Member Info for londoner7

martin, I calculated 11%, based on closing AUS prices, for a 1,000 share holding.

1000 47.18 47180
180.7011203 28.77 5198.771232
5.534 0.110190149

BHP 47.18 and Woodside 28.77. Above is a text extract from my Excel calculation. It will vary from day to day, but a stretch to get to 18%. I had c10% in my mind from a fag packet calculation I did several months ago, so given the rate today (5.534) 11% feels right.

That said, I always accept the possibility of making an error.

It simply means that following the merger of BHP oil assets with Woodside, if you hold say, £1,000 in BHP today, next Wed you will own c£100 (10%) in Woodside shares (in specie dividend) with the balance £900 still invested in BHP.

Although Woodside doesn't currently have a London listing, they will on 1st June. You will then be able to sell the Woodside shares allocated or if you wish buy more.

Hi Therapist, nice presentation. Particularly like the graded target range.

No doubt there is an element of 'finger in the air' on predictions, but some of yours surprise me.

Kraken - no wells planned this year. Why do you expect H2 production higher than H1? I already see production year to date as being high end of guidance.

Magnus - thanks for the heads up on the OGA March data. I'd missed it. Some recovery in water injection, and I was impressed by the March oil production number >12K bopd. If water injection is fully sorted I'm optimistic Magnus could be better and that's before the 3 wells and workovers. I'd go higher on your H2 numbers.

GEAD seems to be struggling to hold the 7-8K range and I believe the new wells be be very late in the year. Probably only have a positive impact at the turn of the year or into 2023, so I'm lower.

I'd expect 'other' to have a c10% or more decline through the year.

That said, my guesses are just that.

On North Sea gas for March I have c2,600 boepd, after Magnus fuel. What number do you have? I ask because I have a Mar total c1K boepd higher than yours.

Tenapenny, look at the information pack (slide 4) under the latest set of results.

Your numbers refer to working interest, but there is a profit share component.

2022 entitlement barrels of oil are expected to be c6Kbopd.

A continuation of my last post. I also see the links didn't work so I'll try them again.

With just 7 weeks to the end of H1 I suspect Breedon will report a very good H1, on both revenue and margin. But it will be the commentary that accompanies the release on the 17th July that will be most interesting. If the house builders come under pressure, they will be resistant to price increases in materials, which will then pressure Breedon’s margins. That said, I suspect Breedon are better placed than most in the aggregate materials supply to manage any pressures.

https://www.theconstructionindex.co.uk/news/view/output-growth-reaches-record-heights

https://www.mineralproducts.org/News-CEO-Blog/2022/release14.aspx

A couple of releases this morning measuring activity through Q1. I emphasis this point as it is historic and of most interest to us, as investors, is future activity.

The ONS has released construction data for March. Breedon’s primary activities are in Infrastructure and Housing, and both are doing well. The measure of new work is largely flat compared to pre-Covid, but this includes the negative impact of ‘private commercial’, largely London office blocks, which isn’t a significant part of Breedon’s business – though they have a share in a London concrete business which will be impacted.

The detail is on the ONS site but I thought the commentary in the media is interesting. Here’s one read:

Construction output reaches record heights (theconstructionindex.co.uk)

The MPA also released their numbers today for Q1, though I believe this data has been available to industry insiders, including analysts, for over a week. I think the commentary is excellent. Here’s an example, “Ready-mixed concrete sales were hit hard during the onset of the pandemic, and in the year ending March 2022 were still 6% below the pre-pandemic (2019) levels. Both London and the South East, which make up just over 30% of the total share of volumes across Great Britain, have endured a sustained period of weakness which can be traced back to comparatively slow recovery in commercial construction projects, particularly for new office towers and retail space. Overall demand is nonetheless supported by major infrastructure projects, including HS2 and Hinckley Point C, as well as a healthy pipeline of industrial warehouse projects.”

Strong start to the year for mineral products but outlook uncertain

It’s only been two weeks since Breedon’s AGM update, but it seems much has changed. Not least the BOE’s warning of a recession next year.

Ahead of the AGM I wrote a note (not posted) which ended, “On the negative side I think housing building in 2023 is one area to watch. The big builders are mindful of their margins.” Yesterday’s bust up between Gove (Housing Minister) and No 10 is a warning. The government will talk about housing targets, but when push comes to shove, they care most about the incumbent house holders, their core constituents. They will move heaven and earth to maintain house prices. If that means adding to the already substantial costs to new buyers, thereby limiting additional supply, so be it. Gove talking tough to the ‘big’ developers is also a clue to intent. (There are largely only big developers today because the planning costs deter the smaller builders).

Over the last month house builders have been reporting positive trading, but that was before talk of a recession next year. There are updates due next week. It will be interesting to see if the tone has changed.

Thanks TimTimebomb.

This morning Petronordic hooked up to the Kraken FPSO. I have c28.8K bopd year to date, and c28.3K bopd average over the last four offloads. Just over 4 months into 2022 I see Kraken performing inline with the upper end guidance (22K – 26K boepd), assuming a 3 week summer shutdown.

Despite the ‘logistic’ issues which have delayed the AGM by one month, I’d hope a trading statement will be released next week on activities and financial status to end April. This periodic update has a standard format which just needs a tweak in commentary and fresh numbers. While we can speculate what the ‘logistical’ issues with the AGM might be, and we’ll have a clearer idea soon enough – assuming it wasn’t simply a fully booked venue – I can’t imagine what would prevent an update next week.

If the Enquest team needs help, I suspect a cut and paste from last year’s opening paragraph wouldn’t be far out.

“EnQuest remains on track to deliver against its targets. Performance at Kraken has been strong, with the FPSO continuing to perform well, and production at PM8/Seligi has improved following the completion of initial restoration activities ahead of schedule. While Magnus performance has been below expectations, we have a number of activities planned for the rest of the year to optimise production.”

They have updated their Financial calendar with 17th June.

I don't know the background detail but from where I sit it looks poor admin.

I nominate Therapist for the position of company secretary.

Thanks Therapist.

"topsides de-bottle necking"
"Given the buoyant oil price,” Jan concludes, “we are looking at accelerating opportunities".
Some blah blah about prudence and discipline. Presentation padding, AB editing or the names of Jan's dogs?

Good stuff!

* The red bit of the cabbage is good eating!

The "problem child" continues to have problems maintaining water injection - Feb data.

Hi Stebo, thanks for your additional comments.

I knew Whitemountain are involved in airport runway surfacing and thought that might be the 'civil engineering' component, but looking again I see Whitemountain has a separate 'civil engineering' division from runway surfacing. They are currently inviting tenders on a project called 'Lambeg Sluice Gate',

I don't know what such a project might involve but it sounds very different from Breedon's standard business. The division will be a relatively small part of Breedon and perhaps a small part of the Ireland business too.

There are clearly two factors in play, aside from any US influence. One, the division may be taking up a disproportionate amount of management time. Two, the nature of contracts, say if they are largely fixed price in an inflationary environment would make them a higher risk than the more straightforward supply of materials as demand rather than contracts dictate. Breedon does pursue some contract business - they did this through 2018-19 in Scotland when other work was drying up - but their preference is for short term supply at a premium pricing point.

I remember a comment by the founder of Breedon, Peter Tom, who memorably said, "Breedon feeds off the crumbs from the big boys table". I thought it summed up their strategy very well.

I'm aware of many companies that have been hammered by a single bad contract, when the rest of the business has been performing well. As I say, I suspect the Whitemountain civil engineering business doesn't have the scale to have a big impact on Breedon overall, but if its a distraction, better to let a business focused on civil engineering handle the work.

On rebranding. This might be a 'flag' to the local market, that there has been a restructure, or refocus, of the business, but it might be unrelated. Breedon went through a similar exercise with 'Hope Cement'. They thought the Hope name was a significant Brand in the industry but the message coming across was that the Breedon name was better known, so they rebranded to 'Breedon Cement'.

While looking at Whitemountain I noticed a concrete mixer badged 'Whitemountain' with the Breedon logo alongside. I don't know the company that paints the Breedon wagons, but I'd guess business is good.

Thanks for your input.

Stebo, thanks for clarifying your comments.

Hi Stebo, what changes are you referring to?

Thanks, L3.
I was surprised a revenue number wasn’t posted, but on a second look, with ‘reported’ and ‘like for like’ the same, 16% growth in revenue is a more helpful measure.

The rest of the commentary was what I’d hoped particularly around pricing and expectations, given macro events.
“The Group has started the year well with order intake and volumes following usual seasonal patterns through the first three months of 2022”

I don’t think there’s much else to say.

dazzag, as far as I know, only on this board.

In a recent post I said,
"In my 16th March estimate, I expect a revenue of £308m in Q1, 17% up on 2021 Q1, because of the Covid impact on ROI. I may be overestimating the 2021 impact, particularly as the ROI market is mainly about tendering in Q1 with the bulk of the work done through the rest of the year. But I’ll stick with it and won’t be too bothered by a small miss. I’ll also be listening for updated commentary on costs and pricing."

Today Breedon reported 16% revenue increase on reported and like for like on 2021 Q1, so I'm sticking with FY revenue of £1,355m.

Importantly, they report 'full cost recovery', which supports margins.

There's an MPA quarterly update in a week or so, otherwise no news expected till interims 27th July.

NQM, this is the text
"The cash consideration payable consists of US$310.1m settled on completion (including US$181.4m drawn under new loan facilities, see section 3.2) and a further US$5.0m forecast due on final settlement amounts, to be agreed with the seller. Deferred consideration of US$62.9m includes US$61.1m which is the fair value, at the date of completion, of deferred consideration of up to US$100.0m which is payable based on future oil prices. The value of this deferred consideration has been obtained using Level 2 valuations. At the year end, the fair value of this deferred consideration had increased to US$68.2m, with the fair value loss of US$7.2m charged against profit for the year.

The remaining US$1.8m of further deferred consideration relates to the fair value contingent payments of up to US$40.0m due on future exploration success on short-term exploration wells. Given the risk profile of exploration drilling the fair value at acquisition of this contingent consideration is low. This fair value is determined using Level 3 valuations.

At 31 December 2021, the total liability for deferred consideration was US$70.0m with US$20.9m due within one year and US$49."

In my record of cash flows I had $25m p.a. Egypt contingent payment for the next four years starting this year 2022, but reduced this year to c$22m - I guess this was based on a comment I heard on the call.

Hi L3Trader,

Kraken decline rates might surprise you, and others, but it doesn't surprise Enquest . Run the numbers on their top end guidance of 26K gross for 2022, 30K start of Jan 2022, 3 week shutdown, production efficiency unchanged and stable, and you get a field decline of 16%.

When I say, "We know from a table I referenced last week that some Magnus wells have recently produced at over 2,000 boepd." I'm referring to June 2018, which in the life of a 40 year old field is recent. That is the latest well data I've seen. Refer to my post for the page number. Therapist's post confirmed 'donor wells', so I'd guess the 16 production well slots identified in June 2018 are in use today.

Hi Tarmak, I think your 10% decline rate for Kraken is too low. Magnus is harder to judge.

Kraken
In a CMD presentation (2015?) there is a table of the anticipated decline rate for Kraken. It guides me to an c18% decline for this year, last year and next year.

In 2021 Kraken production was 17% below the 2020 number.

I work with a 4-load rolling average. To the end Feb 2022 I have 29,374 bopd average. In the latest update Enquest said Kraken has started the year well. I think the numbers support this statement.

My number for the same period last year was 36,149, which suggests a current decline rate of 18.7%.

Do you see anything in OGA data to support a 10% decline?

Magnus
Decline rates at Magnus are hard to determine because of the operational issues which have impacted production. I don’t assign field declines to the 32% drop in Magnus production last year against 2020.

A key question for 2022, is Enquest getting to grips with the operational issues on Magnus? The AGM update to end April will answer that question.

Your 1,500 boepd estimate for each of the new wells seems reasonable to me. But as Enquest has said, these locations have already been swept. The hope is they hit a sweet spot or three. We know from a table I referenced last week that some Magnus wells have recently produced at over 2,000 boepd.

Assuming no operational issues, for Dec 2022:
I see a Kraken (gross) just below 25K bopd, c2.4K below your number.
I think your c16K boepd for Magnus is achievable, even beatable, but a lot must go right.

Nice spreadsheet.

romaron, unless there is a relevance to Enquest please post your views on Energean on the ENOG board. Not here.