Member Info for romaron

Read this from Jeff Currie of Goldman's. It is in today's Platt's update but from an article dated the 5th.

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/021021-interview-hang-on-for-wild-oil-copper-ride-in-commodity-supercycle-goldmans-currie?mkt_tok=eyJpIjoiWVRBMVpXUTBPVFF6WWpFMSIsInQiOiJJZFdJdmNIc1k2WEpnblkyQnBJU1dKS2REVDF6UGtZYjdzRTUyT1pYT1hJNTNSeG5XZVhCOCt3V0pNRFlhbWpcL1JEYlhvRUJ5MFk0MVRaN2t6WEIxeUF0Y2FxdEpWOGl4OXhMWmdxM3NTOW9TM2NCckF6dFZidStyc3pUdGdKdTQifQ%3D%3D

I think we missed it due to the OU and Jeff Currie we already know sees a massive upturn in the commodity cycle. L7 referred to it earlier and it does suggest that in the event of a bull run shale will be dragged back in but at a higher level from $65. Forgetting the Biden administration he mentions a "hostile environment to attract capital" which means only short cycle production will fill the space. That's the middle East and US shale. If Currie is only half-right we are all going to make an awful lot of money.
"Talking specifically on oil, Currie noted perhaps counterintuitively that the massive green spending stimulus will have an indirect pull on oil demand given the energy needs surrounding the whole enterprise.

"And let's remember, what's unique about this is everybody everywhere in the world is doing the exact same thing at the exact same time, which is why you get that immediate impact on demand," he added.

Sorry I hurt your feelings Ammu. I didn't realise how upset you must have been. I'd forgotten all about it.
Looks like you've got me bang to rights Sherlock. I can see the topic was something about sub 10p. That may have had something to do with it.
We're still friends, right?

Don't spoil it Ammu. We were getting on so well. Let's blame it on your friends who were engaged in banter with you. They were having so much fun I felt I was missing out.

I did a New Year's amnesty Ammu. I didn't realise what I was missing. Blind dart players have more success than you but you don't let it discourage you. I admire your dedication. You have many admirers. Ever thought of taking up buffoonery professionally?

See you there Ammu - I've heard your stand-up is better than your investing advice. I think you're pretty consistent myself - regularly wrong but always cheerful.

and that EnQuest post was instant.

Ah- it has just turned up. A good 15 minutes after posting.

My posts are taking time to show on the message board. You question whether you've pressed send correctly and hesitate to do it again and show your incompetence with computers. I posted on TLW 10 minutes ago and it hasn't shown up but in my history it shows I've posted on TLW. it is almost as though they are passing through some form of moderator. Anybody else noticed this?

Something is going on and it looks favourable. This is quite a big move and they know more than you guys.

Yesterday Today
69 73.125 01/03/25
84.065 87.755 15/04/22
______ 87.75 15/04/22
70.25 75.25 01/03/25

I did warn you L7 - don't they have Waitrose in Scotland? Anyway, that's enough airtime for chilting who bangs on about oil is finished and green solutions are the answer. He has mentioned several times his tiny investment here. It bears no relation to his posting numbers. Ammu has more commitment and at least he is ridiculously funny. END

You wrote "Barriers to entry in the oil sector are low. " I totally disagree. It may be a little out of context but it is left to wildcatters and the biggest gamblers. The majors have left town in the NS and elsewhere. Shalers need to call gamblers anonymous but they're American so anything is possible. The talk about stranded assets may be a bit premature and perhaps the correct quote is "the barriers to finance are closed making serious progress almost impossible". This can be shortened to "barriers to entry".
I think Sea Lion and Bentley may never happen whilst JOG may struggle to partner up. I don't know about HUR but it doesn't look good to me. There are barriers to entry in this post Covid world. Why explore if you can't develop? If you have the cash anything is possible but I don't see oil as their number one choice.
Conversely all the above make EnQuest an excellent investment imo. The field isn't crowded.

HiL7 -re Ocado. It's the same as saying that ASOS is a tech company that also sells clothes. I think the emphasis is on tech and the internet whilst clothes and groceries are in some respects a by-product. They're not that different to Amazon really. I'm waiting for the "revenge of the old economy".

I suppose there are even elements of a temporary overdraft here. You cannot forecast the future but if oil followed its current trajectory and reached $75in a few months the raise would have been unnecessary. The higher the oil price the easier it will be for the book-builders and the lower the discount.

Dodger - that's one for the clever people.

This is how I would word it.

People cannot always be relied upon. Life is untidy. Sh*t happens. For a variety of reasons the company has to raise $50 mio from shareholders. The last OO was not remembered fondly as the share price is lower now than then. However, this wasn't an EnQuest phenomenon because most other shares in the oil sector are lower too in the same period.
This P&OO is to part fund the replacement of reserves and production and is complicated by taking the opportunity to negotiate a new short term RBL (maturity before OCT 2023). It is not a distressed raising but one of several options in front of the company. The importance of not calling it a Rights Issue has been missed. This is almost a temporary loan as cash flow is increasing.
Unlike the previous fund raising this is expected to go much better as the oil price is rising and demand returning. In this case it is expected that most shareholders will take up the OO. This means the rump that is left will be placed "the placing" with institutions is likely to be much smaller. The book-builders are very experienced and will sound out the largest shareholders. We do not know the answer but can make intelligent guesses. For sure it will be smaller than the last one. There is even a possibility that the largest shareholder/s could fund the placing. The book-builders will make it look more complicated than it is as they need to earn their fee (like lawyers booking hours) and covering a risk (for me tiny) of poor shareholder take up. The discount for the placing should be very small if the book-builders do a good job.
That's how I'd describe it anyway.

correction - Suncor and RBL. The $50mio placing & OO could apply to either (I suppose) but likely a combination.

Hi L7 - I wasn't being awkward or impugning your mastery of the technicalities but you did make several mistakes:
1. Never engage with chilting. it is like arguing with a rock.
2. Do not mention previous OO or RI. I was in both and like many I barely understood then so asking us to review them now is futile.
3. You were tieing yourself in knots because explaining the process to us is impossible in simple terms. You are not on our level.
4. You are explaining hypotheticals with factors that will change. Then you'll have to explain again.

BTW you never answered. Is this Suncor deal a mixture of OO for retail investors and a placing for professionals who will quote for larger amounts?
I get the gist. There is potential for sharp practise but I'm hopeful that this time it is more belt and braces for others involved. Those involved in book-building will try and maximise fees but they're not automatically dishonest. The process isn't rocket science and I was once the king of arbitrage in Forex but it was a long time ago and I've forgotten most. You do it mechanically without thinking if you do it every day. As you know, most tasks are 90% plus routine and repetition.

Be Lucky

I'm almost scared to ask this. Is a "placing and OO" two things or the same thing? My experience of "placings" has always been where the retail investor is excluded. These have a bad name in AIM where they often the recipient gets them at a bargain price. I prefer "death spiral financing" because they then manipulate their way out of it using latency and ignorance.
I wouldn't mind a named Institution getting a sizeable amount with a small discount if they were to become LTHs. The market would like that and I doubt many retail investors would object.
You're tying yourself in knots L7. I don't know the answer but the book builders and other participants aren't taking massive risk. It is a form of arbitrage. Complicated to the uninitiated (me included) but those involved usually come out the winners. This isn't a distressed placing to raise survival money. I think we should be patient for now and see what transpires.

This might help KO and Squif. An article in the Times today by Patrick Hosking was titled “Chasing unicorns is risky business for London’s staid stock market”. Apart from Ocado the index is packed with traditional banks, miners, utilities and consumer products companies. Perfectly good most of them but altogether rather pale, stale and old-fashioned looking.
The Treasury has tasked Lord Hill to spice things up by looking at rules on free float, dual listings, length of track record and prospectuses. Flotations are expensive and require uncomfortable concessions from founders. Some PI’s and institutions are wary of overseas shares and listings but a London primary listing does mean that certain standards in governance, transparency and accounting have been achieved. In the vernacular London can be set in its ways and a bit sniffy.
The more exciting companies led by entrepreneurs fail to achieve this “respectability” and many are capital-light and don’t desperately need the money. Private companies are happy to pick up the slack and the founders want to keep control of their babies. This often leads to two tier structures where their shares carry more votes. Traditional fund managers hate this and avoid. Almost the opposite of Wall St.
It doesn’t necessarily apply to us but I believe the Institutions are unsure of AB and anyway don’t like founders having the leverage he has. He has control of 10% plus leverage on the EBT of another 5%. When I first bought EnQuest it had more institutions holding a larger percentage. Aberdeen, Swed bank, Legal & General, UBS etc…
So – not only are we boring and staid, many Institutions don’t like us on principle. Throw in the ESG narrative and you get the match ball.
That’s why I’m pleased that AB & JS plough their own furrow. Some in the City would have preferred a Tony Durrant type character. He is definitely more fun at the bar – I’m not even sure AB drinks alcohol. We aren’t easy to pigeonhole. For many houses it is simpler to ignore us.
I’m sure you’ve read this before but isn’t the title interesting from 8 years ago: “AB the ultimate outsider”
https://www.theglobeandmail.com/report-on-business/careers/careers-leadership/amjad-bseisu-the-ultimate-outsider-in-from-the-cold/article4575930/

The numbers will do the talking.

I'm in there somewhere too L7. ATM and because of the size re our cash flow and the current prices and sentiment I have come around to accepting the OO. I don't believe it was a company decision and both Suncor and the RBL lenders are in the frame for insisting.
I intend to buy the OO whatever. I couldn't live with the thought that a City fat cat had nicked my dinner. It has been a long wait but we're very close now.

*I went for my 3 month Covid trial thingy at King's in Sarf London. Sailed through customs. Nothing to add really. Got a piece of paper that said proof of vaccine and the guy taking my blood says he wished he'd had Novavax as he had AZ and was sick for 3 days. Having said that, I know people who had no reaction to the AZ. What was significant was that I bought the Times today to read on the train and I might have a reason for our poor share performance. Laters as they say.

I can remember when $50 breakeven was considered OK. Not brilliant compared to some other plays but doable (c.2014/15 when Kraken and the Bentley field were in play)

As the share price rises the OO amount of $50mio dwindles as a percentage of the MC. The amount is $ .0294 or £.0215 per share. It reads easier as £2,150 for every 100,000 shares held. The accountants might have to join in here because as the amount is relatively small the discount might be tiny. Then it is just a shuffling of the figures with the dilutionary effect of the OO cancelled out by the asset increase. My feeling still is that the requirement has been forced on us by the lenders and is a mixture of the new RBL and the acquisition. If the share price is (say) 20p at launch (is that the right word?) then I expect there to be a demand for shares. It might explain AB's irritation that it was even necessary and an indignity.
Looking good.

*re the party. Do you think a perm might be OTT?