Member Info for romaron

I use google when I want to check the share price (type: enq share price) and it is pretty up to date. I read across to the RHS of the page and you get: "EnQuest plc is an independent United Kingdom-based petroleum exploration and production company which operates mainly in the United Kingdom Continental Shelf. "

Go on enquest.com and you get on the front page "Independent production and development company."

It is a subtle difference between development and exploration but the likes of Moody's and ESG tyranny use exploration as a stick to beat us with imo. As Neil McCulloch said "The best place to find oil is in an oilfield." There is considerable ignorance regarding the EnQuest model and I think we're due a rerate soon and Q3 starts in a matter of weeks. Moody's always plays catchup but one of their golden rules is imminent debt and once the uncertainty of the new RCFR/RBL is sorted the removal of uncertainty will give us a huge boost.

*commercial new field exploration risk is 1:20 (listen 6.30-7.00 https://www.youtube.com/watch?v=WdjTi-uhoqI)

All looking good.

Slift 15.47 - that's another complication. Until Suncor vacate and we get the revenue directly we cannot use the tax losses.

If I am warm then the Suncor is almost the opposite of the Bond PIK. The bond holders don't get their clean cash of 3.50% half yearly but receive PIK. They can sell the extra bonds they receive but no doubt it plays havoc with their housekeeping. We don't at present get revenue from GE oil sales but the amount we pay for the deal is reducing all the time. I've no idea what that does to your bookkeeping.

The Suncor deal has an economic effective date of 1 January 2021. Closing the deal is a little bit like nailing jelly to the wall so you have to pick some constants; January 1st being one of them. The deal is done but there'll be the usual arguing over curtains and carpets but this is my understanding. We don't get the cash flow from the Suncor oil sales until the ink is dry (Q3?). It is kinda ours but the adjustment is in the price we pay. Whilst not getting the cash for oil the deal price is adjusted downwards so benefits the balance sheet (which I don't understand). So at present Suncor are still living in the property but we have bought it. Suncor will move out when the balance is transferred and we will earn directly the revenue from oil sales from that date. To complicate it further there are contingencies protecting Suncor if the price of oil breaks higher and we are also closing quite complicated refinancing. Am I warm?

I'm sure that I'm not the only person who missed the AGM audio cast and it looks like EnQuest won't put it on their site. I understand it was about dividend so any chance of a summary of the Pelle QA.

I wonder if it is set in stone? The LTHs hardly need to be tested again and the few Institutional holders have been pretty loyal over the years. The actual wording on 4 Feb was "Further, the Group anticipates raising up to US$50 million of equity through a placing and open offer" it is the "up to" that interests me. There is also contingency payments relating to oil exceeding $55 and $65 between July 2021 and June 2023 so this probably indicates the mindset when the deal was struck. I imagine the higher price of oil since the deal announcement won't really change things for the deal but our financing needs will have altered with current production with oil over $65 since the deal announcement. It will be c. 150 days of production around $65 at end June so this could be a "bonus" of around $75mio.
I sensed irritation from AB when it was announced but from the lenders point of view they like to have this extra bit of insurance because if it all goes t*ts up the shareholders pass their money to the creditors. Harsh but true. In mitigation you might get an improved rate from the lenders. Like many here I could do without the hassle and it does weigh on the share price due in a large part to the ignorance surrounding EnQuest but also yet another reason to ignore an oil stock. If you're already unattractive to the promiscuous day traders you hardly need a hairy chin and a huge wart on your cheek as additional baggage.

Interesting but so dated. Like putting up Yellow Pages against Facebook. This could have been done so much better. they keep going back to their default presentation. Just how many times can you use "operator of choice". Some fresh ideas required. I'm not blaming the people doing the voice overs but they need some further training.

Nice to be popular but you don't get to choose. When I worked in the City as a FX broker it was a simple world. There was the technical broker with the personality of a flip-flop and the personality broker who was always great fun to be with and knew the best bars, restaurants and bordellos depending on the customers requirements. The problem is that your competition worked under the same strictures and it became a nuclear race with "personality" brokers getting huge sums. If the likes of Goldman's or Brevan Howard liked you your future was assured. Then there was the price and often they were the same with different brokers so an opportunity for the flip-flop to be of use.
I soon realised that you're never gonna get all the clients to like you. If possible you switched another broker on the line but sometimes the chemistry just wasn't there so you might try and hire from another shop with the relationship. I soon realised this was the wrong approach. I had a trainee come through who set the market alight. He set records weekly but wasn't universally popular. Out of (say) 10 active traders; 3 loved him, 5 were indifferent whilst 2 couldn't stand him and wanted to cause him pain. He was brutally honest and when at Midland was escorted off the premises at Banque de France.
This encouraged traders to snipe who didn't like him whilst those who did like him would dig him out. it also helped that the biggest traders were the ones who loved him.
My point is that AB has worked this out. I don't think you can point to one oil company in the public sphere that is popular. Why waste the effort on ephemeral popularity?
We had simple rules. We delivered. We were braver and more aggressive than the banks. Like the British Admiralty in the time of sail the instruction was simple when the enemy was sighted, "attack". It was common for the banks to ask "do you deal?". We always answered in the affirmative and you'd be surprised how many times they never traded. It did though of course give the game away because you often only had one side and their action would confirm what they were looking for. Amounts were important too. we quoted in larger amounts and even when stuffed wouldn't try and wriggle the amount down. Some days it costs you but people get in the habit of coming to you. Control what you can control. If that gets to 7/10that is better than chasing a popularity rating of 10/10 which is impossible anyway.
A splash of arrogance doesn't hurt either. a smaller bank asked why we didn't arrange broker evenings (basically free drinks) like Prebon Yamane. I replied "didn't you hear, we've contracted the entertaining out to them. we just do the dealing now."
Please, no more talk about popularity in a world where we're the devil's spawn. The money will do the talking.

EnQuest Malaysia (MYR 23.80) has exited the North Sea quoting impossible conditions and lack of joined up thinking. The final straw was when the Socialist Republic of Scotland joined Sweden, Iceland and Japan in increasing the number of whales killed to replace less “renewable” sources of energy. The resurgence of coal mining by Scotland as a temporary measure forced upon them by an increasingly hostile England witholding overseas grants whilst Scotland taxing oil companies at 80% was another reason. The Swedish Prime Minister, Greta Thunberg from her tent in Lapland says that hard decisions have had to be made and dolphins and seals just don’t have the scale though polar bears are under consideration.
It was not a complete surprise when EnQuest left the UK and became private. They had used up their tax allowances which resulted in Moody’s downgrading them from Ba2 to Caa1 citing problems inherent in the NS. There had been an industry wide problem in attracting petroleum engineers and accusations that EnQuest were creating a monopoly by continuing to produce them at the Bseisu University, Kuala Lumpur. Enquest left the bond market some years ago and replaced it with Islamic financing which at the time of writing has no relevance to Moody’s due to the absence of interest rates.

We asked for a comment from a LTH called Squif a tax exile living in Monaco. He was happy with the regular dividends (4.8%) but complained that it left him exposed to currency swings (currently 1MYR = .375 GBP).

Hi Slift, thanks for that. I get the gist of it and at the time there were plenty of "experts" on the Xcite message board who had expertise in certain areas including an ex partner of PWC and they accepted the supporting numbers coming from Xcite. I know my limitations. I think the Steve Kew comments are germane and have stimulated posts like yours which are very helpful.

That's how long I've been invested. A pal just told be they don't usually do an audio cast for the AGM so thanks again Slift for the earlier post. AB will not change imo. I looked at my notes from the 2015 AGM and one was that Xcite issued an RNS the previous September when they announced collaboration between themselves, Statoil and EnQuest. Nothing from EnQuest! I also repeat this note "When I said break-even at $35 he didn’t scoff but thought that possibly it was using an Early Development Plan (EDP) which is a short term (cheap) plan and not suitable for the lifetime (kinda throws a spanner in the works of the “do it like a major” quote by Xcite for Bentley. " This was from Neil McCulloch and proves I wasn't imagining things or trusting my memory. At that time EnQuest were quoting $50 B/E for Kraken.
I shifted my investment from Xcite to EnQuest over the following months. it was amateurs v professionals imo.

I disagree Squif. This company is serious and I sense OGA influence around Bentley. I doubt very much that Equinor give a toss about our reserves but don't play games (Bressay). Bentley is a challenge. Get it right and a reliable bread and butter operation. it won't blow the doors off but provide long term support. I've given up on popularity. EnQuest will be more like a bond and still have Moody's holding their nose but the figures are becoming impossible to ignore.

Hi Slift - you have me at a disadvantage because I was unable to listen to the webcast and it seems EnQuest are in no hurry to put it up on their site. Poor PR imo. Your explanation makes sense in the same way that the first barrel of oil might cost $1.5bn but the second barrel $30. There were a lot cleverer people than me invested in Xcite and I'm hoping to revive a few contacts. I have no idea what the response was to my question or how it was phrased. I made it to give the board an opportunity to respond to the comment by Steve Kew which I didn't see as helpful and basically stated that everything he'd been saying whilst at Xcite was disingenuous.

A similar thing happened some years back and I queried the impact of problems with EnQuest wells at an AGM. AB answered my question and suggested the declines were "normal". I thought I was being given a "snow job" and wasn't really happy with the reply. The declines were in the high teens and our portfolio didn't have Kraken producing in it at the time. I did research when I got home and accepted he had told me the hard truth. We like to think we're BP sometimes and have new, highly efficient wells with low decline rates. We don't and that is why they're cheap. Some wells only last 5 years so not a perfect illustration but you could say something like 20% declines in that case.
That is why I'm excited about Bressay and Bentley. Plenty of challenges but lower decline rates.

Build it and they will come.

Looks like I'm talking to myself. All wells decline- the older the faster. If it's a third party problem - possibly even a "force majeure" - then it doesn't matter who you are then this goes into the "sh*t happens" folder. This is a company producing over a billion dollars of revenue a year with debt likely to be under control. A well like Magnus will always have a disproportionate reaction to problems as the higher the rates of decline the quicker the impact on production. I'm pretty confident its solveable so all in all happy with the update. Lets hope we get some penetrative questions and good answers at the AGM. This is now. Exciting times ahead with GE, Bressay and bentley.

"Production at Magnus has been lower than expected reflecting power and third-party outages and slower execution of the well intervention program."

Can somebody add some colour here. Third party reads to me as blame shifting whilst what is a "power outage"? Slower well intervention may be caused by either. Any ideas or do we wait until later?

Apologies for being off topic but it has been on my mind. I can't believe how steady Brent is. The cyber attack had little impact but the situation in Jerusalem has the potential to start another ME war. It wouldn't surprise me if Governments aren't intervening to steady the price of oil. Last day of Ramadan and we have a Palestinian CEO. Occupation never ends well and powerful as Israel is compared to its neighbours the US is even more powerful but couldn't colonise Vietnam or Afghanistan. I don't want higher oil because of this.

"With or without religion, good people can behave well and bad people can do evil; but for good people to do evil - that takes religion."

Hi Pelle - I don't get the question. The RB is quite easy to track: https://www.londonstockexchange.com/stock/ENQ1/enquest-plc/company-page interestingly if you go back 5years and remove 2020 you get a pretty uneventful and unexciting graph. I like that.
The HYN I get from here https://www.bourse.lu/listing-bonds-euro-mtf but there are no associated graphs. I started recording the HYNs from September 2020 but got odd quotes from IR until I found the Luxembourg exchange.
They track the RB more or less anyway so you haven't missed anything. What is most interesting to me is when the bonds move counter intuitively to the equity. This is what they've been doing lately and I take it as a good sign. The equity follows other oil stocks and Brent with a much shorter time horizons than bonds and has lately only interested day traders imo. Perhaps it is the maturity dates that emphasise you need to take a longer view on an oil company. One thing I can report is that IR (and by extension the board) don't pay that much attention to the bonds. This is understandable when you think of them as almost like a mortgage. As long as you can pay the monthly interest you only have to get interested at maturity or if an extension is required. From where I sit the signs are good. The debt has been well managed through a difficult period.
I doubt it would be easy to get a list of those holding our bonds. It really only becomes important if refinancing from a position of weakness (PMO?) when the board would have to negotiate with debt holders. That is not the situation with us.

Dunno if there are any leaks but somebody likes our paper. Both HYN and RB higher today.

"Renewable Power Growth to Plateau After Record Gain in 2020" Wow! Bloomberg headline.
The IEA have excelled themselves once again. This is the equivalent of noticing pipes can transport liquid and water is wet.

A black swan in the shape of a virus called Covid came along in 2020. Fossil fuel demand cratered and companies involved either cut back drastically or went to the wall. Companies involved in renewables basked in subsidies and boasted of how they were saving the planet. They don't have the same strictures that apply to the fossil fuel industry, being profitable and economic doesn't apply to them. Governments pander to the ESG lobby. People out of sight continued to die and starve.

We are now seeing a gradual return to normality and people will go back to their old ways. Demand is increasing with supply struggling to satisfy. Renewables have had their best year/chance ever to prove they are the answer. Reality won't make it easy for them. Unfortunately the term "big lie" has been hijacked by Donald Trump so I'll just call it the "big con".
When people require energy they ain't too fussed about where it comes from. They do care about the price.