Member Info for romaron

Not you lot. Those who held PMO. Linda Cook the CEO of Harbour described the 5% of their shareholders (former PMO) as not natural LTH's of equity and may be the source of some volatility in early stages. I think she is p*ssed with the first day trading of the new stock.
Phil Kirk (President & CEO Europe)also stated that in 2019 Chrysaor were practically debt free. Now call me old fashioned but isn't there a possibility that EIG considered their $1bn investment in Chrysaor as a kinda loan and what we are seeing is a vehicle to return the investment plus capital appreciation? EIG influence 70% of shares but are not short term holders; well not for 6-12 months anyway.
The emphasis on FTSE inclusion is valid which is why I am following this stock (June ISC FTSE reweighting, Sept eligible FTSE series inclusion) *September shareholder 6m lock up also expires but no problem as they are LTH's [cough].
She also mentioned that if their aim of FTSE100 is achieved they will be the third oil company in it. They clearly see this as a route to extract value and get a decent market cap. This isn't an attack on HBR because I want them to do well for selfish reasons. If they don't succeed then it means the market has turned its back on oil!
I (and others here) have continually banged the drum for FCF being unignorable whether it is in the form of capital appreciation or dividend. HBR are building a larger mousetrap than us but with similar fundamentals (build it and they will come).
I tried to get a sensible value from both Shell and BP for comparison purposes but gave up as it is like nailing jelly to the wall. The Holy Grail though seems to be FTSE 250 though and if somebody better versed in balance sheet hieroglyphics than me wants to have a stab at what a FTSE 250 inclusion could mean I'm sure it would be educational.
At present, ignoring all the hype, Harbour are valued at a similar level as PMO was. Yesterday was meant (imo) to be a bit of first day IPO. Next week will be very interesting. Harbour should go up and I'll be very disappointed if they don't although I'm not invested. if they don't climb then neither do we.

"Let's not forget the real meaning of Easter": The Archbishop of Cadbury

*out all day so cannot respond.

Thanks E - I've listened twice today to the Harbour webcast. In very rough terms they produce 200,000 boepd. From an earlier presentation I remember them saying the split is roughly 50/50 (oil/gas). I'm no fan of the self promotion of Linda Cook and am in the process of overlaying them with EnQuest and in several instances we compare very favourably. The points that she highlights are quite easy to question.
My interest though is more prosaic. HBR are going to be attracting a lot of attention and it's a way for me to understand how EnQuest is perceived by the wider market and lenders through the lens of HBR.
Linda Cook in one slide has $2.9bn net debt targeting conservative leverage of < 1.5 X through the cycle. Obviously Ebitda is important (and presently unknown) but we all like a guess. One analyst questioned the boasting of $15 opex saying that for gas that isn't great (using Norway as an example). I thought a bit early for smoke and mirrors on day 1 for HBR.
Having said that I want HBR to do well. One thing I totally agree with her is that just keep doing it right and the rewards will arrive. She says that entry to FTSE 250 (possibly FTSE100 eventually) means that many institutions will buy in. Larger shareholders are locked in for 6m - 1 year. That is a future problem imo.

I must say the OPEC meeting whilst not unexpected does mean that we can look forward to a better week next week. Nothing beats removing uncertainty. I got caught up in heavy traffic yesterday and am driving into central London tomorrow. I know it's a holiday but everywhere seems busy. I can't see Europe sitting idly by if the UK is back to normal in a few weeks. Demand could explode.

Be Lucky

I'm pretty sure Therapist knows the answer but happy for others to answer. I know there is a fixed formula for converting gas to an equivalent in oil. But that doesn't allow for price differentials between the two. A lot of companies report boe but that mixes two products that are priced differently. If a barrel of oil is worth $65, what is the equivalent in gas worth; roughly?

The market will be flat today imo because of Easter but hopefully next week Harbour will consolidate and the analysts will be over it like a rash. It's a long weekend too so maybe more written than usual in the press. Proportionately we have a better tax credit and I expect the number guys to make latest comparisons. The new entity [HBR] will have many of the attributes we are aiming for and will (imo) be a very useful peer/tool for measuring EnQuest.
I'm wishing Harbour shareholders all the best because if they do well; so will we. Not quite at their scale but close enough for sensible debate.

I love it when you talk dirty L7. Your engineer's view are alway's welcome (you probably can't help yourself).

Pro forma production of the new company is 200-215,000 boepd. Opex of less than $15 a barrel with net debt at $2.9 bn.
The reason I mention it is because this is a tidied up company and once our OO and new RBL are in place so will we be.
Another similarity is the large tax credits both companies have.
Hopefully both companies will become more attractive to investors.

They've become Harbour (HBR) this morning. I'm not invested but I'd have put money on it opening higher (wrong). The shenanigans with the debt and convertibles have made it a convoluted share to value but I thought now that the grown-ups are in charge things would improve. Early days but worth keeping an eye on developments there. It looks at first sight that there is a big overhang of shares or is it confirmation that the stock market just doesn't want oil stocks at almost any price? I'll still stick with the fact that returns and fundamentals cannot be ignored once things improve.
Is it pointless to use debt/ebitda ratio any longer or are there two ratios. One for the oil sector and another for the rest of the market?
Finally Covid, what has happened to the West, especially Europe? In Myanmar they put on masks and then go and face police bullets. The world has stopped making sense. The French have a proud reputation for civil unrest and are now meekly accepting lockdown because of their government's incompetence.

*spindok is arranging an invasion of Europe, destination Dunkirk. He's in charge because he knows the way and the only one with a boat. He is in contact with the Swedes who also have some history here.

Hi E - I had to look back to remember. As usual the answer will be a mix. I thought Art was saying that sometimes the impact is months, even a year away. I'm not saying butterfly wings and chaos theory just plain old aversion to change. Sure shale has had a rough patch but people adjust to lower salaries and costs come down. Those in the business are like farmers and used to bad "seasons". They'll also say "what else can I do?" What I took from it is that shale doesn't die quickly but events in oil sometimes take months, even years to reach the full effect. For example it looks very unlikely we'll have any major new field started in the NS ever again (only 7 exploration wells were drilled last year and the annual offering of new licenses were scrapped for 2020-1). In the US shale sector older individuals will adjust and accept lower incomes but I doubt they'll encourage their children into the business.
In the UK, Oil & Gas UK, the industry body forecasts the UK will consume 17 bn barrels of oil until 2050 while hitting the net zero target. They think we'll manage 10-11 million NS production at best. There's plenty of scope left.
I'm most excited about Brent being in contango. Best signal for ages.

Some miscellany:

The comparator group companies for the TSR performance condition relating to the 2017 PSP award are as follows:

FTSE 350
Cairn Energy
Tullow Oil
Ophir
FTSE All-Share
Premier oil
Soco Intl.
FTSE AIM - top 150
Ameriseur
Faroe petroleum
Rockhopper
Bowleven
NASDAQ OMX Stockholm
Africa Oil
Blackpearl Resources
Lundin Petroleum
Other
Genel Energy

I'm having a problem with the 'R' in TSR. For balance some have done even worse than us.

*Historians in Ireland have discovered what they believe to be the headstone of the oldest man ever to live. He died at 193 and his name was Miles from Dublin.

Hi small trader - nothing has really changed in my "build it and they will come" mantra except that the timing is proving near impossible. The past year of Covid and another year of relentless attacks on fossil fuel have taken their toll. But nothing has changed imo. The price is drifting as tomorrow is the last working day before Easter (today really) and we may get an OPEC announcement that will keep us in this holding pattern in the next few days (likely rollover of production). Then the details of the OO which I've been trying to understand and most of it is non-threatening to the price imo. I'll have more later on the OO and we can pull it apart. The best news is that we are in contango which reinforces my belief that there will be a marked shortage in the next months. The fact that it doesn't extend for a full year doesn't really bother me because believe me; in finance and febrile commodity markets 6 months is a very long time. The speculation is always higher at the near end, It doesn't mean there won't be a shortage in 2022.
On dividends I believe there are no excuses this time. They have the match ball now OO 2016, RI 2018 and OO 2021. The amount is small compared to the previous two and in some ways an OO is a simpler way to raise finance. On the last one in 2016, the book-building was announced that after the 07.00 RNS at 17.01 that of the 358m shares 214m had been "conditionally" placed with institutional investors (that's 60 percent). Admittedly it was heavily discounted 17/18 percent but the RI was 45.6 percent discount. I'm no expert but I think the OO is firmly in the price now and you won't be getting institutional buying now if they're waiting for the SALES.
That's my current thinking anyway.

Hi L7 - hardly worth the effort because you'll never get the full picture and I suspect the tax year has something to do with it. AB has RNS constraints on almost anything he does and we could easily overread this.
I eventually catch up to some of your deep dives into the figures but then along comes a major move in the oil price and all calculations need to be done again and recalibrated. If you google EnQuest you get on the RHS
Revenue: 1.201 billion USD (2018) and Net income 185.2 million USD (2016). WTF?? I think sticking a pin in blindfold is an option. If these Director options are to mean anything isn't it only fair that the shareholders get some payback. I think Mr Bseisu needs to consider the private investor because the 2022 AGM will not be virtual and unless there is something more than promises he can expect an uncomfortable reception. Demand, Dividend, Delivery. Just came to me; the three D's. EnQuest has been an abysmal investment to date.

I doubt it'll bother him but the publicity might.

Hi Pelle - yes and no. By vesting them he will have to increase the amount of shares he can pro rata bid for in the OO I suppose. The one thing he cannot do is sell them because that would collapse the price and he is a large holder. Part of the award relates to TSR (total shareholder return). My immediate thought was what positive TSR? However, it really relates to peer's performance so you can lose money and still get a reward if your chosen peers perform even worse than you (I suppose). It does stick in the throat a little but that is how these Director remuneration things work in the UK I'm afraid.
"Summary of performance measures and targets – September 2017 PSP grant
The 2017 PSP share awards granted on 12 September 2017 have four sets of performance conditions associated with them, over a three year financial performance period:
• 30% of the award relates to TSR relative to a comparator group of 13 oil and gas companies over the same period;
• 30% relates to production growth on a CAG basis from a 2017 base level;
• 10% relates to reserves growth (on a relative growth basis from a 2017 base level); and
• 30% calculated on net debt reduction from a 2017 base net debt figure.
Vesting is determined on a straight-line basis between threshold and maximum for all of the performance conditions.
The performance period for the award will be 1 January 2017 to 31 December 2019 but the awards will not vest until 12 September 2020."

The actual award amount has been uplifted (adjusted) in the 2018 Accounts to maintain its value following the RI in October 2018.

Perhaps vesting them now is possibly to show the market his commitment but he hasn't put up any cash - he will have to in the OO.

Hi Tom -nothing wrong with a good dose of scepticism. Forget AB and listen to Bob Davenport as it is his baby. On slide 11 it reads - "Performance to end February impacted by unplanned third-party outage and power failure; now resolved" it goes on "Ongoing well interventions and facilities optimisation to further improve production."

We've been here before. My theory is prioritisation. Whether to please the debt holders or micro manage tight funds I'm not sure. As I keep on about declines almost always go up higher than planned when money is tight because you don't optimise because basically you can't afford to. I think and hope we're coming out of that phase. They aren't drilling on Magnus until 2022 when things will improve.

So I think you're partly right but AB couldn't answer the way I have. Covid is realism too and it has impacted the oil industry even though AB says we had a pretty good Covid. All CEO's and Chairmen have to be diplomatic and dare I say, honest. You're right in that they waffle when trying to gloss over problems; they all do! I think Magnus is a temporary one.

Be Lucky, enjoying your contributions.

To any adults out there. I'm in a right mess. I end up with so many tabs open and pieces of paper that I really don't know my *rse from my elbow. Like the 60's and the EnQuest raises I lived through both but don't remember much. This is what I'm getting.
The OO in October 2016 was to avoid administration. We really were in the mire. Restructuring of finance was unavoidable.
The RI in September 2018 was kinda like this OO in that it included an asset purchase (rest of Magnus).
The OO in 2021 is a bit of both. For restructuring (unavoidable) the SFA maturing October and another asset purchase (GE).
In between we've had Covid which apparently caused a few problems with oil demand and a growing ESG narrative.

When you look back the amounts were much larger and the situation far more desperate (especially 2016). In 2016 we tipped toed past the graveyard and decided that the 18 November RNS re: Chapter 15 court proceeding was procedural and nothing to get excited about. This raise is much less stressful. The raise for the asset is tiny in comparison (except most of us have an awful lot more shares now) whilst you must expect some horse-trading regarding the RBL. I believe we are in a strong position.

I think we're gonna be fine. If anybody could put some order and better analysis than I am capable of I'd appreciate it.

The hull of the EP is 38 years old. I imagine that affects its value too even though the topside is pretty new. Mind you, some fields only have c. 10 years left so hardly worth investing in brand new.

I'll carry on talking to myself. There is another FPSO, the Voyageur Spirit in a similar position to the EP. It is however half the size and there has been talk of an interest from Hibiscus for the Marigold field.
Another possible interest, which I don't wish to contemplate, is that Whalsay are looking for an FPSO but they are potless and on life-support.

seems reserves might be higher 51mboe https://www.spglobal.com/marketintelligence/en/news-insights/podcasts/451-research-episode-8
https://www.woodmac.com/press-releases/total_north_sea_asset_sale/
Of course there's decomms to worry about etc.. Wood Mackenzie only said assets hold over 30 mboe which is where I got the 1st figure from. The problem then is (if you can get an estimate of the value) to try and establish what EP is in the balance sheet at. Beyond my skills I'm afraid.

I was trying to get a handle on EnQuest producer's value. I know comparisons aren't easy in oil but there is possibly a recent deal that is at least a wet finger calculation. Total sold NS assets to Neo Energy recently https://www.hitecvision.com/news/2020/neo-energy-acquisition-of-uk-north-sea-assets-enlarged-and-revised
Won't be easy because it was originally for $635m but a partner backed out. They say that terms are fairly similar (they would) but maybe choose $600m. Production is 23-25,000 a day and reserves 30 mio boe. It has the usual vendor financing and earn-out arrangements but what makes it interesting is that it includes the FPSO Global Producer 111 and it is a similar size to the EP. It'll only be a guess. Anybody up for the challenge?

We might as well start looking at this. At the last OO this was in the 17/11/2016 RNS:
"The Open Offer closed on 16 November 2016 in accordance with its terms. The Company has received valid acceptances under the Open Offer in respect of 233,858,061 New Ordinary Shares, representing approximately 65.6% of the New Ordinary Shares available pursuant to the Open Offer. The remaining 122,880,053 New Ordinary Shares were taken up pursuant to the Placing, which represents a 60.9% clawback of the shares under the Placing. Double A Limited, a company beneficially owned by the extended family of Amjad Bseisu, took up 31,735,702 New Ordinary Shares pursuant to the Open Offer as per the irrevocable commitment. In addition, Double A together with friends, family and associates were allocated 35,673,054 New Ordinary shares pursuant to the Placing (which represents a 60.9% clawback). Following Admission, Double A Limited will hold 103,141,033 New Ordinary Shares, representing approximately 8.9% of the enlarged issued share capital of the Company."
The pro rata amount that DoubleA was allotted was the 31,735,702 figure.
Not exact but the OO figures for 2016 I have are:
13/10/2016 EnQuest 27p Brent $52.03
17/11/2016 EnQuest 27.75p Brent $46.49
The share price did dip down in Nov to c. 25.50p but Brent also dipped by more at that time.
It is almost impossible to be objective about the minds of investors at that time so just posting any numbers that others may convert into something more tangible.
The OO then was for 4 new shares for every 9 existing shares at an issue price of 23p. This one could be something like 1:8

* It's actually the voices outside my head that irritate me the most.

Hi guys, there is a lot of info to wade through and I was looking at the RB and the HYN. Slight confusion and possibly not that material but at the onset the RB was set at 5.50 percent in 2013. In2016 it was raised to7 percent. However, from a quick check the HYN was set at 7 percent back in 2014 and unchanged in 2016 except for fees and PIK. Have I missed something?