Member Info for romaron

Juan - from the article "All responses leave the ultimate cause of energy underinvestment unaddressed."

That's because JustStopOil now run our energy strategy.

I was thinking along the same lines. IF, and it's a big IF, the SPR has a role in modern economics, especially as the US is largely energy independent, does it really need refilling?
The $70 put has a use as a sop to US producers to invest but who may just say, "sod it - we'll wait for a friendly Republican administration and enjoy the current FCF". There is a danger to Biden that the US O&G industry has the leverage. Big and influential as the US is can it overrule the market? To an extent but what happens in the US will impact the UK too.
What if oil never gets close to $70? It is different for a country with energy independence but the r.o.w. needs fossil fuels. Biden is spending the family silver at present. I think Saudi Arabia and Russia are more patient than the US voters.
Nobody is currently addressing the systemic lack of new oil. Biden has few friends in the industry who to simplify it to childish terms can always say "well he started it".
Biden has commited a grave error for a politician. He's forecast a future price and believes he can outsmart "the market". The SPR card has been played and I wonder what he has left?

I found a note pinned by an arrow to my front door this morning (Ok, another email) signed Jeremiah. I think he's missing us. He was having Grayling for dinner, same as yesterday (and probably the days before that). When he left over a month ago BJ was the UK PM but on the way out. He didn't say but I wouldn't be surprised if he's run out of money. I mean, 50 Euros won't last forever. He cycles everywhere with his tent but has taken an upgrade and is in a friends cabin iand has access to 2 TV channels from Norway. Luxury. I delicately asked him about hygiene and he said he smells of firewood so at least we know he cooks his food.
This was my update "When you return to civilisation you might well have the best view on going forward. The performance of oil and EnQuest has been disappointing but fundamentals are secure. Finance is arranged and you cannot ignore field declines. With NO reinvestment there will remain an oil shortage and the only mitigation will be the recession. Even the US can only respond in a limited way and we [EnQuest]are still wrapped in over $2bn of tax losses.
Eventually political animus towards oil will have to reduce otherwise oil companies will NOT reinvest and oil can only go higher long term."

As long as a polar bear doesn't get him we might see him before Christmas.

Our View: The Biden Put Philip K. Verleger, Jr. October 20, 2022 President Biden has followed the example Alan Greenspan set in 1987 when the former Federal Reserve chairman cut interest rates to reverse the largest one-day drop in the Dow Jones index ever. He then dropped rates several more times to keep share prices high. His strategy became known as the “Greenspan put.” President Biden has done the same in the oil market by assuring a floor price for domestic producers. According to his recent statement, the US will buy oil for the Strategic Petroleum Reserve if prices fall toward $70 per barrel, which gives producers a financial guarantee. In announcing his plan, Biden has done more for domestic producers than any president since Richard Nixon. Most have forgotten that Nixon overruled his Cabinet task force on oil imports when it recommended replacing the oil import quota system, which protected the income of domestic producers, with an import tariff. Biden’s “put” provides similar security. Although most will say nothing given the industry’s animosity to his administration, US producers are likely cheering Biden’s action behind the scenes. For example, Harold Hamm, CEO of Continental Resources and a former energy adviser to Donald Trump, will welcome this development after his shareholders decided to sell their holdings back to him. Continental can now plow ahead with its drilling efforts knowing that Joe has its back. Oil exporters, though, should be afraid. Academic research has shown that Greenspan’s put increased investors’ willingness to acquire shares. Ultimately, their buying created a bubble, and shares collapsed. The Biden put will have the same effect. Still, oil drilling in short-cycle fracking projects will accelerate. US producers will expand their output, no longer fearing a reaction from OPEC+ to drive prices down. Thus, US crude oil production should increase when investors understand the Biden put. This means the burden of market stabilization will fall on the shoulders of oil exporters as global consumption drops over the next two or three years. Thanks to Biden, US energy dominance could return.
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fracking tap turned to ON again. The Saudi's won't like that and it's far to complicated for our masters. US -Cartel of ONE.

been out all morning, have I missed anything? Joking.
I actually think this might be what British politics has needed for some time. Maybe we'll get politicians who actually want to serve the country and leave the gallery and histrionics to the US and a few others. I don't think Labour is the answer yet as they've been playing the same game but are likely to be in power before not too long. I blame Boris and Brexit as the main protagonists. It had to get worse before it got better. I hope AB sits on his hands. Labour politics are still based on dogma. Niicola Sturgeon must be wetting herself. This is Scotland's best chance ever for Independence. That's another thing AB needs to consider. Things are moving fast. Investors should/will steer clear of the NS for now.

Couple of questions asked. KO I think we'll go for buybacks as you can turn them on/off. Dividends are much more tricky once started but a good chance we'll get a small dividend.
Auson - I know FA about Biden's next move but I think he's trying to run with the fox and hunt with the hounds. He has offered a convoluted deal where the US Government will have fixed contracts to replenish the SPR. Naturally it'll be with US producers. I think they'll have a rethink post midterms.
Tarmak - you didn't ask a question but I don't think Moody's have issued a new rating yet? EnQuest will pay for the service (pretty sure but might be worth checking). That doesn't mean you get a better rating but it does mean you can speak to them from a client perspective. If they've made an error IR should be on to them like a shot.

Build it and they will come - never thought the question would be "where to build it?"

Just got a message from JJ a.k.a. modestus. He's doing his annual disappearing into the back of beyond and contacted me with a combination of beating on trees and smoke signals (OK a Library in Røros). He's been travelling in Jæmtland and Væsterbotten (wherever that is) and seems to be living off the land. Fishing and no doubt catching the odd moose. He has lived in a tent the last month. Nutter.
He asked me what was going on with EnQuest. This is what I wrote:
"the dollar bond is refinanced at 11.625 and we'll know more when it is launched on 25 October. We have a collapsing Conservative government and Labour waiting in the wings and hidebound by dogma.
Our politics are a mess. We have JustStopOil blocking roads and no real plans for energy other than the "promises tomorrow" of renewables. We need a nice cold winter. Biden is f*cking up the US with his SPR releases whilst attacking O&G he is asking them to build more refineries rather than share buybacks and increased dividends.
It is actually more promising for us imo but we need to galvanise Joe Public because they have been lied to for the past decade. Yesterday EnQuest took a bit of a dive but I think that is more a case of illiquidity in our shares and turnover wasn't huge. The selling was from Sweden and there are 1,001 reasons to sell including the 3 D's (Death, divorce, debt). I expect a bounce back today." He assures me he wasn't the seller.

You're all a bit odd. Not nice and normal like me.

Was there a prospectus cos' I haven't seen one? I'm hoping it is similar to the old one and will be fixed on the Luxembourg Bourse. The old one fixed today at 99.813 and I guess its par really and the slight difference is highly technical and partly because it's an interest bearing product for 6 more days.
The new bond will be interesting to see how it performs. At a discount then the company's timing was good and at a premium it will show the company is well thought of or interest rates are going down. At this moment I don't give a flying F but it should release some news and in these perilous and fractious (new word) times issuing a bond at a decent rate is something that should be well received. Let's see.

The Labour motion by Labour for a "Ban on fracking for shale gas bill" was defeated by 96 votes (326noes/230ayes)

Some sparring over the whip and whether it is a vote of confidence. Some Tories were against fracking but it looks like all the Labour members want fracking banned. Fair enough but sometimes dogma trumps what is a safe process in many parts of the world.

*Dunno about fracking but I've never seen our politics more fractious.

Expected around 7 p.m. It confirms Labour's position of anti-fossil fuels in almost any form or production. The Tories have initiated a 3 line whip to make sure they win. Always a few rebels and certainly not helpful.
Interestingly part of Labour's argument is that the UK wouldn't benefit anyway as the gas produced would be sold at the market price. Er, what about the royalties and taxes it would create? Labour are spouting half-truths and plain lies. Energy security is irrelevant.

Funny old world. Once upon a time Labour supported miners.

Hi Bastan - thanks for that. There are companies, funds and individuals having a rocky time at present. Sometimes you have to sell stock because the liquidity and cash demands force it. I'm a long way from panicking myself but the world is getting crazier by the day. I actually think O&G is one of the sanest spaces. Being unpopular isn't permanent and I see oil (even more than gas) as an essential.

True, but the question is around the will of the companies to commit. With the Tories flip-flopping and Labour taking a stance against oil companies I wouldn't. If we're right then our negotiating position will be stronger in a few months. Polls currently indicate Labour will win in 2 years. I think the companies will either wait or find another place to invest. That is prudent.

mrc - we'll need partners to develop B&B. Are there any in this economic climate? They're essential but with the kidglove approach to activists and the terror of a bad headline few dare raise their head above the parapet. I'm not expecting anything until those promoting renewables run out of excuses and they [renewables] are judged on an ER0EI basis. The public may start learning the truth when blame starts to be apportioned for energy shortages, rationing and queues that could have been avoided.

Hi Jeffrey - I've thought for some time and mentioned here that our stock is fairly illiquid. There aren't queues of investors to buy O&G despite the phenomenal FCF. You also put yourself in the firing line as a fund if you dared buy into O&G so if you want a peaceful life then just avoid the sector. I'm guessing but I think somebody has divested today. There is so much going on in the world that it could even be profit taking and a need to cover losses elsewhere.
I bought small today (all I could afford) because the price is ridiculous and we aren't that far from a dividend. We have the tax losses of several billion $ to get through and reserves for 12 years. Bandwagons are also safe places to be until they aren't. Vocally supporting the O&G sector is considered vote-losing so we have few supporters in the political space.
I'm unhappy that the dire state of our industry is still being ignored but eventually the facts become unavoidable. It is unclear what the alternative to just stop oil is. Go back to an agrarian state where the poor and sick increase? Where is the politician who'll stand up for this essential and important part of the UK economy?

Sorry Dumbly but Labour won that round. I was listening to a discussion with Meta and Google representatives being attacked for misinformation. Nothing new there but what was surprising that even when the misinformation in the detail is changed the headline is rarely affected and that is what sticks in people's minds.
So basically Rachel Reeves and Ed Miliband won. You'll never get one of the activist groups to correct something that has supported their argument even if it is blatantly incorrect or actually a LIE.
Donald Trump has been getting away with the same thing for decades. Alternative facts are now accepted.

Well we did want government to listen. Shame it was to Just Stop Oil.

https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/18/fact-sheet-president-biden-to-announce-new-actions-to-strengthen-u-s-energy-security-encourage-production-and-bring-down-costs/

"Second, the President is announcing that the Administration intends to repurchase crude oil for the SPR when prices are at or below about $67-$72 per barrel, adding to global demand when prices are around that range. As part of its commitment to ensure replenishment of the SPR, the DOE is finalizing a rule that will allow it to enter fixed price contracts through a competitive bid process for product delivered at a future date. This repurchase approach will protect taxpayers and help create certainty around future demand for crude oil. That will encourage firms to invest in production right now, helping to improve U.S. energy security and bring down energy prices that have been driven up by Putin’s war in Ukraine. "

So says the Western Energy Cartel; I wonder how OPEC +1 feel about that?

Pure theatre and a farce. This is part of the 3rd reading of the Public Order Bill.
https://twitter.com/willgeorgelloyd/status/1582413669341663238
Yvette Cooper used comedy to avoid what is quite a serious problem imo. It looks likely they'll be the next administration and the old phrase "making a rod for your own back" has survived centuries so is self-proven. It is always tempting to take the easy road but energy problems will still be around whoever is in power.
Today's News:
Former Shell boss urges industry to combat 'energy illiteracy'
Highland Community says landscape at 'saturation point' as new 656ft turbines planned
Oftsted workers protest 'paltry pay offer'
BlackRock tells UK 'no' to halting investment in coal, oil and gas etc...........

The problems will still be with us and if Labour get in they will be exacerbated. A problem few wish to address is the lack of investment in O&G and it is quite easy to see why. The economy needs their product and their revenues. We already pay a high rate excluding the EPL. The current political horizon looks full of risk and you'd have to be crazy to spend billions on what protestors are demanding we stop and being supported by the opposition and Scottish government.
Change may come but it will be slow and we need a proper energy shortage to wake people up to the threat of a rushed transition. The factors that make EnQuest a BUY are not in our hands.
I cannot go in to it but an individual who reversed the traffic of doctors to the UK worked in Iraq and was at one time a prisoner there and has worked in every conflict zone around the world recently said that the most unsafe he's ever felt is in his current communications job because of the online abuse and threats.
Is it a wonder that decent and brave people retreat? When an anonymous troll can make your life a misery and are backed by opposition parties?
I'm still holding because it can only get worse but that will take time. I think this winter will help.
I'm relaxed because I'm wrapping myself in the tax losses ($2.627m @ 30 June 2022) until the REAL world intervenes.

Be Lucky

I think Labour will go where they "think" public opinion is. They can say pretty much what they like as they're not in power.
We haven't really started winter yet and events are still to unravel. Meanwhile thos two idiots on top of the Dartford Bridge are alienating increasing numbers of the public who just want to get on with their lives.
Another way of looking at it is the facility that fossil fuels have of helping fund the NHS and Education for example. Take their tax revenue away and do what - windfall tax renewables? Because of their expensiveness [renewables] I don't think so.
Perhaps people should look around next time they visit a hospital. The amount of oil products used are everywhere. Oil both helps hospitals function and can also contribute enormously to their running. They also need to be kept warm in the winter because it may go beyond those climbing bridges but hospitals have a lot of sick and old people in them.
Blocking ambulances from reaching them isn't a vote winner.

https://www.tiktok.com/@francis.bourgeois/video/7025284261615799558?is_copy_url=1&is_from_webapp=v1&lang=en

I was unaware of this guy until Sunday but his TikTok videos are so stress relieving and most are just unadulterated joy to watch.
Another https://www.tiktok.com/@francis.bourgeois/video/7035690110783917317?is_copy_url=1&is_from_webapp=v1&lang=en

I shall never take the mickey out of trainspotters again. I'm sure there's a little bit of them in everyone of us.

"Cartels attempt to increase members' profits while maintaining the illusion of competition. There are 4 forms of cartel activity: price fixing, sharing markets, rigging bids and controlling output."

And if you have the mightiest military in the World is it possible to create a Cartel of One? The US do all the above when their interests are at risk.