Member Info for romaron

Good explanation hitman. Barclays doing us no favours. Followed by Buster showing what a tweak on the P/E multiple factor could do. It looks like there is a shortage of oil out there and we are priced to fail. That doesn't make sense and the recent US waiver to Iran suggests that the worldwide shortage is real and won't be solved for a while yet. The US is worried imo. They don't want Russia and China to become even better pals and start ganging up on the West. Sounds to me like Iran have played a blinder. It also suggests that shale can't come off the subs bench. For once the macro is looking in our favour.

Hi mrc - just me throwing ideas out. I do wonder if these fringe outfits will ever get launched. There is feedback to us (we once owned Pilot field) but I took more from the fact that as we are basically ignored by the market. You could argue that the analysts, few that they are, do little more than give us a cursory once over. Trading volume is pathetic but ORCA didn't even trade today!
I don't know enough about Environmental assessment, FID, FDP etc.. and the criteria but most seems frozen until we get some positive guidance from Government, preferably in writing, a la Putin.
Your XEL comment is germane. I was invested there and it became almost a cult. I eventually escaped before it collapsed and it was an expensive lesson learned. It was an amateur outfit but made a lot of promises which some here criticise AB for not making them. My comment about reserves was meant to be cheeky but it seems Ithaca take it seriously. I know little about them but it seems some companies are prepared to dip their toe in the water.
I am confused.com when it comes to understanding the different valuations and what sets one field apart from another. It appears we are getting closer to Equinor. That's a partner I'd like for JV's. They can afford to be very choosy.

Hi onedb - I certainly don't think his rating is everything but in an empty market people need a reason. He has probably been more accurate with EnQuest because he has never been a big fan. Glad to read that you have access to trading tools and I'll pay extra attention to your musings. Nobody gets it right all the time except the occasional anonymous poster on message boards so you play with your own advantages and common sense isn't a bad one. From a professional point of view you will understand the need for distance and facility to translate data.
I'm left with the opinion that the world has gone crazy. In the past the world dropped systems and commodities as inventions superceded them and made things cheaper. For example, water mills to coal and steam. Whale oil and tallow replaced by crude oil. Horses to tractors and ICE. I'm not sure there's ever been an event similar to dropping a source of energy for something more expensive, less transportable, lower energy density and no infrastructure ready to enable it.
I think people think that fossil to renewables is like Beetamax to VHS or land lines to mobiles. You can actually live without them but energy is the source of everything. I cannot stress enough that people should watch this video:
https://www.youtube.com/watch?v=4uNKPDREa-Q
Therapist - I know you like ORCA. If it ever gets lift off it will be a £2bio company using the Abigail field and Ithaca formula. A tad higher than the current £26m.
"Orcadian Energy is “looking at around about $900 million to get to first oil” for the Pilot field in the central North Sea.
In an interview with IGTV, chief executive Steve Brown updated the market on the “very substantial sum” needed to develop the 80million-barrel oil field, 90 miles east of Aberdeen." Energy Voice today.

Actually I wonder if there are two ways to look at this apparent contradiction. The trend, sentiment, ESG call it what you like has demonised O & G to the point whereby the main markets that the average voter follows or is referred to give them scant regard and tell the uninformed that it is all over for fossil fuels. This in turn perpetuates a discouraging narrative with loud voices being given more airtime than they deserve further driving home the misinformation. The nonsense about heat pumps has been quietly filed away (BEIS on a trial couldn't even give them away) and I dare say the time schedules for new sources of energy will be quietly extended. It is therefore established that "them" as in "I blame them" is conveniently translated into oil companies. Trump and Hitler would be so proud of the manipulation of the masses by using convenient scapegoats. With the pressures on the sector companies have gone bust and they are picked up for a song. Often because the majors are sellers too.
But are they cheap? The people who decide they are put into administration aren't oil people. They're usually the bondholders (shareholders are always sacrificed). The next level under the majors who would normally pick up the pieces have their own problems (EnQuest had no option but to buy FirstOil Kraken's share) and decline the offer leaving it to the administrators to sell off or write off at fire-sale prices.
The majors aren't fools and they have clauses when selling that give them extra profits if the fields do well or crude rockets whilst getting rid of responsibility and bad press.
Unless you are in a particularly lucky spot the availability of a decent field in the NS is quite expensive and bears no relationship to the current value of 2P reserves. So, why not just scoop up the undervalued companies?
If they're not staring bankruptcy in the face they'll be well aware of the value in NPV, DCF or one of the fancy acronyms and will hold out for a better price. I think that is what is happening. Widows and orphans aided by the ESG lobby wouldn't touch oil stocks with a barge-pole. Smart money realises exactly what their potential is. Having said that they have to persuade those holding the purse strings that the NS is an undervalued basin full of oil and gas. Still!
Maybe some of the profits recently made in the US and Canada will be redirected to these shores. We're a lot cheaper than they are.

LONDON, Feb 3 (Reuters) - U.S. policymakers are reportedly hunting around the world for alternative sources of gas in the event conflict between Russia and NATO over Ukraine interrupts pipeline supplies to Europe.

Well don't come knocking on our door. We're closed until further notice.

I meant my 12.18 post. Oh, the shame.

Hi mrc - I'd rather you looked at my 11.34 post and tell me where I'm going wrong. Open to everybody. I know I'm being simplistic but what am I missing. Brain overload I think.

*Juan - I have reported you to the age discrimination police!

From City A.M. Tuesday https://www.cityam.com/government-gives-the-green-light-to-new-north-sea-oil-and-gas-field/

"The Abigail field, which lies 233km from Aberdeenshire, has now been given the go-ahead for construction and will cost about £150m, according to Rystad Energy data.
The site is owned by by Ithaca Energy, and contains 5.5m barrels of oil equivalent, which will be split equally between oil and gas."

So, if our 2P reserves are c.190m barrels are we a £5bio company?

*I think if you have 2C reserves (c.280m barrels) they actually deduct their value so I haven't included them.

ooops - wrong account. Ignore earlier post.

sheltie - you weren't at the meeting. Q wants to know if you're OK?

Good luck with that. Whatever is written in the covenant there will be tolerance within the agreement on timing. The lenders won't take responsibility and EnQuest management wouldn't agree to be dictated to that closely imo. Even with the best hedging in the world can't make money if oil averages $40. At $90 I reckon I could give it a good go.
The covenant people are usually strong in hindsight and the "I told you so brigade" but don't want it in writing.
Clearly there is more to be hedged and who can say if they won't do it in (say) August. Too many variables to get accurate insight but an interesting thought all the same.
I'm fairly relaxed. As long as the end result is close to the yearly average I'll take it.

We live in strange times. I've just ticked an Ammu post?

onedb - I think we just aren't on anyone's BUY list. As a friend pointed out it was only a tepid SELL yesterday. No volume, no interest.
I on the other hand am very interested in excess profiteering which is where we are headed if current conditions continue. I think yesterday's update was "all tickety-boo, steady as she goes" which unfortunately in this world of instant gratification just doesn't satisfy the spread betters. They've gone looking for more interesting plays.
Last time I checked it was only "oil" that was a dirty word. "Profit" is still accepted in certain circles.

*It takes a lot of time to be a genius, you have to sit around so much doing nothing, really doing nothing. -Gertrude Stein, novelist, poet, and playwright (3 Feb 1874-1946)

Hedging is an insurance and has a cost. Some of it is out of our control and demanded by covenants and of course it is prudent to protect a percentage (or all) of your production. I pretty much ignore it because you find that most companies have come pretty close to the average for the year with their hedging in the figures anyway. I am interested in what price oil will achieve of course. Hedging protects the downside more whatever people pretend and important as it is I believe the production and reserve replacemnet is of higher importance. In times of low prices the less efficient go to the wall, it is as simple as that. If oil goes too low capex and production is culled until the next time.
If you read away from this board there are a lot of encouraging signs but in the pub most people are just not interested. I remember the swap arounsd $40 by EnQuest in spring 2020 (memory, hope I'm right) and it had elements of panic. Nothing wrong in that because it is action. Governments around the world reacted similarly with Covid.

Unfortunately we won't get the analysis that goes with it. I'd love to see it. Barclays have always been one of the brokers with a more downbeat opinion and TBF have been more right than most. From a consensus perspective they have been more realistic than other analysts so must be respected. You could also argue that what does it matter anyway? I'd imagine that Barclays are avoiding the sector and definitely the small cap producers. Very few of their customers really care and like many companies the number of analysts covering us has reduced. We may get an insight from other pundits commenting on why Barclays downgraded in this time of high crude.
On another note I was watching Question Time last night on BBC. Unusually there was one audience member and a panelist who defended gas and oil. I'm seeing more people moving towards putting the blame on energy policy, not the producers. Those talking about excess profits have clearly not been looking at the past couple of years. Covid impacted many industries and some have done very well out of it. For fairness they should pay a windfall tax if it is about poverty when in fact it is more about scape-goating and defending one of the most subsidised and expensive sectors of the economy, renewables.

*our tax credits protect us from a windfall tax but of course it will still hurt but at current prices of EnQuest I'd argue that they've thrown everything in including a tsunami washing away the Regent Street H.O. I imagine the realists in the Government understand that a windfall tax would hurt most the companies they need on side as the majors leave the basin.

They don't pay you mrc.? Leave it with me. I'll have a word with Q.

I got the Times today. One article about the demonising of carbon, mining or manufacturing weapons and big business kneeling at the altar of ESG making their companies and investors poorer. Another article by two ex-Government advisers about the danger of concentrating on the current energy crisis whilst ignoring the bigger problem in that our current energy policies won't work in the transition time scale. Yesterday was something about O&G companies going private is increasingly attractive etc.... We have seen two top executives leave in our peer group this week (HBR & Spirit) let alone the casualties over the past couple of years. I don't follow the smaller UK companies (RKH, HUR, SOU etc.. and it isn't a great leap of imagination to imagine that we aren't on the radar of big funds who even if they bought the whole company it would hardly move their investment needle at all. We are out of fashion. Forgotten even.
The difference is though that energy use is as important and in as much demand as ever and likely to be so for at least another 2 decades. We each use oil on a daily basis and even at $90 its products are remarkably cheap.
Squif blames our management. Which of our peers does he regret not investing in? It is a sector underperformance.
The market pounces on any weakness, even if it is perceived, and the market gyrates to algos and day traders. The absence of large stabilising holdings by the traditional funds who have exited the sector only facilitate this.
If the trend continues we are going to look like the fire sale of the century to US and Canadian companies, let alone Asia. We know that 2P reserves are remarkably cheap but at the moment we are valued at what? Less than $3 a barrel?
I'd love to see a Chinese company move in and see the reaction of the Government. I guess they'll move to more accomodating regions but the lack of seeing things through long term is damaging to this country.

*save this and watch when you have time. I promise you it'll be worth it
https://www.youtube.com/watch?v=4uNKPDREa-Q
It takes you back to the real world as explained by two energy experts.

Build it and they will come (I never dreamed it would take this long)

The HYN was marked down .67% at today's fix. (95.488 > 94.819) which is discouraging but does help to pinpoint where the concerns are. We have a deadline to work towards. For comparison TLW were a tad higher c. + 125%
Stock on loan showed a small uptick in December (from 2.07 > 2.33)

As always with bondholders it is always "show me the money". EnQuest are balancing repaying the loan with securing our future reserves and slowing natural reservoir decline. It is what it is. The market is reacting sceptically and bondholders behaving to type.

*Modestus - too highbrow for me. I follow these philosophers https://www.youtube.com/watch?v=dh5En5zb6PI

From Energy Voice today headlines:
"Shell celebrates ‘momentous’ 2021 results with $8.5 billion share buyback and dividend raise"

"EnQuest plans largest work programme since 2014 this year"

We are a year or so away from a similar announcement.

in 2022, our largest sanctioned program since 2014 and our first new wells in over two years

At the same time, we will continue to be disciplined with respect to M&A opportunities.