Member Info for Profitaker

Yep, also Reeves and mad Milliband get 2 fingers from us. Fantastic.

I don't see integration as much of a risk, after all we have a lot of experience out there.

I agree completion/execution does carry some risk. But as I understand it both sides are legally bound subject to blah blah and blah. We might lose package 2 by way of pre-emption rights, but even that's not a big deal in the grand scheme of things.

Rom - I was rather hoping that a splendid feast with fine wines would be organised ?

Cavendish note this morning:

Quest (ENQ): BUY Delivering EnQuest has announced a major acquisition of a suite of assets in Malaysia, taking net production through the 100kboepd for a headline cash consideration of up to US$833m. The assets constitute three separate farm-ins, and given the materiality of the transaction, are considered a reverse takeover under the UK Listing Rules. In total, the new assets will contribute around 57kboepd (+134%), 138mmboe of 2P reserves (+56%) and 208mmboe of 2C resources. The production is relatively low-cost (cUS$10/bbl), reducing group average unit costs by around 35% to cUS$16/bbl. Annual EBITDAX is expected to increase by c80% on the back of the transactions, with pro-forma FY25 for the enlarged group of cUS$900m vs cUS$500m previously. The initial US$554m cash consideration will be paid on completion from existing resources with a deferred US$189m payable over three years and a contingent US$90m payable subject to key milestones. Importantly, while net debt is naturally rising to just under US$1bn, leverage multiples are largely unchanged (at a pro-forma 1.1x EBITDA from 0.9x previously). We believe today’s news is strongly positive for EnQuest shareholders. The company has been targeting acquisitional growth for some time, and the delivery of an accretive transaction, during a period of oil price volatility is impressive. We will update our numbers in due course (our forecasts published today do not include the new assets); however, the transaction significantly improves the company’s core portfolio, as well as the credit worthiness of the business. Most importantly, the non-dilutive growth will significantly enhance the group’s cash generation per share, ultimately leading to enhanced shareholder returns.

Using the ENQ current financial metrics (no re-rating) I get £750m market cap as a base case after completion. But hopefully the lower risk profile will be acknowledged in the market and push us beyond £1B.

Shame the completion is so far out in time, but if this completes, the 60p party is longer fanciful !!!

That'll send us to 100K+ boe/d

Stevo

I don’t follow Serica (why would I when I have nothing invested there).

I have no idea what Enquest equity would be valued at if this, that, and the other were to be the case, and neither do you. We can all come up with an opinionated “fair value” number, but the market will swing above and below that number, depending on it’s daily mood and longer term sentiment. Fickle, eh ?

Regarding your assessment of ENQ liabilities I agree a reduction (debt/abex/lease) would be nice, and will of course improve NAV, giving us that nice feeling of safety. But it’s future earnings and cashflow that drive valuation multiples, not NAV.

On your cost of servicing debt / abex / leases you’re just a tad lower than me, so I am truly shocked ! But it’s the debt liability that is the most controllable, and I’m not here to reap a $20m saving on a $200 debt reduction. I assume the Serica cost of debt / abex / lease must be close to zero to justify their £1 billion valuation ? A rhetorical question, just to be clear.

On future oil prices I think Iran have realised they have the whole world by the short and curlies, and even American military might can do very little about it. Arguably, this is as good as any nuclear weapon in terms of warding off future attacks against Iran. So I think we’ll see a significant oil risk premium for many years to come, at least until the southern Persian Gulf countries build more pipelines (like the Saudi east-west), but that will take years and even then wouldn’t completely negate the need for the SoH. If I’m right about future oil prices, then Enquest is the place to be invested, not Serica. All IMO of course and have a good weekend Stevo.

Very good Stevo ! Have you banged your head ?

Although I didn’t listen to the capital markets day, I did read the RNS this morning. They expect in the FY 2026 ~ $500m cashflow from Operations, which is not the same as FCF.

Given the Serica geographics and gas weighting, I don’t think there’s too much read-across from that update to Enquest.

Aimoilking

Yes , and also there was the decom fine of $16m (if not dismissed on appeal) and the HY USD bond fee (I'm guessing low $20's M). But all this was known to the market, and we can all see the price of oil. I'm not bothered by it, but I would have been interested in any hedge adjustments they've made. Lets hope they caught a decent spike in March.

From the AGM statement they are clearly performing well, guidance is intact, and they are pursuing deals.

I am content.

Steveo

Let me ask you, why do you think they didn't release any financial detail on the morning of the AGM ?

“….and I am still scratching my head as to why Enq only provided a limited update at the AGM re trading as compared to the 2025 AGM when a full trading and financial update was provided”.

Because they’re in live talks for an acquisition and want to stay silent on net debt, FCF, hedging, and anything that might move the seller to push for a higher price ?

We all know ENQ are doing exceedingly well right now.

I wouldn’t have thought so. I think the oil reserves on the balance sheet are carried at cost minus depletion / impairment, rather than some sort of mark to market against Brent price.

"Sell the tweet, buy the molecule"

https://www.youtube.com/watch?v=IvHJSRiSp_E

I would expect more than 30p by the next AGM. We just need a good deal (or deals) in the NS. I still say the Harbour interest in Kraken is favourite, when they complete, whereby we take on their decom liability and pay very little upfront for their interest in Kraken.

Stevo

Mr. Market can conclude whatever it wants. What Mr. Market needs to remember is the exceptional cash outflow Q1. I'd expect net debt to be broadly flat "today", reducing to ~ $400m H1 and ~ $260m FY 2026.

Edvin - Yes, they're already stated that March production was +50,000 Boepd.

Well its positive, but a bit basic. Could have done with a few numbers like realised Oil $, net debt, FCF, hedge changes, etc.

I doesn't matter how much is left in our part of the North Sea. We should be milking it 'till the pips squeak !

Papegoja

Sounds good to get the average of $141. But depends what they've included - is it bbl / Boed / any gas or other revevenue included / any over/under lift ? Depends how they calculate their realised $/bbl before hedging, so no direct comparison unfortunately. But we've all been watching the oil price. It'll be a good Ops update for us.