Member Info for romaron

Https://dieterhelm.co.uk/energy-climate/britains-energy-security-what-the-iran-war-reveals-and-the-lessons-that-should-be-learned/

"The consequence of these North Sea policies – higher taxes, banning new licences – is both immediate and medium-term. It is immediate because it tells the North Sea oil and gas companies they are not welcome (as, indeed, leading politicians have told them to their faces)."

"It takes a crisis to reveal the underlying state of Britain’s energy insecurity, and its defence. By now we should be basking in the success of “getting out of gas”. We do after all have a lot of renewables. These, we have been told, are nine times cheaper than gas. We don’t have much nuclear left, and we have got out of coal, so all our bets are in the renewables basket. We should be well on our way now to being a “clean-energy superpower”, relying on “home-grown energy” that should be bringing down energy bills by the now legendary £300."

I don't think you can blame the company for making what on paper looks like hedging timing mistakes. I think you choose a policy and stick to, it in (say) percentage terms. We all know that timing is an impossible art and in oil particularly tricky. The company has now got itself into a position where it looks safe and even bigger, earlier decisions are coming to fruition.

On hedging the further out you go the thinner the liquidity becomes and spreads widen making it more expensive. The majors actually hedge very little but have many advantages over us. We are a small independent company and the further you go the more important counterparty risk becomes. At times we have been very close to going under and our debt was once trading at a 70% discount and I don't know about you but I was "distressed". At times we were practically being run by the debt holders and I remember my confusion in trying to understand the RBL structure (I never really did).

I'm going to enjoy the higher oil price which I think will be around for longer than many expect. Today's move has been tempered by the drop in other stocks. Perfection is unachievable but I think AB and his team have got this as right as any company. If the UK Government puts growth back int the O&G industry then we are off to the races. If they don't we'll just assist in running down the basin. The losers will be the UK citizens/voters. I expect Asian investors and Governments to take a longer more pragmatic view and we are firmly involved there.

The 6 US troop deaths were according to reports from a Shahed drone, cost c.$10,000. Reminded me of a story about a Chinese general urging on his cavalry and archers to continue attacking a European force with a machine gun mowing them down. The carnage was terrible and another officer brave enough to speak asked if a change of tactics was called for. The General with his higher rank and experience replied - "but they are running out of bullets".

There is something on these lines happening in Iran. Religion and corruption are entwined in Iran and history teaches us that this combination doesn't go easily or quickly. Religions are always about sacrifice and this fits the bill very well. Vietnam and Afghanistan are more relative to this conflict than Iraq or Libya where there was a family/tribal dictator. Throw in religion and you could start talking years. Iran is very easy to defend and hard to attack because of the mountains. Tehran is protected by the Zagros mountains to the West and the Alborz to the North. No wonder Trump wants the Kurds to get involved. They don't need to surrender. They aren't frightened of living in the stone age.

O/T I wonder if Trump is aware that the OFAC agreement for the Rhum field runs out in Feb 2027. He wouldn't use use it for leverage; would he?

We're sure living through interesting times. If Scotland beat Ireland next Saturday in the 6 Nations you'll have the unique situation of Scotland rooting for England to beat France.

I hope you're fully-loaded OwB because you've risked letting the "cat out of the bag". The EPL is bearable if there is a period of high oil and gas prices and the term "windfall" actually applies. What you should have emphasised (imo) that it also speeds up the use of tax credits. The downside of EPL is what the government are finding out now - yes, they can share in this bounty but it'll end at some stage. If a similar event happens in a few years (2030?) then there will be no O&G profits to dig into. The ban on exploration and the disincentive to develop discovered fields will not happen unless the government stops persecuting the industry.

EnQuest sticks out and our value has soared but really only those in "the know" appreciate how valuable our tax credits are. Another consideration is that Middle East gas carries a risk and the biggest buyers are in the Far East. Our skills, investments and partners in SEA are possibly more important than what is happening at home.

We have a two-pronged advantage. The best geared for higher oil and a lengthy war at home and the value of our SEA assets have just shot up. Throw in SVT and the EP as top-dressing. I've ignored our renewable interests. At the moment we aren't relying on fiscal changes.

*Fiona Hill confirmed the bromance between Trump & Putin and try as hard as Trump may, Putin continues to play hard to get. Is this Trump's attempt to finally get respect from Putin? We know Trump admires strong-men and special forces. Putin has both skills in Trump's eyes. Putin wouldn't end a war early. This situation is currently open-ended. The UK is unprepared and has self-harmed itself with its policies based on ideology and wishful-thinking.

I suppose you could argue that the oil companies are helping to keep down the price if they hedge. EnQuest are in the business of selling oil. Those on the demand side might be even more desperate. If oil companies suspended hedging? No wonder the likes of Trafigura & Gunvor make so much money.

What excellent posts from Hunbah and L7. I take on board the comment from L7 to look from a distance can give a very different perspective. Last week I went to a talk by Fiona Hill and she emphasised that it is essential to get out and meet people. The Westminster bubble - and ours on here to a certain extent - does not always reflect what is happening on the ground and with the public. The reality can be very different. For me it was Brexit. I was almost physically attacked when I assumed two Northeners, both ex military, would want to remain. I'm not sure I'd vote to remain again. The point about EnQuest being almost exclusively oil in the NS is not always factored in imo. It has plusses and minuses I guess but the ESIM/OGPM combining O&G make it a Gordian knot.

Hunbah has rightly placed the forward curve where it deserves. A list of ante-post prices that you can use as hedges for the future but there are limits. The heaviest trading is spot and the 3/4 months. Spot is what people zero on because this is what is happening today. Coffee drinkers never consider 6m forward coffee but Starbucks do whilst the market trader just worries about this weeks prices of oranges at the wholesale as he passes the price straight to the customer but Pepsico (Tropicana) are checking future frost forecasts

If you can pass the price on almost immediately you can run with the spot but for a variety of reasons companies have to provide supply lines, conservative pricing and protection and perform to contracts. That is why the forward prices peter out as the spreads and volume widen and reduce because 2 year oil for instance is almost unpredictable and counterparty risk goes up too. Oil futures are speculative and the majors make good money out of it but there are underlying contracts between suppliers and users that are affected by a plethora of other influences - shipping costs, insurance, weather etc.. but I'd say the biggest factor is interest rates. In short futures have a role but are just one of the many moving parts oil companies have to deal with.

*Hedging is a form of insurance but an O&G company needs to think and plan further ahead than current futures really extend to. Interestingly there are really only long term sales of physical gas as Mexico ceased their oil auctions. For some reason gas is more predictable.

That is really interesting M. Not directly relatable (US & Canada) but I think we have two drivers. The oil & gas price move and this Governments response to it (Iran) via the hostile and damaging taxes imposed on O&G in the UK. Do they ignore it and wait for the ideology to achieve what the NZ zealots and renewable promoters have been promising for years?

Looks like they'll abandon flights or reducing them as prices skyrocket. Not my expertise but sustainable aviation fuel is even more expensive. Even Dale Vince has accepted electric jets will, literally, never take-off. Luckily the prices get lost in costs of bombing raids but certainly not helping repatriation costs. When will they announce foreign holidays are no longer affordable? No idea what happens to Cruising holidays. Going back to sail power is really only for the rich or leisure pursuits. No problem if you're American but if you're UK based you really need to get to the US first. Not such a big problem for the UK Navy as the few remaining ships rarely leave port. Bit concerned though about the 2 aircraft carriers as they're fossil fuel powered. I'm sure Zack could turn them into stationary homeless accommodation. I could go on but my biggest problem is that the UK Government has unilaterally decided that the age of fossil fuel is over. They did something similar in Cambodia (Pol Pot, Year Zero) and that didn't end well.

Still, there is the Rugby to look forward to this weekend.

Ed Miliband was hiking through the Scotland Highlands and stops to take a drink from a stream. He hears a voice call out as he knelt to drink "Dinnae drink from that mister; it's full of cow p*ss & sheet".

Turning he saw a Scottish shepherd leaning on a stick and he replies

"I'm terribly sorry but could you kindly repeat that but this time in the King's English?"

And the shepherd says:

"Ah, two hands sir, cup your hands together or you'll spill it.

Https://www.agcc.co.uk/news-article/harbour-boss-reveals-2bn-north-sea-investment-is-on-hold-until-epl-lifted

More than £2billion of North Sea investment has been put on hold by Harbour Energy because of the UK’s windfall tax on oil and gas profits, the company’s chief executive has revealed.

Linda Cook warned the tax – which has pushed the overall burden on producers to around 78% – is diverting capital overseas and threatening further job losses across the sector.

------

The key words are "On hold".

Hi M - L7, pragmatic as always but I disagree with this comment "The North Sea executives will listen, making cooing sounds, but ultimately go back to their boardrooms and make the decisions right for their stakeholders. If or when the government moves on the EPL/ESIM, then North Sea investment will follow if the infrastructure still allows." I disagree with "cooing sounds".

It is theatre to an extent and we can accept that not all cards were laid on the table. Previous performance says this government will do U turns, pirouettes even, and I daresay that during the "negotiations" [because that's what they were] the government will have said "we'll get back to you". The plenary discussions will hold the key and this may be The Treasury. It is a bit like when they say "a manager loses the team support". The opposition are the Labour Left wing in this game and RR has to manage the Treasury team. Sadly the only person who can sack her is Starmer who is hardly safe himself.

It is all very confusing but I won't be happy with cooing sounds from EnQuest and I doubt you'll get them from Linda Cook or Serica. Gary Smith of GMB would be apoplectic if "no change".

You also have to remember that L7 posted after Tottenham lost 1-3 at home to Crystal Palace. I believe he supports Spurs.

The pitch is being rolled for a potential return match. The draw should be announced next week.

Thanks Profitaker. So 9 companies attended and the public could only name 1 I bet. I'm speculating that they'll be rolling the lawn at the weekend. Hopefully the grown-ups at the Treasury held sway and the politicians see an expedient exit. I'll be surprised if they don't go through it. I reckon we'll hear a lot more next week.

Coupla things. This is a semi-official photograph so the Government want it out there. There must be some problems with transparency as any JVs, mergers or asset sales would likely be alluded to and at this level the attendees could quite easily guess who they are because future NS plans with an altered fiscal arrangement would be discussed. Was this the sum total of attendees? Did Ithaca and Harbour attend? Are they Mr X and X?

Https://www.agcc.co.uk/news-article/chancellor-looking-to-end-energy-profits-levy-three-years-early

Who are the missing 3 in the photo?

Jonathon Copus EnQuest, Chris Cox Serica, X, X, Neil McCulloch ex Enquest, Spirit and now Adura, X

I think the woman may be Louise Kingham of BP

There is a prize of a pint each at the AGM if you can make it. Otherwise - tough!

Here's your hair shirt back Mr Miliband. It never fitted anyway. Signed: The Silent Majority

Https://www.telegraph.co.uk/politics/2026/03/04/miliband-led-cabinet-revolt-to-trumps-iran-war/

Miliband led Cabinet revolt against Trump’s Iran war.

Ed Miliband led Cabinet opposition to US military action in Iran and the use of Britain’s bases.

‘Petulant, passive, legalistic’

Relying on a legal opinion by Lord Hermer, the Attorney General, Mr Miliband reportedly presented a “petulant, pacifist, legalistic and very political” case against the strikes and any UK involvement. A source told The Spectator: “He fundamentally doesn’t like Trump, and he doesn’t like this Iran thing.”

I imagine the above doesn't surprise anyone on here.

Powerful forces at work. Spain has agreed to allow US forces to use its military bases for strikes on Iran. The UK has allowed them the use of the uni-sex toilets on bases. The biggest benefit as I see it is that it creates a tableau for the defenestration of Ed Miliband whilst allowing him to keep his sword.

Ed put up a fight similar to the Black Knight - he is still saying to anyone who'll listen that in the progress towards Net Zero nirvana it is "just a flesh wound". I really hope it's fatal.

I'm not opening the bubbly yet. The P&J is highly respected but the report is by a junior reporter, Regan Parsons, lets hope she's landed a scoop.

Https://www.facebook.com/reel/1672228127262517

Harrier Cross pointing out the bleedin' obvious to everybody except Labour ideologs. Interesting that sitting next to her is Graham Stuart an ex-Energy Minister. She will have excellent advice. His lugubrious face hides an alert and sharp mind. Labour are being worked into a corner. When it comes to war almost all the heavy lifting is fossil-fuelled. Ships, planes and armoured vehicles.

Energean O&G have an FPSO (Energean Power) roughly 90 km (about 50–56 miles) west of the Israeli coast, close to the maritime boundary with Lebanon. This is closer than Kraken Armada to the Shetland Isles. Now I know that the Celts can have a short fuse at times but I'll stick my neck out and suggest that the Energean Power is under a slightly higher threat then our FPSO. This got me thinking. If Hezbollah or Iran can't sink it then it will suggest that the threats to our NS infrastructure is safer than many think. You can have defence on FPSO's and rigs that would be too expensive to deploy to the many windmills and I'd guess hitting a wingtip of one of the windmills blades would wreck the whole thing. Even if they had a rudimentary defence they'd probably need to be turned off during a potential attack or defence.

With the amount of gas produced by the EP FPSO for Israel (c.22%) its defence is a priority for Israel to defend and Iran to sink. They have already reached Cyprus which is 3X the distance from Lebanon (Hezbollah) so I speculate that they've either tried or accepted it is too well defended. Some people call this action of Israel "Energy Security" which is something I think the UK should try in the future.

It also suggests that our spare FPSO also the EP will hold its value or may even be increasing,

*I was once the only retail investor at an ENOG AGM. I am not invested in them now. I was impressed by their long term contracts and I'm guessing here but imagine that AB would look at similar in SEA.

Gotta be one of the best hedges against falling stock markets FTSE100,250,350 all down around 3%. We've got a hybrid hedge as we face the headwind of a hostile government and its policies. With EnQuest it is "complicated" to say the least.