Member Info for romaron

Hi Tim - well at least you're having the same problem as me. At the back of my mind there is something like they must announce within 3 weeks so maybe they have until Thursday.

Hi Pelle - I cannot find out officially when and where the AGM is. I shouldn't have to approach IR for this information. Is the information available on the internet or am I just not looking in the right place?

OK - I give up. Where is the notice about time and venue of the AGM 2022?

We've seen the chaos that Brexit created at Dover with lorry transport (still happens) so can anybody imagine what is presently happening to oil and gas deliveries. Will you receive it on time, will you be fined for buying from the wrong producer, can you actually pay the producer, will a tanker pick up the load, are the refineries or ships in the wrong place. The list goes on. I'm even anticipating dual markets - one in contango and the other backwardation in different centres. What happened on April 20/20 probably won't happen again but there are forces at work.
None of us know how the insurance market will handle this and the refineries are just about as complicated as you can get but I know they need to operate at high efficiency and there is a big problem with some of their products in high demand whilst for some others pouring down the drain would be cheaper (Not allowed).
I'm suspicious of the Chinese getting in a mess and quite happy to blame it on Covid rather than mismanagement. The whole supply system of oil & gas is under pressure and it won't be solved overnight. The movement of dated Brent must be making some people a fortune at the moment and if you've got a handle on physical maturities and deliveries then you really are the one-eyed man in the land of the blind.

I see no threat to EnQuest share price longer term but we are in competition for items and shipping that may be in short supply/high demand for the next few months. I suspect nobody knows what Putin will do.

If you haven't got an official letter you won't be able to vote but that makes very little difference as the items normally go through in the high 90%s.

I think that if the Swedish contingent come correctly dressed (horned helmet, battle axe and reindeer jerkin) and kick the doors in they'll have no problem. They have form on this.

Failing that they could do what we do in the UK and ask their broker for a letter of representation. They do check but I've seen people present mobile pictures of their statements etc. It is advisable to get some proof but the main concern for EnQuest is if you're likely to glue your face to the dais. We have had activists turn up before. They are normally very polite middle-aged ladies but there is one particular troublemaker who may try to trespass https://en.wikipedia.org/wiki/Stanley_Green

Incidentally, I may have missed it but have we had confirmation of the AGM? They normally post an RNS.

Good point there mrc. If Russia's oil infrastructure and supply systems are as good as their military at redeployment and maximising advantages and performance then they've got a few problems heading their way. "Um, now what do I make next? Oil rigs and pipework or tanks and new ships. Decisions, decisions!

ATM Putin is making Colonel Custer look like a master tactician.

error; death of patients average 81. As you can see she was a bit old school and looked forward to the old flu epidemics that used to clear bed blockers.

monkey - it's the End of the World. We're all gonna die and survivors will live in caves and live off berries.

Another narrative is that people turned over to Bloomberg from CNN. On my recent skiing holiday one morning I felt a bit nauseous (altitude/pervious night's booze?). We had a cancer nurse from Charing Cross Hospital in our group and I told her my symptoms and that I had a temperature. She touched my forehead and said that I didn't have a temperature. I complained that it wasn't professional and she said that's how she's been doing it for 30 years. OK, she was lucky and got it right that time but there was no expert handy.

She also said that before Covid the average age of her patients was 81. After Covid it was, 81.

It only matters if you're a day trader or need the money today.

Quite easy if you're a 100 metre sprinter or a team in the Premier League but much, much harder with oil companies. I expect EnQuest to be more positive and go on record concerning future dividends. I am in the process of going through alternatives to EnQuest and whilst finding none as attractive (I stuck with UK quoted) I did find a company that ticks most of my requirements but is very different to EnQuest when it comes to promotion. I will be investing in this company and it will give me ammunition at the AGM but I am actually expecting the board to anticipate investor demand for returns. The change in sentiment is industry wide and many companies have dropped "Exploration" from their names and only speak of it softly. What did come over clearly was our lack of scale and I think this affects our credit rating. There are a lot of challenges ahead but they are more concerning the best path to maximise profits and reward stakeholders. I've more or less given up on peer review and you can only take isolated instances for comparison. What I like about the new company is its youth and declared intention to pay dividends. Maybe that was our intention too but as we unwind the PKI and covenants we suffered (TBF they were unavoidable and beyond the company's control) the company can no longer hide behind this excuse. With the numbers we are producing I expect our management to stand up to debt issuer demands and start putting shareholders first. I expect them to do this anyway but any timidity or obfuscation will not go down well with me.

We built it, what's the problem?

I don't disagree Pelle - take Juan's £500k. It could easily be higher and there comes a time when the cost curve gets smaller and FCF grows. If all of £500k could be returned to shareholders that would be 26.50p per share. My point is that in 3 years either we reinvest a cash pile (pick a number but $1bn isn't excessive imo) or distribute it. There will be the usual shuffling of the balance sheet but there comes a point where it is impossible to hide the profits. Pressure is building to do something with it. Debt doesn't have to be Zero to pay a dividend.
You wrote "EPS it’s effected by the write down or write back etc based on oil price. Specially during last years." Exactly. it appears quite easy to get past external auditors and it seems that this side of accountancy is as much an art as a science. I asked a partner of a Big4 Accountantcy firm to explain the difference between NPV and DCF. He blustered until it suddenly dawned on me that I knew more than him. The (unknown) future is a great leveller. Accountants have the same belief in figures that some have in renewables. They're not always wrong but they sure as hell aren't as correct as their sanctimonious behaviour warrants.

*I can remember mortgage holders posting their keys through the bank's letterboxes c.1990.

So to continue using official numbers (cos ain’t that what audited figures are?) we can all agree that at a minimum the EPS for 2021 on OUR investment of £1m earned 2.85m shares X 9.61 pence or £273,885. Now I don’t know where this disappeared to but it is in the figures somewhere. Let’s call it sunk cost or seed money. In 2022 we can expect an uplift of at least 40% because the average poo in 2021 was $70 and now likely to be $100 for 2022 so that 9.61p becomes 13.45p or £383,325.
I’m purposely quoting what I hope are figures on the low side but it does (for me) illustrate what I’d do now if I had £1m to invest.
The story gets better. As we move forward the debt becomes lower and the whole industry is hampered from growing production for a variety of reasons. Oil should stay high for the foreseeable and there are some very savvy commentators saying this. Not message board gurus.
Now if the argument was about buying a house in say 2015 it would be a slightly different story but I see EnQuest as being the better investment as soon as the end of this year. If you’re only considering investment now it is a “no-brainer” imo. Of course the company won’t pay a dividend to match the EPS, few do, although a special dividend may be paid. Now, and I’m only guessing, last year’s EPS went towards strengthening the balance but they’ll need a bloody good excuse to not to reward the long suffering shareholders in 2023. We are entering a period where the EPS either goes to us or is reflected in a higher share price. I can live with that. What if I’m wrong and my calculations should have used 21.70 cents?

*Pelle 13.45 – you’re a bit on the low side shag.

This morning I looked in the Estate Agent’s window. I don’t generally follow house prices and was aghast at just how expensive they now are. You need £1m to get even a modest house in London and it won’t be in a desirable area or near the centre. It depressed me because it feeds division and the young suffer. Many have little hope of ever getting on the housing ladder. It started me thinking whether I’ve been investing in the wrong assets. Would housing have been a better investment than EnQuest? I don’t deal backwards but in this case we need to include 2021.
Helpfully the British are so obsessed by property it is quite easy to get statistics which is where I started. So this is about a £1m investment ignoring taxes and using simple numbers.
If I buy a property and rent it out I’ll get around 8% so £80k a year. If I buy 2,850,000 shares of EnQuest I’ll get sod all at present. I’ve read the numbers knocking about with FCF and projected revenues at different oil prices so we can safely say that is about to change. I’ve read Pelle and Juan’s calculations and whilst not really disagreeing with them this isn’t the way to present them.
Juan says FCF of $650m for 2022 (let’s call it £500k for argument’s sake). People on here (me included) think that is a figure close to what could be dished out if the oil price holds and we can reduce the remaining debt gradually, play around with Capex etc… Isn’t that wrong when there are existing figures on the official year end report giving correct numbers called “Earnings per share” (EPS).
You’ll need the report to comment and I will draw your attention to Pages. 2, 28, 118, 137.
Page 2 Basic EPS (cents) 21.70 2020 (restated): (29.00)
Page 28 The Group’s reported basic earnings per share was 21.7 cents (2020 loss per share: 29.0 cents) and reported diluted earnings per share was 21.4
Page 118 Earnings per share $ Basic 0.127 0.217 Diluted 0.125
I don’t understand the difference between these numbers or why there are two of them? The numbers above them help but “Remeasurements and exceptional items (note4)” could be written in Swahili for all the help it gave me.
Page 137 is a summary and you get 4 numbers for EPS which is why I need help. Let’s choose the lowest 12.50 cents or £9.61

I've moved on L7. Your 14.08 post made my eyes close over and I'm out of the discussion. I believe that a certain amount of predictability has returned (as much as oil allows) and we have no solvency issues. EnQuest will move the monies around to whatever currently suits with two imperatives. To become covenant-lite and return some money to shareholders. An unmissable deal could also land but I doubt it would be generous enough to divert our direction in the near future. This could affect timing if the HYN holders won't play ball. We get stronger every day. We can afford to wait.

You're not in the clear yet though. I've some questions that draw in yourself, Pelle and Juan. It revolves around reading a balance sheet or year end report. I can get the gist but a few points need clarification. I promise you it will be interesting and challenging. Back in a while.

Hi Tigar - I think the old RB will just be run out and will reflect outside forces and not be EnQuest specific (i.e. the next 18 months look relatively ring-fenced from problems). It will move up and down along with other short dated similarly rated bonds. All our new bonds will be affected by interest rate movements and credit agency ratings as well as EnQuest's performance. I suppose the same could happen to the HYN's but it is possible to repay early the existing bonds as you can with a house mortgage but you may be penalised. I wonder if those holding the existing HYN's are still a sizeable percentage of those likely to subscribe to the new HYN's? I doubt it. I think it is academic but if I get a chance at the AGM I'll ask. It isn't a question for QA imo but useful for the experience bank in that it will make future understanding more accurate. The kinda info that L7 likes - "so how does it work, what output can it reach and how reliable". I'm not knocking his approach. I learn a lot from his questioning.

I'm agnostic on hedging. Perhaps they should just call it 'output scheduling' or something. Here's a thought. I imagine we also have some fixed contracts to supply oil. For how long and who with? Do any of you numbers guys think there are any in existence? They won't be at a high price if old and for a long period. The swap we made around March 2020 was painful but I'd have done the same. Panic and baling out are also market drivers; sometimes it is the right thing to do.

I think you nailed it there L7 "Academic but interesting."
The bonds will be rolled over and the Analysts and Moody's will produce notes and maybe an upgrade later. They aren't interested in the details but we are and is it worth it? You have an enquiring mind and I don't know your specific roles as an engineer but if it was (say) in building skyscrapers or hotels there would be plenty of daily problems but the important people, the clients, only want the finished result and to know if it will be completed on time and the occupancy rates.
I think there is a considerable difference between the RB and the HYNs and it might be a question to ask as to why they bother? The bigger and more professional are the HYNs and there is a strong US influence, especially when things go wrong whilst the RB can weaken their grip on us. I don't know but a reasonable guess. The RB was a novelty back in 2010 and we entered the market 2012/13. Perhaps once in it is hard to wriggle out (or easier to stay in).
I'm guessing again but there are potentially more awkward holders of the HYNs but the price of oil makes their position far weaker. I'd suggest at a push we could pay them off (farm out?) but it is in all parties interest to play the game. I think we've spent too long on this housekeeping important as it is.
I'm also wondering if they'd like to get this out of the way before the AGM and clear the deck for whatever? Something spectacular like hitman suggested? It is probably more prosaic than that and we are just sorting out our debts and overdrafts at the right time. On the plus side there isn't the air of desparation of some of the older deals and money raises. It all looks pretty promising from where I'm sitting.

It crossed my mind too. I think M&A never stops and we should expect the unexpected. I think we need to be covenant-lite with a healthy cash balance. That's about NOW.

Hi L7 - why are people surprised at the low take up of the RB? We have no idea who these holders are and they could have been funds who deal in distressed debt and there have been at least 2 instances when funds and individuals would have been baling out (Jan 2016 & Mar 2020). I well remember the second one and I had a very large laundry bill that month.
I spoke to Ian Wood regarding reported major shareholders and basically it isn't a priority for anyone because shareholders can be fickle and time might be better spent directing clouds. He said they laboriously go through the register by hand on a regular basis. Even then you don'y know if they're a day visitor or might hang around. I don't know how it works in bonds but there must be some data protection and nominee accounts, not always easy.
Let's say a fund bought the debt in Mar2020. They'll have done well and may still have it or passed it on. It has a maturity of c. 18 months. It isn't the interest rate that concerns them unduly for the new RB but it might not suit or be what their business is about. I think interest rates will rise so 9% might not be that attractive in a year or so? There will be alternatives too. Why buy bonds of a healthy company when there is a sickly one, fundamentally sound, that you can get for 25p in the pound (Ineos debt traded at 10cents to the dollar in 2009). The majority of those holding the 7%RB were prettty stable and on the face of it happy to run it until maturity. The new RB, even with the sweetener didn't interest them for a variety of reasons. People and companies are like that, unpredictable and after the roller coaster ride a few may have decided not to go round again.

But what you're missing Pelle is the excellent stewardship he has provided whilst at the same time helping the loyal shareholders build up their stake at a good price. I also think I've landed on a company where the CEO is a self-promoter and enjoys the stage-lights. I'm just asking a few people who's opinion I trsut what they think and then I'll swap some stock around next week. I have not changed my mind at all about AB. He is quite a reticent individual and if I want amusement I can always go to the theatre. Some investors need cheer-leaders. I just want want good stewardship and a deep understanding of the business.

Only double?

What is currently going on with the RB debt would not be in a vacuum and I think we can take it as read that they are making decisions about the $HYNs and are in negotiations.
Today it fixed over 5/8% higher (98.981).
The share price at a time like this is being affected by the different holders of the existing bonds. As with the RB they were looking very fragile and we were priced to fail back in 2020. We will have some death spiral financiers on board and ARCM showed how easy it was to manipulate and rob shareholders when short selling PMO. They have techniques where they can push the share price around by arbitraging the bonds. They get information often before shareholders and meet with the management more often. They also hunt in packs. I don't think we have anything to fear from them now but like a verruca they're easy to catch but hard to get rid of. Even without the worst offenders we will certainly have a percentage held by what are colourfully called 'Vulture funds'. they didn't dismember our carcass but (and I'm guessing) we have the odd unsavoury 'investor' holding our paper. They don't ignore shares and rely on shareholders to lose money whilst they are paid before us if things go wrong. I've never underestimated them and they protect themselve by selling stock and buying the paper because that gives them leverage over management. I could be talking out of my arse but I'd be very surprised if we don't see the unwinding of some convoluted deal that were built up/into over the past years. They may not be large positions now but in a flat market they will impact one way or t'other. If you were a holder of HYN's and a shareholder you would have ended more or less flat on the day.
I am relaxed about today's movement in the shares being cancelled out by the HYN raise. There is stuff going on in the background but if the RB is anything to go by it should go well.