Member Info for londoner7

Therapist, I'm still on board with your original theory. I don't understand what has happened to change your mind.

BD is the big girl you're looking for and on her way to the S.T.S.2 berth in Scapa, due in tomorrow. She can take two loads. IK will pull alongside and discharge the first. I expect BD to then move to another anchorage and wait.

Whether IK or another tanker heads back to Kraken for a 2nd load, and whether BD ultimately heads to Rotterdam or Singapore with 1000,000 barrels in the hold is trivia.

Your original theory holds, until it doesn't.

I agree with the general comments on volume and its significance.

The LSE book always looks messy with cancellations etc., but as I see it c20m trades reported before the bell includes the usual small stuff which forms the core of an average day with c4m trades, but another 10m+ of new interest on top. I think the 20m is still essentially retail, but with a dozen or so 'higher' retail trades in the £30K to £50K range - these trades may be the difference from the usual stuff of established holders here topping up and slicing off as the mood takes them.

It is this increased level of c20m trades that has supported decent runs previously, and the resistance to pull backs today was encouraging, though confusion over the Saudi comments will have played a part.

There are a few larger trades, delayed and posted after the bell. Possibly MM transfers with institutional interest but impossible to read with conviction. Believe it as you see it.

This isn't a growth stock so it isn't shooting for the moon, but as a value investor I'm sitting tight for an SP which I think will reflect the value within ENQ alongside any POO developments. As I said earlier I think few are watching Enquest, but if the commodity/oil story we believe in gains wider traction in the market then the Enquest stock will get noticed and benefit.

Personally, I believe its too early for any PO impact. I'd expect that after the publication of the prospectus. Near term focus is on book building the RCF. I've no doubt it will happen, but the interest rate and other terms will be of interest to current and potentially new investors. Maybe that's the news L3 refers to.

Hi e121, you’re clearly up with events in US shale.

A couple of points come to mind as I read your post 11:47: current CapEx spend and maintaining restraint in capital spending.

On current CapEx you said, “DVN - 300kbopd in Q4 2020, and they're spending $1.8 bill in 2021 to keep production at 300 kbopd.”
I’m not familiar with DVN but I guess you are so looking to you to keep me straight. I want to compare DVN CapEx in relative terms to ENQ.

At $60 WTI I’m going with a netback of $40 for cash flows of 300K*40*365= $4.4B, so $1.8B represents 41% of cash flows.

Using this ratio on Enquest cash flow, for let’s say 60K production in 2021, including GE, and the same $40 netback albeit on a slightly higher Brent price v WTI, the same proportion of CapEx would be:

41%*60K*40*365 = $360m.

I’m not sure what the sustaining CapEx is for Enquest’s 60K but $360m sounds much more than is needed.

Does my assessment seem correct to you? There’s no catch here, I just want to compare a metric on shale V NS using the numbers you provided. (I didn’t exclude BP Magnus barrels because BP profit share is after CapEx).

Your comment on CapEx restraint made me smile.
I’ve been invested in BHP for over 30 years and I’ve listened to the ‘restraint’ mantra from successive CEOs in the lean times, but they just can’t help themselves in the good times. They do not like returning cash to shareholders because it limits their ability to leverage their tenure (time in position) to their personal advantage.

A couple of years ago I attended a BHP presentation where I had the opportunity to address the final question to the BHP chairman. I felt he’d had an easy ride. He had earlier presented the spending restraint mantra, so I listed BHP’s CapEx and acquisition failures over the last couple of decades. I was prepared, with detail on costs and losses. As I listed each item the chairman looked down to a colleague sat just in front of me who nodded in confirmation of my numbers.

I commented on the urge there must be for the executives to party like it’s 1999 when the cash coffers are full and asked if he was aware of any potential party animals on his current board. He took the question well and responded but I wasn’t really interested in the answer. My purpose was to seed that experience in his memory for the next time his board considered the sanction of a big spend.

Yesterday BHP announced an interim dividend of $5.5B equal to FCF after modest organic and expansion spending. So far so good. But it’s just a matter of time before restraint is lost and the cheque book found! I give it two years tops and it will be a big spend in copper or nickel (but I don't rule out oil). The summer decision on Jansen Potash is a given in my book.

correction

Ooops that date doesn't help the point I was trying to make. I didn't mean 2020, I meant:

The investment community didn't wake up one day in Feb 2000 and decide to disconnect from the internet and take up smoking. A sector rotation occurred. Few anticipated it at the time. Are we due another exit from tech?

romaron, I'm not on the Aquavit so unable to relate to some of your theories, But, as an investor, I have experience of dual listed companies. I don't follow Enquest's listing in Stockholm but Pelle beat me to one suggestion I was going to make.

Oil companies have not been in favour, and the majority of the trading in the small NS producers like ENQ is conducted by retail investors, you and me, and many will be readers of this board - the number of trades and size are typically very modest. I suspect the same is true in Stockholm, but as Pelle say's, choice is more limited, so I wouldn't be surprised in volumes in Stockholm are little higher than London. But I doubt either exchange offers a back door. Those AT trades have several functions and one is to arbitrage pricing between the two exchanges. I suspect price charts through the day will have similar profiles. Of course a larger buy will appear first on one exchange or the other so there may be a delayed price reaction, but good luck with beating the algos in any meaningful way.

That's my take.

But of more interest is what happens if news of Enquest leaks (who was it?) from this board or it's equivalent in Stockholm out to the wider investment community. We can be so tied in to Enquest as to believe everyone else is also looking in. They are not. As Chilting reminds us there's more money to be made chasing the green revolution rainbow, as long as the prices keep rising the chase continues. One day it stops, but momentum trading is a profitable form of investing in these times of new entrants with a casino mentality.

We see talk everywhere of commodity shortages and supercycles, but we've heard them before. ESG types will resist the clarion call to invest in this grubby business until the cleaner trades stop working.

The investment community didn't wake up one day in Feb 2020 and decide to disconnect from the internet and take up smoking. A sector rotation occurred. Few anticipated it at the time. Are we due another exit from tech?

Ask me again in a year or two.

That Aquavit tastes good!

Wolfiewolf, you sum it up well.
I can't decide whether to file the RNS under:
'The dog ate my homework', or
'Fat boy turns up to sports day with sick note'.

Based on indications last month (slide 10) I thought Cinnabar would be the next drill - it is shown as their next 'potential' producer. As they say, as operator Cinnabar is their baby, so surprised they didn't anticipate:
· Acquiring additional seismic data

· Reprocessing the seismic data

· Revised geological model

· Acquiring additional leases

· Identifying optimal drilling locations

· Designing wells

· Drilling planning

Cinnabar might still be the next drill but I'm not expecting it as a Q2 event.
Acquiring additional leases - what's that about?

In a recent RNS Stanley 5 drill in Q2 was gated on completion of Stanley 1. No update today on Stanley 5.

I don't expect a dividend till the interims in Jul/Aug.

After a lull Breedon seems to be waking up.

Therapist, bang on the money!

romaron, I use mid April and mid Oct as interest dates for HYN. But if your focus is on the record date this might help

https://www.enquest.com/fileadmin/content/Bond_docs/bond_docs/High_Yield_Bond_Interest_Announcement_-_October_2020.pdf

Hi romaron, I don't follow the bond pricing but I have previously noted the interest payment dates. Your comments/timing applies to the RB which had a 'record date' close of business 12/2 but the HYB is on a different interest payment cycle, approx. 3 months off.

Hi Therapist,

Golden Eagle area, comprising the producing Golden Eagle, Peregrine and Solitaire fields - are you including the smaller fields?

Suncor mentioned CapEx on the field in Q4, which suggests something started in 2020.

Hi romaron, my purpose wasn’t to name and shame, but any regulars here would have recognised your writing style. Actually, I thought you came out of it well. But your number for oil on 4th Feb 2020 is interesting - $54.14 – I hadn’t realised it what that low, though I now see it touched $60 just two weeks later, before ….. well we know what happened next!

An interesting challenge is a prediction on whether we'll see $54 Brent again this year?

Only last week, with Brent at $61, the EIA said this, “The U.S. Energy Information Administration (EIA) expects Brent crude oil prices will average $56/b in the first quarter of 2021 and $52/b over the remainder of the year.” That implies < $56 very soon, and a $4* handle later in the year.

Me? I don’t predict short term movements in the oil price, but based on historic data, I expect a wild ride.

I get the bull case, links here remind us of it frequently, but having bought in I want to hear the bear case to challenge my position.

I recently heard a bear put his case on CNBC. The resident ‘oil’ anchor, Steve Sedgwick, wasn’t convinced. Neither was I. But an interesting comment the bear made was that BP are so keen to ‘transition’ that they outbid the next bid in their recent wind farm ‘win’ by a factor of 2:1. The bear thinks the oil price will pull back shortly, and he might be right, but if you believe in higher prices then he said play the ‘full on’ oil companies, not the likes of BP or Shell in transition.

I thought that was a good tip.

Recently, I was prompted to look back at anniversary posts on another board. It was so illuminating and entertaining that I repeated the exercise elsewhere. For Enquest, I looked back to the trading update released 4th Feb 2020, actually the period between 3rd - 6th Feb 2020. It amused me, it might amuse you. Set posts to 100 per page to speed up the process. I wish LSE had a search facility.

Here are some of my favourites (remember the date is Feb 2020):

“Isn't oil price tumble based on corona another short lived chunk of volatility?”

“Why are the Oz barrels always hedged so bloody low?”

“the mid-point of the guidance is somewhere around his predicted 65 kboepd. Whilst a bit disappointing, that sets up ENQ to beat the mid-point easily.”

This from our man in Cuban heals and flared trousers. “Just when I thought the virus was being brought under control it flares up again on this message board. Luckily I've quarantined most of the carriers (Filter) and waiting for the arrival of L7, hitman, E121, HMH, Prodopt and a few others in their Hazmat suits.”

It took me a couple of days before I found my flares (and Hazmat suit), but I tried not to disappoint, “What happens over the remaining 10 months is in the lap of the gods but barring another Thistle type incident I think Enquest will achieve top end of guidance. That's the number going into my 2020 forecasts.”

For the record, “2020 average net Group production is expected to be between 61,000 Boepd and 68,000 Boepd”. The final outcome, 59,116 Boepd.

Watch those predictions guys, they might come back to haunt you!

Today’s expiry of the 0.23p warrants marking the one-year anniversary of the 0.15p placing that introduced them, prompted me to look back at posts from the time. It was the occasion Mosman pulled out of a conference at short notice (steakpie in attendance), which prompted considerable speculation on this board, Chinese JV, Baja tie up, etc. I too took part in the speculation, with a sweep of the possibilities. I don’t think anyone anticipated a ‘strategic review’ to sell Welch and Arhkoma, alongside the obligatory placing. The near-term goals set at the time are familiar and some still topical:

;Regular additional drilling starting with Stanley-4 in February and Stanley-5 expected to be drilled in Q2 2020
;Preparation for Falcon and Galaxie drilling which is anticipated in H2 2020;

That placing was modest, £300K, but timely, just ahead of the oil crash and the worst of Covid. A £400K placing followed in July 2020 and a £900K placing followed in Oct 2020.

There hasn’t been much oil production or drilling but there’s now a healthy flow of warrants in the pipeline.

I’d put your money on Cinnabar as the next drill, but no urgency – the next warrants are in the money and should bring in another £460K to cover working capital and overheads.

RNS Monday, this week or next. It will land. Get through to 2022 and talk will be of OZ and laughing gas. The story goes on; a page turner!

(Set the posts to 100 per page to speed up the look back to 12th - 14th Feb 2020, an amusing read for old and new investors. It was an interesting exercise, one I’ll repeat elsewhere on anniversary dates.)

This bit struck me:

"In seven years, the Help to Buy equity loan scheme has allowed 278,000 households to receive an advance from the government to help pay the deposit to buy a newly-built home."

Hard to believe that such a huge distortion of the housing market was to provide a direct subsidy to <1% of the population.

chilting, I agree, load is inconclusive.

I don't know the hook-up time, but based on a 12m draught she has a substantial load. If weather is a factor I can only guess at possible logistics and STC will also have a bearing - if it's two or more shuttle runs she could be shy of 500K (450K?) on this run and make up difference on 2nd run (550K?). But to L3's concerns (and mine) turnaround seems inline with recent production volumes, which is good.

I think she completed under during the AIS loss and all is okay .

L3 - 13 day turnaround, all is well.

romaron, I'm glad it isn't just me, I was thinking of asking the same question. I thought one of my posts this morning had been deleted. I saw it once then it was gone - it had me thinking who could I possibly have offended, and trying to recollect what I'd written.

Most disturbing is that my filter doesn't work every time.

romaron, I take you point that 'barriers to entry' might have been reinforced for oil sector incumbents due to the ESG factors on finance. The challenge to new entrants is now tougher.

But I maintain that the world is awash with oil. The question for us incumbents, is what is the marginal cost of extraction? Ultimately, in the commodity sector, the marginal cost sets the long term average price. Though oil carries a lot more political baggage, than say iron ore, or copper - the internet 'handle' of the commodity sector. (While we're pushing our other stocks, check out BHP. A solid iron base with a heavy sprinkle of copper and nickel - apparently it's in big demand for batteries, Imagine if the reddit crowd ever found out!)

The world is now awash with cash - funny how that always happens in a recession. Talk may be of greening the economy but a lot of that cash will find its way into shale. Don't be too quick to write off those guys with big hats.

Hi Pelle, I did a similar tot up last week. I came up with a lager chunk of 'spare' from a $750m facility, though when I did the same exercise this morning the 'spare' is a bit smaller, so I guess I missed something last week.

However, I'm running my numbers on $55 oil, so there may be a better picture by the end of the summer. If nothing else, the numbers should be firmer, perhaps to the point where JS is confident enough to utilise the 'spare'.

I'd expect some sort of repayment profile to come out of the corporate detail, but I felt comfortable that given $55 oil, and no nasty surprises on the production front, full repayment would be made by Oct 2023.

To keep things simple I'm assuming oil will not average over $65 in the near to medium term so PIK will be rolled up into the Oct 2023 obligations. My interest now is less on debt repayment and more on what ENQ can do to maximise production and cash flows ahead of the next RCF restructure to cover Bond repayment and investment in the next enterprise - maybe a Bressay tie in to Kraken, which could have some spare capacity by then.

Much will depend on the level of comfort JS needs before spending 'spare'. I wish I could sneak a peek at the spreadsheets JS is showing the bankers.