Member Info for Pelle

Enq bond looks attractive to me, yield vs risk.
Specially as we so deep in details regarding Enq.

Spin,
What about bonds?
Enq bond or there these funds with a collection or different bonds with low or higher risk.

Or other safer shares

Hi Squif,

Yes, if EV stays same share price should lift.
Some time ago I made a sheet with historic EV and its not been as low as now since crisis 2016. Then for a longer period it was between 2,2-2,4b
Now it’s bit below 2b

So if oil price and world economy improves a bit in next year there could be a lift in EV also.

Hi Squif,

Its a good point why others in management team don’t invest more.
I don’t need to look further then the company I worked for many years.
Management below owner basically just keep the shares they got at discount during stock listing.
Happy with just the salary.
Even ex CEO sold out when he left and shortly share raised 100%.

So , I don’t see any different behaviour in Enq. But same as you I am surprised management teams don’t buy more in general in companies

Hi HMH

Yeah, Lupe about same production but production cost last year 150 million compared to our 600 mill
And end of this year double production and even more increase in few years going for 200k production.

During last year I realised that Enq capex in Magnus,Malaysia and others only ofset overall declines.
Maybe next year can do 70-75k if Kraken perform even better.
After that its just trying to ofset declines and keep production at 70k.

And at some point I think I think they will prefer do another Magnus deal then put capex in the old fields.

I do think shareholders are priority after debt is down, we keept thing going and put in additional money 2 times in last 3 years. so 100-200 mill / year is possible in few years
Thats why I am holding

Hello

FCF will increase from next year due to lower capex, also following 3-5 years.
Looking at the different presentations
Magnus: 10 wells on map and if they do 2 per year = 30 mill
Malaysia: 2 wells / year = 20 mill
Kraken: 4 wells on map = maybe 100 mill max ,maybe 2021?
Additional north sea capex: 25-50 mill/year

So your looking at future capex of around 100-150 mill / year. Quite some change compared to 275 mill this year.
Think 2020 as low as 100 mill and then FCF around 500 mill and net debt as around 1b end 2020.
Goal is not to become debt free so once reach around 1b they will slow repayments.

After 2020 your sitting at a cash flow of 600-700 mill/year
That can be spend on
Capex
acquisition
Debt repayment
Shareholder returns

Very exciting future here

Hi L3

Looks like my rough 30 usd cost at Kraken guess is ok.
Yes, maybe not best time sell 20% Kraken right now but I still think thats the aim.
If we assume they could get 400 mill in next 6 month.
Then I think they could clear both OZ loan and RCF over next 9 months roughly.

That would be nice in my eyes

Lol HMH

Lets wait for sept and we most likely have much more data to do different calculations.

Hi HMH

If I remember correct day rate is around 450k usd /day
Thats opex 10 usd / barrel at max production
The leasing cost is 100 mill/year for Enq 30k = another 10 usd
So all in all I think you have cost 25-30 cost/barrel

I think idea was to sell 20% and new owner take over cost as well.
I agree if deal was made under your conditions they need get maybe 1b or more.
Not sure its good sit with the cost left.
sounds more like the Mercuria deal they made in Malaysia there they pre-sold about 3k production for 18 months and got 90 million cash in hand.

Below is some calcs from L3 on 2 Aug for OZ deal

Expenses ($M):
Oz loan interest (8.8%) (3/4 year) -11.55
OPEX at Kraken ($19/bbl) -16.75
Lease (FPSO) ($100M per year) -7.5
Kraken FPSO leasing. Interest($57M in 2019) -4.275
Capex (spent since 28/09/18, 2 wells and infrastructure $40M) -6
Oil transportation cost ($4/bbl) -3.53

Hello HMH

Agree, last farmout attemt was during worst conditions.
Proberbly only done to show banks or others that they trying...
But AB never considered sell under those conditions and choosen OZ option.

20% Kraken, I was more thinking at 60 usd oil maybe a FCF of 30 usd
40k = 8k = 3 mill/year
3x30= 90 mill FCF/year
I dont think you get more then 4-5 multiple

You can also google Kraken production profile, there was some old Enquest documents also before.
But this one seems inline with the one I saw seen years ago at Enq site.
The peak production at 45-50k is rather short and I doubt we get any full year with 50k.
More likekly to me it seems we get 5-6 years with 35-40k and an flatter curve then original.

They already shown in presentations about new Kraken areas to drill, maybe 2021? cost 100 mill?
Its complex.. how much can they improve below profile? and what is cost?

I agree it will become a cashcow and after 5-6 years leasing cost is done and dayrates go down.

https://seekingalpha.com/article/4062617-e-and-p-industry-funding-cost-still-high

Hello HMH

I think your right about Tamrak, refers to page 12. But I actually think he means page 11 Magnus profit share at 60 usd.

If they could get those money for 20% Kraken I hope they take it directly.
They tried at around 400 mill before, but low interrest then probably because of the production problem.
Maybe 400 mill possible now with stable production

Hello

Can anyone at Avanza ask Tamrak, where at Enq site he is reading ?

Som jag läser ut det på E:s hemsida så ska de använda pengarna från 2019 under ca 60$/fat till drift/utveckling etc.
Resterande delas 50/50 för extra lånebetalning och utdelning.
Jag räknar med utdelning för 2019.

London Interbank Offered Rate

Not exact sure if fed rate will lower Libor but countries already started lower rates its goint across world already.
if rate is 2% or they lower to 1% doesnt make much difference, 17 mill diff/year saving
We paying the price in other end, not so good economic outlook, lets assume 10 usd less in oil price and we have 250 mill less.

See page 11 here

https://www.enquest.com/fileadmin/content/Presentations/Meeting_Slides_-_July2019.pdf

Libor rates

https://www.bankrate.com/rates/interest-rates/libor.aspx

Looks like 7-8% all over in total on the debt should be an average

Hi HMH,

Maybe your right that the 8 mill/month should be deleted.
After next report we can adapt calculations.
Its big business changes 2019 with Magnus added and Kraken oil maybe selling at premium.

Anyhow it’s impressive numbers going through compared to market cap.
Let’s hope we can get some tailwind from oil prices too

Hi HMH,

I also wish i am counting 200 Mill cost too much but I doubt.

The 8 mill/month is for the negative trade payable on balance sheet.
Not 100 % on this but it’s my understanding from others here.

Leasing cost is under cost of finance.
Cost for loans 1,6b at 7% + 100 mill leasing cost. Approx 220 mill total.

Roughly my calcs
Revenue: 1550
Opex: 600
EBITDA: 950
After EBITDA there follow posts
BP vendor loan and cashflow share: 100
Capex : 275
Finance cost + leasing 220

So it’s leaves you with 350 mill cashflow
And my understanding is that not all these 350 mill can go to debt reduction
50 mill went to negative capital movement in Jan-April
And another 100 mill is needed for trade payable on balance sheet.
This trade payable I am not 100% sure on but otherwise I feel confident.

In September we can trim our calculations

Hi Weny and HMH

This is my sheet, for this year I added column L/M.
Its going into balance sheet but not to reduce net debt.
I am not accounting expert so its my understanding I could pick up from others here

https://ufile.io/3kkizegc

Haha Weny

Ok, might be mine then if its 2018.
Things happened since that...

Let me see if I can upload a updated one in 1-2 hours

Hello Weny

I think your looking at excel sheet from HMH, not mine.
I estimate net debt 1 July around 1650, it would mean a reduction of 74 mill in 2 months since last update end April.
Thats a good monthly rate May/June
L3 have this number too

End 2019 I estimate net debt around 1500, if production continue good and oil price dont get worse

Squif, yes still holding longterm.
Enq is in much better shape now then last Christmas when oil went down too.
Debt is down and will continue down rest of the year.
Most of the big capex we through now
Scheduled amortization next year is small
Production is much better
Probable they done more hedging since last update in May. maybe 50% volume rest of 2019 at 65-60 usd floor.
The small capex projects next year can easy be postponed if needed
Shale will have it far worse then Enq if oil stays in 40-50 a longer period

And I doubt Trump and US want to flush down world economy in the toilet at end of the day.
Maybe they sign deal in Sept? and ofcourse its a great deal