Member Info for londoner7

romaron, I agree with your summary on leverage, both ENQ and unions, and on the political implications (and regulatory i.e. OGA). Clair accounts for almost 75% of the oil going through SVT. If lost, the running costs of SVT on ENQ and the 30 or so other fields using the facility could more than double. If the OGA has any influence BP will feel it on their SVT decision.

I dug out the reference to 34 wells on Clair just before posting and on review now see that their development might support the targeted 110K bopd. I wasn't aware of Clare South, but now found this:

https://www.energyvoice.com/oilandgas/north-sea/222691/bp-pushes-back-clair-south-fid-to-ensure-projects-green-credentials/

It highlights the alternative BP might have. BP tied the local Alligin field back to the Glen Lyon FPSO serving the the Schiehallion and Loyal oil fields. She's a big girl with 320Kbopd of oil processing capacity and 1000K bbls of storage, so could be the alternative to SVT. A shuttle tanker already calls every 4-8 days - weather impacted once over the last winter.

Going back to the article, I note the PR on the new field Alligen, "Initial production of 15,000boe per day has outstripped initial predictions.". The OGA has a peak of 13,700 boepd and a current 1,1100 boepd (March). I guess one day it hit 15K. Reminds me of the PR around Kraken early last year with talk of >50K, when the best monthly average reported to OGA was 40K.

Hi Therapist,

I have good expectations for the April Magnus number but wobbled when I saw the low Mar number out today. I expected some of the expected improvement to be reflected in the Mar number, but only an expectation, I only had the numbers for Mar/Apr combined. The total production (65,938) and the NNS production (21,106) for the 4 months to Apr, taking account of OGA Jan-Mar, still points to a large, now exceptionally large, rebound in NNS production in Apr, and by implication Magnus.

Do your numbers support that?

I'm cautious because the last time I extracted a similar jump in performance (Oct 2019) which didn't happen, IR explained it to me with a change in how they count Magnus gas - backdated over the previous 10 months but captured in one month's number. Perhaps we'll see something similar here.

On your 60,913 number today I only have 59,166. The difference must be gas and or Malaysia.

Did your Jan Feb number combined match ENQ 65,500 number posted 19th Mar? I had 65,509, so I wonder why we're so different on Mar.

Hi romaron, I agree with your focus on BP rather than storage, or at least that’s where ENQ has most interest, i.e. BP maintaining their existing use of SVT for the Clair oil field.

Total Clair oil production is c68K bopd, peak 75Kbopd.

BP has a dedicated facility at SVT for Clair, including 4 of the 16 storage tanks, and a separate tanker offload operation. At 75K bopd that equates to a 26-day storage capacity and a tanker offload every 8-10 days. Peak average production from Clair Ridge is (was?) expected to be c110K bopd, against current production c35Kbopd.

Do you know if there are further phases on Clair Ridge which might increase production levels from current c35Kbopd?

I found this, “There are 36 well slots, two of which are being used for the tieback of pre-drilled wells. The drilling programme, which is likely to last more than 10 years, includes drilling and completing development wells from the remaining 34 well slots.”

But the bit that confuses me is BP’s alternative options to SVT I understand Clair to be a platform connected to pipes. How would Clair store and offload to a shuttle tanker?

dreamachine,
Your post 16:37 27/05, “haven't got back in yet as wanted to see how today played out, as was expecting a retrace today, but lower than it was actually. I'll be following closely tomorrow”

The following day, following a 20% spike on an RNS
You post 08:55 28/05, “Great play and done well on this - seeing such strong gains, now wondering whether to cash out again,”

How did you get back in? Mates rates on opening?

I thought you’d left this board, but as you’re back I thought it worth examining your trading strategy.

ICO represents a very different business model.

"a handful of people sitting there looking miserable" That was the typical experience at an I.C. before coronavirus.

If the authorities allow it Cineworld will be open in July

Typo in the article - should read July 4th.

Which is fine. That's 2 weeks before the release of Telnet.

Tom8080, at the current level of debt ENQ is highly geared to a recovery in the price of oil. Some might think the gearing (risk) is too high, clearly you would like it higher.

Unless the price of oil was to fall dramatically below the current price and remain there for say one year, ENQ will not go bust. No one currently invested believes that is a reasonable expectation, though anything is possible. However, it is a reasonable expectation that ENQ will fail to repay the SFA on schedule or will have to reschedule on less favourable terms. In that event it is also likely that an equity raise would occur. If $40m is the difference between those events occurring or not, I’d rather hang onto the $40m than spend it on a share buyback.

However, you, as an individual investor, have the option to increase your own gearing to ENQ through derivatives. That is not my recommendation, but that is the equivalence of what you propose.

As a result, you will have a roller-coaster of a ride and almost certainly end at a different point – higher or lower. Good luck, but I don’t want to join you on the ride.

The extracts from the blog of the Scottish Housing Minister Kevin Stewart sum up the different approach to business north and south of the border.

https://www.theconstructionindex.co.uk/news/view/scottish-construction-takes-first-step-back-to-work

My focus on the Scottish approach to restarting the economy is two fold, one, Scotland accounts for c20% of Breedon revenue, two , I live in Scotland, and its painful to watch the socialist agenda playing out.

Sturgeon is deluded in thinking her decisions are having much influence on the behaviour of the Scottish population beyond crushing their jobs and the economy.

There had been a marked increase in activity long before today's slight relaxations in outdoor activities. It seemed to have be triggered by reports and pictures 10 days ago from a packed Portobella Beach, which is just outside Edinburgh. The police turned up in the afternoon - responding to reports - but didn't issue a single fine. This seemed to be the green light. There are three small construction sites close to me that have been operating for over a week, all are adjacent to main roads, so police go past them everyday. Road traffic in my local town has increased massively in the last couple of weeks, but there has been no new shops or business allowed to open.

Sturgeon's socialist approach seems to be, take control of big business, while playing to the masses, and screw the economic consequences. Rishi Sunak, get your cheque book out.

Rant over!

I should add, good observation and linkage. And an interesting idea.

Just wanted to follow it through.

ENQ has an indoor trading and marketing function so what you describe is feasible. But it is also feasible that another party has purchased both loads, taking delivery at the shuttle tanker . Which is why I ask the question?

chilting, do you know that ENQ chartered the big tanker, Eurochampion 2004?

CINE has applied for $45m (c£36m) from the UK scheme and $25m from the US scheme.

The UK CLBILS loan scheme runs from 3 months - 3 years, with a max application £50m.

CINE application is weighted to the UK scheme so perhaps that has more favourable terms.

There are a number of conditions attached to these loans, one of which is that recipients of these loans must agree not to outsource or offshore jobs for the term of the loan and two years after completing repayment of the loan. Recipients must also agree that until Sept. 30, 2020, the loan will be used to retain at least 90 percent of the borrower’s workforce at full compensation and benefits. The borrower must additionally certify to restore all worker compensation and benefits within four months of expiration of the current public health emergency.

Further, borrowers must agree not to pay stock dividends or purchase stock buybacks while the direct loan is outstanding, except if required under a contractual obligation in effect as of March 27, 2020. They may not outsource or offshore jobs for the loan duration and for two years after completing loan repayment. Collective bargaining agreements may not be abrogated for the loan duration and for two years after completing loan repayment, and will remain neutral in any union-organizing effort for the loan duration.

False alarm. Scotland still closed. Sturgeon says she is nervous. But looks like she wants her trade union mates in on the act before construction can resume in Scotland. Construction allowed tomorrow to layout sites - it requires that employers work with trade unions to restart sites safely in what first minister Nicola Sturgeon said must be a “genuine partnership”.

STUC general secretary designate Roz Foyer said: “We demand and expect that, where an employer does not currently recognise a union, it is compelled to agree terms for union engagement, and for the admission to sites of union health and safety officers.”

Headland is a distributor not a manufacturer, so less exposed to cost pressures at either end - as market leader it has more control than most over its pricing. But it needs activity, typically 6m transactions per year at an average price of £120.

There had been an expectation that retail outlets would open 1st June. I think the decision to delay openings to 15th June pushed this below 300p, but with the usual trading liquidity issues around Headlam, every bit helps in building a position. The stock is tightly held by institutions with little retail activity.

The last update pointed to good cash liquidity, but I’d expect Headlam to emerge from the current crisis with some level of debt. This will be revealed in the interims, allowing a better valuation , but I believe the downside has been tested.

Lockdown householders, having spruced up the garden and redecorated the walls, may now be looking at the carpet, stained by red wine and worn out by Joe Wick workouts, and thinking, time for something fresh.

A return to 2018 levels of business may take a year or two, but a recovery looks more certain here than with many stocks I'm watching. I like the risk / reward profile.

SolarSteve, you ask about book recommendations.

As you can imagine there is no shortage of books on the subject. There is of course the classic, Benjamin Graham, The Intelligent Investor. Which covers, value and long term investing. Always relevant.

But for a lighter and I think more enjoyable read I suggest 'The Art of Execution: How the world's best investors get it wrong and still make millions in the markets'. It describes the mindset of a investor when an investment hasn't gone to plan. Cut your loss, or average down? A thought process considered by every investor who's made more than a couple of trades.

At a macro level I've just bought 'The Long Good Buy' by Peter Oppenheimer. Analysing cycles in markets - timely.

Then there are books that develop an investors attitude to investing. A couple of recent favourites of mine are, 'The Joys of Compounding - The passionate pursuit of lifelong learning', and 'Fact Fullness - Ten reasons we're wrong about the world - and why things are better than you think', a good one for troubling times.

Good luck with your investments.

I said, 'Trading - beginners normally start here,'

I mean to say, that is what beginners normally do. They shouldn't, but they can't help themselves. There are very few good traders. Those that are good don't talk about it on BBs. The rest eventually move towards longer term holdings.

"So if anyone can give me a few tips, I’d appreciate that."

Buy a book. Preferably, buy several. Consider you preferred strategy. Trading - beginners normally start here, long term investment, or macro considerations.

These BBs sometimes offer insight into the activities of a company. Also, useful for getting a heads up on associated news items.

But there is a lot of noise. Ask yourself why some posters feel the need to inform you of their trades. Should you care? Make use of the filter function.

I appreciate the argument isn't as polarised as I present it.

I think most here are aware of the attributes of Magnus and would welcome a 2nd similar acquisition. But I wanted to highlight how good Magnus is and how rubbish Kraken was to an original investor.

25% interest, effective date Jan 1st 2017, consideration $85 (5% interest) from cash flows, nil cost to ENQ. Option to add remaining 75% interest for $100m cash and $200m vendor loan. Option was taken up Dec 3rd 2018, with $100m upfront cash payment and $116 outstanding vendor loan (7.5% interest). ENQ has first call on 75% Magnus cash flows to repay $100m and c$34m vendor loan p.a. Loan paid off from cash flows in 2023.

In 2019 BP received a profit share on 75% of $21.6m. ENQ would retain the same. In addition, ENQ retained $100m for the upfront payment and BP received $34m for the vendor loan. This means that cash flows for the 75% interest were (2 * 21.6) + 100 + 34 = $177m, which equates to $236m for the 100% interest.

A check on that $236m number
Magnus oil production 5.3m (OGA), Brent $65, OpEx $74.6 and CapEx $31.7m (RI page 203)
(5.3*65) – 74.6 – 31.7 = $238m (Close enough for me)

An ‘if only’ case for the Magnus acquisition in its 4th year if Brent had held $65.
2020 @ $65 oil and using 19K bopd forecast.
(6.9*65) – 70.7 – 5.1 = $373m
Spilt BP (((75% * 373) – 34)/2) + 34 = $157m
ENQ has the balance $216m.

After 4 years from Jan 2017 to Dec 2020, ENQ has acquired ownership of the Magnus asset (no debt), with little of the decom liability, and 62% of FCF after BP’s $34m vendor payment (payment till 2023).

But let’s get real with the 2020 numbers, say Brent at $45 (with the early hedging and perhaps a Q4 recovery) and production at 18K bopd (the latest update gave me hope)
(6.6*45) – 70.7 – 5.1 = $221m. That’s $100m to BP and $121m to ENQ.

Incidentally, BP has also done well.
Assuming the 2020 number, over the 4 year period I have, 85+100+34+21.6+100 = c$350m
And ENQ on 29+22+122 = $173m for the same period.

Remember, the Kraken cherry has still to make a profit on the original investment.

BP as the developer of the Magnus received the majority of the early FCF but now and onwards ENQ takes the larger share (at least above Brent c$30)

But let us hope this piece of ‘junk’ doesn’t develop a gammy leg in Oct.