Member Info for romaron

Hi Juan - you can see the benefits to the US and Canada of having energy independence. We have many of the same advantages but without the moose pasture. Pointless speculating with 3 events that will affect us due at the beginning of next week.

*Number of humps I leave up to you. Just good runners, regularly serviced and reliable.

If it's complicated for us what chance do the general public have? LNG is closer to oil because of its portability but nothing is perfect. As for price caps both parties can share the blame. Ed Miliband's crackpot idea put into effect by Theresa May. They don't work in the longer term.
I don't think anything meaningful will be addressed until we suffer shortages and if we follow the lead of the Eco-Taliban that won't be long.
Oil (and gas) are essential and I'd rather the country had control of its own energy security. They're still using lots of it in Ukraine (both sides). Liz Truss doesn't have to be a mental giant to see that. If she has the courage to stand up to ideology and vested interests we could be in a very good position and leaders of the transition in Europe. And as a bonus we'll be warm and able to travel and see in the dark.

Meet Monday. They've been signposting their decision to reduce supply. They don't really have to do much as they've struggled to reach targets and natural declines take up the slack. E121 is absolutely right about it being all about gas. They're even worried about energy prices in the US. I saw on CNN that they expect winter price of energy to go up by $127 per customer. That's right, $127; With petrol pump prices at 87p a litre there life must be a struggle. Compare that to Europe and you can understand the different imperatives country by country.
Where I do disagree with E is that I believe the erratic nature of oil is hiding a fundamental shortage. The current glut is because all production (and that includes Russia and Iran) went into overdrive abetted by the SPR. Timing is impossible and the future always unknown but Europe hoovered up gas wherever they could and oil will be dragged along. Now we just don't have the storage so prices ease. China handily were running at reduced levels which also took some of the pressure off. There is a lot riding on demand and some seem to think a recession is baked in. I'm not so sure but OPEC prefers higher prices so will take care of any temporary oversupply by reducing. If there's such a glut then why did Biden go to Saudi Arabia in July? We might be swimming in the stuff today but governments are pretending that they're in control of the weather and production. They're not.

Juan - now you're back from your 40 days and nights I might need your expertise. We've been having water problems here in blighty. Following my success with oxen transport I'm thinking of branching out. Have you any contacts in the second-hand camel business?

Build it and they will come.

Assalam alaykum Lawrence. You're back in good time to prepare for next week. New gov. on Monday and our HY results Tuesday. Might even be told who the new chairman is which might give further clues. You might notice more than us the change in narrative following your absence. You didn't miss much and have returned in time for some action.

Hi L7 - afraid I don't have the brevity that (say) SIPP10 achieves (probably because he's pro bono on here) and the points you raise are important. Yes costs are boggling, but I'd go further and say that energy was underpriced for far too long. Action is required but where will the money come from? I agree that there is an intransigent group of extreme Tories but they have more power and leverage (presently) than Just Stop Oil.
My biggest take is that we are at long last talking about the essential role that the NS O&G plays in the transition. What really scares governments is civil unrest and that is getting close. Shorter term and cheaper solutions will be sought so I expect a reduction in opposition towards fossil but the demise of fossils is confirmed. However, it will take decades and people live in the present. There isn't an alternative in the short term other than fossil fuels imo. Quick fix is getting heat from a brazier on a picket line. Energy and its infrastructure takes a bit longer - let us say a decade before any meaningful results are seen.
Next week will be interesting.

Front page "Rush to drill for more oil in North Sea". Inside stories about 'warm banks' in community centres and art galleries. Inside a thoughtful article by Hugo Rifkind about the dire state of our energy infrastucture and capabilities. He used the proverb about the best time to plant a tree is ten years ago. Costs of nuclear are boggling whilst the cost of offshore wind (also boggling) has created whole WhatApp groups of backbench conservatives devoted to cancelling it.
The drop in Brent today is ascribed to SOMO redirecting more crude to Europe. Really? We can now rely on a state (Iraq) riven with religious segregation for our energy supplies? Until when exactly? Glad to see that ISIS have been rehabilitated.
I think today's move is to do with a lack of storage. Moved from SPR to whatever jerry can you have available. Get used to $5/10 moves daily. If China comes back hard, winter is harsh or another 'black swan' (they used to be rare) event occurs it could be every gender for themselves.
I know I am in a minority here but the lower oil goes I read as confirmation of the forthcoming global shortage of energy. Because of the SPR releases the emphasis has been on gas. That gas is increasingly LNG which is much more expensive than natural gas. I just know that when you desperately need energy the cost and emissions play second fiddle. In WW2 the Germans turned coal into oil. Lebanon couldn't function without diesel for example. How close are we to oil being cheaper than LNG; perhaps it already is.
The market concentrates on the front end which is partly to do with the dumbing down and 24 hour news cycle we accept as normal now. In fact many don't even read newspapers or watch TV and do their 'research' on youtube or TikTok.
We are in deep caca and I don't think finger crossing will work this time.

Only a few days before we have a new government here and an EnQuest update. The energy crisis cannot be resolved easily and in the business section Van Beurden of Shell said in Norway "That this is going to somehow be easy, or over, is a fantasy we should put aside". Energy could be rationed 'for years'.
The front page says there is a lot going on behind the scenes but I wonder where the capital will come from to open up new fields in the NS? The only guarantee at present seems to be cold homes, electricity shortages and transport limitesb largely to bikes and walking! I think EP must have just doubled in value.

*Gas prices for this winter closed on Fridat at 827p a therm. 16X higher than the pre crisis average. Kinda makes the claims of Lucas and Milliband that renewables are 4X cheaper has less to do with their efficiency but more a reflection of the energy mismanagement of previous decades.

Just a thought. How would the market react if Elon Musk follower Warren Buffet and positioned himself somewhere in the fossil energy market? He said yesterday that the world needs more oil and gas as a bridge to renewables.
Me, I wonder where they'll get the energy to repair Syria and Ukraine once peace returns.

Dunno about that KO but there is still plenty of opposition against fossil fuels. The Eco Taliban and the Labour Party spring to mind whilst a large section of the media have unfortunately pinned their names to the banner against fossil fuels and are now in the position of having to shut up. They can hardly have a Damascene conversion and start promoting its benefits before reality really arrives; maybe early next year?
Then there's the recession fear and volatility. Since July 6 we're up 55%. I've stopped wondering when I'll get my £1 a share and quite happy to start earning dividends, special dividend and bathe in the warm waters of buybacks.
It will be a change though to be in demand for whatever reason. Will it be reflected in the price?
The only prediction I have is that the situation is not going to improve for some years. I think many investors look at our price and see we've already had quite a large move up. They've had incessant demonisation of the sector and may even have lost money in it in the past. Some will treat it in the same way I treat bitcoin. A hyped money-pit.

*I keep reading of new developments but they tend to be between 20-80mio barrels. We're sitting on Bressay and Bentley wich together have probably 500mio plus barrels. They're already working on EOR at Captain.

Sod it. I've changed my mind - £2 within 2 years.

Nice summary SIPP10. We won't actually get much clarity until starting next week. The new leader of the Tories and the following day our HY results. I'm expecting some debt shuffling.
mrc - I read the same article about KK. Quite an impressive individual and extremely bright. If he does become chancellor then he'll be very influential. I wonder if Amber Rudd will get a position in the new cabinet (they dated). She was the Secretary of State for energy and climate change in 2015 and understands the challenges. An obvious shoe-in I'd have thought? She is anti-subsidy.
The challenges are huge and there is no quick fix. If the Eco-Taliban, abetted by Labour want to abolish fossil fuels we can look forward to decades of a 20th Century life-style. I thought the aim was net-zero by 2050; not a return to the 1950's without fossil fuels.
It won't happen immediately but the UK can react poitively to adversity and wise heads and pragmatism won't disappear. I cannot see any option but for the O&G industry to be given guarantees that will release capital in new fields. They will be the stop-gap until nuclear fills the space or another technology comes through. Who knows, come 2050 after 250 years they may succeed in extracting sunbeams from cucumbers?
https://en.wikisource.org/wiki/Sun-Beams_may_be_extracted_from_Cucumbers,_but_the_process_is_tedious

*If only they'd have had the AIM market in 1799.

Thanks for the comprehensive reply L7. A great post. You have confirmed what I suspected. BG is a horrid little weasel and was once a shadow energy minister so has little defence or excuse. He wants Labour elected and veracity takes a distant second place. As with all fairy stories they shrivel in the sunlight. The 130% is a fantastic headline and it caught LC unawares. It won't happen again and it appears not to have been a roaring success. Bit like offering me free travel in Birmingham - it will only apply to a minority.
Most companies are fully aware of rebates but you don't start a project just to claim the rebate and in economic terms it is quite a short window. There are bigger risks abroad and the 91% rebate falls into the same camp. If the risk outweighs the benefit you sit on your hands. The industry will take some convincing to take advantage.
The situation is bad and could make conditions similar to those being suffered in Ukraine presently. I'll manage because my early years were similar. No double glazing, no central heating, no phone, no car, no fridge but the luxury of a TV. I doubt most of the country will welcome it and why should they?
I have a large extended family and many will be affected. They all have a vote but unlike the intelligentsia they don't blame global warming. Sure they'd like somebody else to contribute to their energy costs and they can be easily persuaded. Whilst energy was cheap who cared? Those presently striking have my support and sympathy. The rightwing media will highlight the £70k train driver but not the minimum wage of the cleaners; as for the availabilty and cost of care!!!!?
We have seen a few tentative olive branches from the Tories but zero from Labour. Facts have a horrible habit of coming out jusrt when you least want them. The media may well get behing fossil fuels and who could have predicted UK fracking becoming a possibility? I find myself uncomfortably agreeing with Farage on energy. He still has a large following and is an excellent manipulator and populist. It is easy to plonk yourself in one camp or the other but I still consider myself in the middle as a realist. Like world peace, net zero is a wonderful aspiration but unobtainable when being powerful or selfish is such an easy alternative. Rant over.
It looks like KK for chancellor and I wonder who will get energy?

I wouldn't want to be out of energy over this winter.

During the Environmental audit interrogation Barry Gardiner was trying to put words into LC's mouth and mentioned that the industry was already benefiting from a 130% super tax deductible before the Sunak announced the 91% super-deduction. It's all gobbleegook to me and I guessed he was being creative. It seems he was correct but disingenuous. A half truth is worse than a lie.
https://www.gov.uk/government/publications/new-temporary-tax-reliefs-on-qualifying-capital-asset-investments-from-1-april-2021/new-temporary-tax-reliefs-on-qualifying-capital-asset-investments-from-1-april-2021#policy-objective
It appears its objective was to get the economy moving after Covid. It was also not solely aimed at the O&G industry. Another point is about eligibility and timing. It was for new machinery and as far as the O&G industry was concerned at that time April 2021-Mar 2023 most in O&G were just trying to survive and anyway the whole ESG movement and activists were doing their utmost to prevent any new project in O&G. Just another example of twisting the narrative.
I am a bit disappointed that Linda Cook didn't grasp the point but it is an arcane measure and probably one for finance directors. I don't remember it being discussed and it certainly didn't stimulate a rush to developing new fields. I don't know if it will be superceded by the EPL Bill. A good question would have been to ask Barry Gardiner just how big was the benefit to the O&G sector and where did its value lie?
I hope that the next time the industry is attacked like this that those in the dock can have experts alongside or be given advance warning of points that will be raised.

There doesn't seem to be much of a future for growth in the North Sea. The majors have almost gone and the largest independent (Harbour) is looking in other regions.

2 page article yet no comment on the Harbour message board. Also a mention of Serica. It is presently all about gas and I'm not jealous as I can remember a time when gas was cheap and we congratulated ourselves that we are basically an oil producer. What was more interesting was the headline "Harbour set for $300m hit from energy levy". We haven't seen that angle for a long time.
and this from the article:
"Cook confirmed that Harbour continued to look at further acquisitions and was interested in finding another geographical area where it could build a substantial base.
She said that the company wanted a more diverse portfolio. 'We have always been uncomfortable with the fact that we have a lot of eggs in the UK basket and had ambition to establish a material base of of production in at leastone other region,' she said. 'That has just been reinforced by the fiscal actions taken in the UK.'"

That area will be SE Asia imo. At least we have experience of the area and maybe we should be doing the same. The narrative is definitely changing and if Norway come out better than us this winter it won't be long before people start asking why haven't the expensive renewables kicked in like they were promised. People want short term solutions which will be difficult but even 2/3 years ahead is beset with problems; the major one being the Labour vindictiveness and hostility towards O&G. If the O&G leaves the NS there'll be nobody left to blame. Companies exist to reward their investors. If they are not allowed to do that both move away.

Build it and they will come. Even if it is in another country.

This is boring but important: https://twitter.com/CommonsEAC/status/1549719809817968640/photo/1
If you are summoned to one of these "select committees" you are expected to attend. Normally I would join the attack on a 'no show' but in this case, after listening to the earlier interrogation, I think Kwasi Kwarteng made the right decision. The Labour and Green parties have turned it from an Audit Committee to a kangaroo court more akin to the Inquisition.
The good news is that they threw their best shots and they were full of falsehoods and half-truths. Easily rebutted but they throw figures and statistics that even Trump would be embarrassed by.
Sure renewables are presently around 4X cheaper than gas but fails to mention that picking tops and bottoms or outliers is not reliable or good economics. For their argument to have legs we'd need the present unaffordability of gas to be permanent and wait for renewables to catch up. They'd be happier if renewables were (say) 8X cheaper but that would be because gas has gotten even more expensive. Of course they bear no responsibility in demonising fossil fuels or actively encouraging a moratorium on producing fossil fuels.
Barry Gardiner said that the average global tax on O&G was 71%, Norway at 79%, UAE 96% and UK was (once) down to 34%.%. Norway own a chunk of Equinor (67%) and gord knows what the UAE does but we wouldn't mind the GDP per capita of 2 of the richest nations on earth. He then attacked Linda Cook by saying that companies had benefited by a 130% rebate on earlier investments. LC was confused and just said that rebate was 91% now "but lower before". She will now have found out the truth and no doubt will use it as leverage when the grown ups negotiate and ideology is left at the door. Later Caroline Lucas (using the 4X cheaper trope again) attacked LC as though it was her fault. LC replied that there weren't enough renewables to fill the shortage of energy, it "wasn't available". A true and honest reply without even mentioning base load requirements and days when the wind dosn't blow. Lucas pounced on the response saying that this was because Harbour don't invest in renewables [they don't make chocolate or run bingo halls either]

I'd say that KK made the right decision.

As for Labour and the Greens. I despair.

This is the Environmental Audit Committee meeting: https://parliamentlive.tv/Event/Index/09e28c6c-4afa-48e8-aae2-d73485784719
It's a bit long but follows a predictable path.

I listened and it will be available later. Very interesting and I've become a fan of Linda Cook. She has interesting views on EPL and put it this way; the Diplomatic Corps was never really a career option for her. I learned quite a bit especially the shifting around of monies from mismatches on hedging and physical and the way it feeds back over time. More interesting for Tarmak and L7.
I'm guessing that a lot of the stuff is the same for EnQuest. Points:
2cnd half higher cash demands due to maintenance and tax payments. They pay taxes 3 X a year July, Oct and (I think Jan)
If no M&A pops up they default to buyback.
They settled on $200 mio for dividend p.a. as sustainable. LC considers the market to risky, geopolitics, ESG and EPL to increase for now so any extra is parked in buybacks.
*I'm grabbing that and expect EnQuest to allow $50mio as our production is a quarter of theirs (ref. Pelle post 10.28)
James Hosie was quite obsequious. He only bullies us and comes over as a 'chippy jock'.
LC was asked about the benefit of EPL and admitted to scratching her head. The fact that HBR now have 100's of $mios LESS to invest might marginally impact. It is harder and longer than ever before to navigate the business and EPL doesn't help. She used the term "unreasonable" and later emphasised that they are looking to have another important centre of operations in another region and this was partly because of EPL. She also said EPL doesn't help with CCS (as written today).

*The theatre that was the Environmental Audit Committee of the 20 July was a stage for the Green Party and Labour to attack the O&G industry. LC didn't come over well in that but I now realise she played her hand perfectly. They wanted a 'gotcha' moment or a possible viral video so it was almost like taking the 5th. Bland replies to leading questions avoided the committee making any political gain. Several statements by the committee were glarying incorrect but none of those being interrogated corrected the committee. There was NO audit as far as I could see. The important stuff is done away from cameras. I got the feeling that LC hasn't been comforted by developments. I hope her hard ball stance is copied by others. It isn't AB's way but I suspect he might be equally 'difficult' away from the camera or microphone.

They're not looking at us. Couldn't resist.

Pelle - I don't think profit and FCF stays out of fashion for too long. I'm taking a lot of encouragement from the tone of the Harbour CEO. She is in the face of the climate activists. "Our Tolmount project alone - brought onstream in April - has increased UK domestic natural gas supply by over 5 per cent. At a time when many are struggling with high energy prices, we are increasing investment by c.30 per cent compared to last year, focusing on doing what we can to deliver reliable, domestic oil and gas from our existing portfolio in a safe and responsible manner."
She isn't a shrinking violet. Nice to see a grown up in charge instead of a "looney".

Cancel that - 29.37

Can't get a price on City Index

Maybe Barclay's should have waited until after the analyst presentation by Harbour at 9.30 today before making a new target price ?

Harbour seem to have blown the doors off and are not holding back with an upbeat RNS with the HY figures this morning. Hopefully they'll have a good day and that will augur well for us for the 6th September. Then there is the blow that the ESG movement suffered with the energy charter treaty (ECT) award to Rockhopper (RKH) c.£200 mio that compensated them for the Italian government's action over retrospective banning of the Ombrina Mare development in offshore Italy. Might only be a postscript as the money isn't in their bank account yet but an unusual reminder to climate activists that there are commercial laws and protection towards companies. It would be nice to dream that we could charge activists over here for money lost to to prevention of O&G companies being allowed to go about their legal business.
Climate changes. We all know that and much is due to population growth that energy made possible. I can just about remember the Canvey Island disaster of 1953. My Gran took me to see it when I was 4 (I think she was disappointed that the drowned bodies had been removed.) To lazily blame everything on fossil fuels ignores the efforts that the O&G industry have made in reducing emissions and the benefits that fossil energy brings. For now it is essential.
I think Tarmak's 24 Aug post is worth repeating:
"If EV was like -17, 1.11 would be the year-end cost per share
If EV was like -18, 0.66 would be year-end cost per share
If EV was like -19, 0.63 would be year-end cost per share
If EV was like -20, 0.45 would be the year-end cost per share
If EV was like -21, 0.57 would be the year-end cost per share"

Build it and they will come.