Member Info for romaron

to be realistic. Merryn Somerset Webb has summed it up better than anyone else "The truth is, whether we like it or not our energy transition involves long term reliance on fossil fuels. That means that we should stop demonising them — evangelising about ESG, following the trend to divest from shares in oil companies and kiboshing new projects with regulation, high financing costs (many banks are pulling back from the sector) and the like. Instead we should focus on making their extraction cleaner and more efficient while we wait for the engineering challenges around a renewables-led future to be solved."
Whilst searching for the truth I came across this: https://ieefa.org/finance-exiting-oil-and-gas/
There are 76 financial companies here but only 3 have committed to going further than Oil sands and Arctic drilling. One of the biggest hypocrites is the Norwegian Government Pension Fund (GPFG). A "General exclusion of all oil and gas exploration firms globally". Only exploration, eh? A bit like saying "we're against slavery so will not buy any more slaves and let the existing resource deplete naturally (by dying)". Suncorp Australia and Svenska Sweden have moved furthest.
I feel sorry for Oil sands because there are some huge potential returms [I believe HMHn and E121 are fans] but suspect that these 76 (so far) are virtue signalling and isn't what I would call whole-hearted commitment. Coal is becoming a no-no (tell Germany) whilst the Arctic never really took off (too white) and Oil sands just looks spiteful. I think the economics mean that there are plenty of pragmatists and private finance to take advantage of the opportunities there. I'm not in Oil sands but thinking about it.

I've given up using whale oil for lighting as my contribution.

helps explain some of the recent selling. Only around 5/6 mio but the volume has been pathetic for some time so even this small amount will have an effect. Doesn't really change anything.

You cannot hurry the legal system. As we all know in civil and criminal cases they have to run through a process and that can depend on availability of court spaces for the necessary public opportunity to attend and possibly object. This is procedural and not surprising with Covid and all the knock-on effects that things are taking longer than normal. I'd imagine they are frustrated at EnQuest Towers too.

*May you have a bright future - as the chimney sweep said to his son (Irish Proverb)

Fixed today at 98.834 Highest since I've been invested in EnQuest.

It moves in lockstep with the RB so was a timely issue back in 2014 if you look at the RB graph. The years between then and now have been a little rocky to say the least. Survival was in doubt at times. Credit where its due to those involved in EnQuest financing.
More info: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/high-yield-bond-news/enquest-upsized-650m-high-yield-bond-offering-bb3-prices-at-par-to-yield-7

It currently gives a YTM of around 7.60%. I think we'll see par in the next few weeks. I expect they're already in discussions regarding the next bond. Always plates in the air with EnQuest and the signs from a bond perspective are good.

Stanley wrote: "Above all Enquest needs stability to pay down its debts - oil spikes won't do that"

Er........ they will!

Hi L7 - I feel sure that the negotiators never used the word "FORCED" but it appears that the RBL consortium exerted pressure to get what I agree seems a high figure for hedging compared to the EnQuest deal. But who knows what was in the mind of the HBR negotiators? At the time Covid was a bigger threat and maybe their view was maybe that oil might test the downside again so didn't kick back too hard. We'll never know but it does indicate that EnQuest got the better deal. If oil had collapsed then HBR would have possibly got the better deal. I wasn't arguing that HBR weren't pressured into the hedging, just that they may well have intended to hedge around those levels anyway.
I like HBR and use them as a yardstick for EnQuest. The problem there is what EIG intends to do with their large holding once they're allowed to sell. They have highlighted how things rapidly change in the oil world and because our gas production is relatively low in percentage terms I have ignored it to an extent. Glad that you bring counter arguments and get us all thinking.
My views on hedging are that unless you are an oil trader you use them as protection against your production/order book and leave the wider speculation to the experts who actually aren't experts. They're just at the sharp end with contacts, information and data that they receive before almost everybody else.

In the land of the blind the one-eyed man is king. Some call him "expert".

"EU workers...will not go to the UK for a short-term visa to help UK out of the **** they created themselves."
--Edwin Atema, FNV union

Only joking. They speak and write better English than most on here.

We've seen what happened with HBR and recent hedging and it's easy to become trapped in a mindset or expect an obvious reaction (higher oil price, higher MC) that doesn't always work out.
However, I believe there is a bigger shortage of oil out there than is generally accepted. Why would China be producing oil from coal? They are the world's experts on competitive advantage and playing to their strengths so why go down this dirty and expensive route? Strategic reasons cannot be the whole story.
Fossil fuel is still the best and cheapest in joules and not everybody believes in climate change. Tokenism and an ability to fiddle the figures has always been an attraction. The developing world are far closer to hunger and poverty than we will ever suffer and the argument to prevent them from benefiting from cheap energy is pretty indefensible in my eyes. China and India are somewhere in the middle but both refuse to be dictated to by the West and it is understandable.
What has happened with gas is likely to happen with oil imo and we are lagging because in many situations gas is (was?) the cheaper option. As gas gets more expensive oil becomes more attractive. Energy is fungible to a point but you also have to get it to the right place at the right time. We've seen how easily a "petrol crisis" has been created in the UK so what happens in a REAL crisis. It doesn't have to happen but for stock markets just the threat is enough. BUY OIL.

Am I self-centred or is it just me?

Great posts E121 and Tarmak. I never realised our gas production was so high. I thought it was negligible and the scale made it only borderline economic. Pleased to be wrong.
Regarding the options. They can have a major impact when your timing is wrong or you haven't protected your downside if a producer but they are based on speculation and our business is the physical production of oil although I am aware we have to utilise swaps and options. They are a combination of insurance, creditor demands and plain simple sensible housekeeping for us. I wish I'd hedged my own Bulb gas & electricity into a fixed deal but the energy "crisis" is doing wonders for my domestic bill hedge which is an investment in an oil company called EnQuest. I don't usually disagree with L7 but in his post of Sun 19:52 he wrote "the new RBL requirement forced on Enquest" with regards to hedging. It is basically benign imo but obviously a negative drag on a rising oil price but the point is than lenders force criteria on you and it happens to all of us whether borrowing for a car or a mortgage. Just saying that "forced" is a little strong. We'd have been pretty p*ssed if AB hadn't hedged whilst a part of us wishes we had the freedom to sell spot with the advantage of hindsight. I liken oil hedging in a sense to retail companies choosing the right stock/fashion and getting the weather right. Impossible to get right everytime but you need a basically strong business and leadership to nail down the moving parts that you can. I think hedging is necessary whether an oil producer or an airline /shipping company. Hedges in size really only go out for a year anyway whilst getting a company to operate within the traditional oil cycle of (say) 4-7 years means they [hedges] cannot offer guaranteed returns. I will concede that shale and hedging is a different game due to shorter horizons but we're not in that one and even that isn't riskproof/foolproof.
I think people get carried away with the vast profits that oil trading companies can make and the famous day in April 2020 when a group of Essex boys had it off at the WTI fixing. What happened that day will be unlikely to ever happen again for a variety of reasons.

*I started talking to a neighbours son and he asked what I'd done before retirement. I said FX trading and he said his best friend Connor had made a fortune in trading oil. Connor lives in Thornwood and the neighbour's boy went to school in Epping, both areas I know well. He added "yeah, he's round here a lot. Connor's the one with the Ferrari". They're both in their early 20's.

12.29 and 12.39 - who parked their prams next to each other? Somebody stick their dummys back in, please?

“If the winter is actually cold, my concern is we will not have enough gas for use for heating in parts of Europe,” Amos Hochstein, the U.S. State Department’s senior adviser for energy security, told Bloomberg Television on Sept. 20.

We usually leave the windows open and wander around in short sleeves. I'm concerned about L7 in the far North. Amazing research from Bloomberg. Who'd have thought that winter affects fuel supplies?

and West is West, and never the twain shall meet" Rudyard Kipling before he moved into cake making.

In today's Energy Voice;
"China’s national oil companies, CNPC, CNOOC, and Sinopec, are expected to spend over $120 billion on drilling and well services by 2025 to help meet rising domestic oil and gas demand. With 118,000 wells estimated to be drilled in China, analysts at Rystad Energy reckon there will be significant opportunities for innovative suppliers. The Chinese national oil companies (NOCs) are boosting spending in an effort to reduce rising dependence on imported fuels. Last year, 74% of China’s domestic oil demand was met by crude imports, the highest level on record.

A report by Rystad Energy estimates that CNPC, CNOOC (HKEX:883), and Sinopec (HKEX:386), , together will spend $123 billion on drilling and well services over the five-year period between 2021 and 2025, up from a total $96 billion between 2016 and 2020.

It seems they have a different view to our government?

Glad to see you're looking in from time to time L7. Your posts are always worth reading.
In the ST Oliver Shah has written an interesting piece titled "How do you solve a problem like the FTSE". I know we're not in it but HBR may be within a year but it really is a piece about the FTSE not being fit for purpose. The FTSE 100 PE is 14 v the S&P's 20's. Comments like "London listings were "based on rules designed when we still stored data on floppy discs" whilst Martin Sorrell describes the FTSE 100 as a "museum". The FTSE 100 delivered an 80% total return over past two decades to April whilst the S&P500 delivered tripled investor's returns. Admittedly the FTSE is anchored to more traditional stocks such as banks, drug makers and oil explorers. The FTSE return was wholly from dividends. Share prices fell by 12%. The malaise is chronic. There are still buyers for UK stocks but the ftse abets poor valuations.
It does end on a ray of hope though because inflation looks unavoidable and if that happens you want to own reaol assets, or shares in them - commodities, miners, oils and property.
In another article I read that the world's worst emitter of greenhous gases (28% globally), China, has one coal plant turns 20mio tonnes of coal into 4mio tonnes of oil products; 2.7 mio tonnes of diesel; 1mio tonnes of naptha and 340,000 tonnes of liquid gas. I only mention this because the last time I read of coal being turned into oil was the Nazi's doing it at the end of WW2. It can't be cheap and it is very dirty but indicates to me that any unwanted Western oil will end up in Asia.
I remember feeling smug that HBR had more gas than oil when the gas prices were low. That has changed and I won't be surprised to see something similar happen to oil. There are leads and lags that we're unaware of but the petrol queues prove that oil is a more important and visceral requirement than toilet rolls.

*bad news on the ox-cart food delivery business. I had to close it as there is no demand in Barnet for cold pizza and they all want it within a few hours of ordering. Early-mover advantage didn't play out there. Being green isn't always enough.

Welcome back L7 (10.22). I suspect you're being a wee bit subversive (too long in Scotland imo) and whilst the rules of the game weren't legally binding the organiser's decision is final and that is me at my dictatorial best. I'll just see what google says in early 2022. The competition did utilise the specialist skills that are required when picking a raffle ticket or playing bingo but it is interesting to note just how competitive many of you are. Hope all is well with you. You've been away some time.
Currently I'm in a mess with all of this. Just who is running the world?

Juan yesterday 22.05. You are still in it. I think we've all seen how arbitrary forecasting Brent is. We've all done better than the 55 participants (experts?) in the Reuters poll at the time who predicted an average of $59.07 on Feb 26 earlier this year.
https://www.reuters.com/article/oil-prices-poll-int/oil-set-for-steady-gains-as-economies-shake-off-pandemic-blues-reuters-poll-idUSKBN2AQ1IG

Here's our list:

L7 64.4
Hitman 66.5
Juan 67
Therapist 71.19
Romaron 72
E121 75.5
Pelle 85

*I'm hoping that there is a reliable average for bet settlement in 2022. Not sure if Reuters will do another survey. I googled "Brent average 2021" and so far it's 66.86 as of August according to statista.com. I assume it's to the end of August.
If it's good enough for google perhaps we can use them?

Mind wandering again and I was thinking about Centrica (CNA). They are picking up the bulk of failing UK energy suppliers and also own 69% of Spirit Energy that has been on sale for a couple of years. At first glance I'd say they're in an enviable position but the share price doesn't agree. They might be worth following as indicators of the direction the market will take. The UK energy market is very attractive compared to N American valuations. Autumn is going to be very interesting.

I contacted Insulate Britain and explained that decaying vegetation is one of the biggest producers of CO2 and they might be better occupied catching the falling leaves of deciduous trees at this time. They were very rude even though several are vicars. I've no idea where they learned such language!

I always thought my parents were overprotective, always watching me cross the road, then I found out about the bet...

I get his email updates (free) and today's starts off with this:

"LONDON, Sept 24 (Reuters) - Record gas and electricity prices in Europe, record coal prices in China, multiyear-high gas prices in the United States and oil prices well above their real long-term average are all manifestations of the same global energy shortage.

In the aftermath of the coronavirus recession, energy production has failed to keep up with rapid growth in consumption as energy producers struggle to raise output while demand has bounced back quickly."

and accompanying statistics https://fingfx.thomsonreuters.com/gfx/ce/jnpweykajpw/GLOBAL%20ENERGY%20PRICES.pdf

All very encouraging but I feel there is still little institutional buying. They tend to avoid confrontation and doubt they'd want XR and pals camping on their doorstep. It's easier to go for the quiet life and they aren't gonna be judged too harshly if they miss out on a fossil fuel bounce back because their peers missed out too. The "transition" includes an almost total ditching of fossil fuels unless the company has passed the "renewables test". The likes of BP and Shell have managed this to an extent whilst still making the bulk of their profits from oil and gas. The future of dividend and buybacks against MC's working off lower ratios looks like the 'new normal'. We're used to more traditional yardsticks but the money earned is still real. I can live with that.

Build it and they will come. The smell of money is the attraction.

............. I knew you'd post that squif. And Yes, I am psychic before you ask.

Hi Aloj, I'll accept that we cause local damage and impact on other countries but don't accept that CO2 is the cause of climate change. The culprit is the sun and even volcanoes emit more CO2 every year than humans whilst animals dwarf our emissions and again the biggest culprit is the ocean. I think we'll have a problem controlling the sun, the oceans or volcanoes whilst the odd tsunami might cause some local disruptions.
This is old and I'd like to see an updated version: https://www.youtube.com/watch?v=pIRICfZOvpY
The climate gravy train has become a religion and if you don't agree you are a heretic or a purveyor of fake news. There was global warming before cars and planes had been invented. The gullibility of human beings is universal and if you're against climate change you risk the modern equivalent of being burned at the stake.
In the U.S. not only is 2050 the target for net zero but also the date by which 41% of Americans expect Jesus Christ to return to Earth: https://www.pewresearch.org/fact-tank/2010/07/14/jesus-christs-return-to-earth/
I think they're wrong but I wouldn't have dared say it in 1555.

Rubbish volume again today in EnQuest. It's almost as though higher Brent confirms the demise of oil. We are easily herded and both me and the wife have filled up our cars. Common sense says that the current energy "crisis" is pumped up by the media who are inadvertently illustrating the benefits of fossil fuels. We have the flexibility that the majors cannot enjoy. We are part of a "transition" and a "sunset industry" so can reap the rewards. We may be only looking 10-15 years ahead. The majors are looking at double that. It may be blasphemy to believe in fossil fuels but then, I've always been a sinner!

The lord helps them that helps themselves; but lord help them that gets caught.

it's at times like this that Eric Nuttall buys. Why is HBR down? The hedges were known. Sea Lion has been a problem forever. ESG is a constant whine. There were no surprises in the HBR update. It will likely be a FTSE100 company in time.
On the plus side - oil supply is constrained by a lack of capex over the past years whilst Covid is (imo) beaten. Nothing changed. It appears that unless an update is smashed out of the stadium the market sighs and marks down the stock. Like EN it doesn't make sense. The value of oil shares regarding earnhings is possibly where its heading but the front end is just plain wrong.
There are far more glamorous alternatives for investors (bitcoin, Tesla) but pretty much nailed on returns have their attractions. The HYN and RB ar now close to par so their is no suggestion of EnQuest collapsing.
A mixture of share buyback and dividend beckons for us.
The volume in HBR is pathetic; as is ours.

Be Lucky