The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Quite
Stevo, quite how you manage to calmly put up with such continued ad hominem attacks from fantasists while continuing to provide such helpful analysis bewilders me but I remain very grateful.
A note of caution I would be wary of extrapolating too much linear debt reduction from 31/12/23 to now due to the overlift and potential Bressay transaction reversal. But I don’t overall disagree with the thesis.
Yes agree, halved my equity position today*. ENQ are paying big money to sweat generally declining assets; in particular GE looks like a lemon after relatively recent $375m acquisition. Could get interested again if peak pessimism takes over, where I think a tidy well structured acquisition could actually be transformational.
*much bigger position remains in the retail bonds, for which I have no concerns.
Spain last week generated 60ish% of electricity from renewable sources. Anecdote is not data.
If you want to get informed - https://demanda.ree.es/visiona/peninsula/nacional/total/2024-05-27
Yes all reasonable questions.
There is scope for M&A now with peak pessimism built in, as long as the valuation works. There is the clear case that some assets are worth more to those with tax losses, EPL notwithstanding.
Removal of investment allowances really is punitive, inane taxation. If you want to make fossil fuels essentially outlawed (not taking a view on the politics of this position) you need to quash demand by replacing them, not tax the suppliers.
A question for Stevo
Where do you see FCF if Labour get in and remove investment allowances, starting with FY24 (presumably implemented immediately).
Potentially catastrophic for cash flows. ENQ play would then be largely on the assumption they make a very shrewd cheap acquisition in UKCS. Mkt cap $360m today with $400m debt.
Enquest have a $15m buyback announced at YE2023 results
They have an authority from the last AGM for 10% of shares
They don’t need to buy all $15m before the AGM where they will get renewed authority.
Buying the shares into treasury for the EBT makes a lot more sense than cancelling shares and then subsequently reissuing.
A lot of emotive posts on this board re sleight of hand and duplicity etc. all a bit embarrassing.
Thanks all for the suggestions of using filter. Have employed to good effect. I had resisted hithertonow in the hope that some of the dross posters could at some stage have shared some insight but I’m drawing a line in the sand. @Stevo12 if you post analysis on twitter make sure you share your handle!
There is some good discussion about ENQ on here but lots of noise. Can we please try and stick on topic?
Speculation about politics and oil price not that helpful. If there is anything tangible by all means but posting that we think the EPL is stupid etc or that oil is due to go up or down isn't really helping anyone make better investment decisions.
Stevo, what do you see as possibility if capex allowances removed from 2025 with a labour government?
Presume capex will fall off a cliff, and continue to harvest cash from Kraken with FPSO lease cost dropping and interest payments dropping
Also does anyone know conditions of the term loan - can it be paid off early?
Sorry I was being facetious. Posters are keen to model on year highs of Brent prices within hours of them being hit but not so much in the other direction. ENQ are healthy at $80/bbl and I don't think it is prudent to model any higher than that.
Speculation on my part but I think that straight cash deals are fairly unlikely in the current climate. Lots of fancy financial engineering to be done around earn outs, vendor loans, etc - see Bressay deal / Magnus etc. At the end of the day as a holder you are putting faith in management to make good deals. At the point of investing in ENQ, I opted to back AB and team rather than the more strongly capitalised dividend paying Serica largely due to this.
Nearly all UKCS operators seem to have large tax losses on their balance sheets - perhaps there is something in that, for NS O&G investors to recognise - ie nobody is making any money here(!?)
To be honest I didn't notice AB mention the GE drilling results in the presentation. At the retail presentation on investormeetco Craig Baxter described the four well campaign at GE - first well successful, second well a failure, third well sitting currently above reservoir and a water injector still to come on stream. Subsequent comment that they would rather be operator than suffer due to other operators work. Both of these in Q&A typed up on InvestorMeetCo.