Member Info for romaron

Eric Nuttall, talking his book but I like the Baytex (BTE) chart (0.5:30) Not that different to ours and an observation (03:40) he made "energy stocks have fallen, you know what hasn't fallen? Their Free Cash Flow, it's hitting their bank accounts every day." He met the head of OPEC earlier this month where his position was validated.

https://www.bnnbloomberg.ca/video/we-ve-had-a-panic-induced-selloff-but-nothing-has-changed-in-energy-stocks-nuttall~2472295

But do they have our tax credits? That will turbo-charge our advance when the obsession with debt is in the rear mirror. Not many quarters away.

"Crude oil showed signs of stabilizing on Friday following a near 15% top to bottom correction during the past ten days on increased concerns that aggressive rate hikes by central banks around the world will eventually hurt growth and, in turn, demand for key commodities from energy to industrial metals. Prices have dropped despite continued signs that the crude oil and the fuel product market remains very tight – the latter being highlighted through near record refinery margins, which would have come down if demand was easing. In the short term, we will see a battle between macroeconomic focused traders, selling “paper” oil through futures and other financial products as a hedge against recession, and the physical market where price supportive tightness remains." Saxo bank today.

Seems like a contest between paper and physical. In the old days physical used to prevail. They're just a little more excitable nowdays.

Build it and they will come, ask MBS.

Oil will maintain a preeminentposition as a global commodity, still the primary fuel that makes the world go round.. Some will simply not want to hear that. But it is based on the reality of all the investments made , lead times for new investments and innovation, supply chains, its central role in transportation, the need for plastic from building blocks of the modern world to hospital operating rooms, and the way the physical world is organized. As a result, oil - along with natural gas, which is now also a global commodity - will not only continue to play a large role in the world economy, but will also be central in the debates over the environment and climate, and certainly in the strategies of nations and in the contention among them.
The Chinese economy will not grow as fast as in the past, but it will be growing off a much bigger economic base, and increasing quantities of energy will be required to assure that growth. China continues to build out wind and solar at a rapid rate, it is also adding three new highly-efficient coal fired plants a month." : Daniel Yergin'The New Map' 2020

I doubt it's all over and we're also seeing a rising India become a big player. Meanwhile I get a very warm feeling about our tax credits.

*Ammu-the reference to building blocks isn't about Lego.

Build it and they will come.

The price of EnQuest stock for 30 December 2022

Your price was 19.50, write it down this time. Afraid you'll have to wait another 6 months to see how your prediction has done.

Rishi Sunak just claimed he was “using all the tools available” to combat rising prices and inflation. No way to talk about the rest of the Cabinet.

I wonder if this is the reason WB chose Occidental:
"With a 60% ratio of debt plus preferred share to capital, Occidental (OXY) carries substantial balance sheet risk in comparison to close peers,"
Maybe he saw this as a market negative for those who just see a ratio and immediately it signals "AVOID". If oil stays high debts will tumble very quickly. That would have a bigger impact on companies with large debt as a percentage of capital.

I think I might have found one closer to home.

*I mentioned to AB that as oil companies are being driven towards self-financing he should cancel the Moody's contract. He disagreed and is confident that them giving us higher ratings in the future which would give us cheaper financing. Seems that he hasn't given up completely on borrowing in the market. I think this indicates they will rollover the existing HYN and include options.

Probably because it's a roilling target with a certain amount of flexibility and a nightmare to give the exact position. As long as you get within the range at some time you'll be compliant. That's why I don't get too hung up on hedging although I don't dismiss its importance. As mentioned sometimes it's a pain but it does tend to come out in the wash. You win some, lose some and it's not always a bad discipline to have. Appreciate you guys trying to decipher it.
I wonder if going forward there might be more contracts between EnQuest and certain customers. By thier very nature they're hedged (slightly more credit risk) but the market likes them. It reduces uncertainty.
To save a post - glad to see Warren Buffet (Modestus) hanging in there. He always has a wider and longer perspective. I hear he's a pretty savvy investor too.

Be Lucky

I said to Juan that after an AGM investors are normally buoyed up and whose to say it isn't reciprocated? The news was pretty encouraging and the management on top of things. Markets are incredibly short-termist whilst the Fed tries to look further ahead whilst most large companies worry about the next quarterly statement (US and some UK). There is very little option but to go with the herd and adopt a risk-off policy at the slighest whiff of gunpowder or higher interest rates because there is safety in being close to the diversified indexes if you're an analyst or a fund [nobody ever got sacked for buying IBM]
This doesn't apply to certain funds (Baillie Gifford and Schroders have their specialist higher risk investments) or Warren Buffet. Investors know this when investing with them and choose what funds suits them best. Diversification is always recommended but I imagine there are a fair few here who don't follow that advice (include me).
They say that the sunk costs fallacy is a handicap. It is I suppose but not if you have taken a longer view. We cannot know future world demand for oil but even tonight there was this on Trading Economics tonight: "Adding to woes, Exxon Mobil and Vitol warned that demand is still on the road to recovery to pre-pandemic levels. Also, analysts argued that Fed-induced slowdowns are a short-term solution to surging prices, but will not solve the problem of supply tightness."
LTH's have lived through this with EnQuest and saw companies go to the wall and it was a close call for us imo. We cut production and capex. Anything that didn't pay its way was tossed overboard. I think that Kraken was one of the very few new fields in the NS in the last decade.
I'm coming around to Juan's thinking and don't expect an uplift until we release H1 figures and I'm using EPS as my guide. The share price hasn't been making sense for some time.

Banana Joe, I don't usually reply to trolls but once only before you go to Filter. So we're supposed to thank renewables for reducing deaths and Putin's ambitions? Can renewables cure cancer too? Oil and gas are fungible products and the demand for fossil fuel is moving East. Demand is expected to be the same or higher for fossil fuels by 2050.
There are innumerable benefits that fossil fuel have brought to the world and far more good than harm has been the result. I have family so naturally want the cleanest air and cheapest energy. Unfortunately the cheapest energy is still fossil. I believe in the transition but not at the speed demanded by the likes of you. It ain't gonna happen that fast. Demonising the industry and promoting more expensive sources of energy have totally missed the point that people have been misled and that is now coming home to roost. Nuclear is useful only for base load. The UK is struggling with increasing this source and it is far from cheap.

Today the National Audit Office have published a review pof "The Energy Supplier Market" https://www.nao.org.uk/report/the-energy-supplier-market/
It affects everybody in the UK but there is only a tiny reference to the cause: "Ofgem could not have prevented the increase in wholesale prices in 2021 from significantly affecting consumers, but it did not do enough in the years that preceded it to ensure the energy supplier sector was resilient to external shocks. By allowing many suppliers to enter the market and operate with weak financial resilience, and by failing to imagine a scenario in which there could be sustained volatility in energy prices, it allowed a market to develop that was vulnerable to large-scale shocks and where the risk largely rested with consumers" - the politicians and self-interested climate activists totally ignored this. Are they still preaching from COP26.

I live in the real world. Not fantasy land. Enjoy your nut salad.

Juan, does that mean "taking the knee" in Qatar during the World Cup will be banned or accepted as a compromise? My mistake, I thought Biden was going more as a supplicant rather than a trader. Either way, not a good look for the so called "leader of the Free World".

Germany are moving from "a state of emergency" to a "state of alarm". It relates to gas but oil is never far away. It means that consumers will have to pay the true cost. I was alarmed personally. I thought the Europeans had all the renewables they could handle and net zero was a formality. Perhaps they should rename it "Never Zero".
Alarm is stage 2 of 3. The next stage (3) is the state intervening and rationing gas.
Then we have the CEO of Chevron calling on Biden (a keen cyclist) to stop criticizing and vilifying the industry. I doubt he'll listen as he already has his trip booked to Mecca where he can meet the nice Mr. bin Salman and offshore the US energy needs. Or maybe he'll go down the German route? Anyway, whatever happens it is not his fault, nor BJ or Rishi. I actually blame the climate activists and renewable fantasists for breaking their promises. Unicorn horn and angel's tears held so much promise, they told us.

For EnQuest it is sunshine all the way. We have what the world needs and are in a far stronger position than at any time since the IPO (2010). I don't think falling demand can keep up with falling production of oil.

"Brent crude futures fell more than 3% toward $110 per barrel on Wednesday, hitting their lowest levels in a month, amid mounting concerns that rising US interest rates aimed at curbing soaring inflation would cause a demand slowdown. US President Joe Biden is also expected to call for a gasoline tax holiday, and is set to meet with seven large oil companies this week amid a campaign to drive down fuel prices. Meanwhile, signs of ongoing supply tightness kept markets on edge, with Exxon Mobil and Vitol warning that demand is still on the road to recovery to pre-pandemic levels and supply is expected to lag demand growth. Supply disruptions caused by the war in Ukraine and OPEC’s failure to pump more crude due to underinvestment also kept upward pressure on oil prices. Analysts argued that Fed-induced slowdowns are a short-term solution to surging prices, but will not solve the problem of supply tightness."

I'd hardly say it 'tanked' but we are getting used to these large movements. The real question is what the price will be for 2023 and 2024. Most people don't really look further than that. The industry itself doesn't have that luxury.
We are in the summer and there is an element of political engineering with SPR and the move back towards coal. Expect plenty of this until our new figures are out or other news.

"Owing to the above factors, building a complex, hydro cracking, hydro skimming, catalytic cracking refinery, can cost anywhere around $5 to $15 billion. The throughput (processing capacity) of this refinery should be between 250 – 500,000 barrels per day.
Using the above average size (between 250,000 – 500,000 barrels a day), it will take between 5 – 7 years to complete the refinery. Duration from breaking ground to achieving full complexity & throughput can range between 3 – 8 years depending on the scope of the project."

I remember Ineos buying Innovene for $9bio which included 2 refineries in 2005. The vicisitudes of the industry combined with the 2008 credit collapse almost ended the venture a few years later. At first it looked like BP were prescient and then Jim Ratcliffe became Britain's richest man.
What we have now is not original but it is 17 years later of drip drip ESG lobbying and climate campaigners to add to whatever reason BP sold their refineries. With this short history and background you'd have to be mad to consider going into the refinery business. Or would you?
E121 made me think. You cannot ignore refinery capacity or the wrong sort of product if you're gonna talk about production. I think the problem is and will remain the lack of commitment from government.
The EPL is not stick and carrot. It is stick and stick. A punitive tax levy and no guarantees of government support post crisis (if it ever ends). You cannot attack and despise an industry while expecting it to support the country in a time of need. There is no cavalry imo coming to save this government and their efforts are so lacklustre in the energy sphere that I am considering increasing my fleet of oxen.

So why the pigrimage to Saudi Arabia if everything is hunky-dory? I agree a recession will affect demand but we have a built in defence against that as it will just confirm the reduction of capex and low new field development which is the present position of most producers whilst field and reservoir declines continue to work their magic. I think it is more fool the 'woke' governments who fell for the blandishments of the climate change militants and the speed with which they could deliver. I don't think David Attenborough has ever run an energy company and his every sympathy is with nature.
Disagree with you on this one E. BTW - 20% is probably too low a premium. Nothing wrong with premiums. Covering risk always costs.
You may be right but I'm guessing sub $100 is a few years away.

Equinor denied the story onedb. See my 08.23

this video is more cheering although he is talking his book - https://www.ninepoint.com/commentary/commentaries/2022/062022/eric-nuttall-june-2022-market-view/

Ooops - not next March but March 2024. And some people expect oil to go lower? How?

"With the Replacement Power Plant Availability Act, the gas replacement reserve will be set up for a limited period until March 31, 2024"
That is Germany's beautifully worded explanation (google translate)
https://www.bmwk.de/Redaktion/DE/Pressemitteilungen/2022/06/20220619-habeck-wir-starken-die-vorsorge-weiter.html
My German isn't brilliant and I'd translated it as "we're f*cked and the weather will get colder. Let's pretend the crisis will only last until next March."

*I'm worried about Biden. Will he be able to get up unaided after kneeling in front of MBS for too long.

I'm treating it as a vaccine. It should give us immunity from further attacks for at least 3 years. The doseage may need adjustment. We were used as trialists because we have few friends and are making boatloads of money. A soft target.

Equinor dismisses ‘speculation’ of windfall tax threat to £4.5bn Rosebank project - Energy Voice headline today

"In a statement to Energy Voice, Equinor said the piece is “speculation”, adding that the firm “stand(s) behind Offshore Energies UK’s position on the Energy Profits Levy”.

On Rosebank, the firm added: “We were recently granted a licence extension and continue to work with our partners and stakeholders to ensure we progress and deliver the Rosebank project to strengthen UK energy security, create local value through highly skilled jobs and enable the UK to reach net zero targets in line with the North Sea Transition Deal.

“Final Investment Decision is planned in 2023.”

At the end of the article.
"The Guardian revealed earlier this month that executives of the 10 largest North Sea operators received a combined £54.4m in their last reported financial year, up from £29.4m a year earlier. Within that, Cook landed a £4.6m “golden hello” as part of her £6m pay package."
Depends how you present it. Linda Cook is fine and so is EIG. It is the smaller PI anbd LTH's that suffer. Especially those that came via the PMO route.

I don't see much change TBH. Politicians have different priorities.