Member Info for Plethorus

Hi Pelle,
Do you think the Magnus loan will be repaid by end 2022?

Thanks Pelle

Does anyone know how long it will take to repay BP for Magnus loan?

Enquest debt reduction was a little slow, hedges were a bit disappointing production guidance will probably still come within the range by year end because of maintenance. Enquest has capex to pay, payables and debt so maybe it paid more payables or more capex (given DC4) now as opposed to just paying it at year end, so there are timing issues which must have meant less debt paid off. We were expecting debt to be within $1.6-$1.7 billion. The update is still positive but the pace of deleveraging is a little slow. I think we can hit 30p by year end if we get hedge the remaining production above $70 because the current hedges are weak.

the complexity surrounding Magnus payments is what makes Investment banks confused as to how to exactly value enquest

Assuming current production for the rest of 2019, and Brent average at $70, what is the Free cash flow projection for 2019?

The market might want to see evidence of debt reduction, kraken improvement and decent hedging before bidding up the share price

If Brent stays in the $70-$75 range for a year and production stays where it is now. Then i think we can hit 30p by summer, 40p by the end of the year and 60p this time next year.

Would EBITDA be $1 billion and ending net debt $1.5 billion?

If brent averages $72 until the end of 2019 and Enquest produces 65kb/d for 2019, what will EBITDA be for 2019 and would would net debt be at the end of 2019?

Hopefully Brent moves up to $75 or slightly above sometime in Q2 and then Enquest can hedge for the year which would ensure a materially higher debt reduction than $500m.

A couple of years ago we never imagined Kraken discount to brent would be $2. it was always assumed to be around $6-$7 Brent discount. If the discount narrows to 0 because of the shortage of low sulfur heavy oil, then a good portion of the production shortfall from Kraken is made up by the zero discount to Brent. Even better if Kraken reaches anywhere near 50kb/d, then Enquest will make more money out of it then forecast just two or three years ago because of the higher Kraken pricing.

So the forecast net debt figure for end 2019 is $1.5 billion?

With Brent at $75 from May onwards and production in the middle of the forecast range, how many years will it take to pay off debt?

With brent at $67 and heading to $70, fair value is clearly higher than 16p with all due respect to everyone on this board.

i would love to buy a million shares at this price. its clearly oversold technically and fundamentally at these levels.

The focus in 2019 might be to get debt below $1.5 billion but as it gets to the end of the year, a deal to grow the company, paper over Kraken's cracks and pay off debt faster has to be on the cards. Given that acquisitions don't happen overnight, i assume that targets are being identified as we speak

I've read a lot of Karenoil's posts and never thought of him as a troll. As for Enquest i said it a few times, Kraken is a flop, the sooner we buy another magnus type field the better. If we bought two fields, one producing 20kb/d and one producing 10kb/d, then we can afford for Kraken to only ever hit 40 kb/d plateau (that extra 7kb/d net to us becomes irrelevent). Alternatively we could buy serica energy for $425m and it has cash of $100m on the balance sheet so the net cost of buying it would be $325m. it has stakes in mainly gas and oil fields producing 25kboe/d (supplying the UK with gas) which we could surely expand. Adding another 5kb/d would probably cost another $60m. There is of course a premium to pay for a publicly traded company of maybe 20%. So all in the cost of buying 30kb/d is $500m.If i was AB i would look to spend $500m buying someone distressed like us over the next 18 months because there is a lot of value to be had.

Your assumptions seem reasonable. If Enquest adds a field and fixes Kraken and hedges properly when Brent is in the high $70 or $80s which can happen for a while if there is a supply disruption, then there is upside to your figures. i actually think Enquest will add two fields over the next 3 years (one similar to Magnus and one smaller). the success of Magnus will push AB to try and do more deals because Magnus saved his company and the majors are only too happy to exit the north sea and invest in the Permian. i will be aiming to add shares over the next 2 years so if someone isn't convinced then i would be more than happy to buy shares below 20p.

what if Brent was $75, what happens to your ending net debt at the end of 2020 and to your ebitda?