Member Info for romaron

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 A lot of hope pinned on renewables that are about to have their stabilisers (subsidies) withdrawn.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.

"Against a backdrop of ongoing geopolitical, economic and fiscal instability" from HBR Trading & Operation update today.

Geopolitical should work in favour of a UK G&O industry (presently it doesn't, maybe never will). Economic instability is not controlled by the G & O Industry. It should be mitigated by competent government which sadly we don't have. Brexit caused structural damage and papering over the cracks isn't really the answer. "Fiscal instability" is really the topping on the cake. A poorly disguised tax raid by this Conservative Government which suggests the leadership is aligned with juststopoil and Caroline Lucas. Pinning your hope on Labour doesn't look any better with Miliband and Keir's 9X cheaper quotes.

Linda Cook has shown strong leadership but you could equally ask, "what other course could she have taken?"

*Harbour have 18.38% of Bressay -

Opposite of troll - contributor, investor

example - Troll "Also remember that if you strip away the capital costs its actually cheaper to generate electricity using renewables"

Contributor - "It would be cheaper to make a cake without a cake tin or an oven"

Thanks for that mrc, very interesting. Two impressive individuals. The whole interview is here: https://www.youtube.com/watch?v=5Ttyqxk77-E
(I had sound issues until about 2:30 but I was most interested from 18:00 onwards when windfall tax was discussed).

Very telling that AB suggests a life for oil until the 2030's. Velocity of change from 05:45 and at 06:30)
I think the interview shows AB's thinking and it is wide ranging. He is a great representative for the industry.

*my view is that the high-fiving from the climate activists because of Ukraine tend to ignore the deaths of what ? Let us say a quarter of a million so far and it isn't over then there is the cost of rebuilding Ukraine (and Syria) which will require cement and diesel. Hospitals still haven't mastered making syringes from bamboo either. Then there is fertiliser. The world's problem is not fossil fuel but overpopulation. To get rid of oil is simple but is the world prepared for deaths from starvation that would be measured in 100's of millions? Read this and decide https://en.wikipedia.org/wiki/Haber_process
As for oil to 2030's I'm happy with that. It is longer than the life of many companies in other industries. Look at high streets for example. I think he means at a reasonable scale but oil will be aroubnd long past then. AB is an exceptional talent and knows the energy world inside out - he now has a formidable ally with the new Chairman.

Hi AOK - I can't find any reference to a floor for oil being set in EU regulations. They seem to be less draconian than ours and seem happy to describe them as 'windfall taxes' which means they should be of short duration and exist only if there is an actual windfall. Ours is simply a revenue raising tax-raid which is why the Tories don't use the term 'windfall'.

*Interesting that AB mentioned the problem of base-load storage for wind and solar being multiples of a 100, 1000X the cost of gas or oil. Today's notice of Britishvolt going bust isn't going to make it any easier. It looks like angel's tears and unicorn nail clippings weren't the breakthrough that Stanley promised.

We passed like ships in the night AOK - It isn't AB's way to bang a drum publicly but I don't doubt he'll be pushing EnQuest's interests hard from behind the front page. I agree with you on Hunt. Tries to look tough but is floundering.

Something like this? https://www.tailwind.co.uk/TRITON

If Bressay progresses having Equinor as a partner will strengthen our case. The UK's leverage over them is limited. It may even be possible to argue that Bressay and Kraken are the same field (that'll please Miliband, juststopoil and Lucas).
There is another diagram on the Serica site regarding the Tailwind deal p.21 It's very rough but the distance of Bittern to the Triton FPSO is a tad over 20 km from the FPSO. Nobody knows more about electrification and offshore wind than Equinor imo. I'd say that AB's comment keeps the pressure on the UK government to cooperate. The unmade threat and a gift to journalists could be "The two largest OIL producers in the North Sea to leave for safer tax harbours".

I'm not sure where we rank as a NS oil producer but it is in the top 5 I'd guess but making us second to Harbour is journalistic license.. The basin has become predominantly a gas basin for the foreseeable.

Good post Jan but why didn't AB want to own the quote? The fat lady isn't singing yet. If B&B aren't developed it won't only be EnQuest that lose out. The Conservatives are unelectable but look like taking the oil and gas sector out with them. Weekend reading was talking about a tough stance from the Treasury for hand-outs. Does 'Treasury' mean Jeremy Hunt? He comes over as a polite somewhat timid individual but I believe he is an ambitious ideologist who has now been promoted beyond his ability. The tough guy stance is more about deafness and ignorance. I think juststopoil couldn't believe their luck with his panicked pronouncements.

Hi hitman and thanks to Mod and Therapist for finding the clips -

AB is a fox. The aim of the interviwer is to get a headline. That is most important. AB never said that directly. The interviewer kinda gets his headline by saying it was dispiriting to hear OFF CAMERA that when he asked AB where is biggest growth are was he replied "it was North Sea, now possibly Asia."

AB is keeping his options open. He is generalising and being specific at the the same time. It is a political statement. Why should he reveal his position? It depends on what the government does next and also what Labour propose. AB did say later in the interview that long-cycle investmenbt is difficult. I think he has said it is up to the government to decide if it wants an oil industry (I'm leaving gas out - that is becoming a utility and we did nationalise coal). I think most accept that oil is necessary to help the transition but if the country decides it would rather import it then only short term cycle investments will work and that does perhaps rule out B&B.

Some extracts from Energy Voice:
According to the NSTA, there was “very keen interest” in these clusters, and production could be achieved in as little as 18 months.
The latest process has attracted a similar level of interest to the 32nd licensing round, which received 104 applications for 245 blocks and part-blocks.
Held in 2019, a total of 768 blocks and part-blocks were offered in the previous round, compared with 931 this year.
The NSTA will now make its way through the lodged bids, with a view to awarding licences “quickly” and supporting winners to “go into production as soon as appropriate”.
Results of the process are expected in late spring.
After licensing, there are several necessary consents companies must secure before they can begin to extract oil and gas.
Nick Richardson, NSTA head of exploration and new ventures, said: “We have seen a strong response from industry to the Round, which has exceeded application levels compared to previous rounds.
Internal analysis conducted by the NSTA puts the average time between date of discovery and first production at around five years.
But it’s hoped that, given they consist of existing discoveries, the priority cluster areas can yield first oil or gas in an even shorter time.

https://twitter.com/aeberman12/status/1614981477225332739/photo/1

Nearly three-quarters of a "fracked" shale oil well's initial production is lost in the first 12 months and a further half in the next 12 months. Operators must keep bringing new wells on stream fast enough to maintain output — this is known as the "Red Queen effect".
Argus Media

The other consideration is that shale is "over there" and has to be shipped some distance. Gas at a 16 month low. So much to take in and to top it all there appears to be no credit available. OPEC appears to be winning. And they want to blame North Sea oil producers! I hope they have a 'plan B' for life without oil.

Hi Dumbly, from your 09:58 post:

Mark Wilson from industry lobby group Offshore Energies UK said uncertainty was the key issue. “The [Norwegian] tax rate has been 78 per cent for quite a while now, which has generated predictability and stability, plus there is greater offset for investment,” he said.

----------------------

Mark Wilson is an impressive individual from his Linkedin bio. 25 years in the Army retiring with the rank of Major. Seems like he worked his way up. On the surface this is a guy who will appeal across the board to high and low. The kudos of being ex-military takes you a long way in Britain. It also means that the security aspect is likely uppermost in his mind and in a changing world this is of paramount importance. You don't stop Putins with flower power.

Before his appointment at OEUK he was HSEA Director at one of the top British oil producers in the North Sea and worked for oil companies for 10 years. For me this of significant importance and he sees the problems ahead from many directions. With his background he will have allies and be listened to. Great find Dumbly and another example of EnQuest reach.

*on the downside it looks like he's a Jock but nobody's perfect.

Ditto mrc - when you're not in power you can say what you like to the gallery. If they want to attract businesses to the UK they will have to convince companies that they are trustworthy and consistent. It is generally accepted that legislation is kept by the following government in the UK. After all it is discussed at committee stages where dissenting arguments are made. The 38% was back in November anyway and follows "labour research". Is this from the same research that tells us renewables are 9X cheaper than fossil fuels?

I cannot understand why the industry hasn't fought back against their cooked up arithmetic and misunderstanding of how oil and gas operates. Maybe they are playing a slightly longer game and waiting until Labour and Conservative actions fly in the face of what is actually happening to the public and homeowners. Gas is already down some 75% from its highs. Perhaps they'll start asking why the wind and solar firms aren't charging 1/9th of earlier prices?

I doubt the Tories would die on the hill of energy prices. It takes away some of the pressure (on Tory policies) on the NHS and Care in the Community. Then there is the point, especially for Labour, that presenting the O&G industry as a golden goose that will pay for their grandiose social plans won't work if they kill the goose. Results of the 33rd licensing round will be interesting.

Hi Frac - yes, it feels as though there is a lot happening around at the moment and I cannot see EnQuest not being involved or considered. Three years ago it was simply surviving but we've come out of it stronger and intact. Just look at Premier and Tullow. We are primed for action which I think is unavoidable.
I'm trying to follow the Serica deal for pointers to us and it is depressing reading. LTH's there did well, basically out of Rhum (more luck than judgement imo), but they are up in arms because a higher deal with Kistos was rejected (who ever really knows the details?). That could happen here but I call it ROMO (regret of missing out) which for some develops into WOMO (whingeing about missing out). Of course we regret not selling EnQuest at 35p but you can't blame management for world events, governments or the price of oil. There is one poster there (NormaStits) who belies his childish pseudonym and makes a lot of sense and is FOR the deal which makes him almost unique. Most of the rest are just WOMO's imo. These deals aren't easy to understand but it does seem that the value of oil reserves over gas is going up. Being uninvested in a stock does give you unbiased clarity I feel but the downside is you lose the imperative to dig even deeper which many of us have done here with EnQuest.
Then I looked at Tullow. Much the same there with continued criticism of the management but not one mention of an event on Friday that I read as highly significant. Their May 2026 $ Bonds jumped almost 2 per cent. But they'd rather argue and score playground points off each other. The bond market is bigger and with greater inside knowledge of the individual businesses because Lenders won't lend without it. They often know about deals from sounding-outs before the equity guys.
I can only follow a select few to get some balance and I haven't forgotten that Tullow were about to employ Jonathan Swinney until the Capricorn merger happened - (another that disappeared into acrimony) and was later aborted into another message board bun fight with the replacement deal with NewMed. I wonder where JS will turn up? He was very happy and chatty at the EnQuest AGM and didn't seem to harbour any ill-feeling; might he return in one form or another?
Both Serica and Capricorn (Cairn) investors have done relatively well considering and I do hope that when we break out this message board doesn't deteriorate as theirs have.

*Another LTH thinks that Gareth Penny was brought in as a finisher.

https://www.gdnonline.com/Details/1172219/UAE,-UK-sign-strategic-deal-to-boost-energy-sector

We have an office in Dubai and never underestimate the value of being able to speak Arabic. With his achievements and the Foundation I imagine AB has a role to play here.

last sentence "or seek a merger to survive or cash out". Spirit Energy/Centrica 96% gas? I smell Gareth Penny involvemnet.

Maybe he's agreeing with Serica management? He'd have to do a lot of digging because of that potential deal with Tailwind affecting the NS and has come to the same conclusion that oil is more valuable than gas. As the Serica CEO said "there is not a natural connection between oil and gas". Broadstrokes lump them together in the same lazy way smaller O&G companies operating in the NS are treated as one sector. He added that oil has hedge mitigation and insurance qualities as well.
He is his own man and not a house broker. When he downgraded us he didn't contact the management of EnQuest. This plus the other downgrades today is very encouraging. The NS is majorless to an extent and it isn't necessarily that we're getting bigger but the scale of those remaining promotes us. We're an important player here and have the ammo to grow. A willing seller would choose us over others because we have the firepower and aren't trying to raise finance or seek a merger to survive.

It is simpler that that though; https://www.youtube.com/watch?v=EU6KmmW38Aw

We're building.

mrc has been known to criticize self-congratulatory, look-at-me shallow posters who add nothing to the subject under discussion or that have no bearing on this company, trolls and the like. I make him right. He is knowledgeable about O&G and where his experience is limited he'll say so. I'd much rather read his posts than occasional visitors as I have a chance of learning something from him or at least a balanced comment.

People get thrown together at these events. Next week is Davos and AB usually attends and appears on Bloomberg. It is incredibly valuable as an opportunity to meet so many other stakeholders and politicians.
Sunak and Hunt aren't going. Keir Starmer and Rachel Reeves are scheduled to attend. I find that a bit surprising but commend Labour for promoting Britain abroad.

Both AB and the Labour opposition leaders are salespeople/ambassadors for business next week.

The Top 10 UKCS producers from Serica is a mixture of O&G. I believe we could be in the top 5 if it was only oil production. Using the figures from Page 9 the total O&G production (headed 2023 - how do they know?) is 977k boepd but we don't know how much is oil. Luckily I'm not an acountant so I can make my own mind up on certain things. BTW in 2021 UK oil production was 874k boepd (Statista).
A couple of things missed by over-enthusiasm over on the SQZ board imo. Kistos may well have realised they were overpaying and backed out cleverly shifting most of the blame to SQZ intransigence. I'm sue many here have been gazumped or gazundered. The deal with Tailwind is for their oil reserves and they seem to be valued much more highly than gas:
"The total consideration for the Proposed Combination of 703 GBPmm represents a multiple of ~$20/barrel of 2P reserves, with 52% of the purchase price being settled with Serica shares. But our Serica shares
trade – referencing the acquisition mark of 278p – at an implied EV/2P reserves of ~$6/barrel, a 70% discount to the price being paid!3" from the open letter sent by a disgruntled investor, Raper capital.
Then there is the loan that Tailwind have. I imagine the lender is Mercuria and in this market debt is so rarely created that it may have to be recategorised as an asset. Mercuria are putting their money where there mouth is. Could Serica go to the market and raise funds?

Presently the UK O&G market is in disarray. EnQuest aren't being looked at but it doesn't mean tyres are not being kicked. Harbour are run as a mini Shell because of Linda Cook and thinks like a Major who clearly have lost interest in the NS.

Whatever happens next the importance of EnQuest can only grow. We have the fresh $ bond and the RB plus the RBL. We are in control of our own destiny from a company perspective. I'd say our timing has been pretty good. I want dividend but I also don't want to miss out on opportunities. I doubt 2023 will be any less nerve wracking than last year but we are in a much stronger position. Of course it can be wrecked by Government directive but I still think pragmatism never leaves this Sceptred Isle for long.