Member Info for londoner7

Hi Tarmak, I didn't know you are using Google Sheets.

Looking at your link example I note that '1000' delimiter is show as a space, and decimal is shown as a comma

I sometimes view my Excel sheets in Google on my IPAD. My sheets have comma delimited '1000s', and I note that the options bar shows 'Office compatibilty mode' with the comment 'This file is in Excel format'.

I only use Google to view my sheets so I'm not familiar with setting but it sounds like a problem with your global setting.

Thanks Way2L8, chilting.

Thanks Col.

L3Trader, thanks for this morning's additions, which answer my query from last night. But I'd like to comment on those before following up on your posts from yesterday.

Your use of derivatives surprised me - those must take some watching and of course there are stop loss tools. But good you see Enquest up there in your high leveraged oil company stakes - I wouldn't want to be on the wrong horse. ;-)

I restrict my direct holding investment horizon to UK listed companies. I use a mix of buy and forget funds to cover ex-UK, particularly tech, on which I commented on another board just this morning.

Yes, your choice of GENL does surprise me, but I don't know enough about the company to comment.

On the timing of the RCF repayment, I do expect it to be repaid before the bond due date Oct 2023. I believe JS said exactly that, but perhaps some debate around the detail on the bonds repayment - full repayment alongside a renewed RCF and bonds adding up to c£1B. I have the gist for my forecasts, and I'm not too bothered about the detail. But I suspect you've raised this because you question Enquest's ability to afford another asset. You might be right. This is an area of your post I found interesting. I'll check out your numbers and get back to you.

I saved the best till last. Luck, skill and Tom Cross (Dana/PMG). We are clearly alike in our interest in this area.

I've long believed that luck plays a big part in the oil sector, whether through exploration success or the timing of investment in long term projects in a volatile oil price environment. The question then, is how much weight to put on skill and experience?

I too followed Tom Cross into PMG with a small investment in 2014 (at a time of $100 oil) and an even smaller investment in 2018, just to maintain my interest. In total it represents <0.1% of my portfolio, so doesn't keep me awake at night. Was Tom just lucky first-time round? I think he's still sufficiently in the game to show he can do it a second time.

Of more relevance here is AB's attributes. Like many senior people in the oil industry, in founding Enquest, AB saw the chance to forge his own path in the industry. Low barriers to entry and a plentiful stock of oil in the ground have tempted thousands to do the same.

It doesn't now matter to me whether AB has the same level of skill as TC or not. In AB I see a man who has learnt some hard lessons through new developments like A/G and Kraken, and he has plenty of ‘skin in the game’. All indications are that he will not follow that path again. From now on I expect it to be acquisitions like Magnus and Golden Eagle, organic development and expansion of Malaysian opportunities.

Reading the latest AR I was further encouraged by the formation of a Technical & Resource Committee within Enquest, whose four members have impressive CVs.

A lower risk plan, and an experienced team in place.

In recent updates Headlam didn't comment on current lock down restriction - if they did I missed it. In fact they seemed to infer the residential market was performing in line, albeit the early year trading is normally quiet anyway.

I understand that the Headlam's distribution channels are open to carpet fitters plying their trade, and the big DIY houses for those doing it themselves, but the closure of retail outlets must have influenced many customers to delay their purchases. Through lockdown trades-men have not been allowed into Scottish homes. This restriction is lifted on 26th April. Scotland accounts for 8% of the UK population, so not immaterial, though I don't know the extent of Headlam's presence in Scotland.

All in all, business should be back to normal shortly, perhaps with some backlog recovery.

Headlam normally provide good detail on trading in their AGM statement. This year it's 21st May.

Therapist, I haven't seen the comment so I might be missing something, but the idea of using EP surprises me.

This from a Parkmead update a couple of weeks ago:

· Parkmead continues to assess draft commercial offers received from the Scott field partnership for the potential tie-back of the Greater Perth Area ("GPA")

· Infrastructure studies completed in 2020 have confirmed that there are no technical hurdles to produce Perth oil from the wells all the way through to the onshore facilities

My reading is this excludes the need for EP or any other vessel.

toneman, as a hobby investor I invest in a small number of companies, currently 9. I'm a value investor and like to fully understand the operations of my investments. As an Electronics Engineer I worked on a few leading edge technologies which highlighted to me the difficulties of investing in that area. For that reason I don't directly invest in technology stocks. I have funds which cover those areas.

Which begs the question, why am I looking at ITM?

I am fascinated by the technological activities around clean energy in transport and more generally. Following companies like ITM gives me a good sense of the struggle to find and implement the best solutions for the real world. More so than an article in a science report - it's the engineer in me.

Yesterday, I considered putting 'skin in the game', but my reservations about investing in tech prompted me to consider a more scatter gun approach on the basis that my experience suggests that very few companies will succeed in the space. and by the time those few companies show clear and sustainable progress their valuations are in the stratosphere e.g. Tesla. With that in mind I was considering small investments in say 5-10 UK companies across the space - hence the reason for my post.

I have nothing against wind, solar or waste solutions to energy as investments, but they are established technologies, commodities even. That's why I excluded them.

We should get Q1 revenues, and usually get like for like comparisons with last year, but there's a lot of noise around this given the Covid impact late 2020 Q1 and the closure of much of construction in Ireland for most of 2021 Q1. That said, not difficult to make some allowances for a comparison with 2020H2 which was good, but for reasons I don't understand, brokers estimates don't reflect a continuation of the H2 number.

I hope for some clarity on Tuesday.

fdh, as I said there was some good discussion in the Q&A on the Greenbloc. Key for SRC is the IP they have on the product, i.e. what's to stop other supply. This was touched on but I didn't pick it up clearly. I often need to listen a couple of times to get the detail. Shame they don't provide a transcript.

On the FT article. Sounds like a slow news day. New builds have always carried a premium. It's the housebuilders way of snaffling up a share of the tax payers cash government's throw at the sector in the form of Help to Buy, etc. including the latest wheeze. Also, not impressed by the threat of a return to the downdip in 2010-2013. As I recall there was a dip across the economy, which was reflected in house building rather than house building or policy being the cause. I thought if was a delayed reaction to the 2008/9 crash, when new starts were shelved. Projects already in the pipe line carried the industry through to 2010.

I think what the HBF are doing here is lobbying for their preferred position, which is their function. I'm sure they know someone close to the commons that could pull the right strings.

Hi L3Trader, thanks for your posts, much to digest. I'll respond in the next day or two. We're still shutdown in Scotland so no pubs or shops to divert my attention from our beloved Enquest. ;-)

But on a first read a couple of points you made seem incomplete.

"I do not need to buy ENQ shares to play the oil price supercycle theme." Can you expand? If you mean a higher leveraged oil company play on the oil price than Enquest, I wonder what stock you are looking at.

Also, you talk of assessing Enquest's success from an operational point of view, and quote S/C as a leading candidate. Is that really what you mean? I assess projects on the cash returned against the investment. Ultimately, as a shareholder, I see FCF generation as the best measure of success . The recent updates have provided a relatively clear outlook to the repayment of the bonds in Oct 2023. The key unknowns are, will they buy another asset soon, the oil price, and, let's never forget, shi*e happens. I've produced a FCF outlook to that bond due date, which looks good given a decent wind, and another asset (Andrews?) could be the cherry on the top.

I assume by operational success you're not looking for a 'Gold Star' from the OGA for NS operator of the year.

fdh, I'm also invested in BREE, but take an interest in SCR.

There was some good discussion in the recent Q&A on the Greenbloc. I listened live but I'd guess there's a recording on the web site.

Hi McBoatFace, thanks for the heads up.

I hadn't considered ETFs. I thought the field too specialised but I guess not. I wen t back a few pages and didn't find a link but found a recent offering from L&G, Hydrogen Economy UCITS exchange traded fund (ETF). No UK companies in the top ten holdings and surprised to find Daimler at the top. I'm not looking to invest in a car manufacturer so not one for me, but you've put me on track for a review of other ETFs.

I thought I might find 5-10 UK companies in the space, but a quick look at the ETF's suggests there are probably 10 times that number based in the US, which prompts a rethink.

Best.
londoner7

Hi, I'd like to know what UK listed companies operate in clean energy technology. I'm not interested in wind, solar or waste to energy, so I guess that leaves Hydrogen, EV and the fuel cell world. Any other technologies?

I have CWR, ITM & AFC Energy.

I appreciate anyone adding to my list, or commenting on wider knowledge of the area.

Hi, I'd like to know what UK listed companies operate in clean energy technology. I'm not interested in wind, solar or waste to energy, so I guess that leaves Hydrogen, EV and the fuel cell world. Any other technologies?

I have CWR, ITM & AFC Energy.

I appreciate anyone adding to my list, or commenting on wider knowledge of the area.

Well done Therapist, you beat me to it - again!

Looks good, but this was my effort

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Hi L3Trader, you say, “I have no idea of why you are so keen on BP's oil field for sale”.

Your argument against ENQ bidding for the asset sounds like a wish to never succeed in a bid.

The news of Enquest involvement in the bid process wasn’t confirmed so could be misplaced gossip, but if true, first and foremost, I’m encouraged that JS is looking at another asset purchase. I outlined my view previously that if the plan is to repay the c$750m replacement RCF ahead of the repayment of the bonds on their due date, Oct 2023, then it makes sense to put spare monies to use. I believe there is spare monies, but I’ll trust JS’s spreadsheet ahead of my numbers on this.

The Andrews field lacks the shine of Golden Eagle, but still offers substantial production. PMO gave an estimate of c18Kboepd for 2019. Looking at the OGA data I judge that to have dropped to c13,300Kboepd in 2020. A large drop, maybe PMO dodged a bullet - only to walk into a missile strike. I don’t know the reasons for this 2020 drop off in production or how it might be extrapolated into 2021. But AB will know, and I trust him to get a good price or walk away. I’m assuming he walks away from the Shearwater non-operated element.

The Andrews area has development and in-fill potential so in production volume terms could turn out similar to GE, but I’d expect a lower cash price. Last June, PMO said, “Estimated revised abandonment obligations reduced to c.$240 million (pre-tax) from c.$600 million (pre-tax)” I suspect this area will form a key part of any deal AB agrees.

You’ve been in ENQ longer than me, so which do you think has been Enquest’s most profitable deal or project? I’d suggest Magnus. Okay, she hasn’t performed to CPR, but still earning her keep, and yes, I am the eternal optimist!

Recently, AB outlined a focus on short cycle assets. When I picture the Enquest business model I don’t see Olympians sprinting down the track for a sub 10 second time, I see the octogenarian competing in the 50-yard dash, usually alone – you know, often the final item in the news bulletin. Will he make to the line before something gives?

That’s the field we’re in – read the mission statement. :-)

Yes, the EOR polymer news on Captain is interesting – suggests another option on Kraken, which may come before Bressay. I watched the Ithaca presentation last week and did some digging. In brief, I was surprised by the scale of the Captain Phase 2 EOR project, in terms of cost and production benefit, and also by a remark that unlike water injection which impacts within a month or two, the benefit of polymer flooding could take a year to come through. A much larger enterprise than I’d anticipated based on a single line entry in the 2019 CMD presentation. Something to watch.

* Saddened on the news of the death of the Duke. I liked the guy.

Hi romaron, I agree Harbour Energy is relevant to Enquest in terms of sentiment and valuation.

Don’t you know that in the eyes of its retail investors, every oil company is the cheapest and best value in the sector. Check out the relevant LSE chat boards for confirmation.

As I’m in more than one oil camp, I’ll present a wider picture. On current metrics and forecast oil prices, all oil companies are cheap. But of course, if oil prices were to collapse then they’d soon all look very expensive.

We can all imagine the investment attractions of the sector to retail investors, the most obvious being the close link between share prices and the oil price and every retail investor has a view on the price of oil tomorrow, next week or even next month. The only certainty is that Brent will average $64.4 for the year, and there will be volatility along the way. ;-

But what is the attraction of the oil sector to non-retail. The guys and gals investing other people’s money, and held to account on a quarterly basis? History answers that question. Very little!

One of the analysists you quoted last week also said something along the lines, HBR will be the ‘go to’ investment in the UK oil sector. My take is that it is important for HBR to do well, achieve or beat expectations, attract non-retail interest, and get a valuation closer to the European independents dragging Enquest’s valuation up with it. I know that’s your view too.

A win-win situation.

I didn’t look closely at the broker numbers you posted as I don’t know their basis and besides, I have my own.

At their launch, HBR presented a detailed outline of performance metrics for 2021 based on $55 oil. My key metric is FCF, so I extrapolated their c$600m (Q2-Q4 figure from the graphs) to $800 for 2021. I can’t be certain of their definition of FCF but as they don’t have Bond PIK in play, I’m assuming it’s close to mine.

I use enterprise value (mkt cap plus net debt) to determine a FCF yield, for comparison between the companies of interest to me – HBR, ENQ and CNE. But I make one significant adjustment for ENQ, by adding an additional CapEx spend in 2021 to compensate for the higher HBR spend on Tolmont etc. (I used pro-rata CapEx spend based on EV, adding $114m to the $50m guided, excluding Abex.)

The short of it is that I have HBR currently priced 25% higher than ENQ, on a FCF yield valuation, based on $55 oil over 2021. If I use $65 oil the price differential increases to 42%, due to gearing and the different gas:oil ratios.

I’d expect ENQ to be priced at a discount to HBR. It’s for individual investors to gauge an appropriate level.

Hi Tarmak, you say,

"My numbers are different when I do the calculation but I do not know why.
However, the company's figures should not differ so much after deducting the hedge loss.

My calculation
(M / Q) 41.58 779865000/18758000
((M + P) / Q) 41.57 (779865000 + -6059) / 18758000
((M + N) / R) 35.09 (779865000 + 60486) / 22229000
((M + N + P) / R) 35.09 (779865000 + 60486 + -6059) / 22229000"

The sales are in '$000', but you've missed that on the 60486 and 6059 numbers in your calculation.

I can see that including the comment "(Gas is included in the blended price)" confuses the point I was making on realised oil price equating to the average Brent, but I included it to counter your earlier comment "it is the gas who pull down the price ".

To be clear, I've no doubt Kraken has a premium. Maybe that will increase - I don't know - but something else in the portfolio pulls their realised average oil price back towards the average Brent number.

That said, your understanding of my English is very good. Thanks for the exchange. Good to see you have PIK sorted.

Walter479, you raise interesting points and ultimately the detail of any restrictions will be captured in the prospectus. But I don't expect the new financing to be particularly restrictive. Near term drilling plans were mentioned at the recent update - this year, near term well interventions, 2022 drills in Malaysia (both licenses) , I think I heard Magnus drill too, 2023 drills at Kraken. Eagle farmed out, and 4 wells at Golden Eagle close to completion. I think that covers capital expenditure ahead of repayment in 2023, so those costs can be presented to the bankers. As I said I detected a revised hedging strategy in comments by JS which seems reasonable given the short period before repayment. Of course we need oil to stay at $60 or better so lets hope we don't see any more black swans events soon, but who knows.

I was interested to see ENQ in the frame for the BP Andrews assets. I like that - leave the gas fields to someone else. This implies that JS has capacity for additional spending in his c$750m guidance, which was my expectation and posted here. I think it should be spent to enhance cash flows into and ahead of the 2023 restructure, which should lead to higher production numbers too - perhaps another '7' handle.

If what I described as a c$400m 'war chest' isn't spent, then it sits in the bank while 7% is paid on the bonds. I believe there is a route to early bond repayment but I doubt that is in JS's current plans.