The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
“With the Malaysian production sharing agreement called out as one for sale, it seems to be the more volatile parts of the business that are up for grabs first.”
https://www.energyvoice.com/oilandgas/north-sea/552529/petrofac-asset-sale-on-the-cards-over-debt-challenges/?utm_source=Sailthru&utm_medium=email&utm_campaign=Energy%20Voice%20Daily%20Newsletter%20A%202024-04-30&utm_term=Energy%20Voice%20-%20Newsletter
AB founded Petrofac Resources in 1998 and EnQuest was partly formed by PFC spin out in 2010. I imagine he knows what is going on there better than most.
It was aimed at those who think we have to accept the pseudo-science, increased costs and the brain-washed cultists who struggle to decide between puberty blockers and throwing soup at paintings.
The latter group are thinning out as there is always a new crusade around the corner. They could join others stealing from supermarkets and putting the loot in food bank hoppers which is the latest 'protest'. They haven't asked me if I'm prepared to subsidise their 'robin-hood' thievery with higher bills. They never do. They think they have the right to think for me; they don't.
*I have a sister-in-law who works at Morrison's Loughton. They used to allow people to skip dive their out of date food. They stopped because of the traffic jams it caused. The worst offenders were the Mercedes and BMW drivers.
Mr. Angry
Https://www.energyvoice.com/oilandgas/547888/increasing-comparisons-be-drawn-1980s-miner-strikes-and-epl-job-losses/
This was an article dated 16/02/2024 "Unions liken EPL job loss impact to 1980s miners’ strikes"
They presciently used a picture of striking Unite members outside Petrofac's Aberdeen office last year. I'm sure the strike didn't help PFC but neither did EPL. Unusually the Union attacked Labour and its plans to fiscally attack the O&G industry.
Today PFC announced there Accounts will be late. It almost certainly means a wipe out of equity holders. Their 15/11/2026 9.75 Bond is priced at 22. The YTM is c.99%. They lose money too.
This together with the damage done to the Scottish economy by their ideological, financially illiterate politicians deserves to be plastered across all media. PFC were drowning so the politicians threw them an anvil.
*I had PFC on a watch list. If it wasn't for EPL I'd be holding them. I really do have sympathy for their shareholders. This country needs companies in the industrial sector.
Hi Dumbly - I'm probably more naive than you. Things I can't change I normally accept. I made (and I may be wrong) an assumption that somewhere in the several hundred pages of an ARA there is a commitment to grant shares to employees as part of their remuneration/incentives. I read this as a positive in that you can't NOT give shares to the employees and these were heading in that direction anyway - that is unless theses are over and above the usual entitlement which will also be buried somewhere in the ARA. I would rather chew my right arm off than search the ARA. It may even be that they thought we would welcome this efficient use of a buyback? I'll stop now as I'm completely out of my depth.
Summer is coming.
I like that shares are earmarked for the EBT. You need employees with you. I'm not sure if Directors also get shares allotted from EBT or it is separate. There is a certain opaqueness but if it is needed to put the 'master plan' jigsaw together I won't complain. It reads to me that there is flexibility being built in.
Shares are always being gifted and options granted. I prefer the openness (as far as it goes) of this RNS. I read it as preparing for a major change in the company and removing barriers and building incentives in at this stage.
If you don't like it you can bring it up at the AGM but I doubt it'll make any difference. I read it as accepting the company is gonna be here years from now in one form or another. Or better still - load up the EBT for a deal.
We are using Merrill Lynch for the buyback for 2 months. We might not use up all the $15mio in 2 months. The end date of 30 June refers to ML not the buyback as I read it.
I think there is other stuff going on and this is a distraction.
The shares are being stored for employees in the Employee Benefit Trust. No cheapo shares for the vultures. This means that AB + EBT is probably close to 20%. We have a dictator with skin in the game. I like this. Does the 2 month window mean that they are finalising a deal?
And the wording is always suspect mrc. Do you support world peace, universal suffrage and an end to sectarian strife. Most would say YES but if at the bottom it asked you to pay £5,000 pounds towards these ends you might reconsider.
The climate alarmists have used up most of their ammunition and their threats and promises have come to naught and causing damage to existing industries. I believe that the Scottish people will be the battleground. If you can't get them onside then the renewables movement has failed. The country is after all the major source of UK hydro-carbons and wind.
It depends how you frame the questions.
AoK - the challenge would need to come from two directions. The costs and evidence that hydrocarbons do not harm the environment.
The flaky claims of the climate alarmists are now being challenged more openly. It was thought once career ending to say you don't believe in ESG or the effects of CO2. Now people are pretending that they never really supported it. With the importance of Scotland in all this I think we are due a major surge. A large part of the SNP's policies were around Net Zero and they have had to abandon their targets and Yousaf might lose a no confidence vote. If there is a Scottish election that could be a referendum on continuing with O&G or treating the industry like criminals.
Labour will take note of the Scottish anger. I'm angry and I'm not even Scottish. The touch paper has been lit. Let's see where it goes? It can hardly worsen the situation for us.
'It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine.' and this is a quote from 90 odd years ago when initial renewable discussions were commenced and it was decided to concentrate on wind power as being less controversial than solar which was a rarity in Scotland. The deep-fried Mars bar brealthrough was to change all that.
Waldorf have financial pressures and are small. RockRose is small too and their track record is short. Neo is a peer but also trying to exit the UKCS. For now I would add NEO so a peer group of 5 over a certain size production wise?
It might hopefully help us ascertain what assets AB might look at from the remaining sellers in the basin.
It is a lot to take in but it seems (to me) that the majors have all but left the scene in the UKCS. I'm suggesting the 'Peer Group' of mini-majors is.
Harbour
Ithaca
Serica
EnQuest
In the closing of the Ithaca Eni deal I read this: "although it should be noted that the Merger Ratio was determined between the parties on a relative net asset value basis rather than with reference to market share price." This to me is an admission that with the current political uncertainty the prices of all parties in the NS it is one of the worst indicators of value. Both political parties are guilty of this and I wonder what happens when they need the partnership of the remaining O&G companies? For sure they don't trust each other.
Spirit is still about and is predominantly gas (96%) not surprisingly with Centrica owning 69%. I think we can leave them on the sideline from a peer perspective as they are not really O&G. A faint connection is that AB did say we'd look at more gas and Neil McCulloch is ex EnQuest.
I realise there is still a plethora of small companies in the NS but in the new order the peer group of largish production companies seems very small and comes back to the comment by David Latin of Serica that it is "a small pond and everyone knows what's going on".[Everyone doesn't include us]
Have I missed anybody?
For me it is actually On Topic https://www.spectator.co.uk/article/when-will-the-bbc-apologise-to-toby-young/
Maybe instead of using the suffix O/T it might be more helpful to add "Politics" in the subject title because some of us are more interested in the political machinations than others.
I think things are getting very interesting away from EPL and companies' performances and suing Chris Packham would maybe make the "deniers of debate" rethink their slanders and libels that aren't supported by either science or facts.
Today the activists have disrupted the AGM's of BP and Drax. The SNP have split from the Scottish Greens (I think the ramifications of this will be massive). The Scottish people aren't happy and their famously pragmatic approach to finance will assure that there will be NO financial leap into the dark. Their claim to the NS is bigger than the rest of the UK imo and the climate debate deniers are losing ground fast. It has never been "settled science" and I'm sick to the back teeth of the likes of foreigners (non-UK) like Al Gore, Greta Thunberg and Tessa Khan dictating to me.
I think the defending of the arms industry by Sunak should reinforce the argument against why the government [if it cares about security] taxes the O&G industry at penal rates. Is the arms industry more ESG acceptable than O&G?
Thanks Stevo - I looked at Note 9D however it was written in Sanskrit but appreciate the google maps assistance. I seldom go that far. Very difficult to compare I know but it has explained things to me. The reserves answer will make me look more closely at reserves. There is often an overlap with total reserves of a field and what belongs to partners in the field. The likes of Uplift and juststopoil are very casual about this and the difference between 2P and 2C. We know that 2C is close to worthless on fields that haven't been given the go-ahead yet. Our Opex is similar to theirs if you average the 50/50 split they have with O&G.
Thanks again for help.
Hi Stevo - can you expand on 5. Is that because of Malaysia and Magnus?
9. What would be a wet finger guess at gas OPEX? in today's presentation David Latin said that their investment into oil compensated somewhat for lower returns on gas.
I like your comparison. Not apples to oranges but definitely Cox's to a Bramley. Serica dividend since 2020 has also played its part.
I have Serica as a hold and EnQuest a BUY purely because Bressay is such a beast and sentiment has changed with ESG now on the defence. If Bressay passes Go then Bentley starts to be discussed.
Summer is coming.
I have no idea who owns the HYNs but it's a fair bet nobody on here does. Just because the larger funds prefer investment grade doesn't mean that those who hold are retail. They will be sophisticated investors and have the funds to invest or play. HYN's are also called "vulture funds" and those involved don't worry about titles and often work in the shadows. It is easy to dismiss them as retail. They ain't. They are ruthless and some lack financial probity (as Premier found out) They may be rich individuals but more than happy to trade in a market that the large institutions either ignore or are prevented by mandate from investing in. They will understand the market better than most on here, me included. I very much doubt that EnQuest are buying back unless their advisors recommend. I just know that this is a positive move. The return from here would encourage some to sell and use the funds to attack a weaker company: it's what they do. Buying at this level has limited upside so why buy now? It is (imo) new entrants who think “why not”. If we are merging we might get a higher credit rating or dowry if debt is merged etc.. This is a YTM of c.11%. Pretty safe and could fit in nicely with a smaller fund that looks after high net worth individuals. At the end of the day it is irrelevant whether a credit in your bank account comes from a gilt, Shell or EnQuest.
This is good news and we are so ignored we might need explosives to lift our price.
2014 Maximising Economic Recovery - more like the Bataan Death March since then.
This from David Latin again in the P&J Scotland under the title "NS boss asks if policy of maximising economic recovery has been abandoned"
"The troubling developments in 2023 – and sadly again in 2024 – came from Westminster. Our politicians appear to have embarked on a race to the bottom.
Mr Latin said: “Any ‘windfall’ due to high commodity prices has long gone and the high
tax situation is ill-suited to a mature oil and gas basin such as the UK North Sea.
“Its continuation will not benefit people in the UK either financially or environmentally.”
He added: “Without doubt, times are currently difficult for independent oil and gas companies working in the UK.
“The troubling developments in 2023 – and sadly again in 2024 – came from Westminster.
“First, the government elected to keep its supposed ‘windfall’ profits tax in place long after any possible justification for it based on oil and gas prices had disappeared.
“And then… in the Spring budget (the chancellor) announced they would extend it by a further year to 2029.
HYNs + 50 points; now 102.00
Today David Latin of Serica said that the UK O&G industry is a "small pond" and everyone knows what's going on. Can they let us in on it?
He said Serica's peers are Ithaca, EnQuest and Harbour. We're the only ones without a dance partner.
Build it and they will come. Where's Ed?
I think it more a case on "unintended consequences". As a concept and pressures at the time there was a defence for a WFT but expediency should never be written into permanent legislation which is what looks like happening with EPL. Be interesting to see how Jeremy Hunt can make bombs, tanks and missiles "ESG friendly" whilst destroying what is left of the UKCS O&G industry.
Try fighting a war without oil. You can't sit in the road in front of a Russian tank.
Both up 100 points today. 100.50 to 101.50.
It takes size to move it that much imo and these are professionals. A very good indicator. They hear stuff before us. They've made money with dividend and a capital appreciation. They're in no hurry for the exit.