Member Info for romaron

Hi Tom – I didn’t have you as the excitable type and you’ve surprised me. I listened to the webcast again and with reflection it passes my smell tests. The large family shareholding has been there since day one and certain institutions don’t like it. It can bring influence to bear so they’ll steer clear. Baillie Gifford and Aberforth aren’t concerned. AB has supported this company throughout and you can’t have it both ways. Some will see it as a negative and maybe shouldn’t be invested here.
Listening again it isn’t materially different to the Chrysaor webcast in December and they have a prospectus to consider too. All deals require NDA agreements whilst all debt renegotiations are ”commercially sensitive” and private; even down to a residential mortgage or car loan. With other companies you don’t get a straight answer to every question and don’t even mention politics. If something is dynamic and ongoing you must always be circumspect. Some questions are so dopey or angled they should be on Fox news. If you ask a question that cannot be answered because of legal restrictions or confidences the respondent will always look evasive as they give a noncommittal answer.
Take the question about will they remove the PIK on the bonds as part of the debt restructure? JS couldn’t answer so I will for him. “Why would we do that? They are at a good rate and not due for 2 ½ years and the PIK is a useful insurance –sotto voce ‘what a stupid question’.”
This is our second OO and I’m no expert but believe it gives more flexibility and opens the door for larger investors. I don’t really have a problem with somebody getting a better price than me for a chunk but have an open mind on my OO decision. The biggest problem for me is that this prospectus hangs around and is misunderstood keeping the price in a holding pattern.
If you don’t trust the CEO then SELL. I do trust him and JS.

*Juan - all of us were right - declines in lower double digits - varies across 11,12 and 13 percent. I'm claiming the bottle of brown ale as my suggestion of 12.50% will now become the argumentative standard by squatter's convention.

Even got TikTok's attention

https://www.tiktok.com/@sophiasmithgaler/video/6944316550128110854

Great posts today. Tom, I have to defend L7 for his verbosity at times because I am guilty of same. I'll need to read it several times before I get even close to understanding the technicals but for us in the shallow end it does help. I fully agree with L7's comment "but to make the point it would never have been developed at $65 oil."
It wasn't only EnQuest that got it wrong (euphemistically called poor timing) but lenders and bond buyers also messed up. At my first AGM in 2015 I was told by Neil McCulloch that $50 was the cost of production at Kraken. He added that reduction in costs by contractors and availability of equipment sooner meant that EnQuest was "vastly ahead of schedule". He also said that Statoil hadn’t yet managed to get their fields to their economic requirements (confused here because I thought Mariner was sanctioned but I may have misheard). At the time the Chairman was betting with AB that oil would be above $80 by September. Probably irrelevant but tossed in anyway.

I think they said about 3 numbers - its not an exact science. Use 12.50 percent or 1/8th is easiest.

*I remember asking the question at one AGM because some older fields were close to 20 percent. It was when we were deep in the mire and spending as little as possible on maintenance. Needs must!

"The scales have to tip in favour of the equity at somepoint" = "when there is a solvable credit problem, you want to be in the equity"

Ref: hitman and Tom8080

low teens Pelle

Thanks Pelle - you're better than me with figures and soon lose interest in declines and new drillings. I agree that new projects will be almost impossible to get off the ground (or should that be out of the ground?) in the future. AB is right when he says the industry has moved from long to short cycle. The timing of Kraken wasn't good but lessons were learned and we're still here. In a few years it may well be described as a visionary development. I'm very excited by Bressay and consider it more an extension of Kraken. This is what happens when I venture into accountancy or try to read a graph. Best I stick to rambling.

Pelle your rough calculation 4200/90= 45usd

Should the 90 actually be 128 as (I think) the 4.2bn is for the whole field and we farmed out 29.5% and if you wish to be pedantic First Oil lost their investment.

Hi Pelle - I agree. The problem is that the people who contributed to that graph could probably defend the figures. On the first page you have March 15 2021 so I think it fair to assume theses figures aren't that old. If Kraken entered COP tomorrow maybe the field would require an even higher B/E cost per barrel. It only makes sense if you use a short time scale and Kraken's life and production are unknown. What it does show though is perhaps the way others view the oil sector.
I regret the posting now because for me the graph is gibberish. Sunk costs are in the past and you are paying off debt and writing impairments if things don't go to plan but a company is a dynamic entity and you should view it going forward. The tax credits don't really show their value in much analysis and they're possibly difficult for accountants to quantify due to conventions and a litigious environment. Publications like this don't help understanding EnQuest imo.

Is there a Mariner there too? As well as Johan Sverdrup, Solan, Golden Eagle, Lancaster, Buzzard, and Jubilee. You haven't convinced me.

Thinking about it there is some basis for the return we might need to eventually come out of Kraken with a profit. However that isn't explained in the chart and it is a moving (downwards) target. As the field develops we'll have add on discoveries and of course potential tie-backs with Bressay. A few years down the road people could be saying what a stroke of genius it was to develop Kraken. After all Linda Cook isn't shy about bragging that they started Chrysaor when everyone was saying the NS was dead and shale was the future.
The main thing though is that there is an element of truth in the chart. What it doesn't cover that mixed up in the $90 b/e is that some of the costs have been moved into tax credits which will bring the b/e cost down but will of course be hidden within the accounts and an example is in the $100m plus NPV of GE. These will be written back in but non-specific to Kraken. these losses are giving us flexibility and deal making opportunities so not all is lost. The most common result of tax credits of $3bn is bankruptcy.
What doesn't kill you makes you stronger. You have to look at EnQuest and Kraken in the round.

*still doesn't really explain why they put Kraken and Mariner in? It isn't particularly encouraging for NS development. just shows how unique we are. Hard to pigeonhole.

https://www.artberman.com/wp-content/uploads/2021/03/CANACORD-SLIDES-MAR-15-2021.pdf

Slide 11 (it's the only one I thought I understood). I was using $57 for shale so if this estimate is accurate a lot of shale is running at a loss. However, it has Kraken and Mariner at about $90 so something is clearly wrong. Unless they have misallocated all our debt and sunk costs to one field? Catcher and Golden Eagle are about $65. Johan Sverdrup is about $45.

Please tell me this chart is wrong for Kraken or even why it is in the list?

No Whiteace - I wish, you need company for that. Just a Friday night ramp. The problem with this stock is that we keep bumping into reality and the oil sector is like their tankers; it takes a long time to turn them around. I'm pretty sure the OO raise is due to pressure/insistence from either Suncor or the RBL funders. I fancy the latter as it does sound rather unimaginative. Having said that it will simplify our debt and Harbour did comment the same as regards PMO. I compared our presentation to the Chrysaor one and we may come to appreciate that the under promise is better in the long run. The EnQuest management know the same as us of what is required to boost the share price and they are moving ahead. The OO was greeted with dismay by most of us when announced but that changed a few days later. I would imagine there is plenty of pressure from our side in the RBL negotiations to achieve greater freedom than in the old regime. There is a need to keep powder dry and careless talk could crater deals so a tendency to be over cautious.
JS is quite open usually. At my first EnQuest AGM I aske him a question after the meeting regarding decommissioning costs. He went to a huge computer readout and found the necessary info and showed me. Naturally I didn't understand it but appreciated the gesture. I remember little things like his sleeping outdoors to raise funds for the homeless and AB's good work with the foundation and other charities. I mtold him my daughter was doing translating work for The Palestine Youth Orchestra UK tour in 2016 and he immediately said that he also supported them and if she had any problems to call him. Things like that mean something to me. I'm sure other companies do similar but I feel it is more genuine with EnQuest.
One good thing did come out of the post and it does concern drinking. The old Terrace restaurant sadly closed but they have revived the name for outdoor dining as well as a rooftop venue. It's the wife's birthday in May and she loves it there. Now all I need is for EnQuest to go up to be able to afford it.

Be lucky

Who’s the richest? Does it matter? *According to google it’s the Sultan.
After a second dose of Linda Cook’s crowing I need to retaliate. Some will say AB could take lessons from her in self-promotion but you really need to be American to do it properly. She is showing off her status and talking of “cash cows” in the North Sea. We are proportionately easily as well positioned as the newly formed Harbour Energy but we stand to gain a far bigger reward than the PMO holders who have donated a chunk of their wealth to EIG of the US due to the incompetence of their management.
I once shared a florist with the Sultan. I had my wedding reception at the Dorchester and he did the flowers [not as flash as it sounds because it was in their (old) Terrace restaurant and I saved on the band]. The florist told me that apart from the Dorchester he also looked after 6 other properties belonging to the Sultan and he supplied flowers for all of them on a weekly basis. The fact that the Sultan seldom or never visited them wasn’t a consideration. They were fully staffed as well.
On another occasion I visited the Crewe factory of Rolls Royce/Bentley as a guest of a garage. You see unbelievable examples of wealth as most cars were destined for export (Arabs do love chrome). With so much ostentatious wealth on display I asked their PR guy if he had ever been impressed by anybody. He thought for a few seconds and said “yes” and it was the Sultan. It wasn’t the 30 or so Bentley’s and RR,s that he bought in one go.
It was the motorway he built to drive them on!

*Brunei produce 127 bopd and 243k gas. I think you can see where I’m coming from although I only need one house, one wife and I can use the M25 anytime I like for £150 per year.
At times, oil has the potential to bestow great wealth and it ain’t over yet.

I love that phrase. Consider it stolen. It's kinda self-proving.

Headline: 'Confident' EnQuest looks to refinancing after losses

1st para: EnQuest is 'confident' of securing a refinancing deal after reporting greater losses caused by the slump in oil prices last year.

Probably still a little to long for the day traders but imagine if we could remove confident or at least the quotation marks and say "EnQuest secures refinancing deal". The price would/will rocket. I wonder what the informal or off the record comment would be. Maybe, "we already have offers on the table for RBL and have alternatives anyway".

Against that it is OK for the CEO of JOG on AIM to put in a presentation that the NAV/Share value is £42.16 which relies totally on finance of which there is little sign of. Goes to show that you have to make your own luck and whilst Equinor were lukewarm about Bressay we are uniquely one of the few companies that can make it happen. A tie-back is a totally different project to a FDP from scratch.

Correction: "leaks practically impossible to stop".

Ref yesterday 10.39 regarding prospectus considerations. I listened again to the Chrysaor/PMO webcast of 17 Dec. https://www.investis-live.com/premier-oil/5fd8845b97a42e100099ee04/ream
I'm guessing there are timing differences but the impact explains a lot to me. Richard Rose (FD) mentions it several times 01.30 and 42.00 whilst at 54.00 butted in when an analyst asked info on optimisation of the tax credits. Forward financial forecasting is verboten at this time. This makes the other board members very nervous and at 56.00 a question on dividends is pointless as the reply is they cannot say more than there is in disclosed documents. I suppose the point is that once in a prospectus the numbers have been slide-ruled and the lawyers and accountants have blessed it. Problem with this is that so many people have seen the figures that leaks are practically impossible. Much better to catch a Director unawares which is why Phil Kirk at 1.10 says he was warned to be cautious on guidance and the prospectus. He also said at 1.01 that previously he would guess which he's not allowed to do anymore.
I'd imagine that JS bears the brunt of this and even if he could answer prefers to stay on the safe side and refer back to most (past) recent guidance. Not being evasive but following governance and stock exchange rules. Sometimes its overdone which can give the wrong impression. No wonder AB seemed pretty p*ssed about the $50mio raise which certainly requires a prospectus. I wonder if the new RBL or the acquisition could have been completed without a prospectus? Probably not but it does mean you kinda enter a period of news/figures lockdown.

*listening to the Chrysaor presentation puts us in a good light imo. Linda Cook was blowing her trumpet but although they are bigger than us we have escaped the cut and are an important player for the next stage of North sea development. The majors need us and we have the scale to be efficient. I think Bressay is parked for tie-backs and is really part of the Kraken project. The most expensive part is the FPSO and that is basically NEW. There is another 40/50 years left in it if EP is an example. All looking good to me.

Sorry PR - missed your post. I'm hoping that AB's enthusiasm for dividend means that the PIK stabilisers will be removed. JS's reticence may be because "discussions are ongoing" and it is better to be non-committal. I don't believe in bottomless money-pits and I guess AB wouldn't mind some dividends for the foundation.

Today's volume was decent but not exceptional. On LSE it says 8.4m whilst Avanza has 17.95m of which they had the lion's share 10.27m. There may be double counting with Avanza as they list buys/sells. I'm no expert here.
So we move in major swings on very little value and it appears PI's may have made up a lot of the volume (day traders). This month has been brutal and I may see it differently tomorrow. I'm hoping these are growing pains and our timing is not poor but we wouldn't have chosen this backdrop to renegotiate the RCF if we could control the weather.
For those only window shopping the fact that there is a small equity raise is enough reason for them to move on. "Just another oil company looking for finance" is enough to stop them digging deeper. If I wasn't invested and read this "It is anticipated the new secured debt facility, in respect of which the Group is currently working closely with its leading lending banks BNP and DNB, will incorporate the refinancing of the existing outstanding senior credit facility." I would probably pass and look for something easier to understand. Throw in the pauses and incomplete answers at today's QA and it is easy to play the negative card. I'm going with the lack of clarity caused by the cross-connections between the new asset purchase, looming SFA maturity and the need for a level secrecy/discretion. it may not even be our choice. I doubt BNP or DNB want their clients or other banks to know the details. All a bit messy but probably an opportunity to BUY if I wasn't already drowning in these shares.