Member Info for romaron

Thanks Juan - I really want gas production. I may have to go overseas to get it. HBR will be FTSE100 soon so that explains their higher rating.

I am too long of EnQuest. I want to diversify. My requirements are to stay in the sector, preferably with a UK based company. I think gas could go even higher and we don't have a lot of it. My fiirst choice is HBR who I think are c. 50/50 oil & gas. Any other suggestions or reasons for avoiding HBR. [I looked at SQZ but not for me]

Hi Tigar, that's all rear view for me as I've elected to take the 9% Bond. Not my field at all but I imagine the sweetener was to encourage and tidy up the books. It is a bit messy with c.58% deciding to stay with the earlier maturity. I wonder who holds those bonds? There was a period when these bonds were sub 40.00and reached 27.13 in March 2020. At that time mandates and covenants would be breached within certain funds and they would have ended up in Vulture funds as they were forced to sell. They [VFs] practise the dark arts and I have no idea what is behind their decision but it is also interesting that we have had an injection of new money in total. I think people are trying to read too much into this. For me it is a bet against inflation and to have part of my portfolio in cash/bonds. At this moment it isn't overgenerous imo but from a shareholder perspective I am happy. The HYN fixed higher todayby about 3/8% so they haven't reacted negatively. This is so far routine housekeeping and we haven't seen anything to frighten the horses. I suppose it is another thing out of the way and we await their decision regarding the HYNs.

Hi onedb thankyou but it is too much info really. My simplistic take is that the amounts are too small (you can deal £2,000) and the rules so tricky for US investors (even if eligible?) they would steer clear of. I'm trying to get a distinction between the RB and the HYN. They come from the same stable but one is NH and the other Flat or whatever nuance you want to put on it. They're the same but different if you get the gist and appeal to different investors and there's even exchange risk. I'm not even sure if Swedish Investors are eligible but I think it is of little import.
I must say I was severely tempted to BUY shares this morning because any confusion or misunderstanding makes day traders hit the SELL button. I called AJ Bell and they are still quoting the 7% 23 RB so EnQuest will just run it to maturity I assume. I think EnQuest should be praised for enabling smaller investors to be able to buy corporate bonds in smaller amounts but imagine the compliance is a nightmare; widows and orphans and all that.
I only look at bonds in the round and I do know quite a lot about credit ratings but it was soooo long ago. I even dealt in gilts but only for clients years ago but understand interest rates because that's what forwartd FX is all about.
It is all much simpler than people pretend. I mean, even I understand most of it and computers were steam driven in my day.
The HYN fixed at 97.986 yesterday but I imagine it is pretty much lock-up paper but those holding it will be the absolute opposite of widows and orphans. I think AB and team will be happy to start a fresh book in US $ bonds. Those holding a weak hand in the Oct 23 bonds will no doubt be awkward; it's what they do.

Be Lucky

Surely the existing RB is run out and that means PAR, even if repaid early you're entitled to what you contracted for? There may be some small print messing around but the company isn't going bust or anything. I'll admit to not reading the prospectus and not going to do it now but we have some bond experts aboard here. As for the new bond I don't really have a clue but thinking 96.5 using Tullow as a benchmark. If things go to plan and we creep up the Moody's ratings it'll climb. Just out of interest we were FTSE 250 when the 2013 RB first started at 5.5%.

You're missing the point old son. Nobody cares or gives them a value. The fossil fuel industry is all front loaded.

I have no idea what this means:

"The bonds will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") and, subject to certain exceptions, may not be offered, sold or delivered within the United States. Any bonds will be offered and sold outside of the United States in reliance on Regulation S of the Securities Act, and may be subject to certain U.S. tax law requirements."

But I'm sure Pyueck can explain as he specialises in bonds.

Sometimes it's the bleedin' obvious that gets missed. The RB was an existing investment of GBP for 18 months. It is being rolled over for a period of 5.5 years. The time difference attracts different holders and existing holders have a rethink. Some original RB holders may remain but some would have exited for the 3D's or the original funds exiting for a variety of reasons, ESG and rising interest rates come into play. How can anybody come out with a definitive opinion on the take up of existing holders? Pyuek forecast the end of year price for 2022 at 19.50 pence, perhaps his expertise is in bonds?

An afterthought. The first RB was at 5.5% in 2013 for 8.5 years. Inflation was 2.29%
This year inflation is expected to peak at 7.4% before falling to 4% in 2023 and 1.5% in 2024. Of course there is more accuracy in predicting this year's rate but if they're anyway close inflation for the next 3 year period is around 4.30%.

You pays your money, and you takes your choice

I can only give a personal opinion because I don't know enough about bonds. I fear inflation and it is already hitting home for all of us unless you're an anchorite or a board troll. If pundits are right then shares, especially commodity shares, should outperform. We all know that bonds are safer than shares and should be in a balanced portfolio. But let's not pretend these are gilts or a Prime rated investment. They are a fallback for me and I have no idea how they'll perform but we will know pretty shortly. My own expectation is that any discount will be balanced by an improvement in our rating from Moody's. Tullows have a 10.25% $ bond (15/05/2026) with an appx. YTM of 9.87%.
I think with a hunt for yield among those risk averse will make this an attractive investment for some.
With the world in the state it is I can imagine many think it safer to keep cash under the mattress. We don't know the opinion and reasoning behind those who didn't exchange. Nobody has come up with a better offer on here and the company has fresh intelligence on how we are perceived in the market. I suspect the buyers of the RB are a different market to the holders of the dollar HYN's.
I'm very happy with my holding and it remains my first choice for holding cash. The exchange can also be viewed as a reward for loyal holders of the RB.
The share price today could be a good indicator if it moves out of line with other smallcap oilies.

Canadian Natural Resources breaks Can$ 100 bn market cap today. Record production 1,235,000 boe/d. MC £61 bn.
We produce c. 50k boe/d so if we were Canadian we'd have a MC of £2.46 bn or a share price of £1.30.

Now, I'll accept that there are flaws in this statement but it sure as hell isn't 36 pence. I could even argue that with tax breaks we're worth more than £2.46 bn.

Hang on for the ride.

There was another Eric Nuttal interview on Monday: https://www.cnbc.com/video/2022/04/18/nuttall-were-in-a-post-us-shale-oil-hyper-growth-world.html
More a repeat of his past interviews but for me the penny finally dropped. I was toying with moving part of my holding out of EnQuest into Canadian stocks. I read that it's sensible to diversify. I changed my mind after his comments from 03.40 when he said that with CVE for example you could achieve a 30% cash flow yield and a free run on 30 years (yes, thirty years) after holding the stock for 3 years.
Now, that is longer than our reserves (or is it?). The point is though, who cares? I decided that our near term performance, which isn't guaranteed but a damn sight more reliable than a 10-30 year view is the equal of any Canadian stock and I quite like it that we are front end loaded at present. Negotiations with Government are essential if we are to develop further the North Sea. I heard a scary interview with the boss of Centrica yesterday being grilled by Parliament and actually felt sorry for the man and his honesty. Along with SSE they both said that the energy crisis was TOO BIG for them to solve.
US shale is prevented from repeating the sins of the past as shareholders demand returns this time. It made me think about out strategy of wringing more oil out of old fields. Along with decomm it is our area of expertise and I think an argument can be made that we are as close to traditional off shore drilling as we are to shale in time-scales. It also made more sense of the majors leaving the NS. With fossil fuels they want the really long reserves and they're not of the scale they require in the NS (Equinor might disagree). We have the BBK hub which could give us 30 years of reserves but the value of it seems closer to ZERO and fits in with Eric Nuttall and who is to say the market isn't right. I quite like our short term horizon as I won't be around for the 30 year dividend anyway.

The belief in the possibility of a short decisive war appears to be one of the most ancient and dangerous of human illusions. -Robert Lynd, writer (20 Apr 1879-1949)

If things go according to plan debt will be drastically reduced; covenants removed allowing dividend payments and entry to FTSE 250 likely if oil price hold for rest of year. Moody's will have to take notice of that and rerate. I was an existing holder and will rollover to the 9%.

Good point mrc - kinda self-fulfilling. You can't pay dividends if somebody has a covenant in place blocking payment. Almost like proving to a bank that you don't need the money when trying to borrow. It is the final hurdle.

https://www.youtube.com/watch?v=P65V-cst6TY

I'm talking about our price. I decided to get technical and check out the P/E. Last year's report stated the earnings per share (EPS) was $21.7 cents compared to a loss of $29 for 2020. A rough calculation would give a P/E for the 2021 of 1.
Using Juan's figures of Mon 16.33 and an estimate of FCF of $818 mio we get an EPS of $43.37. Nothing is budging the P/E from around 1.
This is ignoring the cumulative effect of reduced debt and an entry into the FTSE 250 which (for me) seems inevitable. I know we're not a major but BP's P/E is 8.19 and Shell 11.18.
The market seems to be costing in oil at (say) $65 and lower post 2022 and renewables or increased production making 2023 their breakthrough year. Using $65 oil we would produce similar figure to what Juan forecast for 2022 from 2023 onwards so 3 years of that will suit me fine but we will have longer (and higher) than that imo. Our importance as an essential towards Net Zero will only grow and I think a P/E of 4+ is achievable. As the true costs of renewables and the transition become common knowledge it will filter through into the stock market and to earn respectable returns (investmentwise) the funds will not be able to ignore fossil fuels.

*I couldn't resist a little top up on my CI spread bet. I keep the margin indicator between 110-120%. I only opened it to help towards my replacement boiler. What can I do with a fourth boiler?

Stay Lucky

Sorry that was only a precursor. Where have all the trolls gone? They only feed off misery and get some perverse pleasure from gloating when prices are falling. What did surprise me was something in the weekend papers saying that the most traded share was Petropavlovsk (POG). It seems that for penny punters the most important requirement is movement, turnover and volatility. Why would you invest in them when there are energy stocks which have the same multi-bagging opportunities they seek?
Many of us were here in March 2020 and the single digit price of EnQuest and the rest of the year wasn't much better. This recovery has been long overdue and if I seem a bit overbearing or intolerant towards trolls and it upset any of you I would like to say "tough". I was right and they were wrong!

Or in FX parlance - "owyu left for me shag!"

This message board must be a gauge of some kind. Different approaches towards investment and strategies become apparent from the regulars. I lived in a bubble for 28 years where lunches were long and liquid and everyone had a position or were trading (Forex). I don't miss it.
After the Euro made me effectively redundant I left the market in March 1999. I did a plumbing course and a surveying course (qualifying in both) which makes me officially a plumber and surveyor but I wouldn't employ me. It did however give me massive insight to both industries and I even sold boilers to the trade. A bit like Manuel 'I learn it from a book'. The point is I did learn it and understand it. More than the average man in the street.
Renewables have been going a lot longer than people expect and the biggest driver is Building Regs. These are enforced through planning and building control. It looks great on paper but in reality it is very different because avoidance saves money and there are plenty of tricks. The biggest hurdle is COST.
The ill-informed who glue themselves to property or have a zealotry mission to believe everything a lobby promotes or their favourite scientists (ones who agree with them) promulgate. Governments play to the gallery and the noisiest get most attention and are tolerated until something really worries them. That worry is fuel and the price of a pint and at election time it is ALL they worry about.
My daughter reported on COP26 and basically after it was over she lost all interest and moved on to her next job or pitch. Her friends are the same and sad to report but they never discuss climate change. Fashion, men and the cost of living in London for sure but it is pretty low on their priorities and these include some famous names. Can you imagine asking a Ukranian their view on climate change or food prices (and availability) in Yemen?
The effectiveness of insulation and changing energy systems is massively expensive whatever the missionaries preach and I know it from the sharp end. People resent paying a contribution and once it becomes known and is excessive resistance is almost immediate. We are seeing that now and there is nothing wrong with Nigel Farage's nose and I expect Piers Morgan to jump on board. Trump is already signed up. The deplorables when motivated outnumber the do-gooders by a massive majority. Most people just don't care that much and are basically ignorant of the economics involved. They are fundamental and the ESG group have been largely unchallenged until now.
I look at this purely from an investment perspective and there is no ESG cavalry to save the world from higher energy prices. Any relief is over a decade away imo.

People are making losses in bitcoin, bonds and tech. They will see the commodity cycle retuns but are hesitant because it has moved up this year and is partly camouflaged by the Ukraine war. The signposts are there. Fill yer boots!

Ineos turned up a few times in the 'rogue's gallery'. The grant hungry renewables mob want us to exist without theses products; pharmecueuticals, antivirals, hip replacements, food and liquid packaging, smartphones, cables, plastic fuel tanks, bumpers, tyres, antifreeze, insulation, safety glass, window frames, piping, clothoing, carpeting, paints and coatings, detergents, gas transport pipes, solar cells, wind turbine blades and lubricants. This isn't a complete list and there is also the contribution to this country's GDP and the jobs it provides. The world economy has changed, just in time (intended pun), and the path of decline and stupidity has been arrested. There is more pain to come. Step forward and save us all you do-gooders. We have subsidised and indulged you, like entitled children, for decades. Time for you to show us the results of all our investment in your demands! You've had long enough. Time to remove the stabilisers and go out into the real world.

Jim Ratcliffe picked up the basis of his empire [Ineos] for a song when he purchased 2 refineries from BP. In my own small way I am doing the same with EnQuest.

Build it and they will come.

mrc - I don't even know my own position so it's nice of you to tell me what it is. Bit like my wife.

Encouraging front page headline on Sunday Express "Punish ECO mob Now" which goes on to say how they are losing their moral high ground as their policies fail to bite and reality takes a hold. Followed by news that Oil operators have taken out injunctions agains protestors leading to 600 arrests (Energy Voice).

I think we should thank the protestors for keeping the fallacy of economic renewables alive causing under-investment in the oil industry and creating so many mini-oligarchs who have been able to buy EnQuest at a knock-down price.

Sad to see that Stanley is still glueing himself to this board. It is really meant for investors but I never took umbrage when he entered the pub and I always bought a copy of 'The War Cry' from him. Bit coincidental him turning up on Easter Sunday. The believers have been waiting over 2 millenia for Jesus to turn up. I hope he's not going for a hat-trick!

*I'm delaying changing to an EV. Just read that 'levitation' is the next big thing and 'just around the corner ' to be in everyday use.

We built it (survived more like). They're coming

Jefferies are completely independent of course (cough) except they look after AB and the Foundations holding and I've noticed MW always gives them an easier time. I like hearing what he says too and no doubt so does AB but I prefer James Hosie because he is miserly with his comments (and targets) usually.
Naturally I think MW is too low as well.