Member Info for romaron

I'm beginning to think along those lines too nuri. The underserved will always be with us but everybody seems to have a mobile phone. We've seen what AI can do and frankly it's better at deciding what credit risk you are than a collector, even those with years of experience. If surgeons are relying on it then using it for a loan of a thousand pounds will hardly test the algorithm. Afiniti for example sent 800 coders from ****stan to Bermuda and their systems break every call down in nano seconds before there is even a need for human intervention. I believe Klarna and Afiniti know each other. I hope PFG are taking advantage of the opportunities that AI presents.

Juan, you wrote "romaron, I think you are getting a little confused." Have you only just noticed?

That was close. I was up most of the night worrying. I didn't want to panic the rest of you by mentioning that have you ever noticed how close meteors land to Visitor Centres. I should stop googling crater images.

Hi hitman- I don't know what you're basing that on but atm you sound like gkb worrying that the Chinese rocket will land on you tonight. Depends on your attitude to risk and like Moody's worry about $35 oil. I might be comparing silk to cement but some of the shalers that survived refinanced at much lower rates. Chesapeake Energy 2029 bonds were got away at at 5.875% in February. The Barclays High Yield Energy Index dipped below 5.3% the same month, touching the lowest level since 2014. Of course if there is a total freeze on fossil loans it's all academic anyway.
I think Tullow ran it too close to the wire and who knows how hard ball the bond holders played. They will hold you to the fire. I listened to the TLW presentation and the new CEO is a new broom and a typical C-suite johnny. Competent but unimpressive.
I think I read that the new TLW bonds will be quoted from the 17th. That'll give us a much better idea when we see what the market thinks of them.
I see EnQuest as a hybrid (private/public) and this gives us flexibility in some respects but makes institutions wary of us. I didn't vote because there is no point because I expect the resolutions to be passed in the high 90's (as usual). It is also a good sign for me that there are no activists drumming up support. Let's see what Wednesday brings. Some of us will be proved wrong I hope. Just meandering on is soul-sapping.

hitman 14.57 - " the stock market doesn't care either." That is true about the stock market doesn't care and it is a fact that it relates to past losses. In some ways it's like chopping off a leg to win the hopping race but there is an upside. Somebody might want to buy your slippers and if you are still mobile you can run an oil company. If you survive the operation there is also the option of the three-legged race in partnership. Harbour put a value on it but sadly for long suffering PMO holders they didn't have an AB at the helm!

Good point nick - some pundits don't like buybacks because it could indicate a management that has run out of ideas or growth is over. The majors are looking to buyback too and by and large they're not run by idiots.
I believe EnQuest cannot buyback without breaching covenants and there is a possibility that AB cannot because of the amount of deals going on and his insider knowledge.
Of course the opposite of that is that the current price is a bargain and if you can buy then it is an unmissable opportunity. People do not look at the business in the round and the ignorance surrounding debt is mind-blowing. I'm no expert but feel like the one-eyed man in the land of the blind here at times. Posters like L3 pontificate on minutuiae but are woefully ignorant on bonds. The bond market dwarfs equity markets and the world really does run on credit and interest rates. We are gradually escaping the clutches of the death spiral financiers (our HYNs are unlikely to be in friendly hands) whilst the existing RCF is covenant unfriendly.
I believe that with a leap and a bound we'll soon be free. The price limiters will be removed and investing in EnQuest really does become a simple numbers game with FCF, dividend and buybacks part of the equation.

*watching CNN on African transport. It takes 3 weeks to move bulky goods from Nigeria to Ghana by road. A distance of 1,000 kilometres and the comment that it would take 12 hours for the same journey in the U.S. It is likely (i.m.o.) that this will put driverless EV's back a couple of years in Africa. My guess is about 25 years minimum. Meanwhile back in the West its happening next year apparently. It won't and neither will carbon capture. That's why buying oil shares makes sense!

Build it and they will come.

The $HYN and the RB today reached their highest level since Covid kicked in with a vengeance in Feb 2020. I believe this is partly a response to the Tullow successful raising of new finance (although you won't find any comment on their message board) and although the price from the market won't be known for another week or so their existing bonds to 2025 were also higher today.
I don't track them everyday but a more recent comparison will be early November 2020 when Moody's put out one of their missives about Tullow who were on the same rating as us (Caa1).
On 3/11/20 the EnQuest HYN was 52.778. Today it closed at 87.629. Moody's never changed the record but if the smart money in HYN's don't listen to the music then neither will I. EnQuest is becoming a predictable and reliable source of cash.
On a more negative note I didn't like this from the Morgan Energy Paper. "In 2021 renewables are for the first time expected to garner more capital spending than upstream oil & gas. This process is influenced by diverging costs of capital: 3%-5% for solar and wind, 10%-15% for natural gas and up to 20% for oil projects." Luckily we aren't desperate for finance but you won't get that information from Moody's. I think we'll raise money more cheaply than TLW when the time comes and if ROI goes up 20% I'm happy to pay an additional 3% for finance if necessary.

*the RB closed at 84.75 - I think the HYN is a better reflection because the Retail Bond no doubt has protections for PI's, widows and orphans and trades in smaller amounts. Today's volume was risible in equity so I'd rathe take a lead from the Bond markets which is where the smart money is.

Be Lucky

From Morgan Annual Energy Paper may 2021:

"[4] The Song Remains the Same: geologic sequestration of carbon may face the steepest climb of all
After 20 years of planning and conjecture, by the end of 2020 carbon capture and storage (CCS) facilities stored
just 0.1% of global CO2 emissions. Challenges include cost overruns, failure of bellwether projects (Kemper
Mississippi), the US Dep’t of Energy withdrawing support for demonstration projects (FutureGen), cancellations
in Europe, legal uncertainties about liability and a 20%-40% energy drag required to perform CCS in the first
place. Norwegian Authorities just approved the Northern Lights sequestration project involving Total, Equinor
and Shell whose 2024 capacity will be just 0.0045% of global emissions. The highest ratio in the history of
science: the number of academic papers written on CCS divided by real-life implementation "

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/future-shock-amv.pdf

and we have idiots telling us they're close to solving it. Elsewhere - 19 storey building alight at Canary Wharf. Suggestions that it has similar cladding to Grenfell. 125 firefighters and 20 engines in attendance. Why won't they come clean to the public?

sorry - too many dates and figures. we'll need to sort out our bonds by Oct 2022 imo but we'll still have a year of cash building to repay them. Probably some errors in my figures as I'm not slavish to these things and am not invested in Tullow. Things are looking good.

Hi Pelle, unfortunately our Oct 23 debt is valued a c.86.5 which translates to a YTM of around 14% which is double the coupon rate (Tullow's 01/03/25 is around 10.8 % but of course they pay the coupon 7% AS DO WE 7%).
I am not worried and neither should Tullow shareholders be. There was a bond debt payment due in c. 11 months for Tullow and that has been repaid in full at Par. Back in November they were trading at c.65 equivalent of a YTM of over 40% so you can see the mountain that TLW have climbed. 11 months in bonds is really short term and pressing debt which is why I said in an earlier post we should have our Oct 23 done and dusted by Oct 22 (17 months from now).
Another point to remember is that no debt is FREE. To me 10.25% is 3.25% over the 7% I'd snatch your arm off for. For TLW they now have debt that they can manage at an extra $63Mio a year. Jim Buckee said in 2013 that 8% was workable but many were using 10% for debt. TLW were going to the wall but they're still standing and I wish their shareholders luck.

Our position is infinitely BETTER. we'll be close to paying off the RCF. The HYN and RB are what? $1bn so we'll pay off a chunk of that before we need to refinance in the 12 months from Oct 2023 to Oct 2024. There is a lot of nonsense spoken about debt and I had a mortgage of 18% in 1980 for a few months. Nobody expects us to get prime lending rates. I wouldn't be surprised if Tullow's new bond are soon attracting a premium. A pound of flesh has been excised. That's what HYN traders do!

The bonds that Tullow are repaying early due 15 April 2022 closed yesterday at 98.75 and 98. Stressed? I don't think so. There is usually smart money involved in bonds.
Their 2025 bonds are trading at around 86. In November they were around 55.

London, 02 November 2020 -- Moody's Investors Service, ("Moody's") today downgraded Tullow Oil plc's ("Tullow") Corporate Family Rating (CFR) to Caa1 from B3 and the Probability of Default Rating (PDR) to Caa1-PD from B3-PD. Moody's also confirmed the Caa2 ratings assigned to Tullow Oil's senior unsecured notes due in 2022 and in 2025. The outlook on all ratings was changed to negative from ratings under review.
This concludes the review for downgrade initiated by Moody's on 25 March 2020.
RATINGS RATIONALE
Today's rating action reflects Moody's expectation that a more prolonged downturn and slower recovery of the oil prices in the next 12-18 months, compared to previous expectations, will significantly affect Tullow Oil, given the high FCF break-even point of Tullow Oil at approximately $40/bbl. With no or limited sustained recovery in the pricing environment in the next 12-18 months, Moody's does not believe that Tullow Oil's capital structure will be sustainable in the medium term and it remains doubtful that the company will have the resources to repay the $650 million senior unsecured notes maturing in 2022, in the absence of additional disposals (which may weaken the profitability and/or the growth prospects of the company further) or capital injections from shareholders.
============
Just flicking around. It looks like HBR don't have a Moody rating and from memory neither did PMO. I'm no expert on TLW but they appear to be giving them a hard time too. It's a bit like the adage that to borrow money from a bank you have to prove first that you don't need it. However, their "ratings rationale" seems to have missed the dartboard altogether.

Hi Therapist, I fail to see the point of the announcement. It almost looks like cut & paste. This from 17 June 20:
The rating downgrade reflects Moody's expectation that - despite the rebound in oil prices since mid-April and the significant cuts in operating costs and capital expenditure - an extended period of low oil prices averaging USD35 per barrel over the 2020-2021 period would require a third of the final amortisation of USD360 million due under the company's credit facility in October 2021 to be refinanced."
So Moody's are saying there is a risk of the poo collapsing. That is true as is Canvey Island being hit by a tsunami. This is quite worrying if you live in Essex. I think AB should stop paying for coverage. There is a get out clause in the next periodic review. Maybe this is their response to pressure from the company and is a form of code? I'd be mightily p*ssed if I was AB and a periodic review didn't arrive soon.

There you go again oxygen. Bringing cost into the equation. Haven't you ever heard of "money trees" (they get politicians elected).

Grant Shapps is either plain unlucky or just incompetent. In 2011 he said this at BRE Watford (I was there):"‘That’s why between now and 2016 when all new homes must be zero carbon, I want developers and designers to go back to their drawing boards and see how they can ‘green up’ our traditional, British properties." and this from August 2020. Housing Secretary Robert Jenrick has today unveiled new proposals to streamline the planning process for housebuilders, in a bid to deliver homes that are "zero carbon ready". Under the new proposals, carbon emissions from new homes are expected to be 75 to 80% lower than current levels by 2025.
Shapps lied to me in 2011 so its warming to see that he is still spreading lies and impossible targets that make my EnQuest investment more secure. Realism and an understanding of how the real world works doesn't often go further than the Minister's white paper.
And people are still defending the indefensible when they know F-all about the real world. Haven't any of them ever had the builders in?
Blame planners (that's us BTW) and there is also a huge short fall on EV charging sites (that's Covid's fault). Their tune will change when re-election looms.

I'm voting for Fred Karno. Time for the professionals! Just how stationary do goal posts need to be?

*Grenfell cladding was to improve heating and energy efficiency.

Hi E had a long chat with K and came to the conclusion that we really need the refinance to take the limiter off. BP are into share buy back and have a dividend yield of 4.78%. Just had a good Q1, and has appeased the ESG lobby yet are lower than 5 years ago. Our situation is improving daily and still a better buy than TLW or HBR imo. AB has more at stake than any of us and I imagine is feeling very relaxed with how things are turning out. He has the insider advantage that we don't which makes for calmness. He never panicked in times of stress so expect the same going forward into the sunny uplands.

Oil is like heavyweight boxing in the US. You have to knock 'em out to get a draw.

Hi monkey (07.38) you're not missing anything.

Not a bad summing up Titus. The changes would have tested anybody but traditional lending in this sector stopped working much earlier than this management realised. This sector attracts a lot of mountebanks but to be fair the banks aren't much better. The salaries and bonuses they paid themselves are gob-smacking. However, it could have been worse and we could have had a Benamor or a van Kuffler. It does show though the potential rewards if you get it right and there is a fundamentally sound business in there somewhere. The leverage potential is huge and I have a much smaller holding than I have had in the past. I think the authorities have ignored the social need for responsible lenders in this space and it does take particular skills. I pay attention to the bonds and they are not showing stress and have improved since March.
New entrants are the challenge but the likes of Klarna are gonna come up against the regulators at some stage. It is a kinda blueprint of what the customers want and I imagine (hope) that PFG have learned lessons and as we know early mover advantage isn't always what its cracked out to be.

be lucky

I really think you could be onto something here monkey. This "wheel" thing really hasn't been exploited enough. It is clearly in its infancy as some say development has taken 5,000 years. For instance the first astronauts on the moon carried their own luggage upon returning to earth. A year or so later they invented wheels for suitcases. Have you thought of patenting your discovery?

Neatly summed up by the sage. None of us wish to poison the world but most processes have a downside. Their benefits (as with fossil fuels) have advanced the human race and on balance that is the choice most people make. Flying and driving still have a risk involved but it is managed. Aspirin does too but the benefits are enormous. I will be crossing the road later; wish me luck!

*Oil reaches 13 year high on Bloomberg! Shame its soyabean oil and even palm oil (unpopular) is up 5%. We're next.