Member Info for romaron

Hi DrDunc - you wrote "the UK has the highest inflation rate in the western world" Is the Netherlands no longer in the West?
I'd dispute that we're 3% higher than the US too. I don't get excited by interest rates as I've experienced much , much higher but I do like a weaker sterling. That'll help growth and control inflation to a point.

That this wasn't picked up on the HBR board. From today's Times: "One senior Government figure told The Times that negotiations with Equinor, the Norwegian state-owned multi-national energy company, were at an "advanced stage".
Equinor is due to provide the government with a long-term price at which it is prepared to sell gas to the UK "within days".
The company is understood to be particularly keen to lock the UK into buying agreed volumes of gas well into the 2030s that would give it certainty to invest in new North Sea gas fields."

Naturally the headline has the required negative slant "Long-term gas deals could lock Britain into higher costs" It seems to me that could be avoided to an extent by investing in the North Sea where we have Sovereign control. I imagine the problem is that we are frozen in fear from climate activists.

A small punt on HBR is beckoning.

I have an investment in Energean that sells mainly by contracts rather than spot which is proving to be a workable and successful model.

*It is a question that has never (to my knowledge) been asked at an AGM. Why have EnQuest concentrated so much on oil? I don't really need an answer but I'm bloody glad we did.

One other thought and some of you are far more devious than me. Do you think it is a coincidence that OPEC are meeting today and will read this letter?

https://www.api.org/news-policy-and-issues/news/2022/10/04/api-afpm-letter-to-sec-granholm-on-export-ban

This letter was sent yesterday by the API and AFPM of the US to the US Dept. of Energy. I'll need to read it several times but at first glance it appears this is Biden's way of rebuilding the SPR. It could also mean he is worried about future developments. What I do like is the robust way they protect their industry whilst we have Loonies and Boredons cratering our future.
The letter also explains that for a country the size of the US there are still areas off the grid without easy access to oil. Even the West Coast struggles. This in a country with energy security!

The fat lady hasn't even started warming up.

So she's a rubbish speaker but is somehow the leader of the Tory Party? I think she enjoys being underestimated. Steely resolve can win the day.

In the current climate even Israel doesn't want to be accused of territorial annexation. This is a resource of mutual benefit. Lebanon need some good news and a cheap source of energy. Fingers crossed.

Hi mrc - I think you got my gist. I'm not welded mto any theory really but we have to use the data/tools we are given and it is never apples to apples with O&G but you'd expect some things to be mutual but often they're not even that. I think it's been a long haul and we are near to getting our rewards. I think the biggest barrier is the misinformation we have been fed by lobbyists for renewables. This report that I posted 29 Sep https://www.americanexperiment.org/reports/
is tooth-achingly boring but the authors explain how they can reduce emissions by 98% and save billions of dollars by using fossil fuels. There is no escaping the EROEI of fossil fuels and their relative cheapness compared to renewables. The truth lies somewhere in the middle.
I'm hoping for a narrative that challenges the climate activists dogma and using CCS and other technologies makes a long term success and future for fossil fuels. The Drax story is hopefully just the beginning. The can't fool all of the people all of the time.

*I still choose EnQuest because of AB and the Foundation plus the team he has assembled.

I disagree mrc. Harbour have a better ratio in net debt to EBITA (EBITDAX in their case) but they still suffer as we do and they are paying dividends and doing buybacks. I think it is still a war of attrition and funds and banks are terrified of climate activists and the disruption they cause. Governments are supine and not helping so a safety first approach is adopted, namely AVOID. Harbour have a $500m bond maturing in 2026 as do Tullow and neither are exactly flying. I'm discounting the bond maturity for now as I believe EnQuest are. Looks to me like they'll roll it to when YE figures are out and retain flexibility. There is emphasis on getting RBL down first because that's where the heavy covenant policing is (Harbour too) and there is a freedom with bonds up until their maturity. I doubt very much that AB has finished growing EnQuest. The position could be much clearer/better in a few months although the macro environment could torpedo that.
We are using the debt maturity as a comfort blanket when in fact the market is still very anti O&G. The only reason we aren't lower is that we are bumping along the bottom and judged on a hand to mouth valuation model. Same as market stalls or charity shops. We aren't supposed to be around for much longer.
If AB decided tomorrow to run the company into the ground then we would still make bucket-loads.

Maybe Truss and KK are ballsing up at the moment but their senses are correct and a friendlier relationship with O&G will reap dividends and save the country billions.

Out now https://mcdan.com/price-forecasts/

The historical prices between 2015-2021 (inclusive) tell you all you need to know. I'm personally aiming higher with forecasts. The world desperately needs to replenish fossil supply. Higher prices make that happen.

Hi Zippy - the evidence mounts on the weakness of renewables. I actually want cleaner air but the rush towards net zero has been encouraged by the religious zeal of people who don't understand the real world or complexity of energy and the benefits fossil fuels have brought to billions. Drax is being sold off and I imagine it will continue. This is unexpected and if it gathers momentum and spreads into other crackpot schemes it will bring relief (and honesty) for our industry. I like being warm with access to electricity at a reasonable price.

“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

Oh, and taxpayers subsidise the company. Let's face it. It wouldn't really be considered "renewable" if a subsidy wasn't involved.

Will cop it tomorrow. Panorama ripped them apart in half hour exposé. Apparently more damaging to the environment than coal. They are supposed to use waste wood but found to raze primary forest as well. It takes centuries to replace yet we only get upset about the rain forest and the Amazon.
The ESG and renewable mob will disappear up their own exhaust pipes. They even have KK on tape saying that the "wood pellet industry is challenging". So is telling the truth.
I forecast Drax going back to coal and we use CCS to make it viable because it is better for the environment. Maybe even use natural gas. We are creeping into net zero targets by cheating. You cannot hide the truth forever. Wait until it dawns on the public that the energy crisis is called by trying to transition too quickly and abandoning fossil fuels too soon.

Spin wrote "I would not want to be a young married man now..."

Neither would I. A young single man however ............

Article in WSJ - This is normally the peak season.

"Cargo Shipowners Cancel Sailings as Global Trade Flips From Backlogs to Empty Containers
Dozens of sailings from Asia to U.S. ports are set to be canceled in October as deteriorating economic conditions weigh on demand to ship goods worldwide
Trans-Pacific shipping rates have plunged about 75% from year-ago levels as big retailers cancel orders with vendors and step up efforts to cut inventories."

It is a US story but won't be any different in Europe.

KK to reverse the 45p tax cut for highest earners. That is the correct thing to do imo. Even most of those benefiting weren't happy with the decision. In the scheme of things it didn't make much difference but was a sign to the business leaders that this was an administration prepared to go against orthodoxy in these changed times. The signal was still sent.

BTW - I think Truss and KK are facing reality. Inflation in Netherland 17%; shall we go Dutch? Our interest rates were too low anyway. Do people honestly believe we can keep rates low when the rest of the world is raising theirs?
Sterling drop will give trade a boost. Brexit has mad us a pariah to an extent so we need to be creative. I can't really think of another sector other than oil I'd like to be in.

You could be right Juan. It's out of our hands. I'm so glad our product is fungible oil and not something retail, UK or holidays and the like. Even Wetherspoons is selling pubs. I think its a 3 way bet. OPEC+ going for a reduction in output countered by depth of recession but the clincher is natural depletion and the fact that no real investment has been made in oil for 7 years. I got no real response from my post about "Bottom" and that's fair enough as even BP suffers at the hand of ratios. This talk about Bonds leaves me cold. Some are pinning hopes on debt being zero in another year but that wouldn't help imo. We had a Net debt/EBITA rating of.9X at end of June targeting a ratio of 0.5X I thought fantastic as that means that debt will be wiped out as a ratio to EBITA in less than a year and from early 2023 we will cover current net debt on an EBITA basis twice in a year. That positive thought lasted seconds because I then looked at Harbour's 30 June ratio and it was already c.0.3X (they use EBITDAX but close enough) and look how they're doing. Dividend and buybacks just holding the price. Fair enough everything is collapsing around them but holding the line is hardly aspirational but better than losing. In fact Enq has been the better BUY and if you go back to PMO then it is NO contest.
What really cheers me up is that we've had the first European war for 70 years and Covid, both recent. People expect this current farrago to be like other recessions? Give me a break. We've had our recession and are now bouncing along the bottom. Our biggest help has come from the ESG activists and renewable lobby. They have nowhere to hide now.
The oil sector isn't an industry they can attack incessantly and when things go wrong try to pretend its a money tree/cash cow.
The antagonism shown towards to oil producers in other countries hasn't gone unnoticed either. I think Saudi Arabia and Russia might have other plans.

Be Lucky.

I don't really follow bonds religiously other than our HYN which has just over a year to run. Current YTM is c. 11.20%.
Our £RB (5 years) YTM is c. 10.58% with a coupon of 9%
Tullow 3.5 years May 26 YTM c. 16% with a coupon of 10.25%

Finance isn't cheap for the smaller companies and I doubt it affects just O&G. Malik said the bond market was effectively closed for a period in the summer on Sept 6. Well things haven't improved so I'd say they were firmly battened down now. EnQuest have proved creative in the past in raising finance but he did mention a subordinated instrument and one thing they're NOT is cheap. The good news is we probably won't need any bridging finance for very long and the amount is getting smaller by the day. When talking about SVT AB mentioned partners to reduce finance requirements. We've been here before and I am not unduly alarmed because the amounts are tiny compared to earlier scenarios but markets are edgy. It would be nice to get clarity. The good news is that the majors are flush with cash. It may happen that we don't have another bond until conditions in the market improve and that could easily be beyond the maturity of the current HYN.

And just to complicate it further (in a good way) this ratio is BEFORE taxes and we have our tax credits to consider. I don't think forecast earnings are FCF.

I'll stop digging. I think the holes deep enough.

Maybe "forcast earnings" is too nebulous a term. I like EPS and on that basis we are very undervalued but EPS has been discussed on here many times before.