Member Info for Plethorus

Without this windfall tax, Enquest would have been 40p+ now given that Brent is $120 and production is steady. Instead it hovers sub 30p. Whichever way one looks at it, this windfall tax is a heads you lose, tails you lose idea. When oil prices are down, enquest and other oil companies can barely survive, when oil prices are up, the government slaps a multiyear windfall tax not a one off. I think longer term, Enquest will not be developping assets in the North sea and north sea oil companies will lose market share to US and Canadian Oil and Gas companies.

Is Enquest unaffected by the windfall tax because they have tax losses or because they are investing heavily in the North Sea?

Enquest has hedged 8.6mb this year and has 9.65mb unhedged. Can Enquest sell its entire hedged barrels every month or does it have to strike a balance between hedged and unhedged barrels that it sells? Conversely can Enquest defer its hedged barrels until year end and sell only unhedged barrels every month until July for example?

Direct company buyback. It’s the best investment for Enquest. They can triple their investment in 2 years. Not sure any oil field can give them such a return.

Pre placement and capital raises Enquest reached a peak share price of £1.35.
If Enquest buys back 30 or 40% of the company, there is no reason why the share price can’t go higher than the old peak share price of the shares outstanding goes back to the 2013 level.

I think the new bond with 9% coupon is to allow Enquest to buyback shares quicker. Enquest buying its own shares in the 30s or 40s when the company is probably worth £1 in the next 2 years is worth paying 9% on a new bond. The investment opportunity for Enquest is to buyback its own shares at such a low valuation.

Enquest can add 4-5p every month for the next 12 months if Brent stays above $100.

How basic is their research. Cant believe it is owned by the FT and many idiots actually buy the magazine.

https://www.investorschronicle.co.uk/news/2022/03/24/enquest-s-creaking-assets-bringing-in-the-cash/

Just to double check, the hedging strategy that Enquest has in place means that so long as brent is above $78 they sell their hedged oil for $78?

I have FCF at above $800m for 2022.

Loan interest is lower than $100m and goes down every month because of debt repayment. Enquest receives a premium to brent for about 30-40% of its oil production (Kraken).

If you include gas sales and include the fact that capex is strong this year, production should be closer to the upper end of the range (51kb/d).

Does anyone know how much Enquest is making from gas sales roughly?

With Brent over $100 until at least next June on the forward curve, Enquest should be hedging the remaining 50% of this year’s production and at least another 25% of 2023 production. If oil price surge to $200 in the next few months, the global economy will crack and oil prices might head back to $50 by year end.

Does anyone know what happened to the Eagle field development (https://www.energyvoice.com/oilandgas/north-sea/207708/enquest-outlines-plans-for-landing-eagle-field/) and whether plans are back on. It was supposed to be completed in August 2022 but then Covid happened in the interim period.

Does anyone know what kind of premium Enquest is receiving on some of its oil vs Brent? Is it just the Kraken oil that gets a premium?

I’m not arguing against Enquest hedges, I’m just stating why the share price isn’t surging with brent now comfortably over $105 and Enquest’s share price lower than where it was in October at 27p when Brent was $80.

A few years ago, Enquest was a levered bet on oil prices, everytime bent would go up, Enquest would surge. These days, Enquest has lost its strong correlation to brent. It could be because the company was 50% hedged for 2022 at much lower prices than the current spot price as of early February and now probably even 60%+ hedged. Also Enquest was 25% hedged for 2023 as of a few weeks ago.
Another explanation could be that Enquest is at least 18 months away from being debt free even if brent goes to $110 and stays there because of its hedging and necessary drilling.
Either way, I see Brent being above $100 for the next few years and Enquest should in theory go up a tiny bit every month and possibly reach the high 30s by year end.

Agree with your tradable bounce of Nasdaq. The market also seems to agree. I believe by year end 2022, energy will outperform the Nasdaq but for the month of February, Nasdaq is too oversold not to bounce back violently. Luckily Enquest is holding up compared to other oilers.

Opec+ have the perfect excuse to delay the 400k per month output hike.

When does everyone expect the Bressay oil field to be developed (2024)?

I think if oil prices are $80+ for 2022 and for 2023, then enquest would be £1-£1.5 by the end of 2023.

I think by end 2022 once debt levels are acceptable, Enquest will probably start a share buyback that would shrink the share count back to 2016 levels. In the UK the capital gains tax rate is lower than the dividend tax rate so it makes more sense to start with buybacks before dividends.