Member Info for romaron

People are expecting a quick resolution to Russia/Ukraine. Why? Putin is in an excellent position. Gazprom is not increasing gas production for commercial reasons. Nothing to do with Vlad! Even if Gazprom's bottom line for gas does suffer they're likely to gain from redirection and anyway, the production of gas only accounted for about 6.5% of the Russian federal budget up to the first 11 months of 2021. This creates a risk-amplifying asymmetry of impact. Russia could potentially deprive Europe of almost 40% of its gas supply and 10% of its total primary energy supply while sacrificing gas revenues that will likely be largely offset by higher oil prices, assuming oil exports from Russia are not hindered.
However, the West is ready for any eventuality as we proved during the pandemic. We have a counter-punch of LNG from Qatar and the US. A kinda Marshall Plan. This doesn't translate unfortunately into cheaper energy as evidenced by how cheap iphones are and google profits.

Winter is coming, 2023. Gas rationing anybody?

squiif asked "so please tell me where my thoughts are incorrect?" Well it's hard to know where to start. Some of the debates I've seen on here between people who do know what they're talking about have different opinions and interpretations on the figures. Take the Cairn impairment of a few years back. Each company has a different way of treating the figures and both had their annual accounts signed off by auditors. So on that basis both were right. EV has elements that are subjective and we will soon have an embarrassment of FCF. I'm happy with the way I calculate value. The longer term price and performance of oil and competence of the management count more than getting the paper-clip inventory to balance.

Build it and they will come.

EnQuest HYN up 3/16th's

Another poster here pointed out to me that Hurricane has taken off today. Almost up 20%. Unlike some of the other smaller oil companies like RKH, JOG, ORCA they do actually produce. A few years back I was encouraged to invest in HUR by people I know, especially a poster called Shed who isn't a mug. It did well for a while and then collapsed. I couldn't get an answer on how they produce because (from memory) it isn't a conventional play. Anyway, that isn't the point of this post. There is no RNS so I suspect that an approach has been made. Either that or somebody has bought a big interest. That will give useful pointers on valuations if I am correct. Worth watching.

You've got me there squiif. I just made an argument that going forward we're a cash machine. I tend to look forward. I never was an accountant but find they get it more wrong than most. You seem pretty amateur in that area too. Did you learn it from a book? Most of the stuff I write, I lived. Surprised you find my posts confusing when I usually give the source. People like Platts and Jeff Currie (a.k.a. Therapist) tend to know more than me. Probably confusing you that somebody my age can think faster than a younger person. In your case its just true. Plenty of bright people contributing here. For some reason they don't attack AB the way you do. Maybe they're all wrong too?

Sorry to disappoint you squiif but your post collapses on the "paid scribe" point. I actually personally know probably a dozen people who contribute to this message board and they are chuckling away as they read your post. A £1,000 to the charity of your choice if you can prove your delusional claim.
Of course it's an attack. Imaginary conspi****** theories always need destroying. It isn't personal though. I am concerned for you, get help.
Broader conversation? When have you ever been supportive of a company you purport to be invested in? I'll agree that I am an admirer of AB. That's why I'm invested here.
Trying to manipulate figures to prove your arguments show an absolute unawareness of the real world about us. The direction of EnQuest does depend a tad on the industry, geopolitics and climate change activism. Sorry to disappoint you again but AB doesn't control them.

Are you're an anti-vaxxer too?

best,
Q

Keep torturing the figures and yourself squiif. I bet you do the same with the house you wished you'd bought. Here's another one.
We are all doomed and as UCL said this week we need to reduce NS production by 7% per year to meet climate goals (it ain't gonna happen by the way). So let's do that. Run the clock down and close up. Easy for EnQuest we just use up all our reserves, pay abandonment costs and divvi up anything that's left. So some abex, very little apex. Let's assume a decent couple of years with debt gone. So 200 mboe divided by 10 years is conveniently 20mboe a year which is roughly our production. I'm using $65 oil for last 8 years and a B/E of $40. So $4bn with various costs to be taken out and let's say $2bn of tax credit to use. Any future threat of windfall tax will mean we're coining it so I'm discounting that. Whatever way you cut it up we're gonna walk away with a lot more money than today's level. That is of course assuming oil stays in 'transitional' demand, Putin is removed and replaced by a Russian Greta and the US agrees to go back to an agrarian society where it's always sunny. Gord knows what India and China will do.

Luckily I got paid a divi yesterday for the RB. I spent £400 of it last night going to Sheeky's and then to see The Drifters Girl at The Garrick. West End chocker.
HYN up 5/16% yesterday if you're interested.

Turnover is vanity, profit is sanity, but cash is king.

From Bloomberg
"Forget the futures market, the world’s most important oil price just smashed through $100 a barrel with every sign it is going to push higher.
Dated Brent, the price of cargoes bought and sold in the North Sea, reached $100.80 a barrel on Wednesday for the first time since 2014, according to S&P Global Platts, the company that publishes the marker. Price spreads in the futures market are pointing to one the tightest markets ever.

The surge through $100 a barrel for Dated matters because the daily price assessment is at the center of a web of complex oil derivatives and also sets a baseline against which millions of barrels of crude are transacted daily. It also shows that the rally in futures prices -- they passed $96 at one point on Wednesday -- is in part being driven by what’s happening in the real world.
Dated Brent reflects an oil price that’s more immediate than futures markets. Its rally shows how traders are willing to pay up to secure actual barrels for delivery to refineries.
A similar sense of urgency is evident in the forward curve in the futures market. The six-month timespread in Brent -- the gap between most immediate prices and those six months later -- reached as much as $8.74 a barrel on Wednesday, according to ICE Futures Europe data. That’s the biggest in data going back to 2007. "

Seems to me that they don't expect it to last otherwise we'd be arranging a party.

Strike - today from Energy Voice "Waldorf in talks for $1bn deal for ONE-Dyas oil and gas assets"

Not saying it has any impact on us but they are our partner in Kraken with 29.50%.

"A number of newcomers have been picking up discarded assets from oil majors and larger operators who’ve retreated from the aging basin. Late last year, Spirit Energy Group agreed to sell its Norwegian business to private-equity backed Sval Energi AS in December, and Japan’s JX Nippon Oil & Gas Exploration Corp. sold its U.K. fields for $1.7 billion."

Strike, what grabbed me in the piece was that BP were trapped by the negatives around being partner with a Russian company. The market (I think) sees a large chunk of BP's cash/assets being threatened by sanctions and if they decide to divest there is only one buyer. On top of that Rosneft fails on so many ESG measures that BP is forever tainted and it makes a mockery of BP's slogan "trusted by society". It is bad when even large profits become a negative. Google and Apple have never had that problem.
Ken - good point but we aren't really peers. They usually make a profit, are FTSE100, in tracker funds, higher credit rating, pay a dividend etc...
My overall point is that if BP cannot attract investors it is even harder for us. We attracted Cobas and Helikon last year and they appear to have stayed but the anti fossil narrative was almost unchallenged for the recent past across mthe industry. The US and Canada have made some gains and even the mighty Aramco is pedestrian and they must be having a good time. I'm really with Tarmak and HMH. We may remain unattractive for the forseeable but those who look further ahead can see growing profits which cannot be ignored. M&A is certainly going to happen. We are attractive there for many reasons. Naaturally the macro is beyond human knowledge but I don't see our landscape looking like a Constable painting.
Pyuek - carry on whingeing if it helps you. EnQuest is taken seriously by some of us.

Turnover is vanity, profit is sanity, but cash is king.

Probably nothing and just a reflection of the low turnover in the stuff we can see. The RB had a 3 % drop according to this:
https://www.londonstockexchange.com/stock/ENQ1/enquest-plc/company-page
but the HYN was up 1/16 of a percent.
I checked with my AJ Bell Account and the RB closing was 97.46 which would be the middle.
I think one of the problems is the lack of volume which distorts and exaggerates movements.
Having said that the equity volume was a tad higher but with all the Russia/Ukraine pressure that probably means little too.

I totally agree with those sentiments Tarmak. Ticks are good for the ego but what I desire is argument and people testing my theses.

Piece in the Times today explaining BP's troubles which thankfully we don't share. A chunk of profits are coming out of Russia and it's plain embarrassing. The well named CEO , Looney, said that currently it's a 'cash machine'. That's going down well as fuel poverty increases. Future reserves big push by Rosneft their Russian partner is guess where? The Arctic. That'll go down well with the COP crowd. The value of Rosneft is ostensibly what BP paid for it 10 odd years ago. The problem is that if BP want/need to divest there's probably only one buyer. I think any claim for windfall tax could well sabotage BP's plans and future. It is another mess waiting to happen during this "transition" which has decades to run. Nobody will touch oil stocks if even making record profits doesn't make them popular!

We're better being off the radar and can just get on with building and producing decent FCF and reducing debt. If BP can't move forward with record profits don't expect us to advance either. Something needs to change and thankfully it's the Majors taking the pressure. We are in a very good position out of the firing-line and below the parapet. You can't really argue with cash .... unless you're BP of course.

*remember Jim Buckee quote: "Russia and CDhina - just don't go there".

At last some numbers I can understand. The sheer weight of profit/FCF cannot and will not be ignored. Thanks for all the work Tarmak.

One small problem. I'm not sure the Antichrist is allowed in the competition.

Don't bite. I've filtered him because of the odd behaviour and more importantly that he posts nothing worth reading. All things being equal I'll be at the AGM along with a few other LTH's in May. He won't be there and has never attended an EnQuest AGM although he has spent years on this message board and says he lives in London. Is he a LTH holder? A day-trader for sure. No point in responding as his limited repertoire and lack of imagination is frankly mind-numbingly boring and I'm not alone.

Sorry about that Zippy. It mus be the relentless ESG mob weighing on me. They keep telling me that I'm being used as a 'drug mule' every time I fill up the car.

I reckon AB and his mates were persuasive when they had dinner with Kwasi. This from Energy Voice today:
"Boris Johnson has delivered a huge vote of confidence in the North Sea oil and gas industry by claiming “everybody credible” understands the sector cannot be abandoned in the near term.
In an interview with The Press and Journal on a visit to Scotland yesterday, the prime minister signalled his ongoing support by saying a “proper transition” to net-zero “must involve hydrocarbons for an appreciable length of time”.

Build it............Hofstadter's Law: It always takes longer than you expect, even when you take into account Hofstadter's Law. -Douglas Hofstadter, professor of cognitive science (b. 15 Feb 1945)

Be Lucky

Clearly oil is our dirty little secret. The only other product I can think of immediately that is also hard to live without and because of ESG actually illegal (social and governance) making it prohibitively expensive is cocaine.

I hear AB is considering having hippos in his swimming pool and growing a moustache.

p.s. can you be arrested for owning oil shares?

Found this whilst browsing. Old but germane.
https://graphics.wsj.com/oil-producers-break-even-prices/
If you go down the list most of the countries really only have oil and gas to fund their budgets or a large percentage of it. Even Russia because of the huge cost of their military. Maybe Putin has a master plan to keep oil prices high and will certainly have Saudi Arabia on side.
1 barrel of oil =6.1 gigajoules/5.8m BTU's. The average American uses 60+ boe per annum. A barrel is roughly 10,000 hours of manual labour. In Bangladesh that is $2.48 per hour and in the UK between $5.87 and $11. So using just these two as examples a barrel of oil should be $24,800 in Bangladesh and between $58,700 and $110,000 in the UK.
Wind & sun energy harvests nature to turn into useable energy which is exponential but nothing on the scale of fossil fuels which really are the low-hanging fruit.
*so an American should pay $1.5m per annum for energy if they used only Bangladeshi labour?
We are treating oil like the VHS, Vinyl and CD's in our cupboards. Many of us don't even have anything to play them on. We use oil and its products every day and will continue for decades yet.

I'm going for a lie down in a darkened room.

From FT article yesterday: Investors rush to US oil and gas bonds as energy prices boost finances
ESG concerns move to ‘back burner’ for some attracted by strong returns

"Investor appetite has dragged down the difference in yield between high-yield energy bonds and the high-yield bond index to just 0.2 percentage points, from around 2 percentage points at the start of 2021 and as much as 12 percentage points at the worst of the pandemic in 2020. However, investors said the bond rally has more room to run, especially among the debt of companies such as Occidental, tipped to be lifted back up to investment-grade by rating agencies soon."

Now, I know we're not an Occidental or even US but don't we have some bonds that need attention? Surely we're not becoming a little more investible!

"“I think folks have hidden behind ESG when oil prices were just lower,” said one debt banker. “ESG has gone to the back burner. I’m not saying ESG is no longer relevant but it doesn’t seem to be as important.”

Where are you getting $96 prices from?

la perfide Albion

mangetout, mangetout - I'm possibly miles out but my point is that the Black Swan effect can also cover unintended or consequential consequences. The rapid pace of late towards renewables was helped and extended because of Covid but also created tensions that maybe a historian will say in the future were always there but the trigger was the West's ditching of fossil fuels (OK, not completely ditched but there is still plenty of gas & oil in the NS) and cessation of production on fields that still had economic life in them. Events in Ukraine could lead to a reassessment of secutity and energy reserves starting a counter narrative to the almost unopposed agenda of global warming activists. This is the importance of what happens in the next days. Even if conflict is avoided there will still be simmering resentment or concessions made. Glueing yourself to a road will not stop a Russian tank.
None of us want a war in Ukraine but fossil fuels have been given a world stage and will, imo, finally stop the casual abandonment of fossil fuels and exit from the North Sea in this country. The march will continue but at a more sensible pace towards renewables. We are ideally place.

We built it. They are coming.