Member Info for romaron

Hi mrc - you wrote "You could look at the AK topsides spec for an idea of what is needed to convert EP."

No, I couldn't - but I'm sure there are some visitors to this board plus yourself who will understand as info is released. You made some good points. For the second part Equinor will have various reasons for basing their final decision, as will Harbour and there will definitely be politics involved. I don't think it will drift forever. It could be that they're pressing us. We just don't know at the moment. I think there'll need to be trade offs with the government but I don't think they'll delay too long. There is an urgent need for energy and the real shortage has yet to arrive imo. A new field brought online quickly would be a major coup for the UK governemnt.

Hi ukb - doesn't hurt to ask and sometimes you sow a seed in somebody else's mind. I even asked a neighbour who was a director of a shipping insurance company if he could find out any details on its insurance. I assume that 'warm stacking' requires insurance still, even though at a reduced level. He came back and informed me it was 'warm stacked' because he googled it. Even I can do that.
All I really know is that it was first built in 1983 and the FPSO work was done as recently as 2012/13 in Hamburg (google). I think I've read that hulls have a 50 yearish lifespan so with the ever reducing horizons in oil if we could squeeze 10 years out of it that would be a result. The world has changed and steel prices are higher, labour shorter so who knows what that has done to second-hand values and attitudes. The just-in-time and throw away society is changing. And with that attitudes to an adequate FPSO rather than a brand new model available in 5 years at an extortionate price might be the answer. We don't have that problem with buildings or bridges if they're properly maintained and used correctly. It is a handy card to have in your hand.

https://www.statista.com/statistics/323381/total-demand-for-electricity-in-the-united-kingdom-uk/

What doesn't make sense is that we're using less of it and it has got more expensive. Isn't it meant to work the other way round?

and this ""Bringing back coal-fired power plants into the mix could add about 10 GW of capacity."
"That is painful, but it is a sheer necessity...to reduce gas consumption."
German Economy Minister Robert Habeck

That'll go down well with their Green Party.

I only use computer. You haven't seen the size of my fingers.

Hi Pelle - give him my regards. My daughter is coming round today so I'll ask her to show me how discord works. He is an interesting guy with a sense of humour. Unusual really because in Germany humour isn't a laughing matter.

I am easily distracted. I had an interesting chat with a young German guy, also an investor at the AGM. His day job is flying airliners but he’d flown his own plane that morning into Biggin Hill. I asked him where from and he said Munich, his home town. I commented that the romaron ancestral home was quite close to where we were (24 Durham Row, Ratcliffe). Unfortunately another German pilot in 1940 delivered a package which meant my father’s side of the street was obliterated. Some of the odd numbered houses still remain. He mentioned that he probably flew quite a similar route as that pilot and the Thames is excellent for navigational purposes. He then mentioned that his own house has blackened timbers due to incendiaries delivered by the RAF. In fact Munich suffered more than London with 60% of buildings destroyed or damaged.

I like to think I’d done my bit for International Relations. We never mentioned football.

*You do get some odd people at AGM’s. They’re not all normal like me.

Flashbacks, I got that right. I sometimes can’t get to the end of a sentence without losing the thread but my longer term memory is slightly better. Problem is I have to wait for longer term to catch up.
During the AGM there was a discussion and AB mentioned that the EP might be an option for Bressay, almost sotto voce. He threw it in with other comments that there were offers on the table for it and I was surprised.
He could have replied without mentioning Bressay. By packaging the response in this way no rules are broken because if that was the case it would mean the field was progressing and we know that in the world of FDP/FID nothing is guaranteed until the ink is dry. AB doesn’t really do hype so I’d say it hasn’t been ruled out. Which brings me to a question for ukbb – on 28 May he wrote “I have a relatively small holding in ENOG (my friend's son worked on the fit-out of the FPSO” – it would be interesting if you could ask the son what is the feasibility of the EP for Bressay?
Richard Hall is coming back and he got Armada Kraken producing. In another conversation I mentioned this and the reply was “yes, we use him in these situations”. I get the feeling he is more a contractor type. I was worried once that he’d left and wasn’t at an AGM but basically he’d moved onto another project as his role was over. A clue?
It must be difficult because there are non-disclosure agreements and the danger of a loose comment affecting the share price. Then there is governance. Juan’s suggestion of JS becoming the new Chairman got a chuckle but a mention that governance could be an issue as was my suggestion that we moved into something less toxic than fossil fuels like people smuggling.

Juan, stop picking on me. I'm confused enough!

This applies to Pelle 07.04 and Juan regarding valuation. I believe it is just a higher level of waffle using different accountancy terms. My go to video of Jim Buckee in 2013 was more or less a repeat and even then the US/Canada stocks had better valuations: https://www.youtube.com/watch?v=WdjTi-uhoqI (08.20-09.10) and he suggests share prices may be better using a lottery ticket type valuation in the UK. The point is that valuation of UK oil stocks, especially smaller ones, has been a perrenial problem for a decade at least. We do fare worse than US/Canada stocks but are in turn relatively cheaper but they are undervalued too according to Jeff Currie, Eric Nuttall, etc.. and much, much more importantly the companies themselves. You only have to look at the increase in buybacks across the industry. Who knows best. Analysts or the company? Are the companies intentionally throwing money away? To me bank analysts are simply acting as commentators to something like Eurovision. Many songs don't even get a look in and some instantly forgettable ones win. I've never owned and will not own any bitcoin or crypto. I believe the relentless attacks on oil mean that many investors will NEVER buy oil stocks.
The current sell off is (to me) an overreaction by the markets to inflation, interest rate hikes and the impact of Covid. If oil wasn't so important then why is Biden going to Saudi Arabia next month?
My case is the lack of incentives to invest in oil with flip-flop governments, ESG promises that hopium cures all and more importantly under-investment (and that includes Saudi Arabia) which means we are fire-fighting with, for example, SPR releases. I know people go on about summer driving but I think supply shortage is a bigger worry when it gets colder. We are muddling through now but 2023 looms.
So we could be saved by a recession? Are you sure? People still do a lot of the same things whether the market is breaking new highs or new lows. Eating, travel, keeping warm etc... The declines in reservoirs continues whilst the replacement investment just isn't happening. Praying to the ESG gods won't make it all hunky-dory again.
ukbb 18.25 - there may be truth in the suggestion that Equinor won't invest in the UKCS. It could aklso be posturing as well. I wanted Liv Stubholt to be at the AGM because she would have a better feel for conditions in Norway. That would be a death knell for Bressay imo if they postpone or pull out. We will however be a cash rich oil company and will be offered more end-of-life fields with assisted financing from the owners. The future looks pretty sound to me. The next few months will probably continue to be rocky but from 2023 onwards we'll have an embarrassment of riches. Nobody has mentioned EPS. At least I understand that but it doesn't seem to feed into the share price.

Build it, there's a shortag

Is this a threat? - "A spokesman for Equinor said: 'Equinor welcomes the North Sea Transition Authority’s decision to extend the licence on the Rosebank development project. We will continue to work with our partners and stakeholders to ensure we progress and deliver the Rosebank project to strengthen UK energy security.'”

The headline is definitely click-bait.

There is obviously jockeying, lobbying and veiled threats regarding the next steps. There always are. It's what they do. Monday is a US holiday so should be quiet.

.....another bit of convesation I only got part of. I hadn't heard earlier parts but JS said something along the lines of - "that isn't the way to look at it. PE was a measurement but now we use ...... as it's more accurate"
I may not have everything right but I remember thinking I wish I'd heard the whole discussion because it was about valuation (I think?). There were 5/6 people involved or listening so maybe one of them can elucidate. Later AB joined the group. I'd say they [EnQuest] made more effort to answer investor questions than at previous AGM's I wasn't at the back so as a pure guess, apart from the board - there were 35/40 present.
Pelle - if you have any more info from the Swedish contingent please pass it over.
What did come out was a question of whether the company would continue to be quoted in 2 centres. The answer was YES and that the number of Swedish shareholders on the register had dropped and was now around 10 percent.

A question not asked and I wouldn't mind an answer was if currently the bunker fuel and odd bits of gas premiums were of much consequence to our bottom line?

I should add that my impression of the HYN maturity being a problem is close to NIL. They'll never say "yeah, we'll repay it standing on our head" but the numbers are encouraging and there was something about the next window of opportunity is September time? I think they'll remain flexible with rollover or repayment in full. Things change.
It is more a problem for analysts and linear adherents. I did say that there are plenty of temporary lenders out there - the likes of Och-Ziff for example and he replied "yes, but they are expensive". I do get the impression that as a company EnQuest lean towards parsimony.

Hi ukbb - there was discussion about the EPL but TBH I've moved on so tuned out. There is pressure on the industry so we had to take a hit somewhere and we are making super profits. I just know that when you fight governments you usually lose. Same with the accounts. It was mainly rehashing what gets discussed on here and I usually tune out of that as well. However, I would say that Jonathan Swinney was more chatty than usual (possibly influenced by his leaving) and he was talking for some time to a group. I think hitman was part of it and he'll remember most of it as he is an accountant and tax guy. JS is a decent guy and I remember him sleeping on the streets for charity and I contributed. I did say to him it was an experience he may now need to call upon (jobless). He did comment that people at EnQuest have children and family so worry about the environment as much, if not more than most. What gets forgotten is that the middle ages was brutal and life was short. The Industriakl Revolution changed that and lives improved for billions. The transition is not properly understood.
The point about capital markets being closed to the industry means that we'll have to self-fund. We've already seen the help that majors are prepared to give (self-interest always motivational) and they'll partly fill the gap. Bressay will need finance and I do wonder where that will come from? If EP could be used that would help but I have no idea of the feasability. Bentley wasn't really discussed.

Was KO there?

correction: sub-surface not sub-service

There were 2 absentees at the AGM. Liv Stubholt who I did want to speak to and (I think) John Winterman who was stuck in Kyrgyzstan.
Before the meeting I spoke to a young lawyer who I thought may have been a PI and it turns out she was there as a proxy to vote for a client. Not unusual but there are always odds and sods who make up the numbers. Later EnQuest people said they were pleased with the decent turn out and there were some good questions. I’d guess at about 15 PI’s (4 Swedish?).
A question was asked about declines. AB said that high single digits (Magnus) and low double digits (Kraken) which we kinda know and I’ve used 10%.
The covenants on hedging are tied to the RBL and end next year.
They are talking to Equinor and Harbour next week about Bressay. A decision has to be made or the license will be relinquished in 2024. I asked AB later just how much more do we need to know about this field and he replied it was more about the economics.
EP may be used for Bressay. I was pleased to hear that Richard Hall would be involved in this side of things as he brought Kraken Armada to production.
Towards the end JS was speaking to a group of PI’s and others would have got more context but he was saying that oil companies will probably need to self-fund as the capital market from traditional lenders is shrinking all the time.
I spoke to Rani Koya who is impressive. Both Martin Houston and AB were grilling her about technicalities. She is a go to person for (not sure) reservoir or sub-service (the other one AB matches her). I did find out one thing that bugged me. In 2015 I know there was a bet on $80 oil by October between AB and Jim Buckee. JB was the bull. It does feed into my impression that AB has a clinical approach to the business and minimises risk. You always get the feeling talking to him that he knows his brief. He has an extremely swift mind.
A PI asked MH if the company had had any approaches. He replied, “NO”. I followed up and asked if there were more than usual approaches from M&A or investment banks with pitches. AB replied saying “NO”. There seemed to be a consensus with the nodding from the board that current events are hindering or slowing deals down in fact. I was imagining opportunity but they are more cautious. I suppose you have to be with the lead times.
SVT continues to be important concerning CCS and there is a possibility to reverse carbon captured by reversing the process. AB did say it may require new pipelines.
Question about the Magnus clawback 37.50% duration. It is the life of the field.
Buybacks and dividends will always come second (imo) to the economics facing the company. They will choose what gives the best return to the company and if it meant funding a new field then that is where it will go.

Sorry for fragmentation and I’ve probably forgot stuff. Hitman was there and he is good on detail.

Looking at the bigger picture. Harbour and BP down and they pay dividends and do buybacks. We will only be a footnote today. At some stage FCF will mean something again. Better get ready. Cuban heels and flares. No jacket - up to 33 degrees in London today.

*I'm sneaking in a thumbscrew to the meeting.

Thanks E - I was running behind. Phew, that's cleared that up.

Hi mrc - I read it that they would not issue an RNS disputing the Barclay's assumptions, nothing to do with the AGM. For now we are getting the expected result. It throws in an element of uncertainty when we expected more clarity. The market likes predictability and the company hasn't shut down for 3 months since the last communication. Some numbers had to change. How is that going to work. Does it mean we don't get any update because of RNS requirements or have we dropped the ball in the last 3 months? I'm thinking of asking the Spanish Inquisition on tips for getting more information out of EnQuest.