Member Info for romaron

First the FPSO - we bought it in 2012, then named Uisge Gorm, from Bluewater for £42.4mio. It began its life in 1995. First oil was expected Q1 2014 (from Q3) mainly due to the increase in scope of refurbishment of the existing FPSO marine and process systems.

This from various sources: Rosebank

130km NW of Shetland water depth 1100m

The FPSO will be electrification-ready from day one, to allow it to be powered from shore when technology is qualified and matured, viability is confirmed and necessary regulatory consents are in place. This has the potential to reduce production emissions from Rosebank by over 70%. Before electrification, Rosebank will produce oil at around 12 kg CO2 a barrel, which will reduce to less than 3 kg CO2 after electrification. The North Sea average is currently approx. 20 kg CO2 per barrel.

Equinor says the field will be developed with a redeployed, refurbished Floating Production Storage and Offloading vessel (FPSO) tied to a subsea production system.

I mention the above only to show the scale of the challenges for Bressay.

I found this helps: https://www.shetnews.co.uk/2023/07/04/no-decisions-yet-on-rosebank-electrification/

It means we'll almost certainly have to solve the electrical problem but it looks like we're close enough to the Shetlands (SVT) and whilst I don't know the difference I'm guessing shallower water is better than deep. it's not that much further to Norway either where hydro-electric is available.

At first I was discouraged by the electrification demands and the bigger pockets of Equinor. I'd say we're in with a fighting chance and need to get Bressay moving before Labour get in. It looks also (to me) that the electrification deal is ready and any delay may be political and I don't mean that in a negative sense. We have a Tory government floundering and they'll want to maximise the benefits and divide Labour.

Any electrification cost can be offset by development of Bentley [I think Cambo & Rosebank are similar]

I'm pretty sure the environmental assessments are done and no doubt earlier costings and tests may still be relevant. We aren't starting at the beginning. We'll need capital and I think AB knows where to find it. I imagine Gareth knows a few people too.

Oops - They have taken the FID (sorry)

Equinor and Ithaca Energy have taken the final investment decision to progress Phase 1 of the Rosebank development on the UK Continental Shelf (UKCS), investing USD 3.8 billion.

The North Sea Transition Authority (NSTA) granted consent for the development of the field on 27 September.

Will Rosebank be subsidised with taxpayers' money?

There are no subsidies for the UK offshore energy industry. Companies can offset the expenses of running their business against their profits. This applies not just to those involved in the exploration and production of oil and gas in UK waters but also shops, sole traders, and many other industries. These costs are known as Allowable Expenses. If business operating and capital costs increase, then profits and the tax due on them will decrease.

Governments also deploy investment allowances in a range of industries to target investment in key policy areas and this is also not a subsidy, with the investment funded in full by the company.

https://www.equinor.com/energy/rosebank

This, 9 months ago

https://www.cityam.com/miliband-slams-north-sea-oil-and-gas-field-as-he-unveils-labours-green-day/

Ed Miliband launched his £28bn 'Green Prosperity' plan. We need Rosebank to reach FID. As you can read from the article it is full of inaccuracies. Surely it is not beyond the wit of lobbyists and industry to take advantage of the missteps that Ed has made and will continue to make. It will be a disaster for this country if he [Ed] is ever actually put in charge of energy. If Rosebank doesn't progress then neither will Cambo, Bressay or Bentley. The £28bn has been shelved and the Labour party won't be allowed to equivocate in election year. They sense a trap. I've an easy answer. Move Ed Miliband to where he can't do further damage.

Hi oxygen - I don't think the US production will last. Around half is shale and that depletes fast. Then you have the falling rig count. You can't blame a company for making hay while the sun shines.

Then you have the US presence in the Middle East. They are a selfish country and would they be there if the majority of the world's remaining oil reserves were somewhere else?

Then you have the consideration of the type of oil and refinery capacity.

Something bugging me about gas. I'm not sure what AGM it was but I'm pretty sure KO was there so I'm guessing 2022 so Juan was there too. AB said something along the lines of "we might increase our exposure to gas". I pick up on things like that because (for me) it gives a little insight into what the company are discussing.

I checked back and in June 2022 Jonathan Swinney was at the AGM. I also sent this email to IR on 18 June "Hi Ian, good to meet up yesterday. Jonthan Swinney was saying that oil companies may have to self-fund as the capital markets and lenders are shrinking all the time. Is Moody's relevant or necessary to EnQuest any longer? They've done us few favours and we pay them for that!" - it generated this response "As Jonathan has outlined, longer term we would like to be self-funding but we do still have some debt requirements nearer term, and if we were to do an acquisition at some point that required debt, the likes of Moody’s and S&P remain relevant to us as debt holders still take their assessment/ratings into consideration when viewing the terms and pricing of any debt offer we may make."

My point is that we were possibly already talking to Famcorp.

Some googling on P.2067 https://www.nsenergybusiness.com/projects/anning-and-somerville-gas-fields/

https://www.proactiveinvestors.co.uk/companies/news/1036922/small-cap-oil-and-gas-stocks-to-watch-in-2024-part-one-1036922.html

I still think there are a lot of plates spinning. 2024 is going to be interesting. I listened to the King's speech and was pleased that he didn't mention 'renewables'. Juststopoil are finished. They were an aberration. Saddo that I am I listened to Dale Vince of Ecotricity. He's trying to sell the company. People think he's a visionary. He is NOT but is on the autistic spectrum and what got the company going was Thames Water giving them a contract for waste energy worth £50mio. Their electricity naturally isn't the cheapest but you can wear a smug look at the vegan convention.

I think Dumbly is right. It doesn't really change the Bressay project and is absolutely the right message to send to both Tory and Labour. I said yesterday (06:02) that the consensus was that Bressay was next to worthless. I reread the RNS and it says £46m of which £11.25 is for Bressay and payable from future Bressay cash flows. That's the side bet and doesn't get paid by Vario if the next government puts barriers in the way. And Vario hasn't yet paid it. It is like long odds and actually not very encouraging*. It is probably not even 15% of one's month production if Bressay ever gets to production. On the other hand do both Tory and Labour (plus Trade Unions) want to follow up the example and speed up the exit of good companies and their revenue set by Equinor and Harbour in having chosen to exit from the UKCS?

A positive is that if Bressay ever went to production it would revolutionise Vario's valuation and not do us any harm either. It doe put a seed in the minds of the politicians who slavishly follow self-interest and can see the way EV's, ASHP, windmills and energy bills are going and the public aren't falling for the renewable BS.

I think this gives a valuation of the 85% of EP as £197m and if the Govt don't want the NS to survive it can sail away to where it will be welcomed.

I doubt very much that any politician has said on record that they will support the NS and as both parties are in love with punitive taxation you would be foolish to commit to anything other than short term tie backs and working over declining fields that the majors are ditching.

At present the uplift, though welcome, is more a translation of the value that EP brings to the balance sheet. If Bressay got permission then we'd be North of £1.

*Grand National NSTA stakes 2024 - Bressay - Jockey A. Bseisu - weight 200m tonnes of oil - age 150m years (est.) - form - tends to fall at first hurdle but now with new trainer - ODDS 40:1

Hi Dumbly, I think you're looking for something that isn't there. Extrapolation from the earlier tranche is possibly helpful but this was done in plain sight and the sentiment at the time was that JSO was on a roll and COP 28 would put the final nail in the coffin of fossil fuels. Labour were spouting the 9X narrative and punitive windfall taxes so basically Bressay was considered a weak 2C and likely to remain below the seabed.

It was lost in the 5 April YE results so the RNS responsibility was covered though it was hardly likely to have affected the price if issued as a separate RNS.

Majors look at fields differently and scale is important. Sometimes progress is simpler and more efficient to let a specialist (EnQuest) handle the obstacle course that this country sets. I've said before that I think Equinor (and possibly Harbour) have a clause written into the deal that they have first refusal to farm in if the field ever gets to production. A bit like when teams sell a player and if he plays a certain number of games or gets in the National team there is a clawback (not that large but pleases the lawyers, governance and compliance). For Equinor and Harbour it is a kinda option on Bressay and both would be welcome partners because of their firepower. The details would be considered 'commercially sensitive' and I don't think the analysts even pursued it. It was ignored.

A good spot of yours and worth going back over stuff. It also shows how astute AB and his team were although they didn't have much option.

A field is worthless if never developed. That at the time was the general consensus imo.

As VoR said - traders were in, albeit in reduced numbers, so I am very pleased with today. In the New Year we might see some funds taking a different stance. The bots can sniff them out like spaniels at the airport. That could easily be the beginning of an overall trend for capital allocation in sectors. We've hardly got first mover advantage but at last this feels like the bottom. The UK politicians might be in thrall to juststopoil and the like but there are other centres and investors who know a bargain when they see one. It is a confident move from EnQuest and £46mio isn't a small bet by Viaro.

Nobody in the office?

Only joking - they have to be the best buys around. RB - c. 11.30% HYN c.13.30%

Christmas Quiz - why am I listening to this? https://www.youtube.com/watch?v=dS65-ZvUSSM (another rabbit-hole)

Why not? I expect the deal to attract another farm in partner if it goes ahead and RockRose have shown their commitment to the tune of £34.75mio. They wouldn't have done that without a signal from NSTA, Tory and Labour. I just did some quick sums and with an early production facility of £600mio (our share £510mio) All finger in the air stuff but 30,000 boepd @ $100 means best part of a $1bio in revenue for us. OPEX would be lower than existing (no lease) and we could net in Y1 of production £288 mio (let's call it half our outlay). I'll accept my glasses are rose colored and Stevo is away and cannot pour the cold water over my 'model'.

It is so long ago that this kinda conversation occurred that I had forgotten a term last regularly used a decade ago. I expect it to be resurrected (agree VoR there will be another partner) and that term is.... drum roll....wait for it......

EnQuest to open a DATA ROOM for Bressay

Perhaps they already have?

*I got the £510 mio from here: https://www.viaro.co.uk/viaro-energy-signs-spa-with-enquest-to-acquire-15-stake-in-the-bressay-field-development/

Papegoja - £510 million

It does put to bed one question that cropped up from time to time. EP is NOT for sale. It is part of a plan to develop Bressay. Equinor made a success of Mariner and it looked like they were going to do similar with Bressay but conditions changed and they mothballed it. There is public news that we are privy to but not what happens privately. Hunt will have received a huge amount of opprobrium from the companies still in the NS. The eco-zealots are being found out daily for pretending that 'models' are scientific data (my model says that if EnQuest goes up every day like today I'll be a billionaire by 2050) and Labour are watching this and beginning to realise that the public and trade unions may be right about heat pumps and windmills.

Hi Papegoja - I don't know where you got the 40% from but we owned 100% of both EP and Bressay. I have a feeling that Equinor and Harbour may have hidden away in the small print that should Bressay ever go into production they have first refusal or some payback.

Out of interest way back in 2015 a founder of EnQuest told me that they looked at Bentley then but chose Kraken. Then there is the fact that Equinor paid c.$15mio for data from the Bentley EWT. They lifted about 150k barrels so a fair bit is known about the geology and reservoiirs.

BTW - Bots don't go on holiday or down the pub.

Hi VoR - I did think that after I posted. I was often left practically alone on my desk and I was the guvnor too, especially at holiday times. You might have a good head count but a lot of people have made a career of appearing busy. Turnover is good today but its been awfully poor for years. We haven't turned over 1% yet today but every little helps. I'm not proud - I'll welcome every buyer. It must be making a lot of people think about the tactic of releasing the RNS today - even HBR was quite late. They (HBR & ENQ) aren't really playing to the gallery and I hope some of the messaging penetrates the ignorance and hostility towards the O&G industry of most politicians.

*thanks for the trading numbers - Bloomberg is too expensive for us fossils.

That's ESP VoR. I was wondering exactly that. Long time since I was in front of a bank of screens but human nature seldom changes. As I remember it - a skeleton staff, rollovers and positions sorted, presents exchange or panic bought, people in and out of office. The last thing you need is a position to worry about over the holiday and anyway, you couldn't deal in the size required or the input from other departments - analysts etc.. Staff that are in mainly junior and I have no idea what the impact of WFH has either.

It was intentional to release the RNS today, not sure why.

It is only a half-day today but will finish way before 12:00. The back-up staff won't appreciate anyone trading either.

I'm up to my gills in these anyway but found some change down the back of the sofa. As much as the funds can't get aboard there are an awful lot of retail investors who can't trade either due to the holiday. There'll be hardly any size traded today.

And of course the timing doesn't help if you suffer from FOMO.

They won't be unaware. Just sod all they can do about it. There won't even be much information around. I've been in this stock for years and it still surprises me. AB is a formidable leader and has an intellect to match.