Member Info for romaron

On my way to the Post Office to send the Black Swan to No.10 I had BBC Radio 4 through my earphones. At 10.30 "You're Dead to Me" was about US prohibition and its implementation and after effects.
Alcohol was the fossil fuel of its day and the do gooders succeded in banning it in the 1920's. It failed. There were more Speakeasies after prohibition than legal hostelries before. Crime took over because the demand was there. Politicians and even the President were heavy drinkers and had their own sources, both in the White House and the Capitol.
What changed? The Wall St Crash of 1929. Govt needed revenue so brought back booze so they could tax it. The sentiment and timing was perfect. It certainly rhyhmes with today when politicians are again in trouble. There is a lot of life left in oil.

The competition proved one thing for me. You lot would compete for a leftover brussel sprout but I have a more interesting prize for 2023. My daughter has been trying to educate me (a work in progress) and bought me "The Expectation Effect" by David Robson as one of my xmas gifts. The blurb is "How Your Mindset can Transform Your Life". It isn't the usual self-help book and is deeply researched with actual data from the likes of Stanford University. It gives rigorous, science based insights and even has good things to say about stress.
I'm sure the algos have read it but the most important thing I took from it was that a positive and optimistic attitude has been scientifically proved (from data) that they live longer than pessimists. That is my message to Trolls. Enjoy spreading your poison you haven't got long.

So the prize is a second hand copy. No real idea of the competition. We could make it the same but end date the AGM 2023. I'm open to ideas.

*my daughter worked with David Robson and apparently his brain is as big as a planet.

We actually did better than a lot of sectors (apparently). Like many of you I'll be recalibrating for 2023. I read the latest Adam Kay book, Undoctored this holiday and I don't hold out much hope for any compassion or understanding from Jeremy Hunt.
Adam Kay is an intelligent and experienced ex-doctor who because of his fame actually got an appointment with JH. He had rehe****d his points and was well prepared. He admitted to being slaughtered in the exchange. AK was never a member of a debating society. It was a cat with a mouse. Honesty and dedication are no match against a seasoned politician who doesn't care about fall-out but has his eye (always) on his job and re-election. Miracle money is still the currency and if you can take it off an industry with few friends by sleight-of-hand you will be rewarded.
The damage continues to be wrought and the much vaunted EPL Investment Allowance looks like getting few takers and one problem may be because the banks are not prepared to advance loans against reserves that are hard to value against a backdrop of a hostile govt.
I'm always optimistic and think EnQuest are one of the better placed companies to weather the coming turbulence and believe that the damage caused by lack of investment in oil in the NS will more than compensate the recessionary effect on demand. They keep harping on about the nS beinbg a mature basin. That means OLD and we know what happens to natural declines on OLD fields.
In 2023 I think our patience will finally be rewarded. The ball is with the Govt imo.

Be Lucky

The closing U.T. of 2022 was 21.40 making Pyueck the clear winner with his price of 19.50

2cnd and 3rd were Slift with 27.80 and Northernmonkey 28.25

Pyueck was the lowest of the range that had a top price of 66.60 and congratulations to the winner.

Google says we are actually up 9.74% YTD but it certainly doesn't feel like it. 2023 looks like being equally eventful. Maybe we should do something similar again?

Pyuek your Black Swan is ready. Please email romaron49 at gmail and we can arrange postage.

2 more trades around 11:30 (455,107 and 453,035). We might not be interested but somebody was. Looked like BUYS imo.

And of course they won't sit and wait if something major happens. You could argue too that the real deals are made away from these meetings; for instance when Biden visited Saudi Arabia.
I'm more interested in the future actions of the UK Govt.

Normally I don't bother with trades because they are so misleading and there are so many. This time of the year the trading is more desultory and easier because of low volume. EnQuest trades today are odd. Again 2 trades for c. £50k stick out but even more confusing is that the first trade isn't until 8:38:02.
Do Algos have lie-ins?
I was using this link: https://www.londonstockexchange.com/stock/ENQ/enquest-plc/company-page

I suppose even Algos have to have a reason to get out of bed but at first glance it seems we weren't a first port of call. I checked HBR and SQZ trades and they were normal. Start on the crack of 8:00.

Unless it is a computer glitch it appears we are very much on the sidelines and we should ignore the price. It seems there is a considerable lack of interest in us. I think the £50k trades are sells but am reading nothing into that. It could be anything (the D's Death, divorce, debt, diversification etc..) and there'll always be the trader/s with his/her own weird model.
I liken our share price to what an auctioneer might value an item prior to an auction. You wouldn't want to sell over Christmas but you might pick up a bargain.

I discussed this last night with another investor. He thinks the recent AB buy was the most significant event this month. He also corrected me on the firm NO I got from Martin Houston regarding approaches at the AGM. What else could they say? And it was the most easily parried of dumb questions. If they had there would be an RNS and if he said YES it would have got the management into trouble.
It doesn't stop others kicking the tyres or checking us up on Zoopla though. Both of us expect things to happen with M&A in 2023 and I think it unlikely we'll remain on the sidelines - that or maybe movement on B&B.
O/T I looked at our trades today. It confirmed that human beings are basically enjoying the break and almost ALL trades are Algo. There are 4 potentially interesting trades each of c. 230k between 8.:8>8:51.
It does though illustrate that the Algo models don't sleep or take holidays. No different really to today's horse racing at Catterick and Leicester. Bets will be placed and laid off still. That is what we are seeing and (I suppose) it is mainly following the oil price andthere are the most complicated derivatives and arbitrage trades done in nano-seconds by mathematical formulae with pointy heads all thinking there's is the best model. It brings in regular money but will never match the profits of getting the right call on a major event. No doubt Ladbrokes and William Hill have state of the art computer models too but big bets still require a rails bookie and human involvement. No real sign of that but I only looked us up, SQZ and HBR. Zilch going on except possibly those 4 large trades. There was nothing of consequence with HBR or SQZ.

"Final investment decisions (FIDs) are being predicted for a series of large untapped oil and gas fields in the UK North Sea next year.
Analytics firm Welligence said, alongside the announced FIDs planned for Cambo and Rosebank, progress is expected on Perth, Bentley and Bressay in the North Sea.

EnQuest (LON: ENQ) acquired operatorship of both Bentley and Bressay in 2021; large oilfields close by to one-another around 85miles south-east of Shetland in the Northern North Sea.
The London-listed firm said in March that they added almost 250m of barrels of oil equivalent to its 2C reserves and that it was exploring a range of development options.
It added that a field development plan would be advanced in 2022, though this has yet to filter through to the public.
The two fields are close by to one-another, and a boss at Xcite Energy, which used to operate Bentley told Energy Voice that developing them in tandem was an “obvious” solution.

He added that the pair are “quite likely the same field, or they’re very closely related”.

Bentley lies less than 10miles from EnQuest’s producing Kraken field."

The last two sentences interest me most. Those involved don't folow the daily fluctuation of the share price. I wonder if EP is in the equation?

Being of a suspicious nature I do wonder about a Boxing Day release. Having said that there isn't much news around. Then again what made Welligence release today. They don't appear to be a mickey mouse outfit.

*Finally a benefit from my wife's Amazon Prime account. All the Premiership games to day for free.

That's clever thinking Tigar. Bit cruel though to mention it was in the prospectus. Someone will bite. I'm taking your word for it.

Sorry - I didn't see that Stevo had addressed me. From his post "any decent finically text book will clarify."
So Stevo, you learn it from a book.
I've seen all these ratios and even your post is wrong here. Our EV to MC is about 2.5 on accepted valuation methods. Play with it as much as you like. Torture the figures till they say what you want to hear. I don't like it that 2C are valued at ZERO but they practically are. If there is no accomodation between Govt and the UK G&O industry then a lot of 2P will become 2C.
You have your own method of calculating EV but I'll stick with the accepted method used by the majority and make my own adjustments. You haven't once mentioned the calibre of the EnQuest management and I imagine that you're like the rest of us and a bit in the dark on tax losses. You can only learn so much from a book or an armchair.
BTW - my post that you copied onto SQZ Wednesday was from an article in The Times, not the FT.

I shan't be replying to any further posts from you. They don't add value for me.

Hi L7 - I think the $1bn was a nominal figure. Your workings make sense. There may have been a figure needed to tidy up the contracts so it is a very rounded figure and BP would most likely pick a number that they didn't expect ever to be reached [I won't have any EnQuest shares left above £2]
What I think Stevo misses is that there are common sets of accountancy rules that companies generally follow. Of course the lease was important but the heavy payments were at the front end and are getting cheaper though maintenance may increase. Companies aren't always out to hide costs or dupe shareholders but will have them signed off by an accepted Audit carried out by a reputable company.
Although it seems we are given a lot of information we will never match the plethora of moving parts and knowledge that the company has and they in turn use tax experts and lawyers for the further intricacies. Just read SQZ - there are several sharp people on there and at least one is an ex-partner of a large accountancy firm. They admit to lack of information and gaps in their knowledge. They are dancing around the tax losses on there because basically it is above their pay grade unless they are a UK, oil industry tax expert. The info required would COST and why would a tax expert give it freely? In fact they could be liable for a future personal claim if they breach the anonymity provided by the message boards and are deemed to have given advice.
I think that if you asked EnQuest about the treatment of THEIR tax losses they'd reply "how long have you got?"
The vagaries and treatment of tax is a specialist field which is why they get paid big bucks. It takes years of training and a deep knowledge backed by experience. You're unlikely to find a definitive answer here.
You have to consider this when you ask the management of EnQuest questions. They have to weigh up potential litigation if they stray into too much detail.
I'm hoping to learn a lot from SQZ if it blows up - it isn't at EGM levels yet but you never know.

Hostilities put aside until next year. There is a certain amount of willy waving on message boards and I'm not an innocent. 2 excellent posts this morning. AOK and his erratic numbers plus Tarmak asking for criticism.
I'd say to AOK that those numbers aren't EnQuest specific. I'd go further to say that I think there'd be a consolidation around the 22p mark for LTH's because they held pre Covid and EPL meaning they would have been unable to resist the sub 20p (even single digit) prices plus RI's helping firm the average so the last 5 years of -73.84 does not apply to many holders here.
Tarmak is inviting criticism and that is to be applauded. I think we're lucky to have him and it is useful to have a base number for reference purposes and projections.
I'm enjoying the Serica - Tailwind story. I'm not invested there but it is a massive indicator for us. PE is always sniffing around and they don't take prisoners. The SQZ holders are up in arms but haven't asked who might buy them if Tailwind exit? They clearly want to sell and are now castigating a management that made them a fortune in the past. PI's can always sell. It ain't so easy for founders and Directors.
I'd even suggest that Tailwind's offer isn't too bad. PE (Mercuria) look at various vehicles to make money from and to use as exit facilitators (EIG - Harbour?). I've no idea what their plans are but they usually have more than one. One thing it will hopefully flush out is the exact way that RFCT and SC losses affect the deal and we can bring it into our calculations. Reading their [SQZ] message board it seems there is a large amount of ignorance about its impact and what it can be applied to..

A very interesting end to 2022.

Merry Christmas tutti.

On that I totally agree with you Martinen. I read that analysts set up their models and adjust as events and company releases of importance are fed in. The Inland Revenue don't really care too much if the accountancy shuffle doesn't assist tax evasion. If Accountants were so great it makes you wonder how the complete collapse of large companies and fraud happen so often. The best names in the business make elementary mistakes it seems. I guess there are also debates about how to treat specific items that fall into a grey area.
This is salutary and an example from IR yesterday "With regards EPL, we continue to work through the various potential impacts on the business but certainly feel the incorporation of a floor price would make the EPL mechanism a much more reasonable proposition."
I'm guessing but imagine getting a straight and simple answer from the Treasury on EPL isn't that easy.

*Annoyingly James Hosie has been more right than other analysts. His run is about to end.

BTW - I forgot. I think Stevo is AI and they're struggling with the "I". Humourless and picking it up as it learns more. Completely misses nuance, has to be a machine.

Hi Martinen - seems like you're in the financial shallow end with me (I'm the one with the Dinosaur inflatable ring). My advice would be to take notice only of what you understand. Before long they'll be arguing about the new Teasmade and should it be opex or capex and is it EPL eligible. People like the comfort blanket of figures but events always overtake. It is important to have prudent accountancy policies but none of them prepared the smaller G&O companies in the NS for the draconian level of the windfall tax for example. It shows our resilience and the serendipity of tax losses.
At the moment we can only sit and watch as our debt continues to tumble. I'm encouraged that Mercuria want to grow whilst EIG wants to move away (Tailwind and Harbour) but at the same time it facilitates exit and reshuffling of assets.
EV means little to me. A row of terrace houses may have an average sale price of £800k. We don't know which ones have large mortgages or none at all. Some have loft rooms and extensions; are more energy efficient but the corner one has a large garden that may have development potential. The EV is still around £800k but you havce to make some adjustments.
I suppose even valuing through reserves is tricky and I think I read somewhere that banks are moving away from RBL lending.
Hang on I've got to move. The guy with the huge green tractor tyre getting in is Stanley. You don't want to get even more confused. He'll try and sell you some Hopium or get you to join his protests.

*recorded after close of business sometime between 17:11 and 17:22

Bit surprised on LSE 17.493mio. Didn't have to look far as it was 2 trades timed at 10:12:15/16 each for 6,985,000 shares at 21.25.
Unusually large. Things are happening.

21.12.22 10:12:15 21.25 GBX 6,985,000 1,484,312.50 Off-Book TNCP LRGS ECHO XOFF
21.12.22 10:12:16 21.25 GBX 6,985,000 1,484,312.50 Off-Book TNCP LRGS ECHO XOFF

I wanted to add. Our deal with Equinor on Bressay is strategically brilliant, closely followed by the Bentley deal. With Gareth Penny now in the Chairman's seat I expect this to be played out in 2023.

*https://www.offshore-technology.com/marketdata/bentley-heavy-oil-field-uk/

It is just over a year old but why did Offshore Technology write about Bentley "The project is currently in approval stage and is expected to start commercial production in 2024." Preeviously Xcite had almost completed the Environmental Report and I imagine there isn't much needed to get a FDP passed. I've read elsewhere that work continues; same for Bressay. They are close to Kraken and sub sea tie-backs can go a long way. Maybe we can convince the UK Govt that they are just infills from the Kraken?

Just saw your post mrc. I'd say that in oil terms we have the recipe and just need to get B&B oven-ready. Are the Govt interested?

A comment from Alistair Osborne the chief business commentator of The Times doesn't really help the debate about valuing barrels of oil between the 2 companies. Here's the para from today's edition.
"To boot, the maths over proven reserves looks flawed. Adjust for cash, tax and a likely production drop since Serica's last count of 62 million barrels and the investor reckons Serica's are valued at about $8 a barrel. Contrast Tailwind's
41.8 million, which are also likely to have shrunk. Serica seems to be valuing them at $18 a barrel or more. How does that make sense? This deal is less slick than it looks."
I fancy Mercuria (Tailwind's backers) are the more practised and able in merger/buy outs/sales than the SQZ board. I only say that because EIG (Harbour) are a pretty smooth outfit too and meanwhile we await Neptune & Spirit developments. I doubt they'd get near EnQuest as AB makes us (like them) practically a private company and we are in no way a distressed seller or have a venal management in a hurry to cash in the chips. There seems to be a merger trend around and a need for scale. You won't hear anything from AB - it's not his way. I did ask publicly at this year's AGM if there had been any approaches? The answer was NO. I also imagine that AB's recent buying means that we have had no direct approach. I doubt it's because we are not attractive. BTW - I am using $8 as the value of our reserves and a conservative guess of 180 million barrels [Net 2P reserves 194MMboe at end 2021] and conclude that we are worth $.76 or £.628p a share. Kinda indicates that EnQuest's intrinsic value and today's valuation can co-exist. It is the market that is wrong here.
I know somebody will pipe up with "the market is never wrong". Sorry, but it is, often, and I've seen it happen countless times.

*Things not much better with Capricorn and Tullow's attempt to consolidate their romance.

He also seems to be ignoring this: "Tailwind had some $1.366 million of forward UK Ring Fence Corporation losses and $1,202 million of Supplementary Charge losses as of year end 2021".

I've no idea of the difference as I'm not an accountant but then clearly neither is Stevo so I have used the lower figure. Those benefits cross over to SQZ on a successful deal/merger. Valuation is often subjective so I just cancelled the debt against the tax losses and agree with $10 a barrel. I obviously wouldn't mind $20 but I'll stick with the analyst's suggestion. He wasn't rebutted but that doesn't mean that SQZ agree with him. I'd say $12 actually is closer but that depends on the strength of the wind when I wet my finger.

For those with me in the financiaol shallow end the calculations are as follows:
Cost of Tailwind in shares c£367M +cash £59m/ 2p reserves 41.8mboe = £10.191 or $12.33

Obviously you're using some 2021 numbers, depletion, hedging etc.... so I'm happy with $10 for guessing. The gist is that oil still has a value and some companies are suffering a discount of NAV in the G&O industry. One of the parties will have got the better deal. As I'm not involved I hope it's Tailwind obviously.