maybe the design and construction of AK could have been better but I think the heavy nature of the crude accounts for most of the problems" will not fool Mr. Market, regardless of how hard you try.

DD,
I might be wrong about many things, and my quick post might be inaccurate in minor ways, but the figures in the OU are in USD not GBP.
I am not oiluser. If I were I would say it. You are obviously used to interact with people for whom their word means nothing... I am not of that type.

Coloneldrake,
You said it right: "Without Magnus acquisition this company would be sunk.

Natural declines in older assets expected but disappointing to see Kraken struggle and DC4 delays pushing production into late Q1."

I think at things stand Oz capital's loan will never be paid back unless POO shoots up to $80.
They have to repay the $175M loan out of 15% of 30K boepd production net cash flow (including CAPEX, if Iremember it correctly). So, out of 4.5boepd cash flow. With POO at $60, I leave it to others to figure out where the train is headed.

Squif,

I said I would only return after the OU. I kept my word about my silence.

I am afraid that when we predicted production for this year my prediction is the one that comes closer among everybody else's. See early October prediction posts.
AB says "Full year production expected in the range of 54,000 Boepd to 56,000 Boepd".

I am sorry but what is stated about Kraken is an absolute disgrace. Once again a failure, like Alma/Galia.

"2019 average Group production expected to grow by around 20% to between 63,000 Boepd and 70,000 Boepd
Growth driven by additional equity in Magnus
Gross Kraken production expected to be in the range of 30,000 Bopd to 35,000 Bopd."

Obviously there are serious issues with Kraken. It has now been stated as it matters to the bottom line. So much for offloads every 11/12 days. It will stay at 16 to 18 days at best. The OU should explain what is wrong with it, and if it can be fixed. This is a material relevant fact. May be it is time for them to be sued.

Hopefully the market will not understand this, and Enq will bounce up to 30 p or more fooling a few new PIs.

Do not be fooled by the net debt figures:
"At 31 October 2018, net debt including PIK and the net proceeds from the rights issue was $1,771.8 million; cash and available bank facilities amounted to $386.6 million".
So, this means that debt was lowered by $135 million as a result of the rights issue. In the meantime $100M has been paid to BP. So like-for-like net debt is $1,881.8 million, only a $100 million decrease in 4 months of very high oil prices.

Hedging program is good but short-term.

My prediction is that the 47p or 60p parties have to be postponed until 2020 the earliest.

TA.
I am looking to get out. So this will hopefully allow me to make a small profit. Oil is not in a good state at the moment, and won't be for a while...

SmokinAces and DiscoDave,

I have no agenda.
I am not oiluser as DiscoDave claims . Yes, I have too much exposure, and plan to reduce (but not terminate it completely waiting for the day when AK delivers 40k on a regular basis before DC4) my position as soon as I can, i.e.. the poo bounces back and pushes everything up with it, including ENQ..
It is not my fault that the poo was now close to testing the $65.
I shall be silent, and let the ones who keep hoping to post their thoughts... Unfortunately, hope does not move Mr. Market.
I did not turn the Moody's upgrade into a negative. I had questions about the numbers, because the update is short on specifics for us to understand how they got at the figures. Fernan later also asked for clarification because his figures do not go along with what Moody's posted. Fernan provided enough details, item by item. Fernan's analyses are always extremely clear and grounded on data and facts. So, please do not dismiss the doubts posted on the board as being negative.

I shall remain silent until the TU, and let the ones who keep hoping to keep posting. I wish them well, because in doing so I am wishing myself well.

Final thought: No one knows what SA and Russia have agreed to. They can no longer speak in public about agreements in a clear way, given that the US congress wants to pass legislation against coordinated price action by oil producing countries. This is the new world we live in, and the result is going to be higher volatility of the poo, and lower prices than we would see otherwise, followed by sudden spikes when the Market realizes that indeed supply has been reduced. All this I write is pure speculation, so treat it as such, and nothing else. Au revoir!

Yes, of course. Look at the last 3 loads (data from MO). When have they had a 500k load? Using hope in forecasting is a recipe for disappointment...

Offload #1 (Stena Sirita) - Started: 22/7 @ 06:30 - Finished: 22/7 @ 23:00 (Duration 16.5hrs) - Draught change: complex - Estimated Offload: 300k barrels

32.5 Offload #2 (SIRI KNUTSEN) - Started: 24/8 @ 11:00 - Finished: 25/8 @ 09:00 (Duration 22hrs) - Draught change: 2.5m - Estimated Offload: 200k barrels

40.1 Offload #3 (Stena Sirita) - Started: 4/10 @ 12:00 - Finished: 4/10 @ 23:00 (Duration 12hrs *Est Poor AIS) - Draught change: complex - Estimated Offload: 300k barrels

Zero effect. Any effect will be because of Moody' incomprehensible analysis, and the poo. We have to realize this is becoming a very volatile stock, if you look at the swings it has gone through this year.

Still no news on Enq producer offload #4... That is what really worries me!

Thanks Lawrence 13. The question is: will the interview lead to a higher sp?

Hi Fernan10,

Many thanks for your analysis. Like Squif I had suggested that Moody's net debt reduction seems to include US$ 100M reduction of the BP's vendor loan. If so, then net debt as in Moody's excel spreadsheet at the time of the deal closing will have US $200M, which is the vendor loan...So, if $100M out of that $200M is considered paid, the other $100M will count towards the net debt. E121, if I am not mistaken, suggested the loan would be treated as provisions because it is only paid out of cash flow, and so technically not debt.

One way or the other what your calculation make clear is that free cash flow in 2018 H2 will be low, unfortunately. Were Kraken, producing 40k consistently, we would be happier now...

Hey MO,

I do not have the time stamp for when HK stopped drinking from AK. But if it was as you predicted in your message on Thursday, i.e., that day midnight, the gap is 16.6 days, so 520k/16.6 = 31.3k. Barely above 30k. Zero improvement means lower net debt decrease this semester, and so forth.

Obviously in the TU Enq will not be able to say it has fixed the issues with Kraken, and I predict Mr. Market is not going to like that.
Perhaps a grand finale with INEOS buying the ConocoPhilipps interests and buying ENQ as well, at a price of 45p would be a fab scenario for the PIs. That is the only way to get to 45p in the foreseeable future.

TA

MO,

Many, many thanks. So what is the daily production that corresponds to offload #27?

Hitman used real world arguments...to say that you cannot squeeze more out because of the installation details....

TA

good morning MO,

thomas zafiras is underway. draught now is 11.6. perhaps you could please update the offload forecast?

still no news on enq producer...

hitman thinks that DC4 won't give any more production. also thinks that AB wants another deal. please stop him now. he is addicted to debt. he needs treatment, lol...

mr gekko; who knows? some think $170, others think it will be less, but Mr, Market needs a higher number to be happy.

Squif,

Assuming 2P reserves stay constant (through replacement, i.e., somehow they find more oil in Alma/Galia/Kraken/Magnus) , then SP should go up by that much from some notional level, which could be as low as yesterday's closing price, 24p. So add 36p to that.

Eagerly waiting MO's info on Thomas Zafiras and news on Enquest Producer offload #4.

Hi Pelle,

I did not mean you told or said. Indeed, your advice at the time was spot. I only hope AB/JS hedged then. It would have been a master move. But somehow I suspect they do not time their hedging, due to not wanting to miss up on the up.
I meant that the press when oil was in the 80s, all the press was only saying oil will go to 100. now, some of the same press is saying that it will go to 50s.

Pelle,

when oil was in the $80s, people were being told oil will go up to $100. so ENQ's hedging for 2019 H1 might have been smaller in quantity than 5 mbbls. we should find out soon.

E121,

That being the case, i.e., it does not include the Magnus related $100 mill vendor loan repayment out of cash flows, then 2018 year end debt would be under $1700M. I would be thrilled with such a figure.

hedging: excluding the 75% Magnus asset, ENQ would have production of as high as 12 mbbls in 2019 H1.
they can also oil price related derivatives to hedge their 50% interest in 75% of Magnus indirectly, i..e., not to compute the cash flow owed to BP, but to hedge their share of the cash flow.

so, which company did you choose to add to your oil-related positions, PMO or ENQ?
i have added to my GENL position (they are in a net cash position), now that the political risk premium in Iraq's Kurdistan has gone down.

Hi E121 and Pelle,

from what vase are Moody's considering net debt to be reduced by $270 million in 2018, and that would indicate a circa $240 million in H2. does that figure include $100M of the $200M vendor loan that will have been aid as a result of cash flow from 75% of Magnus? I ask this because it would make a huge difference if it did not include the $100M. It would result in ENQ having a net debt of $1720M by 2018 year end.
Looks like they are including it.

different issue: "Looking ahead, Moody's projects that incremental contribution from the 75% interest in Magnus (assumed to be acquired on 1 January 2019) combined with the continuing ramp-up of Kraken should lift EnQuest's average production by around 20% in 2019." is this 20% increase in production net of BP' share of 50% in the 75%? I hope so. because at current level of production of 60k (a figure that is at the top of the 2018 estimates), 20% increase would be 12k, and just the 50% of the 75% of Magnus being acquired should be 7k, so would only leave 5k increase from Kraken/Alma/Galia and elsewhere. It it inclues the whole 75% (i.e., including BP's share), then the 75% of Magnus on its own should be more than 12k.

another issue; "At the end of June 2018, the group had debt maturities (including finance lease obligations) of $570 million falling due within the next twelve months." well more than $175M have been paid with the loan from Oz capital, and other debt cancellation. So they have to repay an amount lower than $400M until end of June of 2019.

another point;
What Could Change the Rating - Up

The ratings could be upgraded should EnQuest further strengthen its reserve base in order to underpin average production above 70 kboepd while maintaining a 2P reserve life of at least ten years and avoiding that adjusted total debt to EBITDA rise above 3.0x under a range of oil price scenarios.

if they take the whole 75% of Magnus into account 70kboepd should be easy to achieve even for people skeptical about Kraken like me.