Member Info for romaron

The UT is the equivalent of a FX fixing in my simple opinion. I bring it back to how prosaic stuff really is at the pointy end. Decisions can be made - my place or yours, your call, let's spoof for it, I paid last time etc...
Something has gone on and maybe we had some clues. Jonathan Swinney leaving, postponed AGM and we were distracted. It could have been neither of those things just as easily. The price is probably not that relevant, it was the size that mattered. Each side has its own reasons for entering the trade and it may have got down to a willing seller and a willing buyer not knowing what price to close the deal at. Probably pointless speculating and we won't be analysing the price. It'll be about who bought and who sold. The size is c. 3%+ so we should see an RNS if one side was one bank/fund.
Of course it could be fat fingers but more likely a negotiated trade with a few people getting a whiff. I'd say it was a sell and the MM (it would have only been one I reckon) had to talk to a few people to get the amount away in a thin, febrile market. These things are hard to disguise completely and it may even have dragged down HBR and SQZ because people weren't sure who was involved. It does though now give a firm base because this is the level that has been signalled to the market where stuff can get done. Solid as a rock. I'm guessing much higher tomorrow. One side is set in concrete now. You wouldn't stick your neck out in a market like this unless you had deep pockets. This is smart money.

You might ask about the seller? Who cares. The 4 D's are always there and the amounts involved are large for EnQuest but small for Goldman's, Schoders and the like. The trade could be sell EnQuest buy another company, pressure from a broken mandate with the Levy etc.....

Tomorrow will be bloody interesting is all I can say.

This is more for Juan as it is highly technical. I took all the last day Brent futures for H2 2022, added them up and divided by six. The average was $115.39.

Obviously it can go lower but that should make our 2022 a bumper year imo.

Hi Pelle - afraid I'm gonna have to back to default mode: https://www.youtube.com/watch?v=WdjTi-uhoqI

The JB video is almost a decade old but fundamentals are slow to change - fashions much quicker. From 08.45 he mentions correlation and valuations which in the US and Canada is measured by reserves and production. In the UK it is closer to lottery tickets and 'people lie' (that wasn't a reference to EnQuest).
Equinor PE ratio is 8.76.
Exxon 16.18
Lundin 14.75
The UK may have lower PE's but frankly they're all over the place and smaller ones seemingly priced to fail. It balances out I suppose in that it makes them effectively cheaper to buy in the first place but we are on a big winner if we get it past a PE of 2.
There are many theories about this but I'm being drawn to thinking that you need either scale or a specific attraction to another company (takeover premium). I think we have a good track record allowing for the times (shale war - covid) and decent production and reserves. The tax credit of c.$3bn must have M&A teams wetting themselves trying to turn it into commissions.

Our PE hurdle isn't that high and the Govt have created yetb another barrier to entry but strangely we are well placed. Funds are avoiding presently because of our small marlet cap and illiquidity in shares imo.

We won't have to act from a position of weakness as with previous RI and OO. Time could be on our side but that doesn't help investors who need profit NOW.

I can hear the groans from here. Relax, it isn't abount unreliables or changing your diet. It is about the sustainability of the oil price. Governments with their straw clutching attempts to take profits away from the least protected (but possibly most important sector) are terrified that it will last some time. In our case until December 2025.
The markets and analysts consensus on the other hand is a matter of months. They say the market is pricing 3-6 months ahead so this Autumn we can expect the price of oil to be $65 (arbitrary I know but we used to have PIK at this price on our bonds).
Each O&G company is a special case with divided loyalties as these message boards confirm. Finding peer comparisons is particularly tricky. PE is supposed to be a useful indicator and I hear it a lot on Bloomberg etc. but does it actually mean anything. Just using the button above called "Fundamentals" I got this selection of PE ratios.
ENQ 1.801
CNE 1.497
ENOG -33.543
HBR 43.854
SQZ 8.783
BP 15.186
SHEL 12.575

Almost every company needs an explanation. The answer is quite simple to me. The funds don't really like small caps so that explains some of the ratios. Debt is OK if you're a major but not a junior. They don't give medals to brave investors who held in the troubled times but they also don't use the PE's as a reliable indicator.
I think PE's and wet fingers in the air are just as good as each other but when you compare our PE to the current price it really dumbfounds. If we're still around in 6 months then I'll see you at the party because we'll be practically debt free by then and our PE may have shot up to 1.95 (mc £1.17bn share price 60p). Improve the PE to 2.5 and you could be looking at a mc of £1.5bn on a sp of 60p.

I caught this number craze from Juan. I'm avoiding monkey.

A couple of holes in that Juan. On the announcement Brent was bubbling along at a tad under $111 . It jumped on the Levy news to $115. That was the immediate effect and you could argue that the British government has only worsened the world situation by reminding overseas investors of their "droit de seigneur" and the possibility of other governments following their lead. The warm feeling we're getting at the moment doesn't mean that oil will continue to rise for the rest of the year (I think it will be higher too). The problem is that analysts, banks and credit agencies know this and do not use the higher end prices but make a lot of 'worst case' models. You are wrong on cost of production. There is a thing going around at the moment called inflation and a world wide labour shortage. That isn't good.
I totally disagree with maddog that we were overpriced at 37p.
Perhaps we need to accept that fundamentals do not apply to the oil and gas industry because of (w)reckless government intervention, nutjob activists, weak leadership by the majors and profit no longer being the main reason to invest.

I will continue taking the dirty money. There's loads of it heading our way.

hitman - look forward to seeing you there. I can't argue with your higher costs (because that part always confused me) but expect some debate and response there from the number crunchers. Regarding the 2023-25 future scenario I'm expecting higher for longer so even if your figures are correct we can easily ride them. As for any FDP that depends on Equinor and developments in government and the basin. That's without geopolitical.
Jeffrey - chuffed that you think I know stuff but I'm as much in the dark as most. What I do know is that at the top it isn't that different to this message board. Top CEO's have to charm the media and recalcitrant engineers. They fire fight problems daily and some are worth their salary or options. I think AB is in that category. The oil industry works far closer with government than almost any industry and the government usually holds the whip hand. However, we aren't ruled by diktak or government imposed 5 year plans. The government have got out their bullworker and made an industry challenging move and we now have to serve and respond.
I'm pretty contemptuous of "the market" because it isn't objective. Why are US and Canada oilers worth more - the product is pretty similar. The price moves with momentum and clever Bloomberg commentary. I worked in the City. Those things work for day trading to an extent - bit like the bookies but real profits are made by larger positions. You need liquidity for that and I don't think EnQuest provides that, neither does HBR imo because of the large overhang and past history that's still fresh. You have to live with the swings for now.

Build it and you're never out of the equation.

....and reality
"The new windfall tax is unlikely to raise the revenues the chancellor is hoping for. Even if it does, it will have second and third round effects on other parts of the economy that will hit government revenues, lower productivity and squeeze investment. Like previous similar efforts, it will cause damage that, after a few years, will require the policy to be abandoned. The bigger worry is that Sunak has opened the door to further taxes based on political posturing and fantasy mathematics rather than sound economic reasoning. Once you head down the path of politicians punishing specific profits and implying that big business can foot the bill, it's hard to turn back." Mark Littlewood Director General of the Institute of Economic Affairs.

I'm guessing here but Kwasi Kwarteng looked pained and only following orders. I imagine that with the Jubilee and recess many members of government had prior engagements (holidays booked and half-term) and this deal was rushed through. It is a government that works more obviously by expediency but that is to be expected with a weak, entitled liar and philanderer leading the Party in power. What actually happened will leak out and I think we will be amazed at the cowardice and principles tossed aside by this failing government as it clings to power. It almost guarantees that energy prices will go through the roof. On top of that the companies now have the support of angry shareholders.
When government returns I expect resignations.

You must have made a mistake Juan. The EPS this year will be more than the current market cap at this rate

I think the reality is that the market price is based on future prices and not today's $120. McDan were using $97.00 for the rest of 2022 on their April 1 forecast. You could probably use $110 now.
However, the market and analysts factor in Putin surrendering and sanctions ending next week. New ways of making fertiliser without fossil fuels. People going caravaning (horse-drawn - how clever was my ox-cart hedge?) and giving up foreign holidays. Eating liver and tinned mackerel again. Banning cement so Kharkiv, Mariupol and Aleppo won't have to be rebuilt.
I just don't see these things happening any time soon or unreliables coming over the hill to rescue the world's economy. You only have to step away from the message boards to see politicians positioning themselves for a worsening situation. In today's Times:
"Millions warned of power cuts" scenario suggesting rationing and Kwasi Kwarteng has written to the owners of the 3 remaaining coal-fired power stations to stay open and suggesting an 18month extension for Hinkley Point
9 out of 10 public swimming pools facing closure or refuction in service
Climate change to reduce UK GDP by 7.4% by end of century - they're clever people but I won't be here in 78 years
30 companies have written to the government expressing their fears that the new Levy 'could undermine the levers to long-term solutions'.
Drax, Centrica and SCC fell by more than 10% as they are next in line for a raid.
Weekend ST - be nice to Norway - they might redirect the gas coming to the UK to their European neighbours and fellow EEA members (we left it)

It goes on and Tory backbenchers are calling for Fred Karno to be installed at No.11.

....or another way of looking at it Robbie is that the market cap is too low.

*meanwhile Juan is organising a demonstration - here he is practising https://www.youtube.com/watch?v=ELXM7ZuFMq0

(I did warn him that the clogs will make him stand out at the AGM)

Hi Aloj - I'm not exactly sure who (if anybody) is in charge but the UK Ambassador to Sweden, EnQuest IR, the North Sea Transition Authority . I think you will get little response but might make yourself feel better. It seems a poor reward for holding the line against a succession of attacks against the UK NS but it seems the majors have done OK whilst the second tier NS oil companies who are essential for the transition have seen their values (which had underperformed anyway) drop by c.15-20% following the 26 May announcement.
I imagine they have common purpose now and will provide a coordinated response. The weakness isn't helped by the open-endedness of the measure and I cannot see foreign investment rushing in to fill any vacuum or see this as an opportunity. If the Governement and opposition by their words and actions have shown a distaste and disrespect for what the NS oil companies represent then you cannot expect any new investment. This is a barrier to entry that is self-imposed. F*ck knows how the industry supplies the energy requirements the UK and European economy rely on. Best we surrender to Putin now. He's beaten us without firing a shot at us.

Obviously none of the above can happen because we would totally lose our sovereignty and quaint as our customs are we do eventually say, "enough is enough". We are pragmatic and quite capable of reversing decisions that prove to be expedient and damaging. We even have a name for it which we borrowed from the French, "Perfidious Albion". I am quite confident that we will muddle through, or "keep buggering on" as Churchill phrased it. It is this very characteristic which will give us the outcome we wish for. The British public have been placated for the time being and it shouldn't damage us too much in the longer run. At say $85+ we incur a Levy. We can just about live with that. It requires the companies sitting on their hands regarding new developments until they get some written guarantees. It hurt us the last 2 days but we now have leverage. Even the majors will need to be nice to us (self-interest being their driver).

The fundamentals viewed through EPS and P/E lenses are very encouraging and even with a shortened horizon our future is extremely promising. Most people have no idea about fossil and renewables. Inflation, pump prices and the cold will mean that the importance of fossil fuels will be reassessed as reality bites. The current situation is temporary imo. The energy shortage is not.

I watched again the video of Stuart Kirk https://www.youtube.com/watch?v=bfNamRmje-s

He's probably lost his job but that is what happens when you go against the tyranny of group think. It is required watching and for those too lazy then start at 10.00 for stranded assets and EPS.

In the spirit of listening to both sides I watched a video of Sharon Thorne of Deloitte who SK mentions several times. I chose this one at random and it is soporific. It is a sermon and about as interesting. She even managed to make Stanley sound entertaining! https://www.youtube.com/watch?v=16kxn9kAIfI
The only points of interest I got was that the summit discussing climate change threat was in Bali. I doubt she walked there but more interesting is the radiator in the background. It has an attractive cover but of course it reduces the efficiency as it disturbs convection. Mind you with Indonesia being the largest export of coal in the world and also a gas exporter it probably doesn't really matter. It's tokenism that counts and spreading the missionary message.

You'll have to do better than that Coco. It's old news and for many here not of that much interest. The P/E and EPS projections are pretty impressive but not reflected in the share price. Doesn't bother me in particularly as I am what they call "a long term holder" a term you have probably not come across. Doesn't make you a winner or loser but Warren Buffet has done OK with it.
I have mixed feelings about tomorrow as I released some funds on Friday (Fundsmith) that aren't credited until the next day. My intention is to buy if the selling continues but it may well have exhausted itself. Even with the Levy we will soon be practically debt free and the EPS is getting close to the market price. I feel good about this holding.

Whilst you're here there's something I've been meaning to ask. Do you wear face paint when you post?

correction - sums worked on $50m not £50m.

This action has given all the nutjobs and climate activists everything (and more) than they ever dreamed as recently as COP26. That saying "be careful what you wish for" makes the possibility of the UK relying on unreliables to replace fossil fuel whilst any shortfall or temporary demand for fossil fuel will be bought in the global market from friendly states. The first problem I come up with is that many of the oil states aren't that friendly. Still, we'll still have the US help through profit driven self-interest (after they've secured their own supplies) and hopefully they'll bring their gun culture with them. We'll need them.

What a frigging mess.

That would be the mother of all short squeezes and with the portion of super profits (lets say between $85-$115) would mean a war chest of c. £50m would only take around a month to refill (less of course the 25% levy) so say 45 days.
Holes in the argument are;
the bottom may have already been reached;
we probably have covenants preventing it;
the minute you announced it the price would rocket and you would get nowhere near 200 mio shares;
the paucity of available shares would add to upward momentum.

Nice idea though which is why I said that we (and the government) haven't run out of ammunition and if it helps BJ keep his job another month he'll bend over backwards to make things happen. It's what they do.

There wasn't a presentation and I hadn't prepared a list of questions. With larger numbers of PI's they get their own dynamics and you can feed of other attendees questions and the responses from the directors. You'll only get what's in the public domain anyway and you can pick up tidbits after the meeting has closed. I find they can be quite gossipy about other companies and can sometimes give you an insight that you won't find on a message board.
I expect to build up a rapport with their comms and IR and quite happy to approach them. With luck a few more PI's might start posting on here. It does help when other investors contribute because they often have strengths and knowledge that you're missing. If it's excitement you're after you won't find it here so this message board should be relatively troll free.

and that's a bonus.

Hi ukbb - I made it with minutes to spare. There was a lot of security and this was the reason for the late change. There were two large individuals outside at the Broad St. entrance and more inside. A demonstration was possible but in the rush I had left the super glue behind. I was the only PI there. The meeting was brief and I asked no questions but did have a chance after to talk to various board members and employees afterwards. It will benefit me more in the future I feel and I now have faces to names and they now know me. I met Roy Franklin and he was chairman of Premier for a while. He wasn't part of the debacle there. I spoke to the whole board and how often does that happen? I realised I was holding them up, made my excuses and left.
What my attendance did confirm is that there is little appetite amongst UK PI's for this stock although the late change may have affected numbers. I mentioned this to Mathios Rigas the CEO and said the reason was partly the high price of the shares not matching the penny stocks loved by the UK punters. He agreed to a point and said their investors in Greece and Israel tend to be funds and there isn't such a culture as there is in the UK. They would like more PI's because of the liquidity it improves. I also think there is less excitement with this stock as the business plan is different to many other punter favourites in that they go for long term contracts which misses out on the volatility of spot movements and hedges beloved by the day traders.
I expect to get quick responses to any of my enquiries going forward as questions crop up during the year. I found and smelt nothing untoward.
I will probably increase my holding here as I learn more. Israel and Greece seem a lot more stable from a financial perspective than the UK at present.

Be Lucky

Thanks for that Therapist. I thought he was impressive and especially the final sidebar titled Street Cred with a potted CV:
Amjad Bseisu, CEO EnQuest
Fmr Board member Petrofac
Former Chaimman Serica Energy
Formerly at ARCO
He is an experienced and qualified oilman.
I hope he is annoyed.
He described us as a "Transition Company" but only mentioned SVT (3 projects ). That will help with the Levy but leaves open any NEW field development. My main interest is Bressay and a lot will depend on EQuinor imo. They seem relatively happy with Mariner so maybe they will go ahead? mrc sometimes gets wind of sentiment here*.
At present I could understand it if AB looks eastward for growth. We're not wanted in the NS.

I think the Tories have a first here. They managed to upset their base, go back on their word and let Labour get the credit. At least BJ gets the match ball. He is an embarrassment and a pinball prime minister.

Ah - interesting. I attended their AGM on Thursday. I was the only PI there. Cannot expand as the gazpacho police start knocking on your door.

Good post ukbb - I was thinking along similar lines. The majors are exiting the NS but may have a rethink re: Ukraine/Russia. I think they'll pause and then continue the pattern unless something of a really juicy scale arrives. The transition will continue and smaller companies are essential as the larger companies divest. Indeed the Levy may speed it up. It looks like EnQuest are as peeved as the rest of us and the Government can look forward to unintended consequences. A bigger problem for us in particular is what will happen at Bressay? Will Equinor retain an interest - HBR will obviously be reevaluating too but they are in the same boat as us.

*O/T do you hold any Energean?