Member Info for londoner7

A brief history of Alma.

Between 1975 and 2008 the field was developed and decommissioned twice.

Then:
‘EnQuest announced its plans to redevelop the field in November 2011. Redevelopment of the field is in line with the UK Government’s policy to stimulate indigenous production of oil and gas and increase security of energy supply. Although Alma is a marginal field, development is feasible due to the current oil prices.’ (The oil price was c$110.)

At first oil, Oct 2015, the oil price was c$40.

I think AB would like to bury the project deeper than 1m.

Perhaps investors should club together a get AB a fridge magnet.
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Alma was a marginal field at $110
Alma was a marginal field at $110
Alma was a marginal field at $110
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Timelines - A month or two back I saw a news item on another North Sea field being decommissioned. I don’t remember the name of the field, but it had an FSPO and similar scale to Alma. The project was described in three phases over 3-5 years: FPSO sail-away; clear sea-bed infrastructure; plug the well heads.

Alma could be a project that just fades away perhaps never to be spoken of again. A fridge magnet would help.

From ENQ media, "SVT was the terminal through which the Group shipped production for all of its UKCS producing assets in 2017 with the exception of Alba, Alma/Galia, GKA and Kraken. "

>30 fields supply oil to SVT through several pipelines c 32MMbbls in 2020. I believe storage is 8MMbbls. The CMD update stated " c.8 mbbls crude storage".

ENQ operate SVT but only has a 6% working interest. I'd guess that applies to their working interest in storage, so about 480Kbb, roughly one Kraken offload.

I wouldn't look to SVT as a storage option.

As everyone seems to be having a dump today, I thought I’d join in, and to save space I’ll be blunt. Apologies to snowflakes.

(Sadly my offline construct exceeds the limit - 0 characters left - and I can't be bothered to edit it. However, I'll post some extracts to give you the flavour. Another time maybe)

……. we may look back in months and years and say the KSA action was pivotal to resolving the oil imbalance – the timing may be fortuitous alongside the demand destruction from CV.

…. talk of supply cuts are pointless and the repeated links to same posted here, are tedious.

For me the key message from the UK three-part CV slogan is ‘Protect the NHS’

We currently ‘tolerate’ 27K killed or seriously injured on UK roads annually...……………………... Few advocates 30 mph restrictions on non-urban roads.

I’d expect social unrest if the wider lockdown lasts more than three-weeks. Where are the anarchists when you need them?

Rather than a 4-hour minimum time for A&E how about a 4-hour compulsory wait for those (subject to triage) who shouldn’t be there in the first place, in a room with blank walls and a mobile signal jammer.

Access and availability of the NHS, along with the significant taxpayer support, should be treated with greater respect.

‘Get fit. Protect the NHS. Or suffer an agonizing unmedicated death’. Okay, the last bit might need the Cummings treatment.

The younger generations are already overburdened – they just don’t know it.

Now, where did I put the bog roll?

1616 characters left

Hi romaron, I don't know if your last post was a 'gotcha', but to be clear I was having fun with your earlier post. No offence taken here.

To gbk47's point, no wine supply issues here - whisky maybe. I was in my supermarket on Wednesday and saw that there were only two bottles of my staple Rioja left on the shelf. Not wanting to be badged a hoarder I picked up one leaving the second looking very lonely on the shelf. Today, I went back to the shop and the bottle was still there - having consumed the first, I took the second. I'm not sure what that says about my taste in wines.

romaron, I’ve done some fact checking on your recent post.

‘Many of those dying would have died anyway of a mixture of age and existing conditions.’ This is a dodgy statement. ‘Many’ – definition, most or majority. But you don’t define a timeline, so one could ague that the statement is superfluous considering your closing statement.

Incidentally, I saw 4.4% as being the chance of a person over 75 dying within one year. (Sorry I don’t have a reference). Even if the population of the Earth, say 9 billion, was replicated a thousand times across the galaxy, then that statistic would point to an infinitesimal small chance of any 75-year-old within the galaxy, seeing out another 100 years. I’ve done the math.

Therefore, I can, for arguments sake, accept your closing statement:
‘Another fact is that we are not immortal and we're all gonna die of something eventually.’

A grime fact to accept, but one reassuring outcome of the current lockdown is that the #30 bus that used to career down (and up) Linlithgow High Street every 15 minutes has been changed to every 30 minutes. Therefore, the chances of my demise by collision with the #30 has been correspondingly reduced.

It's at times like these I urge people to consider their glass half full.

While off topic.

I've been exposed to far too much detail on virus epidemiology.

Last night I was reflecting on a discussion around viral load. I wondered if perhaps one way to achieve 'herd immunity' is to adopt an index finger handshake. ;-)

Remember, you heard it here first. I think it's time for my daily exercise session - clearly I'm not handling confinement very well.

Listening to the piece on the BBC I heard a so called 'expert' say that Boris now needs to follow his own advise and remain in isolation for 14 days. The BBC news interviewer didn't correct him.

Clearly, the advise is not clear to some people, including BBC news presenters!!!!!!

Once you show symptoms the isolation period is 7 days.

If a member of your family shows symptoms and you don't then your isolation period is 14 days to take into account the incubation period, whether or not you go on to present symptoms - you may be asymptomatic.

I think the summary of this commentary around the combined impacts of CV and the KSA market response is that producer shut-ins will happen. The problem for producers is the unknowns around future oil demand.

Opec ++++ is a sticking plaster on an amputation.

Talk of 20M bpd cuts in demand today, but what will be the profile of the recovery – which will come – and to what extent could there be an overshoot in demand? Oil demand by transportation will return to normal (one could argue it might be a new normal), but demand for other oil uses should spike above ‘normal’ as the effects of a delayed replacement cycle kicks in.

Delaying CapEx is a relatively easy call for E&P companies There’s a benefit now (reduced costs) and a benefit later (higher oil prices).

But the call on halting current production is much tougher. At time t(0), it will always be cheaper to maintain production at a loss rather than halt production and face higher costs to restart later. At various oil price scenarios producers will have a good idea of their t(x) for a breakeven time to restart. t(x) might be days, weeks or months – the shorter the period the easier it is to call a halt. (Of course, there is also a time to restart in the calculation)

Given what is known and expected, if significant production is shut in the hysteresis in price point between the shut-in and a restart should cause an oil price spike in Q3 or Q4 (Almost regardless of the effectiveness of the current decisions around CV I expect the economic consequences to come to the fore, or as Trump would say, ‘The cure can’t be worse than the cause’. On that I agree).

Enquest will know t(x) for their various hubs. Unless there is good news near term on CV – which I see as a possibility – I can envisage Enquest announcing further revisions to production.

The call is like oil price hedging – everyone is wise after the event.

Modestus, that's a very good expansion of a similar piece I read a few days ago - I like the 'paper barrels', 'physical barrels' contrast.

The earlier piece had me thinking - not all crude is the same. To be clear, crude shipments are marketed. When the Kraken oil is offloaded there is probably a customer/refinery already in line, with a price, premium or discount, already agreed. (I don't know if Enquest market their own product or this is contracted to a larger player like Shell).

I recall comments by PMO and CNE which combined indicated a decent premium for Kraken. I'm going from memory but I think, PMO stated their Catcher oil had a $2-$3 premium on Brent, and CNE stated that their Catcher and Kraken was achieving good premiums to Brent, particularly Kraken.

Useful as these premiums are we're still in the dirt with Brent at c$25. I wasn't expecting much out of the G20 wrt oil - CV is a much bigger issue.

In announcing a large discount to increase their market SA are effectively handing a chunk of profit to the oil traders - it's hard to see that element of SA strategy holding for long. I'm still minded to believe that the longer SA sticks to their production volume strategy the better the longer term oil fundamentals will be - but as the piece states we can't be sure that those volumes are real.

April Fools Day on Wednesday - it could be a cracker!

In relation to Cineplex, this comment by Moodys is interesting

'The review will also take into consideration the developments related to the acquisition of Cineplex, which will result in a material increase in Cineworld's adjusted leverage, if concluded. However, in Moody's opinion the chances of this acquisition concluding as planned are low. '

Thanks to MaryMullins on the HUR board for this link. A status update from OAG.

https://www.ogauthority.co.uk/news-publications/news/2020/message-from-andy-samuel-oga-chief-executive/

I’ve been following Mosman for several years after advising an associate on their investment here in Feb 2016 (long story) and began posting to this board following the acquisition of US assets a year or so later. I only made a small investment following the Baja alliance to have ‘skin in the game’ - I enjoyed following the Mosman story. Some LTHs here may be familiar with my posts. I’ve tried to ignore the opposing opinions and focus on the numbers.

My investment in Sept 2018 was followed by slow progress on drilling S2 (weather impacts) and by a placing in Nov so my timing was unfortunate. I wasn’t impressed by the placing comment so while others talked of buying to average down, I reduced my investment. My assessment was that the reward/risk ratio had got worse.

I reduced further following other placings, finally closing my position after the most recent placing in Feb this year.
Like some posters here I was confused by the director placing in lieu of payments. At first, I saw it as an encouraging development but after enquiry determined that the Au$120K share/warrants in lieu only accounted for a portion of the directors contracted arrangements rather than full fees for the year – I estimate 25-35%. I also wondered who these investors are buying in at the placing – it didn’t look attractive to me – and concluded that they were effectively out or getting out of the equity leaving the warrants to run.

I also concluded that the US assets have little value left in them other than as a ‘cover story’ for further placings and any significant value was in a successful outcome in Oz. However, I felt that if a JV (farm in) happened the 0.23p exercise price on the warrants and resultant dilution would significantly limit any equity rebound.

I’ve just remembered a similar investment I made (2010) in an exploration company called Altona Energy. They made a deal with a Chinese company and the share price popped from 4p to 20p over the course of 2 months. A period which covered the initial talks to closure. World economic events meant the project has never got beyond the feasibility stage. I see 8 years on the share is still listed (but hard to find) with a price of 18p. Sounds okay except repeated placings have diluted the 20p price 29/03/2010 to 0.02p today.

Back to Mosman. Today’s update has a lot of detail. I crunched the numbers and it’s easy to approximate their cash burn rate. Disappointed to see the BOD still taking 50% of their contracted fees in cash, considering the current environment.
It’s been an interesting story but for me the change in the relationship with Baja turns another chapter. It’s now only about Oz. I’ll look in occasionally.

I should add that JB has always responded to my emails. Keep it polite and you’ll get better clarity on aspects of the business from JB than you will from this board. People should take responsibility for their own investment decisions.

Good luck to all.

Hi romaron, I'm good thanks.

This is the definition I use for Prelims, ‘an announcement of a company’s full year results given out to the press before the detailed annual report is released’. That’s what I was expecting Thursday, but we’ll know either way soon enough.

I commented on the 19th Mar OU. I’d only add that I was surprised and pleased at the extent ENQ were able to adjust their Opex and Capex for the year.

Events are moving fast so I wouldn’t be surprised at further adjustments to operations.

*They’ll be many stories of the health of elderly friends and relatives. I’m a ‘young retired’ but following the death of my last parent two months back my youngest brother delighted in phoning me to ‘check in on their elderly relative’ – I’m the oldest of five siblings – causing much amusement with a follow up post to the family’s Whats App group.
This was compounded by the receipt of a 2nd ‘help in isolation’ note from neighbours. Not strictly age relative but I responded by riding my pushbike around the courtyard, ostensibly to test my brakes after a servicing (gyms closed), but I threw in a couple of stoppies and attempted wheelies to make it clear to any neighbours watching that there’s still a pulse.

Enquest prelims due Thurs may be delayed by an FCA request to temporarily suspend updates for two weeks.

If we take the cash metric at face value then the numbers do point to a reduction in gross debt. But I have a lower figure of $33m, based on a PIK of $6m - the semi annual payment on the c172m Retail Bond.

The net debt calculation uses 'cash and cash equivalents'. The cash number presented in the recent updates is 'cash and available facilities' which includes ring fenced payments etc. I don't how much the difference between these metrics varies through the year.

But I would question why ENQ would choose to pay down a portion of the RCF due in 2021. Today's rebound in the oil price is welcome but who knows where it will be over the coming months. I ran a calculation on the breakeven price for Q2 through Q4, assuming $30 holds for the remainder of March and come out with $34. Perhaps in a month or two we'll be into the 40s, but I'd be surprised if ENQ isn't holding on to cash until the situation is clearer or to play safe - the future has come to pass.

I'm happy to wait for Dr T to expand on the 'increasing pressure' comment at the CMD, but interesting ideas.

I'm more intrigued by the fact that HUR added this comment to the update, only one week ahead of the CMD. Did the market need reassurance in this area? I wasn't aware of anything. In the best case (presented at last year's CMD) the pressure drop over one year was only c1.5% so I guess a marginal increase is feasible. I sense HUR see this as a key outcome/metric. No doubt more to come at the CMD.

I'm also interested in the implication of the 'best case' pressure change scenario. I'd guess it means higher for longer production rates and a longer delay in any need to use the ESPs - often an unreliable piece of kit.

are looking through the current oil price environment

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/031820-us-gulf-of-mexico-lease-sale-captures-93-million-in-high-bids-lowest-in-nearly-4-years

As a conclusion to my previous post I had some numbers but deleted it from the post because of space and formatting issues. Not sure the formatting is any better but I’ll post now to support my initial assessment of this morning’s update.
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A rough look at Enquest options:
Ranked on operating cash flows
Prod (Kbopd) Oil ($) Costs($) Cash flow ($m)
65 60 26.6 792
55 40 18 442
65 40 26.6 318
Costs $525m plus $105m FSPO lease. $26.6 bbl
Points to marginal production having negative Op cash flows at $40 oil.
However, any suspended or terminated hubs will incur costs in 2020.
ENQ has bitten the bullet with the Heather and Alma hubs. Will there be others?
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This morning’s update guides to 60K @ $17.2 (excluding FSPO lease) for OpEx cost savings of $150m in 2020. I took a different approach based on 55K @ $18 (including FSPO lease) which points to a cost saving of $124m @ $40 oil. If I add back the lease that’s a saving of $229, but as I say in my note above, the suspended or terminated hubs also have a cost, which should be deducted.

The revised production is 5K higher than my more aggressive base case which suggests to me they are maintaining the GKA hub. (The Eagle development in 2021 which may be a casualty of 2021 Capex, requires the GKA hub.) The merits for maintaining production from the Dons hub in the current oil price environment are less clear.

Bottom line I see this as a good update from ENQ and the note on FCF breakeven c$38 for 2020 (after cutbacks) provides the clear guidance many of us have been looking for.

Also interesting. If I add the $230m combined savings back into the previous production forecast, it points towards FCF breakeven around $55 before these actions.

Therefore, a good response by AB in the circumstances. But the market will be assessing the near-term consequences. As am I.

I was just reflecting on the CNE presentation last Tues – it was a tough gig for management. The previous Friday they’d have had their slides prepared and be coached on the Q&A session.

They arrive in the office Monday to chaos in the oil market. No wonder they put in a hesitant performance on Tuesday. “We have options to cut back CapEx if needed”. You bet it will be needed! As I said, “a tough gig”.

One week on the future isn’t much clearer but AB still has the best part of two weeks to prepare and to be clear to the market what options ENQ has in the current and expected oil price environment.

I think there is a danger of conflating the two key factors on the oil price, the impact of CV on demand and the OPEC+ alignment over how to address the demand/supply imbalance which existed before CV.

We’ll all have a view on likely outcomes, but we need to settle on something on which to base investment decisions. Beyond the oil sector a bear market crash of circa 30% is a rare beast, and an opportunity to upgrade the portfolio – that is, come out stronger – and in my experience doing nothing isn’t the best play, though not the worst either.

My base view is i) that Saudi has now taken a course to rebalance the oil market in the medium term (two years) which would be to their benefit in the longer term and they will not be easily deflected from it and ii) countries are following the science to minimize the impact of CV on their health services to the benefit of their older community, but focus will soon turn to the economic impact on the wider community. (I suspect a key trigger will be the development of a test to determine who has had CV and the numbers might surprise to the high side. (I base this on the animated reaction by a chef scientist at yesterday’s press briefing when talking of asymptomatic outcomes).

What matters to ENQ investors is AB’s view and the degree to which mitigating action is possible. On my base case I’m looking for a net $100m saving in 2020, through a balancing of reduced Opex, Capex and production.

The current share price provides AB with cover to take decisive action next week. The market expects!

Oopps. I'd forgotten that tomorrow brings Breedon finals and the long awaited 'Infrastructure Budget'. Perhaps these upcoming events are behind today's SP movements.

However, having looked again into the detail of Bitumen pricing I'm even more convinced of the benefits to this year's numbers if the current low oil price holds. Tomorrow Breedon should report close to 3.0m Tonnes of Asphalt. The CEMEX acquisition add a further 0.75m tonnes for a total 3.75m tonnes. Note, Bitmen pricing would have been one of the headwinds CEMEX faced over recent years.

Bitumen typically accounts for 5.5% of Asphalt so 3.75m tonnes translates to 206K tonnes of Bitumen.