Member Info for romaron

Ken - just giving you numbers doesn't really answer what you asked. These numbers are insurance for a percentage of EnQuest production. They are financial instruments whilst there are actual deals/contracts that get invoiced, loaded, shipped, delivered etc.... that we know little about and TBF is usually of little consequences as the product is fungible (lovely word). The company could close some of these hedges at a loss now but would only win if the price they actually get for their production is higher than the cut-out price. That is dangerous because crude is volatile and we have covenant agreements to honour. The kinda free float (non-covenanted production) might be left to run if oil prices look likely to increase as they presently do because of Russia/Ukraine.
There will be another department engaged in negotiating deals and arranging delivery. For them the hedging is largely irrelevant. Production is usually pretty consistent and they'll have their own patterns and regular customers which are to an extent commercially sensitive.
The real world isn't as simple, or as easy as bulletin board trading. For instance they may delay selling a load as late as possible hoping the price will rise. It may or may not. Even worse in gas; I hear the March against April natural gas futures trade is known as "the widow maker".
I'm guessing but I think they spread their hedging fairly evenly to match production but it is only part of the overall story. I ignore it because there is an element of the coin toss involved. As insurance it is valuable.

typo Putin to invade Ukraine first line. To him it is Russia.

the ESG brigade for emboldening and empowering Putin to invade Russia. Their demands have largely been met by a supine West who bow to the latest polls whilst agreeing to satisfy the noisiest protesters. Western Europe now relies on Russian gas more than ever as we move away from fossil fuels. I wake up every morning expecting Russian tanks to be trundling forward in Ukraine. What has Putin to fear?
Macron took early mover advantage to surrender this week. Germany supports NATO as long as Russian energy flows. Biden remembered he had something to do and then got distracted whilst our own Liz Truss showed her 'Iron Lady' side by promising to defend the Balti states if the Russians try any argy-bhaji. I despair and suspect a stiff letter won't stop the Russians. Biden wakes up and says the answer is 'build a wall'. The US voters say 'where is Ukraine'?
Sanctions will be put in place, obviously. This means they will have to wash their money outside of London but Dubai and China will help out there. Energy prices will probably rocket and what is robbed from Peter will be paid by Paul. The West hasn't done so well with Tibet, Uyghur or Belarus and lets not even mention Africa or Afghanistan so I'm not expecting much from current discussions.
Putin is a kinda patriotic Mike Tyson. Compared to other world leaders he really could disable them in a one on one contest. He is a skilled Judoka with Sambo on the side. He doesn't feel fear in the same way. Judo requires much probing and testing. To throw forward you push backwards. If an opponents attack fails you often can respond with the same technique. If your opponents strength is nage waza (throwing) take them into katame waza (groundwork) whilst a quick strangle or arm-lock can end it at any time. I believe this feeds into his strategizing.
Then their is misinformation and propaganda where he is also a grand master. Russia is largely a Military State which spends a disproportionate amount on weaponry and has large forces. This means that the Military pervades their society throughout and no doubt the pensions for veterans and death in service are high. There won't (imo) be a lot of internal resistance to invading Ukraine.
So Putin will in his dotage achieve what he always wanted and that is for a new Russian Empire. The West will do a lot of handwringing and sanctimonious output whilst desperately making sure the lights stay on. Putin wins the encounter aided by a fifth-column called ESG.

*Greta and others will say this is a result and we can now live off renewables. I'm not so sure they'll be happy having to learn Russian.

Now you're a UK tax expert Pelle. I wasn't sure that if you were a finance company paying 19% CT and you bought an oil company with potentially 40% tax credits you'd get the lot. I'd think too that any company interested in EnQuest would have to get past the regulators first - they don't like selling to people such as Dominic Chappell. That's why I qualified it.
I'm no longer interested in going into the accountancy torture chamber so I'll not be replying. I'll leave you and squif to enjoy.

Be Lucky

I read the ZFG email and wanted to believe it but still sought corroboration from a pal and his take on it. I am happy that it is genuine and I'm sure ZFG would do the same for a post of mine. No disrespect intended.
Other people would have done the same and a message board post is always treated with an element of scepticism. There wasn't really time today for a reaction but algos don't go to lunch or take the weekend off. It will filter through and I expect some short covering and some fresh buying Monday. There will be others seeking corroboration because "I read it on a bulletin board" is normally dismissed as day-trader nonsense. Occasionally trusted posters and LTHs help each other. I believe this is one of thoses cases. I'd like onedb's thoughts on this impacting trading on Monday? AB is a gambler because that is the nature of the business but he is not prone to hyperbole or over-promising. That email was the most positive I have seen from him. Something is expected to change and it will be for the positive imo.
Thanks again ZFG. I've been invested here a long time too.

For those with similar accountancy skills to mine the reason I said "if that company was an oil company" because of the wide divergence between UK CT of 19% for the blessed companies and the 40% for the devil's spawn. Probably unnecessary because who else but an oil company would buy us? It does though mean that we have enhanced value from a tax perspective.

I asked IR a question following the rubbish that squif was writing about EV. I like the idea of B/E's and our value to another company but wondered if I was missing something on the accumulated tax losses. Ours are c. $3.2bn and I'm sure fits in somewhere with our value to another oil company, I wrote - "If a company had a tax loss of (let us say $3bn) and got taken over by a company making large profits. Let's say $10bn pre-tax. Now if that company was an oil company what is the rough net benefit of using that tax loss as an offset to the $10bn be? $7 bn taxed at current rate and the $3bn part saves how much? It says on google 30% corporation and a supplementary 10% on top so is the net benefit $1.2 bn?

Answer: With regards your questions on taxes:

"Correct that if Company A had $3bn of tax losses and the total effective tax rates was 40% (CT plus the supplementary charge), the total tax that could be saved would be $1.2bn
If Company B purchased Company A, it would have to consolidate its operations into the legal entity (subsidiary company) that holds the losses in order to be able to offset the profits its makes from its existing operations i.e. that tax losses are linked to a legal entity rather than a specific asset."

I'm comforted but wish they hadn't added Company B buying A. Add that to Z.F.G's email and you wonder what AB and his team have up their sleeve. I spoke to a knowledgeable friend and he says the ZFG email would have passes through legal. He is treating it as a quasi RNS. If I didn't know better I'd have said AB's been at the bottle.

I did say fill yer boots on Wednesday - the signs were there.

I don't know what the newspapers, TV/radio and trade publications over in Sweden are saying but there is a decidedly different narrative in ours regarding renewables, some of which you cannot see which is why when I come across something parochial I think relevant I post it. The energy bills will be pushing many into poverty in the UK and there is no easy answer. We are moving from fossil which was too cheap imo to more expensive alternatives. There are many pitfalls ahead which is why I like what the professor said about the short run 10-15 years. It has already started and when Putin invades Ukraine the security of supply will silence to an extent the hysterical minority which have been on a crusade far too long and are never satisfied. I think Juan was right and this year we will see the increase. I think we stand a good chance of the party this year too. Happy now?

If AB is so sh*t then I 'd like to see who these people think should replace him. Claudio Ranieri is free and I hear he likes a RNS.

Apologies for that. He should have said "two body positive ladies"

*for our Swedish readers it is the bingo call for 88 - two *** ladies.

And I thought I'd house-trained monkey.

....up another 3/8% The HYN is a safe haven with the uncertainty. We're up 2 1/8% this week. Unlike equity you can't ignore the (almost) guaranteed returns. When equity flies the percentage returns outperfrom bonds by a wide margin but bonds are a lead indicator. The equity will pick this up before long.

I listened into R4 (You & Yours) because of a story about the demise of Bingo halls. It was followed by the "Energy Crisis" being spouted by somebody called Professor Sir Dieter Helm who advises the UK and European Governments on energy policy. He says that the £250 we pay for renewables should be renamed an Innovation cost because it relates to R&D. We are apparenttly heading to our "First net zero crisis" and there is a "juggernaut of costs heading our way". He said that Governments (especially ours) has been "peddling myths" that it will be cheaper in the long run. He then repeated the quote of Keynes that "in the long run we are all dead" and said we should worry about the short run as we transition. [The short run BTW is 10-15 years] There are more subsidies and support required heading towards us. He mocked wind in the sense that all promises and forecasts leave out "when the wind blows". He likened the UK attempts to compensate for global warming as "complete nonsense" and pointed out that it is China, India and Africa who count and that China is building more coal powered electricity plants than the US and Europe are closing.
He didn't mention windfall tax or Stanley once. Always cheers me up when grown ups enter the room.

Nobody really talking about oil but if they can't cold turkey from the addiction to gas they're not gonna drop oil as it is baked into the fossil energy cake too. I think the short-run will do for me.

We built it and they will come (in the short run).

*monkey - what are we gonna do if they close all the bingo halls? Down from 600 >360 in 2 years.

https://www.bbc.co.uk/sounds/play/m001471v Energy crisis 32.00 in Bingo at 17.45

I'm not surprised by the avatar. I'm not even sure it's human. However, I cant really say AI because it is lacking the "I".

I was a LTH of Autonomy and certainly don't pat myself on the back for the win as it was more luck than a canny investment. They had a habit of announcing deals by RNS, sometimes to counter negative press. This RNS does worry me a little and there is a danger of too many. A RNS is supposed to be for deals and events that move the needle or affect the stock price; not for advertising purposes. Maybe its a precursor to a larger deal with the same company but that would be premature. People on Dragon's Den might get their sauce into one branch of a major retailer. It is a good sign but not necessarily a huge win. Promising certainly.
I'd have been much happier it the RNS read "multi-million dollar deal".

might as well add this bit -

"This sits uncomfortably with many of these funds’ investors. Almost 1,500, representing $39trn in assets, have promised to divest from fossil fuels. But the juicy returns from dirty assets seem too good to quit."

... or not so smart money? From The Economist yesterday:

"In the last two weeks BP, Chevron, ExxonMobil and Shell reported over $70bn in combined annual net profits. TotalEnergies, another huge Western oil company, is expected to announce bumper profits on Thursday. These results reflect high oil prices. But majors are pocketing returns from the $44bn of mostly fossil-fuel assets they have divested since 2018, under pressure from green-minded activists and regulators.

Many such assets end up in the portfolios of private-equity funds. In the past two years they have bought $60bn-worth of oil, gas and coal assets—a third more than they invested in renewables. Specialist oil funds are no longer fashionable. Canny asset managers lump fossil fuels into generalist funds or buy pipelines, which carry less of a stigma than oil wells."

Does this read that the Majors have inflated their figures by the sales? If that is true then it follows that the buyers would have had the opposite result whilst they absorb the cost and integrate them. Especially the latest deals. It has been hidden in part due to higher crude. It feels to me like private-equity funds are filling the vacuum and replacing the traditional investors. They aren't day-traders and this reads like a 3 year trade so far. The next 3 years could be the turn of these funds to turn the purchases into large profits and dividends. I doubt smart money has become dumb money in such (for them) a short space of time.

I heard it at PMQT or something similar. One suggestion was that the oil companies assist some sections of the community in an innovative direct way rather than a blanket tax. A bit "woolly" but at least it wasn't the strident call from extremists to get us all back to ploughing the fields with oxen. Collaboration and an understanding that the oil sector is not the enemy and a lot of progress has been down to the dense, cheap energy they've provided. Labour can be discounted to an extent. When you're not in power you can say what you like. If it looks like they may get voted in and put it in a manifesto is the time to worry. I thnk Kwasi may be a convert too. Renewable proposals aren't hitting their targets imo and the public at large are usually passive until they're hungry and cold. Those in power know this.

Thanks Indy - it isn't the debt I get hung up on it's the bloody variability. I thought B/E was kinda stationary like reserves and moved between quite tight boundaries. I was wrong. Thanks again for helping it sink in.
I think in difficult times they pare back so much that in the next period they have to grow and increase capex. I've seen it happen with reserve declines too as they miss out on the service and M.O.T. when finance is tight.

HYN up 1 1/8 % today following 5/8 % gain yesterday. A leading indicator. Let the climb back begin.

Fill yer boots!

It looks like crude will do better than $65 this year but what about 2023? We know very well the closing price of 2021 (ask Therapist) and we are up appx. 28% but don't expect volatility to disappear. McDan forecast on Jan 1 2022 $75.00 for 2022 and $69.87 for 2023 which is why I chose $65 for the next decade. The original post was to destroy the argument that we are a one-trick pony and that paying down debt is our only raison d'etre. An eternal rinse and repeat opined by one of the trolls glued to this message board. We will easily pay down debt and have enough reserves to last at (say) 50k boepd a decade. I believe we'll pay back or make a huge dent in our existing debt within 2 years. It won't be straight-forward (it never is) but I believe we have the talent and market to make large profits once this obsession with debt is out of the way. I hope we do develop Bressay and I think in Equinor and Harbour we have two excellent partners. The proximity of Kraken makes us essential imo to develop the field. In fact the aim shouldn't be to completely repay the debt as debt gives us the flexibility to grow reserves and make deals.
I am maybe too casual with the numbers but life is too short (mine certainly is) to worry about yesterday and events beyond our or the company's control. I really prefer the simple numbers because once ratios, impairments etc... get brought to the front you sometimes miss the target and it ain't pleasing accountants but sadly you cannot move forward without their blessing. There is more than getting the decimal point in the right place or successful hedging to winning in the energy business.

We've built it and are open for business.

Last question. Sorry. We are talking about 2022. Is it too soon to be having a stab at B/E for 2023?