Member Info for londoner7

The best I can offer is between 8am and 12.20 ish. Good to see.

UK fuel duty has been frozen since Mar 2011

"I sashayed down the wide staircase as I imagined Daniel Craig "

I can't get the image out of my head! But as I replay it in my head I wonder ..... did you stop at the bottom of the stairs and adjust your cuff links?

What, you weren't wearing cuff links ..... and you were carrying a menu. Ahh, now it becomes clear.

epiphany121, you mention Continental, but your link took me to Centennial. However both companies paint a sorry picture for investors. Perhaps no surprise given the decline in the oil price over the last 6 months. You don't need me to add that the ENQ SP has also been a sorry picture over the same period.

I took a (very brief) look at their Q1 numbers. In relation to what keeps them going here's a picture that forms. In the case of Centennial YoY oil production is up28%, Capex was ramped up with the oil price in 2018 at an impressive level and is already coming back- the on/off switch romanon referred to earlier. Debt is up over the last Q but their liquidity (cash & credit) is also up (????) Someone is supporting them. The revolving credit (drawdown currently zero) isn't due to be repaid until 2023, and the unsecured loans ($900m) isn't due to be repaid until 2026-27.

Continental production is up 20% YoY. The item that struck me here is SCOOP, about a third or more of production. They have cut the rig count from 12 to 9 (-25%) in the last quarter, but their production is going gangbusters and they even increased their Q3 production guidance. It made me wonder if additional investment is ringfenced to future developments and perhaps legacy poor performing assets are left to wither in the lower oil price environment - a purely speculative assessment on my part.

Please don't take me as an advocate or defender of shale. It's just that I've been around this game for a while and I remember similar arguments about shale being voiced in other cycles yet it keeps coming back. I would not be surprised to see a pull back in shale production over the coming months but if oil goes back to the $70-$80 range these boys will be back with new investment and I wouldn't be surprised if production costs are even lower in the next cycle.

I am not invested in ENQ in the hope that shale production diminishes significantly - if it did I guess that would mean all oil companies are in the dog house.

Perhaps the Jaegar jacket reappeared on the streets of Portofino with a pretty young girl on the arm. Okay, it wasn't your arm, but there can be a happy ending.

romaron. earlier today I was reflecting on my investment in BHP. In 2011 they spent $17bn on two acquisitions in US shale. Their annual spend since then was $1bn. Total spent - I don't think the term 'invested' is appropriate - $25bn. Last year they sold the US shale business to BP for $10bn. That means that BHP shareholders have essentially subsidised the US shale business to the tune of $15bn. It wasn't a loan, there's no debt owing to BHP.

Many of the big energy companies did the same. I don't think any of them would claim they were good investments, but with positive cash flows in prospect, or so Shell claim, I don't see them pulling out in the near term. Of course at the margin smaller shale producers whose pockets are not so deep will go bust, but like BP's acquisition of BHP's shale assets that doesn't stop the oil flowing. The wells just change hands.

I know that logic suggests the growth in US shale can't continue, but it does. I guess we're all missing something. Economics 101 doesn't seem to have an answer.

As to the report, I be taking it in a few pages a day. I'll be much wiser in about a months time ;-)

Beerbull, until Nov 2020 Trump's focus, wrt oil, is on the cost to potential voters filling their tanks. The average voter isn't that interested in the trade deficit. Beyond that he'll be focused on his legacy. How that translates to policy initiatives is anybody's guess.

The following is relevant to current discussions:
Oil - Against this backdrop of steady demand growth, all the excitement came from the supply side, where global production grew by a whopping 2.2 Mb/d, more than double its historical average. The vast majority of this growth was driven by US production, which grew by 2.2 Mb/d – the largest ever annual increase by a single country. Since 2012 and the onset of the tight oil revolution, US production (including NGLs) has increased by over 7 Mb/d – broadly equivalent to Saudi Arabia’s crude oil exports – an astonishing increase which has transformed both the structure of the US economy and global oil market dynamics. Largely as a consequence, US net oil imports shrunk to less than 3 Mb/d last year, compared with over 12 Mb/d in 2005.

The full report:
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf

Oops my mistake. You're right Krakenoil.

I'm invested in a couple of oilies and I got confused with the field locations.

Wake up at the back Londoner7!

If SN is to reach Kraken in the next 12 hours she'll have to engage the 'warp drive' very soon.

He has sold Breedon. He is a forced seller and that normally has a detrimental effect on the target company (Breedon) unless the acquirer (St James Place) is seen as a beneficial holder, e.g. an activist investor.

It was widely reported that Woodford has been selling down his portfolio to resolve his fund liquidity problems. An RNS on Friday said Woodford had sold down from a 6.8% holding here to below 5%. I'd worked out that as his holding had dropped out of the top ten he had sold at least 74m taking the holding to below 41m. The RNS on St James seems to confirm this with their 6.4% holding of 107m. Essentially, the 114m holding with Woodford has transferred to a 107m holding with St James and the balance 7m still with Woodford or other parties.

I know that St James has 'divorced' itself from Woodford funds but I have no idea how that leads to St James taking a holding here. I view St James as a passive investor so neutral in that sense.

Can you imagine what the Breedon BOD are thinking? They implement a strategy to liquidate Peter Tom's 20m sale - not unexpected for a retiring chairman, so I read nothing into that - only to be hit by a 114m bombshell from Woodford. Such liquidity events are good news if you're looking to get into Breedon and bad news if you're looking to get out.

In the near term I'd expect the fundamentals of the Breedon business to return as the primary factor in the valuation of Breedon rather than the woes of a fund manager.

My near term interest is in the interims due to be announced next month.

"Dr T said that often explorers run out of money when they could do with more time drilling. "

I heard this comment from Dr T in a 2017 video presentation. In a follow up AS clarified that it is sometimes the weather that is a limiting factor, particularly West of Shetlands. I took the point to be that for one particular well that didn't reach a full and complete conclusion, I don't recall which one, drilling activity was terminated due to weather.

Thanks proverloop, an interesting read.

It answers some questions I had around gas plant commissioning. It's very clear. Completion as far as practical before first oil. Completion within two weeks of first oil.

There's been some speculation here on the volumes of gas production from the GLA and whether that may lead to a relaxation of OGA restrictions on operations. The 20K bopd restriction on oil production will be based around detailed design oil:gas ratio expectations and presumably a margin to remain within the 40 MT / day flare restrictions.

This isn't my area of expertise but I'm an engineer so put together some numbers for any posters with expertise in the field to expand upon or rebuff.

Gas production volumes are reported to the OGA regardless of whether they are exported, used as fuel or flared. The typical ratio for a North Sea oil field is 95:5.

On this ratio 20K bopd equates to 1,053 boepd of gas. The Aoka Mizu power generation consists of 2 x 10 MW Gas turbine 2 x 5.4 MW Diesel Generator. I've no field experience but I'd guess that in full production mode the diesel generators will be off or in hot standby, and one or both of the gas turbine generators will be powering the facility. I've calculated that a single 10MW gas turbine on a 75% load factor will use 400-500 boepd of gas.

The interesting and unanswered questions are:

Will the oil:gas ratio be higher than the expected rate - whatever that is?
Does the facility operate on a single 10MW generator with the second as a backup?
What is the conversion for 40 MT/day dry gas to boe? I've tried and failed to get a clear conversion for this.

Saltire69, I have never heard this. Can you link to something?

There are restrictions and exceptions to flaring in the US.

http://www.bogc.dnrc.mt.gov/Hearings/2018/2018_12/2018_12_FlaringReport.pdf

There was an interesting analysts presentation earlier in the week - probably a recording on the website.

The CFO pointed to potentially $125m+ of shareholder returns (dividends and buybacks) @ $60 oil and invited people to make their own judgments on the mix. Here's mine:

If the yearly cost of dividend is held at 2018's $15.7bn, then we can estimate the buyback and it's impact on the dividend yield per share. I estimate the current 6% dividend yield to grow at 6.6% p.a. over the 5 year period 2021-2015. Guidance was that the dividend would be held at the current 47cents per quarter until end of current buyback is in sight - late next year if $60 oil average holds.

Many bits of interest, one for me was the forecast that CFFO to oil price sensitivity - currently $6bm per $10 - would decrease over time due to the changing mix of the business.

Workings:

$bn Shell
260 Mkt Cap
15.7 Year Div 6.0% Current yield
78.5 Dividend
25 2018-20 buy back
46.5 Share buyback 8.3% 6.6% Growth p.a. over 5 years

Thanks Foresight22, some very interesting points.

"I suspect some gamblers took long positions in CFD's hoping for a spike to clean up.
The ads do say 80% of CFD players lose money."

And the 20% would have sold into the spike. It's been a text book SP response to the news. The other 80% should read the text books, or at least learn from this experience.

Well done Dr T and team. Although yesterday's tanker action and this morning's RNS look stage managed it sets up the AGM nicely. They may not smoke cigars but I hope the team can enjoy a glass of bubbly.

! was struck by how quickly the joy at this morning's announcement was turned to gloom by the SP reaction, albeit not by all. Good to see some level heads on the board.

To my mind the content of the RNS was exactly what I was expecting and hoping for. The two wells had previously tested at a combined rate of over 20K bopd. An FSPO is now connected to extract that oil and turn it into cash, and it works. The FSPO has achieved 'contractual provisional acceptance'. Well done to the Aoka Mizu team. Start up data acquisition objectives have been achieved. The previously announced ramp up process has been confirmed and clarified. More information will be released at a Capital Markets day in July.

A perfect RNS!

It could have been very different. Imagine the response if the release had simply stated 'first oil achieved'. Where's the 20K?

You expected more? This isn't the wild west. The OAG regulates the industy to safe guard the interests of various stake holders. This oil is a valuable resource for the country so it's extraction is regulated to ensure the reserviour isn't wrecked by oportunists. 20K bopd is a limit due to gas flaring restrictions, but why allow it to be flared at all is a question to ask. (Not my field of expertise). When a gas export solution is developed and other actions come to fruition 40K boepd (gross) is targeted. Incidentally, I'd expect the gas to fuel the process (1.5K - 2K boepd is the expectation based on other discussions) and the commisioning of these systems may be part of the ramp up (again, not my field of expertise).

In conclusion: The EPA is now generating cash and valuable information with potentially greater returns to come. The work to full development of GLA has begun. Then there's the not insignificant matter of a drill on GWA. Quite a prospect.

I'll raise a toast to Dr T and team in a Glaswegian pub tonight - oops

Londoner7 (Scottish branch)

But the weekend may have been a factor ;-)

Not strictly true.

On 11 May 2019 hydrocarbons were introduced into the Aoka Mizu FPSO's process system. The RNS was released on 13 May.

I could only guess at the detail or progress but there will be an update at or before the AGM.