Member Info for romaron

VoR 14.57 of yesterday "To be clear - its an announcement they are doing it - its not ‘done’ yet - otherwise moodys would have upgraded us (and s&p) as it removes last doubt on our funding"

So just how close are they? The release of the update on a US holiday and the quick response from Moody's and S&P suggests co-ordination and perhaps this is partly an advertisement for a "NEW" Bond? I never worked in a Credits dept. so don't understand the process.
The uplift in the existing $HYN yesterday was encouraging but could have been EnQuest buying? Is this the announcement of a tombstone. It suggests that (guess here) it has been underwritten and now they are testing the market?
Underwriters would have done there own testing so I'm expecting it to be taken up.

Anyone who does know the process please comment?

With the RB we will have appx $500m Bonds total. They said at interims they'll lean towards RBL as "a more meaningful component" whatever that means. My guess would be 700/500. You can buy or develop a lot of things with that amount of money.

Good point KO. No covenants on dividend is what we want to see. They said at half year that they hedge 50 percent usually but they would edge it with puts towards the upside so I expect little change there and that is not a covenant that worries me unduly, What is interesting is what they'll do with the money. Come the middle of next year we could be looking at a FDP. We'll have decent resources and possibly a partnership in developing (Bressay-Equinor?). UK politics is particularly fluid at this time and who knows what will happen? This administration is definitely warmer towards O&G.

So NO hedging involved in bonds which was what we were talking about? Glad you are confident that oil will be higher next year. My crystal ball is cloudy.

RB showing up .95 at 98.58. That's not a company under threat in these febrile, high rate time.

We could be off to the races for EnQuest boys!

I wonder if there is a hedging requirement? - you're confusing me there L7. I take it you mean with the RBL? I'm not gonna trawl through all the refinancing stuff but (from memory) I thought the hedging related to the RBL. I know that EnQuest likes the extra freedom you get from Bonds or institutional money as they call it.
Whatever the answer we are in a much stronger negotiating position than before and I expect us to be covenant lite with our debt. Hedging is also good housekeeping and not necessarily a bad thing.

*Our HYN was fixed today at 165 points higher. That's a big jump (97.126>98.727) so maybe it hasn't hit the market judging by the share price.

Hi VoR - thanks for that. Got to be worth a couple of pennies on the price. I wonder who the buyers are? Hardly likely to be the vulture funds who bought at 30cents. It's a double hit in my book. Takes away near term pressure and we raised money when others couldn't. Also a tidy amount to be part of the next deal for reserves.
Academic probably but details will be interesting.

That's the word KO - "information". In the world of trading if you know one side is safe then you have a massive advantage. The biggest traders attract a following. Whether they're right or wrong it is probably understanding that they in turn have excellent contacts and success builds on success. I remember when Liffe was in its heyday and you could become a 'local'. Fortunes were made and lost but best to follow David Kyte. I remember the owner of Taberna Etrusca showing me a blank cheque signed by DK. It was for their Christmas party - the owner Enzo was just told to "fill in the amount". At a major bank the sales teams played with charts but what their clients really wanted to know was what Brevan Howard were up to. It can get scary too. One do in North London had all the Cristal and girls arranged with added security. The Adams family heard about it and also fancied a party. They arrived uninvited to enjoy the festivities. The expensive security scarpered.
Close friendships are formed and sometimes tips or assistance are given to stop you making a massive loss. Dealers need brokers and vice versa. It can also work to push the price further in the direction you want. The minute Crispin Odey publicly said sterling had further to fall you could almost guarantee he wanted it higher. The media is often late with stories or miss the point Those involved cannot afford to stitch up another dealer (within reason) because of mutual interests. Parasites generally don't kill hosts. The public are blissfully unaware as are many day traders of just how it works. It ain't charts.
I'm sure there are people on this message board who've been given tips or information off the record in their business. For example tendering when you know your competitor's quotes can be helpful. It happens everywhere.
Another advantage is just to be there with facilities. Profitable deals do fall into your lap. A bit of experience when you are surrounded by panic can make you trade in the same way that Paul Scholes played football.
There is a thin line between regulators/compliance and trading.

"93% of 2021 U.S. crude oil imports were 35° API gravity or less
U.S. tight oil & deep water ouput reduced U.S. imports by 4.7 mmb/d 2005-2021" Art Berman twitter yesterday.

Remind me. What is the gravity of Kraken oil? Oh, and Bressay's and Bentley's?

Bit to add to weekend papers. One of the (smaller) concerns surrounding EnQuest was an approach by Private Equity (PE) and to a lesser extent (unlikely) of us being taken private by management.
I read that PE are struggling to raise finance. PE has always had a higher tolerance for leverage than plc investors which was hugely encouraged by LOW interest rates. They take a company poorly run or in an undervalued sector - delist or hack to pieces, tidy it up and bring it back to market making a healthy profit along the way.
This market has now seized up on both sided of the Atlantic (good luck Elon) . Underwriters of debt for Elon's venture from better times (April) are sitting on $13bn of debt and Deutsche bank estimate there is 4X this amount sitting in the wings on Wall St. It is worse in Europe.
One banker reckons that "About the maximum you could cobble together from the traditional banking market would be £1.5bn - it wouid have to be a really good credit and it would be super expensive. It's not possible to do a largepublic-to-private [deal] in the nUK right now - the banks just won't lend to you."
Many things to take from this. Although differentissuing bonds hasn't got easier. Our credit rating is not prime so PE can look but not touch. It also explains (for me finally) the poor(er) performance of HBR. EIG describe themselves as 'capital solution providers' - that's PE to me in one of its many forms and they will be struggling as are the rest of PE. They have many pots on the boil and HBR was almost ready and I believe that they were/are forced sellers of HBR due to liquidity and contractual commitments with other deals. The 'masters of the universe get' it wrong too, it isn't only us.

Be Lucky

There was another article from the ST that I particularly enjoyed. The Government is about to impose a windfall tax on renewable electricity generators' revenues.
You can argue about that among yourselves but it does highlight the fact that the wholesale price for electricity is set at the marginal cost of electricity and some pundits - mainly the gluers and Labour Party - have repeatedly said that renewables are cheaper than fossil. True if you take the highest marginal costs but people will come to realise when its hurting that the marginal cost is as steady as the stock market and goes DOWN as well as up.

24 Aug Ed Milliband @Ed_Miliband
"New renewable power is now NINE TIMES cheaper than gas.
This energy crisis is a fossil fuel crisis. The way to solve it for good - whilst strengthening our energy security and tackling the climate crisis - is to get on with the clean energy sprint that Labour has called for."

He left out the bit where renewable companies were earning up to 9 times their costs of production. They can't hide this from the public much longer. In fact I hope the renewable industry does contest the windfall tax and people start to question the COST of renewables.

I expect them all to be strangely publicity shy.

A lot of what we read is biased or half-true and we can all miss the bleedin' obvious. The tide is turning and facts becoming irrefutable, eventually. Looking backwards is important too and it is only to the beginning of the year.
From today's Sunday Times:
1. "Global stock markets are in turmoil at the moment. The tech-heavy US Nasdaq Index has fallen 31.7 per cent in 2022 while the S&P 500 is down 23.3 per cent.
The shares of large UK firms have held up better, but have still fallen 6.9 per cent; medium-sized stocks are down 27.2 per cent and small share 33 per cent."

There is so much just in those few lines. EnQuest has bucked the trend and is actually up 55.64 per cent for 2022 (source Google) and HBR is up 24.02 per cent. Against the overall market they are pretty exceptional as if we'd followed the broader market we'd have been down c. 30 per cent.
Another point to consider is that we have very little upside factored in. That is the result of being attacked and demonised for the past 7 years. We are still bouncing along the bottom along with the rest of the industry. The recent enforced sell-off due to recession worries, redemptions and especially the pressure on pension funds from LDI margins have added to weakness. It highlights that we wouldn't be included because of our rating and the illiquidity in our stock. The liquidity is fine for you and me but not the traditional, heavily mandated funds. They don't even look at us. HBR on the other hand would have been impacted and I believe there is also pressure to use the excuse of "take a profit and cry" from selling O&G winners when most of your portfolio is under water. Funds have been desperate for cash and they do sometimes throw out the baby with the bathwater. And that is without mentioning ESG.
The rump of holders of EnQuest are not the 'johnny-come-lately' investor although they are of course welcome but LTH's and the few new faces (judging from posts) don't appear to be wet behind the ears.

We are at the beginning of a roll.

*earlier post I wrote LPG when I meant LNG.

The energy industry is fiendishly complicated in reality but because we all use it there is an overabundance of "experts". I wouldn't dream of telling KO how to run his automotive repair business but oil & gas companies are fair game. As was displayed at the last QT on BBC1. We had Brian Cox telling us that "fracking is dangerous and doesn't work" whilst Lisa Nandy was over £100 bn out on her estimate of large oil companies profits. Hardly a rounding error and she has no excuse as she was once a shadow energy secretary.
We should all watch this : https://www.youtube.com/watch?v=5UnWj7zun78
It explains an enormous amount that I didn't know about refineries and the fact that the SPR is made up of light oil that the US cannot use. They are actually dumping oil. It is a gentle introduction to the complicated world of oil.

I am not waiting for the cavalry in the shape of funds returning to the sector. Many are not allowed to BUY O&G whilst the size of EnQuest means it doesn't have the scale to interest the likes of Warren Buffet. This means that there are many companies that are remarkably cheap. Oil isn't like gas in certain respects. Gas is super abundant. Almost like water but like water it requires a grid or expensive conversion to LPG for transport. Oil is far more adaptable and fungible.
Oil requires refineries and as the video explains you need a longer guaranteed use for them than most investments (30 years) that just aren't available in this financial and political environment.

The FCF argument is hard to refute whilst the threat from government begins to disintegrate in the face of hard economic facts and the need for energy security. They NEED US.

If there are any investors considering the sector then EnQuest is an excellent choice. They also have tax credits/losses which are very valuable ($2,627.7 million at 30 June 2022).

Build it and they will come.

https://twitter.com/MerrynSW/status/1578290741465448448/photo/1

Net zero..one of those phrases that can be ill defined , total nonsense in practice and scientifically is impossible. But who wants to be the first person to stop clapping after a Stalin speech ? [for you youngsters replace Stalin with Kim Jong-un]

I was browsing through rubbish on LinkedIn. It seems to attract people who struggle with the complexity of FaceBook and I got an alert on a post that TP ICap had closed its spot FX desk. It surprised many that they still had one and the FX spot world is now run electronically. It attracted some true characters and almost single-handedly earned the "barrow-boy" tag associated with FX traders. Us forward traders coud handle more than 2 numbers so considered ourselves superior. You never saw a newspaper on their desk (reading wasn't a strong point) but they knew every character in the Bash St. Gang from the Beano.
The link led me to EnQuest 52,147 followers and the post about decommissioning had 37 comments. Surprised me but the comments were by and large from people who work'worked the rigs and was nostalgic but without any moans and derision. A nice change and it made me wonder if any have invested in EnQuest. They would be welcomed but I think it more likely that it was an old habit from job searching days and there is little correlation between working in the industry and investing. Indeed, it'd probably put you off.
I've never invested in a money broker but know more about them than oil. I worked 3 years with the P in TP Icap and my first ever lunch was with T.
I think it's over for anybody trying to win at trading equities short-term. Would you play chess against a computer? There'll be some almighty electronic F***ups but it is often the client who loses or maybe the pension fund as shown recently. Because it's hidden it gets washed away as an almost victimless crime. If you're close to the action and have an angle you may have some success but the attention required is beyond me and there are better things to do with your day. Like spend too long on this message board. My wife calls it "The Forum".

But no volume. I wonder if it is the drip, drip of small investors who've had enough of the masters of the universe and gone back to basics. Not a lot wrong with a well run company earning money in a business that supplies necessities whatever the state of the world?

So you're sitting in the dark and you're cold. But you have that wonderful warm feeling that you're saving the planet and will be lauded by your fellow sufferers. WRONG. Your fellow sufferers have transport needs and kids complaining they can't access the internet or play their Xbox. And to top it all the media are turning against you. Accusing you of being selfish and not understanding economics. Some are even saying that you're taking the country backwards and hospitals saying that hypothermia cases among the old are rising and bed blocking (because they're warm).
But you tell them. No pain, no gain - salvation is on the way in the form of nuclear and hydrogen. Just hold on for another few years. The answer is just round the corner. People say "but you've been saying this forever. All we've got is a hotchpot of energy sources with renewables being among the most expensive and unreliable. What have you done with the subsidies?"

“When you are right, you have a moral duty to impose your will on anyone who disagrees with you.”
—Tomas de Torquemada, Grand Inquisitor of Spain (1429-1498) and climate activist.

https://twitter.com/HFI_Research/status/1577728202713141248/photo/1

Is this a 9 month recession so far?

Zippy - without looking it up I think the amount mentioned was £8bn but with no actual measures. In energy terms it won't touch the sides and will be a woolly "think tank". But it attracts headlines and moves the energy problem in either a circular or backward direction. Remember green hydrogen? They're just waking up to the need for water. It probably needs to get worse before the country wakes up to the imminence of the problem.

Good point KO. It's OK for the US to dictate to Saudi Arabia and manipulate the price of oil for domestic reasons but doesn't work the other way? The way to nullify SPR is to reduce supply. There are trade offs we know nothing about except that there is considerable antipathy between Biden and MBS. Saudi Arabia needs US military might but there are always alternatives. Its a balancing act.

Same page Dumbly but we're gonna have the public ask more demanding questions of why we aren't following other countries in accepting that fossil fuels still have a role and are CHEAPER. The poor ratios attached to the sector say it all. Problem for Labour will be that expensive or lack of reliable energy will hit all sectors - building, farming, fishing, tourism etc.. How are they going to explain that to the electorate?
Are we going to rely on Norway when we have our own North Sea reserves? There's plenty of evidence to support the NEED for a secure energy supply.