The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Hi Eurofil
RBC and Barclays are looking for 15/16p so IMHO 18p is too expensive.
How underwater is your current holding if you don't mind me asking? Have you been buying more all the way down from 40p?
Very risky to try and catch a falling knife IMHO and throwing good money after bad can make you very poor.
Hope everything works out OK for you Buddy.
MINERB
Hi Romaron,
This company is currently being run for the benefit of banks and bond holders. Shareholders need sustained high oil prices if we are to ever see any returns IMHO.
The scary thing is that even the bond holders do not have high confidence that they will get their capital back at the moment IMHO.
I am in no doubt that the reason is the uncertainty about Kraken first and foremost. The bond price was above $85 at the same POO last year. The only thing that has changed is confidence in the company's execution.
Thanks MO
So about 4100 barrels per day based on 61 days since the last tanker left.
As I have said previously this is a 10% drop from what we managed 2 months ago.
Last years H1 report shows a 40% reduction YoY at CNS.
Really not "Excellent" as some would have us believe.
Hi Romaron,
Many thanks for the chart.
Any thoughts why the bond is trading so low? in Feb last year we were sitting at the same POO but the bond price was above 85?!
Do the institutions know something we don't?
Many Thanks,
MINERB
Some on here have posted information (apparently from Enquest IR), that at least one of the recent failures on Kraken has been a weld.
If true then this is very concerning IMHO. A failed weld on a hydrocarbon system can lead to questions from the HSE and potentially an enforced shutdown if it is found to be a widespread quality issue. Worse than THAT is the potential for a release to the environment or an explosion potential event.
Even the practicalities of a repair can cause issues on non-hydrocarbon systems. For example if there are not suitable isolations available then large parts of utilities may need to be shutdown which could easily take out production. In my experience piping quality issues can be the hardest to resolve.
For me the downside risk on this share is huge. Yes every operator carries these risks, but Kraken does not seem to be settling down to its planned plateau and that makes you wonder what is left to be uncovered. On a good day Kraken is responsible for over 50% of our production so any prolonged shutdown (similar to what we saw this month) may have a huge impact.
This is why the big boys at Barclays and RBC think we are over priced IMHO.
Will she hold up this time?
Gale warning - issued: 21:41 on Sat 26 Jan 2019 UTC
Severe gale force 9 backing northeasterly and decreasing gale force 8 soon
WindSoutheasterly, backing easterly, 6 to gale 8, occasionally severe gale 9, backing northeasterly 4 or 5 later.Rough or very rough, occasionally high.
All i am doing is highlighting risks that the company itself recognises in its own releases.
From the RI prospectus:
"While the Group assesses the merits of each lawsuit and defends accordingly, the Group may be
required to incur significant expenses in defending against such litigation or arbitration and there can be no
guarantee that a court or tribunal finds in its favour. The Group is currently engaged in a dispute with KUFPEC
with respect to an alleged breach of warranty provided by the Group pursuant to the Alma/Galia Farm-in
Agreement as well as a dispute relating to variation works with EMAS, one of its contractors for the Kraken
development. For further details about these disputes, see paragraph 19 of Part 11 (“Additional Information”)."
From the H1 2018 report
"The Group is currently engaged in a dispute with KUFPEC, the Group’s field partner in respect of Alma/Galia. KUFPEC has commenced a court action in the High Court of Justice claiming an alleged breach of one of the Group’s warranties provided under the Alma/Galia Farm-in Agreement and seeking damages of $91.0 million (the maximum breach of warranty claim permitted under the Alma/Galia Farm-in Agreement), together with interest. The court proceedings are on-going and the Directors believe that a considerable period will elapse before a final decision is reached by the courts."
No provision for this as I understand it.
Last time we had 53 days between tankers, this time it is looking like 61 days if we hook up today.
What is going on? A ~10% drop in only 2 months? If that continues then how long before EP is decommissioned? UNIT opex will certainly be driven up at EP by lower volumes.
Last load finished at 3am on the 28th of November according to Chilting.
for all the fish.
I'm off down the pub to spend some of my cash from a very successful week.
Take it easy all and dry your eyes ;)
Be back again for the next leg down
Well done to everyone who has had their shorts on this week.
Hi Pelle / E121,
We will find out in the next update I am sure if it is good news.
The Venezuelan void seems to be getting filled by the Canadians at present who have a bunch of the stuff that they have historically struggled to shift economically.
https://www.investors.com/research/futures/canadian-crude-oil-railroad/
To back that up from full year reports...
2018 = 7.5 mmbbl @ $62
2017 = 6 mmbbl @ $51
2016 = 10mmbbl @ $68 (the price had just tumbled from $110 a couple of months earlier)
IMO they will hedge at least sufficient to meet their debt obligations and CAPEX.
I fully expect ENQ to have hedged a substantial part of their 2019 production at $50-$55.
With breakeven in the high $40's as many on here have proposed It would be the safe thing to do.
Many on here expect them to wait for higher oil prices to hedge, but could they really take that gamble?
First and foremost it is their duty to keep the company going, not take speculative risks. If you look at the hedging history the company seems to have hedged the most at this "existential" price range.
All IMHO and DYOR