Member Info for LythamSlim8

Discussed at length in the past few hours. Looks like a massive tax break for CAPEX in North Sea O&G.

£91.25 back at source for every £100 invested.

Here:

https://hansard.parliament.uk/Commons/2022-07-11/debates/CDDDF326-8810-47DB-B3EE-CAE1893344C3/Energy(OilAndGas)ProfitsLevyBill

Very interesting figures Tarmak. So breakeven goes from $64 to $66 and production is mostly hedged. With the chance of FCF exploding at some of the more optimistic estimates for OOTT, yet it trades at less than EPS?

Ostensibly little or no downside here with the prospect of a healthy yield and also multiples on the SP in the offing.

Paraguay has never looked so tempting.

It's happening. Slowly at present but will gather pace. The initial token divi usually gets the party started.

Buy wisely at the bottom and it is not unrealistic to get your initial stake back in divis over a couple of years.

He manages an energy fund so is a natural bull on oil. However there are certain points Eric reiterates that are far from vested interest hyperbole:

- the oil market is tighter than the physical price suggests.

- FCF is staggering. This is where the shareholder value comes from. At this stage of the cycle, co's like ENQ that simply carry on pumping oil go can quickly go from indebted to paying healthy shareholder returns.

That is where we are. Enq creating shareholder value on a daily basis. The sp will look after itself as investors chase the yield.

The new Chancellor is an an O&G Exec and Iraqi Kurd - hello?

37p when Rishi floated the WT. Another 2m barrels flowed since then.

All good then:

https://www.newstatesman.com/environment/2022/07/new-uk-chancellor-nadhim-zahawiwhy-putting-oil-exec-economy-bad-idea

How Zahawi plays this is key at the moment.

'OEUK also wants Zahawi to exempt smaller producers from the levy'

https://www.oedigital.com/news/497931-uk-oil-sector-secures-changes-to-windfall-tax-want-more-amid-gov-t-chaos

Busy few hours but sure it's all in a day's work for the canny dealmaker. Hopefully AB has been in touch to wish him well.

https://www.theguardian.com/uk-news/2022/jul/06/nadhim-zahawi-the-past-business-dealings-of-the-new-chancellor

Yes. Net debt free within spitting distance. Throw in oodles of FCF - this is as good as it gets for me. Like FXPO a few years back.

Zahawi not previously averse to a little consultancy work in O&G:

https://www.thelondoneconomic.com/news/tory-nadhim-zahawi-second-job-oil-commpany-301274/

Me too. Nice little annuity when the divis start.

ESG is a dead duck.

Fair points Ammu but imho as we enter the sweet spot for small oilers the potential headwinds that you mention are mere bagatelles.

Well worth 5 minutes of your time:

https://bisoninterests.com/content/f/buffett-buys-oil-gas-stocks

The part where small cap oilers are discussed is apposite to Enquest investors - specifically the issues of value multiple compression, the effects of leverage and also enhanced FCF.

As I say, a veritable sweet spot.

And the rest - a crazy valuation given the FCF.

A little perspective on the present market cap - last week Buffet spent the same on Occidental shares. The PE at Occidental is around 9, compared to 1 and a bit here.

You've gotta laugh..

https://www.bloomberg.com/news/articles/2022-07-01/jpmorgan-sees-stratospheric-380-oil-on-worst-case-russian-cut

Governments? P1ss up. Brewery?

Negative sentiment is all and won't last. The FCF is hard to ignore and focus will soon turn back to fundamentals which, as highlighted, look strong.

Back in here today. The FCF Vs SP was too tempting to ignore. Hopefully that is the bottom of the range - MACD crossover would confirm it for me.

Good that - leaves some room for cautious optimism at $100 Brent.

Strong case in my view that oil is headed even higher which adds multiples from here.