Member Info for londoner7

Dec 31st 2021 cash AU$948K equivalent US$665K
May 2022 £1.1m placing equivalent US$1,375K
Jun 30th cash AU$2,400K equivalent US$1,680K

Implies 6 months to 310th Jun 2022 spend: 665+1,375-1,680 = US$360k (cash flow out)

I’d guess the Aussi spend in the 6 months to 30th Jun isn’t repeated in the 2nd calendar half year. Overall production is down, with lower sales price, but oil volumes have been maintained at c2,900 bo for each of this year’s calendar quarters. Hard to judge the weighting of work over cash costs. There is a deferred cash payment (US$100K) (2nd July?) to be made for the Nadsoilco acquisition. All considered, I assume cash flow out (pre-Cinnabar) will be similar to first calendar half year, say US$300k.

I think Mosman are responsible for c85% of Cinnabar drilling and build out, 85% x 1,600K = US$1,360K.

End year cash position (pre-Cinnabar production) = 1,680-1,360-300 = US$20K.

I can easily see my numbers out by US$100K, so let’s go to the positive side and say, US$120K net cash year end.

If Cinnabar flows at 120 bopd through Dec and a net-back of $75, then cash flow = 120 x 75% (net) x 75% (after royalties) x $75 x 31 = US$157K. (I don't know the royalties due on Cinnabar but followed on from another poster's comment. Clearly, this is an important consideration. A bonus if 25% royalties are not due and would impact my closing remarks.)

Therefore, with Cinnabar production Mosman cash flows into 2023 are (157-(300/6)) = US$107K / month.

This would be the best cash flow position in Mosman’s history, but within the oil sector FCF yields of 30% are standard, At a $4m Mkt Cap that requires a FCF of US$1.2m p.a. (US$100K / month)

On those assumptions Mosman is fairly valued.

What next?
Cinnabar needs to produce at c120 bopd (that’s oil, not gas).
Another drill is required. If it’s another 85% x 1,000 = US$850K, this isn’t supported by cash flows till late 2023, so I expect a placing within 3 months. As I said in an earlier post, I think that could be a better entry point for longer term holders.

(A follow up I'd missed)

Smidtol, your $2.1m calculation assumes the quarter to Jun 2022 sales prices applies for the full year. They don’t. The reported revenue from projects come out significantly below what could be expected from the sales price. I’m at a loss to explain this. One possibility is that the difference is due to royalties, but I can’t make that fit. Besides, I think royalties are included in the ‘Lease operating expenses’- I can make that fit more easily.

I have been invested here but not currently. A few years back I contacted JB with a query on the application of royalty costs. He instructed his accountant to reply but it was still unclear to me. I subsequently sold out so didn’t pursue my query. However, I enjoy following the Mosman story. I’ve noticed that in the last couple of years the detail and quality of Mosman reporting has improved significantly. This msg board is useful for following production activities and given the low liquidity in the stock can help the day traders in their bets. But if you consider yourself a long-term investor then the accounts would be a better reference than this board. Between the RNSs and accounts (albeit very delayed) it’s possible to get a good grasp of Mosman’s activities.

We’ll see the accounts to Jun 2022 later this year, but a key number has already been reported:
“Mosman further advises that at its financial year end, 30 June 2022, it had circa AUD2.4 million in cash.” (c. US$1,680K)
Production in the quarter to 30th June 2022 was 8,815 boe (net). The production numbers for the quarter to 30th Sept are due anytime. Largely, they will reflect the loss of Falcon and the result of work over activities on Stanley. I can only guess, but I think it’s reasonable to assume current cash flows do not cover the normal operating costs – a positive cash flow position was reported 10th May 2022.

Cinnabar drilling costs are US1,000K and on a successful drill and completion costs are US$600K. I think Mosman are in for 85% of these costs.

I expect some level of success on Cinnabar. I’d bet Cinnabar will be producing oil and gas in Q4. But the unknowns are the volumes and the oil/gas mix. I think Mosman has been unlucky with recent wells, F1, S5 and W2, so due a break with Cinnabar.

One for the day traders.

If Cinnabar is close to estimates - 100 bopd and 200 Mcfd (gross), I’d be looking for an acceleration on C2 before mid-2023 (one well per year isn’t enough), but that would require another placing, at which point Mosman could offer something to the longer-term investor.
GLA

smidtol, I’ll focus on your first paragraph which concludes with “Total annual sales $2.1m.”

6 months ending 31st Dec 2021.
“The average sale prices achieved during the period was US$71.07 per barrel for oil, and US$3.74 per MMBtu for gas (in each case after transport and processing costs and prior to royalties).”
The average market prices during the period were WTI $74.2 and HH Gas $4.55 per MMBtu ($26/boe).
Page 19 of report
(i) Project performance Stanley $ Falcon $ Winters $ Livingston $ Arkoma $ Other Projects $ Total $ Half-Year Ended 31 December 2021 Revenue Oil and gas project related revenue 321,220 322,803 6,390 7,455 41,386 46,536 745,790 Producing assets revenue 321,220 322,803 6,390 7,455 41,386 46,536 745,790 Project-related expenses - Cost of sales (15,008) (22,307) (294) (344) (2,980) - (40,933) - Lease operating expenses (223,615) (138,701) (3,956) (6,483) (8,133) (135,482) (516,370) Project cost of sales (238,623) (161,008) (4,250) (6,827) (11,113) (135,482) (557,303) Project gross profit Gross profit 82,597 161,795 2,140 628 30,273 (88,946) 188,487.

Formatting is poor so I’ll extract the revenue for each project and using the net production volume (boe) from each project I’ll also present average US$/boe for each project:
Falcon AU$321,220 US$20.4 Mainly gas
Stanley AU$322,803 US$54.3 Mainly oil
Livingston AU$7,455 US$52.2 Mainly oil.
Winters AU$6,390 US$44.3 Mainly oil. Post period Winters 2 (W2) on stream producing mainly gas at volumes >> W1.
Arkoma AU$41,386 US$15.2 Mainly gas.

In the report Mosman said, “The average sale prices achieved during the period was US$71.07 per barrel for oil, and US$3.74 per MMBtu for gas (in each case after transport and processing costs and prior to royalties).”
US$3.74 per MMBtu for gas, equates to US$21.7/boe.

The total reported revenue for the period was AU$745,790 (c. US$520K)
The gross profit from projects was AU$188,487 (c. US$132K)
The last two lines represent the first 6 months of the year to end June 2022. Total net production in the period was 17,344 boe, which is 46% of the 37,915 boe reported for the full 12 months (H2 19% higher than H1). I estimate that Mosman’s average sales prices in the 6 months to June was US$100 oil and US$5.0 (US$29/boe) gas. This is an increase of 41% on oil and 34% on gas. Production volumes are weighted towards gas, largely due to Falcon, but I’ll use a mid-way price increase of 37.5%.

Applying these numbers to the US$520K revenue number in the first 6 month, for the final 6 months I get:
520x1.19x1.375 = US$851K, for a 12-month total of US$1,371K. This is my expectation for total project revenues.

The full year report will be published 31st Dec 2022 latest.

Da_Gee, yesterday you asked a very relevant question, "Any guesses to how much we have left in the kitty?"

I'll post my assessment shortly. A while back I wrote a couple of entries to my log, which I didn't post, but I think provide a detailed backdrop to how cash flows might be determined, given the long delays between ARs.

Here's the first:

Be nice! (8/8/22 not posted)

I note several deleted posts.

Concerns over Falcon being off-line seem warranted, given Falcon accounted for nearly 60% of net production in the FY. But talk of another placing is probably 6-9 months early.

The timing of the Cinnabar Development Drilling might not seem important – late August or early September – but it is important. Production from Cinnabar and any Stanley workovers are needed to put a positive handle on the Sept quarter production update. A c.10K boe net number in 2021 Sept quarter (Mosman’s Q1 quarter) will be hard to beat given current production, particularly with the loss of Falcon, unless the new Cinnabar well steps up.

Initial flow rates from Stanley workovers frequently get a headline, as S4 did today, but the rates decline fast. The gross Stanley numbers provide a clearer picture, 26,212 boe for the latest FY against 45,309 boe the previous year – a significant decline.

The case for Cinnabar is it is a larger reservoir than the Stanleys and therefore subject to a lower rate of decline. Mosman shareholders must be hoping that is the outcome. They deserve a break.

Hi Therapist, your deep dive skills are hard to match.

Keep up the good work.

Dunbly, in your post (09:50) it was your apparent belief that Enquest WOULDN’T attract the attention of the Labour party that got my attention. I’ll come back to this shortly.

I see the current political focus on ‘energy tax’, as on the pursuit of the gains renewable energy companies are making on the ‘marginal cost’ of supply structure around the current high price of gas. It appears that the UK government is taking a ‘windfall’ revenue approach rather than a windfall tax approach, largely it seems to me, for ideological reasons. Either way, not of much interest to me as that isn’t an area I’m invested.

I was pleased with the change in approach on UK energy price subsidies from 2 years to just next April, subject to a review of the market. It was IMO a hugely expensive energy subsidy for those that can pay, with little incentive to cut UK consumer energy demand. I know that’s a political point, but it’s mine.

I struggle to see how Europe, or the UK will influence the local price of gas, given the global connections, but I can envisage a new pricing structure on renewables currently piggybacking the high gas price. Though I also see risks in short term politics interfering in the market, which prior to the Russian invasion had worked in the interests of consumers if not energy supply security.

Back to the Labour party.

When a windfall tax was discussed last May, many, including Enquest, thought the existing tax structure would leave them in the clear. When the detail was released, I knew that assessment was wrong and largely sold down my position in Enquest. I’ve since rebuilt it.

Last week I presented my assessment of the windfall tax (EPL) due on Enquest. My numbers were challenged by one poster who didn’t substantiate his $10m estimate for 2022. I subsequently detailed my numbers but didn’t need to post them. It should be plain to anyone, that if the impact on Enquest of the EPL was only $10m in 2022 the SP wouldn’t have crashed last May.

One of the biggest challenges to an investment in Enquest is political risk. If Labour gets Enquest might get hammered. This week the SNP released their ‘vision’ for an independent Scotland. A key element is a socialist ‘wet dream’ of a £20b investment in dubious infrastructure plans which will be largely funded by NS oil and gas.

Going back to my previous post. If having assessed the pollical risk, Equinor proceed with a buy of CNNOC NS assets and subsequently proceed beyond the Bressay FDP, I’ll feel considerably more comfortable with my investment in Enquest.

I see Equinor are again in the frame as a possible bidder for CNNOC’s North Sea assets. An obvious link to Enquest is that I’d guess the NS assets include Golden Eagle. CNNOC has a 36.5% operator interest in Golden Eagle. Enquest’s interest is 26.7%. Let’s see what plays out.

But my wider interest is the potential partnership with Equinor on a Bressay development. Enquest hold 42% and Equinor hold 42%, but the terms are interesting. My understanding is that on approval of an FDP Enquest would pay a further $15m to Equinor. However, if Equinor decides not to proceed after the FDP then Enquest has the option to take Equinor’s share for an additional $15m on a ‘sole risk’ basis, following which Enquest would have an 82% interest in Bressay.

While the terms might look attractive; given the political risk that has attached itself to North Sea developments, I’d prefer Equinor, having assessed the political risk choose to close out a CNNOC buy, and buy into a Bressay FDP. IMO it lowers the development risk.

Early days, but something to watch.

Yes, it was positive commentary from Ibstock, but no numbers (at least that I could see) on the Q3 or full year expectations.

I'm a Breedon shareholder so look across the sector company updates for some insight to 'bottom line' performance. Something beyond the confidence surveys, ONS measures etc. Useful as they are.

I'm looking forward to Sigmaroc's update on Thursday. I hope it is positive, but I'm confident Max will at least give us a Q3 revenue number - something to work with. Anything else would be a bonus.

Tigar, Sipp10,

Interesting points on Magnus, which prompted me to look at the notes in the latest interim accounts.

"Within the statement of cash flows, the profit share element of the repayment, nil (2021: $1.0 million), is disclosed separately under investing activities. At 30 June 2022, the contingent consideration was $392.4 million (31 December 2021: $344.6 million). The contingent profit sharing arrangement cap of $1 billion was not met as at 30 June 2022 in the present value calculations (2021: cap was not met)."

The clearest point is the reference to "contingent profit sharing arrangement cap of $1 billion", so we can exclude certain payments made to BP from the $1b figure, but while present expectations continue as "cap was not met" our expectation should be that BP will retain a 37.5% share of Magnus cash flows for the foreseeable future, unless you choose to use numbers different to Enquest.

What is in the foreseeable future?
The two obvious elements are oil price and volumes.

Oil price
The contingent consideration is based on present and future oil price expectations. As we know, these are noisy. In Oct 2021 expectations for Brent in 2023 & 2024 were $69 and $66 respectively, and today are $83 and $80 respectively (Ref McD. & Associates)

Volumes
Enquest released a table of anticipated Magnus volumes on proven plus probable reserves

https://www.enquest.com/fileadmin/content/Corporate_actionsPDFs/Rights_Issue/RIProspectus.pdf

Refer to page 203.

Note the CapEx out to 2025. This includes the current well drilling and over the next few years.

The contingent consideration to BP's profit share captures these numbers and revised expectations for the foreseeable future, which is tabulated on page 203 of the link. If you are wondering why the $392m number is so far off the £1b cap it's because future expected payments are shown at present value in the balance sheet at a discount rate of 11% p.a.

Sipp10, your reference to 800m barrels of moveable oil takes us to 2C territory and perhaps beyond. One day those reserves might close out the obligation to BP's profit share. It's another option available to Enquest, and the on-rig drilling facility could support a low-cost route to addition barrels.

I wrote the last line with Kraken and Bressay in mind, alongside a recent comment that Golden Eagle might move to an on-rig drilling option for future wells.

A consequence of any sudden rush to drill in the NS are restrictions on the supply of services, rigs, etc. There will be cost inflation. All the more reason for believing Bressay will be a lower cost phased development than might have been considered at the time of the Kraken development. We shouldn't have to wait long for the answer. I'm expecting a Bressay FDP within the next 12 months.

Correction:

one well has been drilled on Magnus in '2022'.

Tigar, good spot on the $350m net cash flow benefit from Magnus. Excluding any discrepancy between the alignment of the first tranche purchase and the second, I interpret that as a net payment to BP of $210m to the end of 2021.

However, still a long way to $1b. (Sipp10, yes, from BP’s perspective, subject to a 40% tax, it’s ‘only’ worth $600m to them, but on first look I don’t see any beneficial impact to Enquest from the EPL. I haven’t looked very hard.)

Based on recent oil price expectations and Magnus production, Enquest doesn’t expect the $1b to be repaid so, unless that position changes a good assumption is that BP will ‘forever’ maintain an entitlement to 37.5% of Magnus free cash flows.

What is clear from the financial metrics of transactions like Kraken, Magnus and Golden Eagle is that good early year’s production numbers are vital to the eventual return on investment. Any early mishaps are difficult to make-up. (To be clear, the nature of the Magnus transaction, doesn't lead to any loss, but the potential for lost opportunity)

A good contrast with Kraken is Premier Oil’s development of Catcher. Both projects operated along similar time frames and so were impacted by the 2014 collapse in the oil price, but while Kraken fell well short of its initial 50K boepd target, Catcher exceeded theirs by a similar amount. Consequently, Premier Oil were able to announce payback on the Catcher project within two years of first production. Premier Oil got a lot wrong, but their Catcher project was a good one.

In 2019 I estimated Kraken would never get full payback on the project due to the fast build-up of finance costs. (I posted my numbers here) But I hadn’t anticipated a potential extension to Bressay. Perhaps the ugly duckling will have its moment.

• Tigar, you agree with my interpretation that only one well has been drilled on Magnus in 2021. I note SIPP and L3 have referred to two wells. Reference?

I don’t know the reasons AB participated in the RBL, but it does not represent an ‘equity’ component. The risk to us as shareholders is that AB is taking an unfair advantage of his position. Within a ‘premium listing’ the FCA offers other shareholders safeguards. Quoting the FCA, “The safeguards are intended to prevent a related party from taking advantage of its position and also to prevent any perception that it may have done so.”

I believe, as do others on this board, that AB’s actions through various transactions over recent years has been in support of shareholders' interests, and no doubt adds to creditor confidence, which, typically, at the margin reduces costs.

AB is the founder of Enquest and no doubt has an interest beyond the usual CEO renumerations to see Enquest succeed – or at least get the SP back above the 100p listing price.

I don’t have any insights to the terms of the new bond or RBL but having read the terms of previous versions I can make an educated guess:

- I didn’t note a date for the expiry of the $305m bond but I’m assuming it aligns with the RB in Oct 2027.
- The RBL facility closes in April 2027, ahead of the Bonds.
- Repayment of the $305m bond isn’t permitted unless the RBL drawdown is zero.
- In the early years Enquest would need to pay a premium for a full or partial buy back of the new bonds,
- In the last one or two years, before Oct 2027, there is no premium on buy backs.

In summary, it is a little early to be looking at a refinance of the refinancing.

Hi ukbbb,

yes, 2022. Good spot.

I'm surprised your EPL number is so low. I'm dashing out but appreciate if you could elaborate on your number. I haven't seen the Jeffries number. I'll come back to this later.

Bish, bash, bosh – job done! (Okay, 25/10/22 if you want to be picky)

I guess that is what Enquest finance meant when they said, “ready to move when market conditions are right”.

I prefer the lower sizing ($305m) than some expected, even if it might be at a marginally higher coupon than could have been obtained a month or two back, which would have been at a higher sizing.

Some interesting detail:
$400m of the $425m RBL to be utilised (assuming $75m restricted to Letters of Credit)
A $300m accordion facility – this represents additional optional financing at a premium to the basic RBL terms. This is likely to have added to the fee, but no interest charge unless utilised. A ‘nice to have’ if an M&A opportunity arises, an earlier development (Bressay, or Kraken WF) makes sense, or the oil price crashes.

PYUECK. Your ‘headscratch’.

Unless I misunderstood your comment, Enquest has not been buying ENQ1 bonds in the market. They have been buying the US$ HY Bonds.

I didn’t anticipate the move earlier this year to ‘exchange’ the 2023 Retail Bond, with a 2027 RB at the higher coupon (9%), but I read it as an astute move. I guess they would have liked a higher take up on both the new issuance and the exchange, but it removed an unknown element from the overall restructuring.

I think Enquest has been clear in their comments on ENQ1. The offer of exchange has been made (it is no longer open) and the balance of ENQ1 will be repaid Oct 2023.

We’ll get some clarity on cash flows over the coming months, in particular the cash cost of the EPL – I have $75m in mind for 2021, and $150m for 2023. A $50m payment to Suncor in 2023 H1 and c$125m payment on the RB in Oct 2023.

I don’t expect any of these payments to require a dip into the accordion facility.

Given AB’s recent comment I’d be very surprised if the new arrangements materially impact potential returns to shareholders. I look forward to the detail on any hedging obligations.

Hi Tarmak,

I did check out your spreadsheet. Impressive work.

In 2019, when I first invested in Enquest, I'd have dug into the detail to validate my own workings, but repeating myself, I'm at a point where I'm comfortable with my estimates on Enquest and able to make reasonable adjustments as the news comes in. That's why I tend to be quieter on the board between announcements.

In 2019 I had the likes of Mo, e121 and L3 answering my myriad of questions.

Today's new investors can avail themselves or yours's and Therapist's detailed spreadsheets, alongside more general comment on Enquest and its market. There may be better boards but amongst those I post to ENQ is the best for relevant comment.

But you ask for a critique. From memory, there was one item that jumped out at me. In a Magnus 2022H1 column you had a $50m vendor component. The vendor loan was repaid in 2021 so I wondered why you'd continued with that component. (I could be wrong)

On Magnus. Yes, perhaps a last-minute change on the timing of payback on the two wells relative to an imminent expectation of refinance. Or perhaps a change due to what does now look a significant failure in H1 on an existing well. We know that the wells average <1Kboepd, but some can produce 2K or more. A focus of fixing a key well and production from the one they did drill might get some life back into Magnus numbers. (Is that L3 I hear groaning in the background? ;-))

I still maintain a spreadsheet on Kraken offloads - thanks to the tanker spotters here - and as of the last offload 4th Oct, I have a Kraken (gross) average of 26,334 bopd. Very good if, as I suspect, this year's maintenance has been completed.

I'm guessing your Kraken number is similar.

Best,
Londoner7

Therapist, I'm unclear on your numbers.

Pg33 of the interim report has:

Average realised prices
Period ended
30 June
2022
$/Boe
Period ended
30 June
2021
$/Boe
Average realised oil price, excluding hedging (M/Q) 111.0 67.3
Average realised oil price, including hedging ((M + P)/Q) 89.9 62.8

The average oil price achieved per barrel in H1 2022 was $111.

McD & Asso. reported 105.55 average for Brent, so Enquest achieved a higher price.

I put this down to a combination of higher dated Brent than 'front month' and a Kraken premium. I don't know about Malaysian pricing.

The loss due to hedging is a separate item. Contracts closed monthly and values at Volumes x (closing Brent minus hedge ceiling price). The average ceiling over the period was $78 but there's likely to be some variation between months.

The realised price simply reflects the impact of the hedging contracts (financial instruments) on the actual production sales. The two items operate entirely independent of each over but can disrupt cash flows, for better or worse.

L3, on your other points.

You say the reduction in the RBL from $600m to $425m is surprising.

I hope ukbbbb has nailed it. Less restrictive T&Cs, with no or little hedging requirement, and a Pelle dividend in prospect. (Adding hedging requirements into RBL agreements seems to me to be a recent development. Perhaps it’s time has passed)

I would add that I’ve seen Companies report a reduction in their RBL to save on fees. If your plans don’t include a higher level of RBL then why pay fees on an element you don’t intend to use.

Is this the New Enquest – debt light, organic in-fill drilling and low capital phased investment in developments.

I've nothing to add on gas revenues. I don't think gas pricing is a game changer for Enquest. But I do have a holding in HBR so I might pop there occasionally to talk gas.

Best,
Londoner7

Hi L3Trader,

As always, good attention to detail. When I first invested in Enquest I also paid attention to the detail until I got to a point where I felt I had a good understanding of the business including an expectation I wouldn’t be hit by an unforeseen accounting surprise.

That’s where I feel I am and, as I commented in my post, now take a simpler view of Enquest’s finances.

Given AB’s guidance of a 0.5 net debt : EBITDA objective I’ve come round to the view that following restructuring, total bonds would come out to c. $500m with an RBL on top. There was some discussion around this topic earlier in the year.

I haven’t seen confirmation of Voiceofreason1’s £300m Bond number, but it aligned with my expectations, and I assume he didn’t pluck it from the air. Subject to exchange fluctuations adding this $300m to the UK RB makes it $570m, and $450m after repayment of the outstanding 2023 issue next Oct.

On the detail of your first paragraph, it seems to me the main difference between us is on the usefulness to Enquest of the ‘restrictive cash’. If you look back over yearly accounts, you’ll see there is always a significant element of ‘restrictive cash’. At 2021 year end it was $191m and as of 10 days ago was $188m. Perhaps the nature of this ‘restrictive cash’ does allow Enquest to drop to a level of $35m of unrestricted cash you’ve determined. Enquest will have a good insight into cash flows over coming weeks, if not months, and will judge the level of Bond replacement accordingly. Remember too, there are the timings of those lumpy offloads from the likes of Golden Eagle and Magnus to take into account. I don’t know the timing; you don’t know the timing, but Enquest do know the timing.

Within the next few days, we might have the answer to our speculation on the Bond numbers.

In a recent post you said, “I expect ENQ to be very cautious about spending on CAPEX until Q3 in 2023.”
Replace the last part with ‘until the HY Bond is refinanced’ and I agree with that comment. I think we’ve already seen caution.

On Magnus we heard, “The North West Magnus production well, which is the longest reservoir section drilled this century at 1,914 metres with the longest liner ever run at Magnus, has been successfully drilled and logged in late July and is expected online around the end of September.” I look forward to the production numbers, but I missed comment on the other two Magnus wells due in 2022. We got, “Further infill drilling is now expected in 2023.”. Have those two wells been deferred?

On Kraken, I had an expectation that there would be drilling on Kraken in 2023, but that was not in the plans discussed in the interim update.

True to his word, I think AB has been/is focussed on getting debt levels down ahead of refinancing. Once the Bonds are away Enquest can plan short- and medium-term CapEx with greater confidence. That gets a ‘thumbs-up’ from me.

Hi L3Trader, I haven't seen those numbers. What's your reference?

My simple view is that based on the end Aug numbers, RBL ($90m) plus HYB ($794m) equals $884m to be financed. The cash position was c. $340m.

The proposal outlined is $300 Bond and $500 RBL ($425m excl, LofC), therefore $725m.

Cash and cash flow since end of Aug will cover the difference of c. $160m.

As Moody's say, the RBL "is projected to be largely drawn at closing".

If this goes through, and Enquest will have dropped the ball if it doesn't, it's great news and Enquest will have greater clarity over their Cap Ex options over the next few years.

romaron, I don’t know why you are confused. The RBL and related hedging requirement has been discussed at length on this board.

“amended and restated $500 million RBL”
I repeat, I wonder if there is a hedging requirement.

Hedging forced on you by your creditors given the current level of backwardation is a bad thing. I prefer Enquest free to implement hedging as they see appropriate.