Member Info for romaron

Thanks for your time Stevo in putting that together. Most people who invest in O&G and read message boards aren't tax experts but in fact there is more of them and their scepticism is valuable and reflected in the share prices of O&G companies and associated industries.
I have a few questions. Labour portray the relief as a gift of £91.25 from the taxpayer. In fact it is tax that you won't have to pay and it is convoluted as you explain. EnQuest don't get the quickest return but enjoy the FCF from our core tax position with existing tax losses. Other companies may benefit more quickly but there doesn't seem to be a queue to start new developments. I hope I'm wrong.
You say "Accordingly the need for bank financing going forward for new projects is obsolete - operator only funds between 5-8.6% of development costs." So who funds the other 91.4 - 95% ?
Capex suppliers aren't investors in the fields usually and apart from a few of the bigger ones aren't suppliers of Capital either. Who will be supplying the capital that is needed? A promise out of future profits isn't good enough and in a declining basin even more difficult.
A quickie - is a new well on an existing field eligible for the relief? I guess it is from what you write.
You also say "I accept this only works if you are making taxable profits (which will be the case for oil over $30)" I disagree. You will need $50 + as a minimum imo and we have been there. It isn't pretty.
I like that you say it is not ringfenced to a specific field.

Much of this will be moot if Rachel Reeves carries out her threat to remove the relief. It is not a climate to invest in the North Sea when a future government (2 years) threatens to increase penalties on O&G and is too short a time in the scale of things to do anything. Labour have effectively shut down North Sea growth. We are stuck in a sea of aspic. What encouragement is there to invest? Other industries and foreign investors are probably amazed at this Country's propensity for self-harm.

mrc - just caught your Bressay post. We could move very quickly. Labour would make a token gesture of defiance and threats but secretly pleased that some revenue beyond 2030 is possible from the NS. With Equinor and Harbour involved the need for capex funding is covered.

Hi M - I'm sure others are just as incensed as LC but this is phoney war time. The Tories are raising revenues by attacking an industry that has suffered a relentless media and activist campaign knowing the actual facts are difficult for the man in the street to understand. A soft target. Few would turn down a handout.
Labour are taking the populist approach because of the windfall without understanding what has gone on before and the actual challenge of the transition and the implications of closing the industry down. Here I am, an ex Green Deal Advisor, who actually knows how improbable and impossible most of the solutions are and mostly that we are decades away from being able to dispense with fossil fuels, if ever?
The Tories are finished imo but this won't be a Corbyn government replacing them. Positions taken now tend to be more extreme than what happens when they are in power.
As KO says, once jobs are lost then the backlash will change policies because people will then get off their ****s. Could it be too late; who knows?
The problem with renewables is that they haven't solved base load or storage. Phyiscs and chemistry are real and renewables don't have the density and require huge acreage for solar and expensibe offshore wind (do bases require cement?). It is like getting drunk on 2% shandy against Glenlivet 12 year old. Another consideration is that the promised jobs with renewables suffer from the same problem. Low skilled with low wages. The only benefit I can see is that it might make caring for the aged or fruit picking more attractive as we have a labour shortage with our immigration policy. If the new government want to build on Brexit and take us back to the 1950's who are we to argue?

Rachel Reeves promises to raise our O&G taxes higher than Norway’s to match their headline rate. Ignoring the fact that “Norway gives its offshore industry investment allowances and other tax concessions far more generous than would be the case in the UK “ (OEUK)
This is likely to make the UKCS unprofitable for the future.
She will also cut the investment incentive linked to the windfall tax. It is described as a 91% return on new oil and gas projects. I have two problems with this. For a start if Keir Starmer follows through with his threat of NO NEW investment in O&G under Labour then this measure is largely unnecessary anyway. Another point is that it isn’t necessarily a 91% cash refund as people seem to believe. It is an offset against future profits and companies have to fund the investment first and that means funding 100%. If you make a loss on the field you can park the ‘rebate’ but if you go bankrupt then it may be of use to a solvent O&G. However that won’t be much use if the industry ceases to exist in a few years.
We are as investors happy to whinge on message boards but I’m afraid it will require a little more effort elsewhere and whilst it is comfortable to find like-minded fellow investors it doesn’t advance our case and imperils our investment if we do nothing.
Unlike some I more or less stick to this message board but do read others. There are thousands of retail investors like us invested in O&G companies who don’t have the problem that lobbyists or the companies have. We can be just as objectionable and difficult as juststopoil if we so decide. Most of us are UK voters too. I note that the Serica message board is motivated by what most there see as an unfavourable terms for a merger with Tailwind but are supine when it comes to the larger threat to the whole industry in the UK.
OEUK estimate that if there is no NEW investment in NEW fields O&G production will decline by 50% by 2030. We know that we’ll require O&G until 2050 so the answer here would have to be imports to fill the gap.
Reeves brainwave saves £500 pounds on energy bills per household apparently by freezing bills and using the ransom money obtained from the O&G industry (or what’s left of it). After this, no doubt, she’ll start taxing farmers and supermarkets to the hilt to reduce food bills.

And I thought Brexit was our low point!

I should add that Rod Liddle was brought up in a suburb of Middlesborough, roughly 50 miles from the nearest Waitrose, and is referring to England but obviously government actions on an industry that is basically based in Scotland (I'll accept the best paying jobs in O&G are in London) affect the whole top of the UK.

*my nearest Waitrose is 1.3 miles. monkey - it is a posh supermarket.

I'm suspicious of the praise from Juan and monkey. Maybe they're closer to the holy grail of 9X cheaper and are trying to throw me off the scent? Regarding good articles; today in the Sunday Times, Rod Liddle (not a particular favourite of mine) does deserve a mention for a simple and easily understood comment on 'levelling up'.

"For sure, the government could do a lot more. The rail journey times between the main cities oif the northeast would shame any western European country; there have been insufficient incentives for businesses to set up here and too little dispersal of public sector jobs from London. All of that is a failure of successive governments but particularly the Conservatives - who oversaw the almost complete elimination of well-paid jobs in our steel and chemical industries."

And they're doing it again to the oil and gas industry which is northern based. I hope the Jocks, who don't appreciate being pushed around, are alert to the ramifications and dangers of too much media Kool-Aid.

Don't be silly mrc - you don't have to be Scottish or an investor in EnQuest to come on here and spout rubbish. Everybody has an opinion on climate change - if asked. The rest of the time mjost people don't give a toss and will follow the money - cheapest cost and it ain't renewables. Try stopping foreign holiday flights. There are a smaller group of noisy activists and spreaders of muddled science. Nobody has addressed the millions that will die without access to fossil fuels. Fertilizer being one of them.

"The average home uses 12,000 kWh for heating per year, according to the latest Ofgem data.
Fortunately, the typical air source heat pump produces three units of heat energy for every unit of electricity it uses, largely because water holds onto more heat than air.
Where your pump falls on this scale is called its Coefficient of Performance. With three units of heat produced for every unit of energy, its efficiency rate will be 300%.
If your pump is your sole heating system, that means you’ll only need to use 4,000kWh of electricity to produce the 12,000kWh of heat needed to heat the average home over a year.
However electricity’s average price is currently 34p per kWh according to Ofgem, while gas only costs a relatively low 10.3p per kWh. That’s 3.3 times higher.
So one factor reduces your costs by 300%, while the other increases your costs by 330%, meaning you'll pay slightly more in energy bills.
Instead of paying £1,236 per year with a typical gas boiler, you’ll pay £1,360 with an air source heat pump – but that's not the end of the story."
Source: https://www.theecoexperts.co.uk/heat-pumps/air-source-heat-pump-costs#:~:text=Air%20source%20heat%20pump%20running,t%20be%20the%20case%20forever.

Oh dear, the running costs are actually higher but they tell me that gas will become more expensive in the future whilst air is likely to remain FREE. Do I accept their confidence in forecasting the future? Can any contributor here direct me to the supplier of renewable energy that is 9X cheaper? I'll make it easy - I'll settle for half price.

Got my energy bills out and found that I'm with Octopus (was Bulb) and found from their website that "All our energy comes from 100% renewable sources like sun, wind and water". Now I realise I have gas heating (naughty) so only checked out the electricity. I went on to British Gas who don't make such outrageous claims. I expected it to be more expensive and it was. They charge an outrageous 36.077 per unit against Octopus's 35.13
On my average use of 5488 kWh this means I am paying an extra 14p EVERY DAY.
It is mitigated slightly by a lower standing charge which brings it down to a still exhorbitant 13p A DAY.

Armed with this knowledge I decided to look at an air source heat pump. I'm still after this elusive 9X cheaper cost and as far as I know, air is still FREE. I will admit to knowing a little about this business and decided to use the blurb from ecoexperts - chosen at random but they do run the risk of being sued unlike politicians who are coated in Teflon.

They say the average home uses 12,000 kWh but mine is higher so my saving will be greater. Off to find the 9X cheaper heating.

Thanks Zippy - in the video of the panel discussion Starmer again says that renewables in the UK are 9X cheaper than oil and gas.
Nothing is cheaper than sun and wind or come to that water in the UK but delivering it is a cost as well as the inherent physical properties of different energies. Nuclear is a winner but at a cost whilst the downside of fossils is emissions but renewables have huge costs too. They leave out subsidies and the future is based on hopium. I would have a large bet with anybody that Labour will not achieve its targets if elected but like Brexit the damage is done early and excuses and misremembered memories fill in the gaps.
The 9X cheaper has become pretty much accepted as there is never an expert on hand to challenge. We know how difficult it is for the layman to get his head around the complexity of energy but this is dumbing down to the extreme.
Once again he qualifies the 9X quote with "in the UK". Is he suggesting it doesn't work like this in Saudi Arabia, US or Russia for instance? Here we basically have a political leader promoting alchemy. It can easily be proved by phyics and economists.
I think that our lobby group OEUK has been a dismal failure in explaining the TRUE costs round energy and the hidden subsidies including failed initiatives. We fumble through and 19 years after the 2004 Housing Act we still haven't sorted out our housing stock. Is that the fault of fossil fuels?

*I notice they still use the Woodmac graphic. I think the Serica one is more up to date with us at number 10 but I'd prefer to see a graphic of UK oil producers.

I have been writing to various outlets regarding the 9X quote without effect but I will continue. I suspect there are political and tactical reasons for this but the "Big Lie" is becoming entrenched.

I find these useful https://mcdan.com/price-forecasts/

just released 2022 and forecasts.

Another video, sorry https://www.youtube.com/watch?v=mQ1V0Bsc6AU

The good news is you only have to listen from 49:30

I have little interest in Serica other than what I can garner from the retail investor revolt and translate what I can back to EnQuest. The guy with the foreign accent makes an interesting point that boards like to feather their own nest and this is what Serica management are (allegedly) doing in collusion with Mercuria/Tailwind. What he is suggesting couldn't happen at EnQuest because of the large holding of AB and family + EBT and Foundation. I would also argue that AB has shown more integrity than certain other CEO's in the sector. He values his reputation and I don't get the impression that money is his sole driver on a personal level.
People are bandying about ideas that other companies should buy us because of our tax losses.
This explains it better from 3:00 https://www.youtube.com/watch?v=mAs5ypkzvOU They think they're Moe Greeen. They're falling into the trap of thinking from a today viewpoint. AB is months and years ahead. He knows our strengths plus Gareth Penny didn't join EnQuest for a stopover imo.

*Jeremy Hunt explained inflation via a social media video with coffee cups and what he's going to do about it. He shows why a coffee that cost £2.50 a year ago is now costing nearly £3.
One small detrail he omitted, thanks to heavy taxpayer subsidies, a flat white from the Despatch Box coffee shop in Parliament is still only £1.85.
He can't even get that right!

Headline today on Energy Voice "Whopping 76% of Scots want North Sea production despite energy plan"

That's a bit awkward. Have they run it past juststopoil, Caroline or Ed?

Your other post mentioning Private Equity actually works in our favour I believe. They take bigger risk (and a bigger cut) but are totally mercenary. There is a vacuum forming in the North Sea, driven to an extent by EPL, and traditional investors in the sector are afraid of investing in fossil fuels. The PE people need to be courted. That is why Labour is at Davos.

Morning M - there was also another clip on the news where Rachel Reeves (shadow chancellor) was asked about ending oil in the North Sea. It was a much softer reply than when they are asked about Tory policies and was a clear pull-back on earlier aggression towards the industry. I'll try and find the clip today but it was along the lines that "there is an important role for O & G in the transition to net zero by 2050".
My immediate thoughts were that they realised how much of a corner they were putting themselves into and this was definitely walkking back on their earlier stance. We are acting as though Corbyn is due to take over in 2 years. That is far, far from the case. I think that they have spoken to the industry and are now more aware of the effects of closing down fossil fuel too early and of course how to replace the missing revenue. Oil would just have to be imported if they follow the climate extremist path.
Another thought on NO new O&G fields. Until we see the results of the 33rd round we'll be in the dark but I wonder how many are next to existing fields and could be argued are extensions. Bentley and Bressay have progressed quite a long way in analysis and a FDP for both could be speeded up. They are decades old in appraisal and if anybody can spin a situation it's a politician.
I think AB's stance is perfect. He is a match for any politician and he may well be strengthened by Equinor support. It would also be a great headline for Labour to play with if they could spin a Harbour Damascene conversion. The facts haven't changed and renewables aren't total energy. They are electricity basically - around 20% of the UK needs.

One day fundamentals will return.

"renewables can power a great civilisation - just not this one"

https://twitter.com/aeberman12

You have to go back 21h as I write to see the video of a discussion titled 'They're not making oil like they used to' between Art Berman and Nate Hagens A scientist talking to a a PhD in natural resources but it is very entertaining and illuminating. Might be a bit long for some of you but from 1:06.40 you get the best slap down of renewables I've come across. I will add that Art Berman is coldly analytical and often writes what I don't want to read. I didn't warm to Nate Hagens but he is a great interviewer and breaks down complicated subjects into bite sized, easy to understand components. I would push all of you to watch the video - it goes much quicker than most. I'd love to be able to get the graphics he uses from EIA and Labyrinth.

We need to get away from gas regarding EnQuest. We are a conventional, heavy oil company mainly and that has greater value. The US is running out of oil and there is a shortage of conventional oil. The video explains.

Finally, following the Harbour results I will be pushing hard for a dividend. We cannot be far from the company being in a position to pay them. We are treated as capitalist fat cats feeding off the poor and hungry yet we haven't received a penny from this company. Personally I would want 2p. I don't say that as 2p but would settle for say 1.5p. My personal figure is 2p but have no topside; it is a minimum. I believe a lot of LTH's are in around 22p. That would not even be 10 percent and is hardly a massive return. It could be described as a special dividend to avoid committing dividend payments to an unknown future. We may not be as important to the company going forward but we put our hands in our pockets when we were 'untouchables'. Time for us to be partially rewarded and it is now (imo) possible without damaging the company's forward progress. They must listen as they may need us again. I doubt we could scupper any future deals but we do have the potential to make life difficult for them.

Oh M - and I had you down as a smart guy. Plan B if energy prices decrease was always for O&G to pay for Covid. I do like the quote "North Sea piggybank" and will steal it. Sums up the situation in 3 words. British politicians have always been masters of expediency. Is it that bad in Belgium - or Sweden and Norway where I know you disappear to for months at a time?

*during your last absence you were being compared to Jeremiah Johnson on here - it wasn't me, honest guv - my account had been temporarily hacked.

Zippy - in case I misunderstood your question. These initiatives attract a lot of paperwork and delays in getting paid. This drives away the guys at the sharp end who have families to feed and are not normally the types who enjoy paperwork. The companies that jump on the back of these "Energy deals" have a much higher failure rate than established businesses because they are basically built on subsidies that are treated by the govt in power almost as indulgences. They look good on paper but seldom work. Look at PPE grants and a painful lesson I learned was when I shorted EAGA. I was counting my winnings when Carillion bought them. Carillion followed them some years later. EAGA was built on the Warm Front Grant, little else. These aren't companies supporting infrastructure, producing or making things. The worst aren't that different to bitcoin imo.

I was hoping nobody would ask that. It was August 2012 and an add-on qualification. It all goes back to the Housing Act 2004. The Labour Govt was bringing in something called a Home Information Pack (HIP) which pushed the responsibility on to the seller to get a survey of the property (the Buyer could still commission one). Part of the HIP was an Energy Performance Certificate (EPC). It was a Labour bill and basically it would now quantify the insulation properties of the building (commercial came slightly later) and give it a rating. The Tories on coming in cancelled the HIP immediately but kept the EPC.
It was populism because if you moved you couldn't really avoid a survey but Tories played it as an unnecessary expense. It went back to a system that was like the closed shop of old. The same property could be surveyed many times before a deal went through. The HIP would have insurance and effectively mean that one was enough. It was bitterly opposed by RICS who have an exceedingly high opinion of themselves and obviously a vested interest - it may be incendiary but I think most are Tory voters. Sellers no longer had to pay for a survey and most buyers thought they got one from the mortgage company. They do get a survey but it is a "valuation survey" not a condition survey and basically acknowledges only that the building exists and isn't derelict. *RICS have now adopted the HIPS type survey which was superior imo. This does relate to our current situation in that certain interests are more than happy for the public to keep their ignorance and be told lies that they are conditioned to accept (9X cheaper).
The GDA role was to see if a property qualified for the plethora of new ideas and gimmicks around to increase energy savings and insulation - (it wasn't the school thing but loosely connected). They were mainly poorly thought out, relied on grants and swiftly disappeared. Heating Engineers just gave up and went back to tried and tested.
The technical ratings were worked from the same source as building Regulations (BR) but simplified. Architects would work from the BR's but there requirements are stricter but there isn't a great difference (L7 territory), in fact they should be the same but I'm not an engineer.
I kept the Surveying qualification and if I wanted could have joined RICS who belatedly accepted defeat and moved into the 21st Century. I also picked up a plumbing qualification along the way and became a MCIPHE.
I was never a brilliant plumber or surveyor because I took them up late in my life (50+) but I do have a lot of contacts. I also have enormous respect for the people who make sure we're kept warm, safe and can move around. What I learned basically was that Government interference is pretty hit and miss whilst legislation might get the same results by using a system of drawing straws. It is Darwinian.
As the video I linked says "roads don't have a vote in the way that nurses do".

You're talking common sense Frac and that ain't so common any longer. This government is hostile towards the industry and doesn't seem to understand the importance of oil [I'm not concerned so much about gas as conflating the two just confuses the public where the biggest bill is electricity and heating]
There MUST be negotiations between the few remaining energy companies in the North Sea behind the scenes. They're playing hardball with the nurses, doctors, rail workers whilst ignoring the cost of eventual settlements. Remove the experience, expertise and riches of the North Sea and the British P/L Account won't look so healthy.

*If you wish to depress yourself further this explains how far we've fallen:
https://www.google.com/search?q=duncan+weldon+economist+brexit&rlz=1C1GGRV_enGB751GB751&biw=1680&bih=939&tbm=vid&ei=JRTJY4n1FZKQ8gKKs6jICQ&ved=0ahUKEwjJm5y9r9P8AhUSiFwKHYoZCpkQ4dUDCA0&uact=5&oq=duncan+weldon+economist+brexit&gs_lcp=Cg1nd3Mtd2l6LXZpZGVvEAMyBQgAEKIEMgUIABCiBDIFCAAQogQyBQgAEKIEOgUIIRCgAToICCEQFhAeEB06BwghEKABEApQ2AhYrRhgzhtoAHAAeACAAXaIAZgFkgEDNi4ymAEAoAEBwAEB&sclient=gws-wiz-video#fpstate=ive&vld=cid:9a89a75a,vid:R5g_S9BBtqw

Headline on Energy Voice today following AB's Davos interview:

"EnQuest CEO takes shot at ‘particularly unstable’ UK tax system"

The Government won't listen because they have other more threatening issues to attend to. Largesse is wonderful if you're getting it but someone has to pay. A lot of hope pinned on renewables that are about to have their stabilisers (subsidies) withdrawn. I sat in with engineers at a talk given by Mitsubishi some 12 years ago about air and ground source heat pumps and their efficiency. They got ripped apart by heating engineers who said their multiples didn't work without extensive insulation and new plumbing. There has been some progress but unfortunately physics gets in the way. There was some progress regarding insulation when Labour were in charge but Cameron and Shapps soon put an end to that. I met Shapps at BRE Watford. Totally underwhelming. It is where I got my qualification as a Green Deal Domestic Adviser. It cost pennies as take up was so poor and offhand I can't think of one initiative that has worked. I earned some money scoping schools with the qualification.
It might surprise some here but social housing is far better maintained and insulated than a lot of private housing. This Government doesn't care - simple as that. It looks like we'll be taking our chance with labour in 2024. They're actually better than with this shower.