Member Info for londoner7

I'm sure that politics or the planned IPO have no relevance to this story. The Saudi Aramco engineers have a financial incentive to get the plant back on line by the end of the month. Come October they could name their price in the market. I hope AB is at the head of the line to get them working on the Western Flank extension, or tweaking up the FSPO production efficiency. Should be a breeze by comparison and worth their day rate. Two days max?

ProdOpt, I'm still digesting the ramifications of the points raised in your excellent post.

Like romaron I enjoy trying to understand that stuff. Unlike romaron I have the advantage of being an old school electronic engineer which means I've also a background in fluid systems amongst other disciplines, but nothing like enough to play more than a passing interest in the detail you raised.

As an investor in Enquest my goal is to try and understand how my investment is impacted. To recap the essentials, the challenge next year will be to add the Western Flank extension with minimal impact on existing Kraken operations. Interesting in light of the news that the 3 week maintenance planned for this quarter has now been postponed to next year. This became an option when unplanned shutdowns in July and August (apparent in tanker offloads) allowed some of the planned maintenance to be brought forward. While there's still some impact expected over the coming weeks, the opportunity/decision to move the 'large' shutdown to next year may also accommodate works on the WF ext.

If the WF ext challenges you raise are not explicitly referenced by Enquest I'll be taking particular interest in guidance on Kraken production for 2020 and maintenance activities, in light of your post.

* I took a look at your earlier posts. Interesting stuff. The Magnus note on WAG caught my eye but I struggled with the abstract so the full document would be wasted on me. But your thoughts on implications for investors would be appreciated.

Based on draught I've got 390-435K bbls. (12.9Kbopd-14.3Kbopd)

I hope Amaja has a 'cousin' in Willhelmshaven.

Last week she offloaded 500-550K bbls from Kraken in 27 hours. Of course the rate is determined by the FSPO pumps not the tankers.

The two previous offloads from Lancaster were completed in just over 24 hours, which would put a similar completion around 3pm-4pm this afternoon. I'll then present my 'estimate' before it's blown out of the water by our 'Man in Rotterdam'. :-)

romaron, the 'old stuff' is interesting. Helps understand the distinction between oil density (API) and viscosity (cP). Clearly, it is the oils ability to flow (viscosity) that is key to getting it out of the ground. But your friend's brother was clearly alert to and wary of the 'gentleman from Enquest'. when he says, 'Was the gentlemen from Enquest saying that the oil in Kracken flows without AR(artificial lift)? I know nothing about Kracken but saying the oil flows out of the ground without the need for a pump is a little surprising.'

Of course we know that artificial lift using HSPs is used to extract Kraken oil.

https://www.spe-uk.org/aberdeen/wp-content/uploads/2014/07/16.-The-HSP-Versatile-Artificial-Lift-Choice-for-the-Heavy-Oil-Subsea-Kraken-Development-EnQuest.pdf

The amber warning in relation to HSPs (slide 8) is interesting - Top side fluid handling burden. I'd guess that's the challenge the FSPO is struggling with.

My conclusion - if we need additional hot water handling, 'We're gonna need a bigger boat'. ;-)

https://www.youtube.com/watch?v=2I91DJZKRxs

'2010 H2' Yep, that's a challenge.

I meant 2020 H2 (next year).

Hi ProdOpt, an interesting and technical post.

I've recently seen the comment, 'Fairly mature technology for Canadian heavy oil, but limited use offshore so far', in relation to Kraken's current operation, which blew a hole in an ill informed comment I made recently about engineers finding solutions to current Kraken issues - perhaps that still true but at the time I made the comment I wasn't aware how groundbreaking the Kraken development is! But back to your post.

My assessment of your comments is that the current demand for hot water from the FSPO will not diminish with fall off in oil production from the current well stock so either hot water capacity is added to the FSPO to support the Western Flank development or an alternative solution is developed. Hence consideration is being given to the 'downhole electrical heating and ESP' solution.

Grit in the flywheel. But at least romaron is confident a solution will be identified and implemented by 2010 H2.

As Trump would say, 'locked and loading'.

15:00.

Abbeydale, I'd expect Enquest to confirm if the cash payment condition has been met around 2nd Oct. It's dependant on Platts daily Brent average for the 6 months to 15th Sept.

I don't have access to Platts data but I averaged livecharts daily Brent closing average for the six months and it is $65.34 - just above the $65 threshold, which would mean a cash interest payment rather than a PIK. (livecharts might be using Platts data.)

You'll need to wait a couple of weeks for confirmation.

Don't know if this has been posted amongst the fog but she's heading towards Lancaster. ETA tomorrow morning.

L3Trader, you ask, 'why does a $10/BBL increase only impact EBIDTA by $60M in H2? ENQ will produce at least 12Mbbls. So it should be $120M.'

Enquest guided to a $10/bbl increase impacting EBITDA by $60m in H2, so you should ask IR. To the 2nd part, cash flow should increase by $120m for a $10/bbl increase (given your assumption), but then a greater percentage of that cash would accrue to BP (Magnus 75% deal). A rough calculation suggests $10m-$15m, which means EBITDA would be correspondingly lower by this amount. I can think of other factors that could make a difference but it still seems a long way down to $60m. (Just a thought, there could also be a seasonal variation in how other volumes are assigned)

Which is interesting and why I highlighted the significant difference between guided full year and H2 EBITDA sensitivity.

Boschbear, it sounds like you're out if you haven't already gone. Or are you hoping like karv1 that the deal will not go thro'?

Of course I could be wrong but the mood music from the GFRD webcast covering the finals is that the deal is all but done - the current GFRD management have secured their positions. My issue is that I consider the current GFRD CEO a bit of a clown. I recall after the rights issue he laughed at the market response to his introduction of a rights issue as CFO. The market provided to be right. I'd bought in seeing value but when I heard his comments I had doubts. Wish I'd listened then, but that's history. My current view is to see this through to completion then time an exit.

colinoco, I'm looking at your response but I can't figure out your point. Can you expand or simplify?

'Net average debt is 186m.'

That's for the year to June 2019, but it was running at £250m in H2. Guidance for this year is mid to high £200m - listened in to the webcast.

I think I know where the £150m cash surplus comes from.

A net debt of £40m has been mentioned, but that's year end when every invoice has been chased down. Nobody take much notice of that number. It's the average daily debt that people look at because that is what is chargeable to interest. The current run rate on average debt is £250m. GFRD guided to mid to high 200s in the recent call.

If Bovis pay £300m cash and assume £100 of private placement debt that's an effective cash injection of £400m.

Subtract £250m from £400m leaves a £150m average cash balance. If GFRD were able to maintain this working cash balance then finance interest charges would be minimal. Perhaps wishful thinking that they won't eventually blow it but that's where they would start out as a pure construction business.

Hold or sell?

Doing some quick maths. The BVS shares awarded are not eligible for the final div or £60m repayment (84p/share total), so at current price value of BVS share to GFRD is £610m. Current GFRD mktcap £766m so new construction company valued at £155m. Business on around £1.4bn revenue, at 2% margin (don't laugh) that's £28m and on a 10x PE (remember £150m average cash balance) that's worth £280m. Add that to £610m makes £890m, 16% above current price of 690p.

I can think of some risks, but to the upside:
Market sees good synergy with addition to BVS and may mark BVS shares higher on completion.
Aberdeen claims - I saw a £100m mentioned - are still ongoing and would accrue to GFRD.

Make your choice. I'm holding.

Somebody please check my maths.

https://www.edisongroup.com/publication/lincoln-crestal-positive-flow-test/25043

3.5p tieback valuation on 6 year field and 64% chance of success.

For clarification, the 10p referenced earlier is for 10 year field and 100% success.

Muzza2, it is 15p.

In my base model I had a 3 year terminal value (TV) beyond the 10 year operation, As you no doubt know these models are very sensitive to the TV. A conservative assessment would be that the field has no value after 10 years, which appears to be your model, but then decom costs could be added. One has to find a balance.

If I set TV =0 I also get a 10p delta for the tieback over 10 years so it seems our models are in agreement.

My post was to set a more realistic price expectation, but I would take the base price back to a point before news of the flare.

Another aspect is sentiment which I touched on in a post a week or so back. The LC success keeps the Spirit GWA agreement alive (based on comments made by DrT). To return to previous highs I would like to see success on the next well - Warwick. This might bring the GWA concept back to where it was before the Warwick Deep failure in that it enhances the prospect of a full $250m carry for GWA.

A further thought on EBITDA sensitivity. Given a clear view of accounts and cashflows I'd have thought that Enquest has a clear and fairly precise view on these expectations so the annual number could be split between H1 and H2 as $90m and $60m respectively. This lends support to my view that cash generation has been weighted to the first half.

Just a thought. Time will tell.

hitman1a, having just listened again to the webcast I see where you got the $60m EBITDA sensitivity. It relates to H2 only not annual. But I don't see how that correlates to the earlier $150m annual sensitivity. Another reason why I prefer to use the cash metric.

Beerbull, using HUR cash flow projections I updated a discounted cash flow model I have for the EPS (I attach no value for GWA or future developments) my delta share price change for tie back start 2021 and $47m cost to HUR is 15p.

For any posters unfamiliar with a discount model it discounts future cash flow to a present day value. I use 10% discount here so $100m of cash flow one year from now is valued today at $90m.