Member Info for romaron

Occam's razor appeals to me and I was getting confused over US oil production. Shale problems seem to have been around forever yet their production seems to ignore the current situation and they just keep on pumping. I just assumed that every month there would be mounting casualties which would reduce output and inventories. It is as though they're defying logic. Up is the new down!
Where I've made a mistake is with the Drilled but Uncompleted wells (DUC). This from a recent report " Although U.S. oil
production has been recovering since June 2020, rig counts remain near record-low levels. In contrast to
the very low rate of new wells drilled in the past few months, the inventory of drilled but uncompleted
(DUC) wells is relatively high. " Source: https://www.eia.gov/petroleum/drilling/pdf/September_2020_Supplement.pdf

I thought the inventory of DUC wells would reduce sharply. It seems I was wrong. A DUC well has spent capex so if you shut your eyes and forget it you can kid yourself that you are making a profit on producing shale oil. I don't know the spent costs but assume its not peanuts. It does bring in cash which may go straight to the debt holders and avoids breaching covenants. It is a Micawber strategy and we shouldn't knock it because many of us are doing the same here with oil.
I wonder if the holding on for basically bankrupt shalers and their unusually benign debt holders is that there is a potential saviour in Donald Trump? By that I mean promises and law/tax changes if he gets a second term. If he loses next week then the whole shale deck may well collapse.
They have been uneconomic for some time and I doubt Saudi Arabia and Russia haven't come to the same conclusion.
Anybody agree with me?

Most here have lived through a few financial crises and one thing I do know is that volatility is extremely high but turnover is low. A few stops have been activated and mandates acted on but the funds and institutions will largely be on the sidelines. In my City days it was regular for the dollar desks to practically cease trading before nonfarm payroll data was released. When announced it was chaos for 20 minutes and you had to be there to earn the commission. Markets meander until a statement from the Government or Central bank is released. In extreme cases you get Countries releasing joint statements. Perhaps it's a sign that things aren't actually that bad that countries are happy to go it alone to an extent. We're in a storm and shouting at the wind and the waves releases tension but does nothing else.
I think there'll be a big rally if Biden gets in and that does look likely. Until then panic and baling out is a fringe activity. As for EnQuest I see a lot of cars about and they don't seem to be powered by electricity or hydrogen.
Markets always react negatively to uncertainty and we have that in spades. The second half of Q4 will be a totally different story.

I was just having a little banter with spin and the death of four migrants, two adults and two children, is beyond sad. My timing as usual is poor. We sometimes forget how lucky we are to be living here. I apologise for my trivialising of what drives these people to take such risks.

Whoever masterminded the hijack of the Nave Andromeda (228m.) missed a trick with only 7 illegal immigrants. They should have employed spin as a consultant. He could get that number on his much smaller boat with room to spare (allegedly).

*oil floats on water which is why Nigeria sends oil to Britain and we send it to Singapore.

I like this bit "For oil, the sharp drop in capex is now having an impact on non-OPEC decline rates, with capital markets refusing to fund shale drilling, only debt rollovers. "
We know this is so. The debt markets have to push for mergers or rollovers because the alternative is that they become owners of oil companies and in this market who's going to buy them? We will not be pushed into a merger but that doesn't mean that a deal cannot be constructed that is too attractive for us to miss.
It isn't altruism on their part but a necessary survival function. With Covid in retreat and demand picking up we will still be unpopular but it will be impossible to ignore the growing cash piles of the survivors.

I'm not in TLW but follow their bonds to benchmark my interest in EnQuest. Information on bonds is much harder to obtain and the amounts involved exclude the small retail investor or day trader. This site shows their latest prices https://www.bourse.lu/search and it's good news for you guys imo. The 15/04/2022 close at 63.125 and 61.51 (both 56 before RNS) The 01/03/2025 is 54 (53).
If your bonds are trading higher that is a much better signal imo than the oscillations of the stock with its volatility and ramping/deramping usually based on ignorance. You'll never know what is behind a trade and if you use the PMO debacle hardly anybody questioned who the large shorter was when you don't have to be a mastermind to perhaps try and establish if a hedge fund has bought the distressed debt. It is quite common to hedge through the stock. Hard to find evidence but you'd at least give it a try.
This is usually smart money and doesn't go in for knee jerks and has a much more sophisticated approach to risk.
In TLW some are missing fresh arbitrage. If you fancied the bonds are heading to par a hedge could be to sell some stock. It doesn't mean they have no faith in the stock and it ain't personal. Prices are always snap shots and it doesn't mean they're right. If you bought the bond you'd believe the company is solvent for the forseeable. Selling a bit of stock is an insurance. A lot of posts here are just shouting from the terraces and there are too many to read but yesterday winniworld made a lot of sense. You really should consider the EV which means you have to consider the bonds and the shares. Bonds aren't glamourous or exciting but often paint a truer picture.

Be Lucky

Sounds like a decent alibi Captain spin. Wee bit choppy but plenty of cloud cover if you decide to launch tonight. I know another guy who has all the tickets and used to deliver yachts around the world. I'm sure you and him have a lot in common. He also fits boilers. His name is Hugh Doyle.

You might have something there squif. We can actually afford to do nothing. There does seem to be a lot of oil field sellers in the NS. It is a buyers market.

I'm possibly miles off but you cannot ignore what's happening around us. Of course AB has a strong hand but there are other large shareholders and I'm sure he's aware that (say) 10 percent of a £1bn company is worth less than 5 percent of a company worth £3bn. I wasn't promoting anything hasty and our performance over 10 years suggests that our moves are measured anyway. Requirements and regulations mean impulsiveness is near to impossible (except maybe with hedging and that is relatively short term). The larger you are the better the moat and the past few years have turned the business upside down (shale, covid, ESG pressure) to the extent that smaller companies and those needing to raise finance will be at the back of the queue for essential financing going forward. You play the hand you're dealt and ours is a pretty good hand all things considered. To still be above water in these times is an achievement in itself.
My post was more about the changed landscape. I think we are constantly in talks because that is what the oil industry does and there has been more cyclonic events in the past few years than at any other time that aren't caused by a war. We're possibly due one of those soon too. Might as well go for four of a kind and leave the kicker as a 'black swan'.
I don't think there are that many companies interested in the NS for us to be outside any calculations or approaches. AB has been around long enough and has the necessary contacts and influence.
All market caps are low but it also means that some targets have never been cheaper. It works both ways and we don't have the bailiff knocking on the door.

Excellent find Mavrick - in the article it says "Size matters in US shale because economies of scale, lower overheads, increased bargaining power with suppliers but also, crucially, greater access to debt markets." Many of the factors that affect shale apply to conventional too. To offset natural declines the producers in the NS need to drill new wells and find resources. Practically all of the smaller producers need to increase their debt or roll it over from a position of weakness. PMO look likely to have escaped but the shareholders have been heavily diluted. TLW have sold some family silver and seem safe for the moment. We are not under immediate threat but I don't think there's a queue of lenders waiting with their cheque books to finance us past bond maturities (3 years) and the RCF needs replacing. Not beyond our present capabilities but we are looking small in both production and reserves and today that isn't a good look. However, we are very attractive to companies looking to exit or go through the IPO route to divest. DEBT is boring and information from and about bond holders is held mainly by professionals who don't pass on their expertise to message boards. Most of what we can access here is pretty basic TBH. We can stagger on alone but I feel the next step is a merger.
Two immediately come to mind. Spirit and Neptune. I believe that a merger with either would give us a better credit rating relating to their backers who want out anyway. It would be a marriage of convenience but what is happening to shale needs to happen in the NS too imo.
Neptune were looking for an IPO by April 2020 and are backed by Carlyle Group and CVC partners who have deep pockets.
Spirit is owned by Centrica 69% and Bayerngas Norge's former shareholders (31%) who I believe want out also.
I think it might even be staggered and the mergers entered into, companies integrated and plans to either sell their holdings when the market cycle is better; possibly to whoever buys them.
It is beginning to get interesting. The professionals deal months and years ahead. They are already looking at a post-Covid world.

Reported in the FT: "Nil-premium mergers would be pathway for US shale ...Industry too highly fragmented with too many managements, too much G & A, too much growth ambition & too little focus on shareholders.”
--Citibank

Over here in the NS we've only had one potential merger (Chrysaor/PMO) so like buses can we expect a couple more along shortly.
Is this still in operation FYR 9 April: "§ Directors and senior management have agreed an interim voluntary reduction in salary of 20%" ??

amounts https://www.londonstockexchange.com/stock/PMO1/premier-oil-plc/company-page
The price is still within the range 68-72 mentioned here.
https://uk.reuters.com/article/premier-oil-restructuring-arcm/hedge-fund-arcm-to-sell-200-mln-of-premier-oil-debt-sources-idUKL5N2GI32K
It says that ARCM has c.15% of the company debt. So $440mio makes the debt $2.9bio. Is that correct?
The half-year report quotes net debt at $1.97bio. Perhaps I've read it wrong?

The large amounts on the Retail Bond suggest that the deal seems to be bench-marking around the figures quoted 21 September. Debt holders don't have to inform the market of their holdings which might bring some clarity. ARCM were rightly fined for not revealing their large short (talk about elephant in the room) but I don't think you have to reveal holding above 3% in shares. It is followed by the more reputable companies but I think it is voluntary and I have had IR (not PMO) use the excuse that they rely on the companies informing them of their holdings.

I was reading about it again and there is nothing new around but it may be the next bit of news we hear: "The deal is expected to be completed in the fourth quarter of the year." from https://www.energyvoice.com/oilandgas/north-sea/256109/equinor-bressay-enquest/

Does anybody understand this? "EnQuest will also assume operatorship of the licences following the plugging and abandonment of the 3/28-1 well by Equinor, the Norwegian company."

It's the abandonment bit I don't get. Probably not that important but just to increase my understanding of the terminology and what it means.

Thanks for that Runner but I think I'm in the shallow end of the intellectual pool along with Jan. Sorry to hear you take medicine for anxiety but hopefully you can throw them away at the 60p party. The medicine I picked up Friday was Naproxen as it appears I have gout in my right foot big toe. Its gone now and I haven't touched the Naproxen as I had the Covid trial on the following Monday but I'm ready for the next attack. I get "white coat syndrome" when I have my blood pressure taken and wondered if it'd be too high for the Covid trial but was OK this time. I spoke to the senior doctor and he kept repeating that there is lots we don't know about Covid still. It isn't beaten but I'm in the camp that thinks we're over cautious. No sense in looking for trouble but I'm running out of runway and don't intend to become a recluse.
I believe I lean more towards the pragmatic and concentrate on what matters not opinions on this message board though there are posters with skills I don't have and are better at research. I believe we don't look at the bond debt enough and I record the HYNs daily. I'm with you on calibre and integrity of the Directors and believe we score highly there. In the real world there is NO meaningful, cheap alternative to oil for several decades. I'm not too worried about Europe because they can afford to be smug and condescending about energy. It is a different story for much of the rest of the world and competitive advantage in energy costs is extremely valuable. Why would we risk falling behind when we have food banks here?
EnQuest isn't a Major but it does have scale in its area of operation and expertise. I think the price will start motoring soon as people tire of these lockdowns. It's sad but lessons learned from the early days will manage expectations going forward. I was always surprised at my mum's vehement rejection of going into a care home. She knew better than me that the average length of stay is 2 years and you almost always leave in a box.

Pelle - common sense ain't so common.

FOMO is growing but it hasn't reached our sector. China is aggressively working on vaccines and testing to enable people to go abroad and continue the economic miracle. I read that for £80 you can have a quick test to fly and some countries accept this. You may moan if you're a regular Ryanair passenger but it is peanuts for business flights. Whilst we continue soul searching other countries will grasp the opportunities and we'll be left behind. The middle ground is procrastination but we'll continue to muddle through with an increasing number of risk takers challenging the status quo. There is a different feel imo about Covid now. I thought about the Californian Gold Rush. Many perished en-route and were welcomed by Typhoid and Cholera. Mining itself is dangerous but once you feel that the profit outweighs the risk you will go ahead. We'll look pretty stupid if Asia is back to pre-Covid levels and we're still undecided about what Tier to voluntary subscribe to.
From: http://files.brontecapital.com/amalthea/Amalthea_Letter_202009.pdf
"You either thus go the “drive to elimination” route (Melbourne) or the “welfare plus no
lockdown” route (Sweden). Which you choose depends on the mortality of the virus and
how you weight that mortality versus the considerable costs of harsh lockdown.
The middle ground here looks pretty stupid actually. Strangely we agree with both our
libertarian friends here (who hate all lockdowns) and our public health orientated friends
here (that think the lockdown is not harsh enough). Both are rational positions. It is hard for
an instinctive centrist (like John) to say this – but in this case the middle ground is plain
stupid. "

and they will come. I notice the usual suspects (lock 'em up) are challenging my confidence in the eventual outcome of holding EnQuest stock. The West has failed to handle Covid as well as Asia and Africa. Future growth will not be in the West and is flat-lining. Production is down and so is demand. Once Covid is defeated or managed demand will return but I don't expect the oil industry, which is heavily dependent on debt, to find lenders and bond issuers as enthusiastic as in the past.
EnQuest suffers from the 3 D's (Death, Divorce, Debt) as do BP and Shell. They continue and are always SELLS. It may be a trickle but it is continuous. Usually it is counteracted by contrarian BUYS but has gone on so long that many have thrown the towel in or at least stopped buying. They are wrong and I'll be proved right.

Build it and they will come.

Walked home through High Barnet town centre. I know it's a Monday but it was empty. South London not a lot better. I collected a prescription from my local chemist on Friday and he said that he was crazy busy again as the Covid fear comes back. He said prescriptions for anti-depressants had "gone through the roof".
I notice that spin has been freed. His humanitarian gesture had been misunderstood by border control. Luckily he had a puncture outfit onboard and was merely towing the inflatable to a safe harbour. The accusation that he was part of a sinister human trafficking scheme run by a mysterious Mr. Big known only as "J" could not be proved.
Today I had a Covid vaccination (or placebo) at King's College. No reaction so far and they want to see me in 21 days. they also gave me a flu jab, a thermometer and 3 swabs in case I get symptoms. It was 1st day of phase 3 and was chaos. Trump hasn't a clue and it is very much paper based. i asked the guy in charge if it would be better on a computer and I just used a fingerprint. He said that the trust and belief in programs and apps was seriously over-hyped and paper works. I passed the BP test and now have an experience of 2 Covid trials and frankly there is nothing to choose between them. I think several will cross the line together for general applications. This is the one I'm on "A Phase 3, Randomised, Observer-Blinded, Placebo-Controlled Trial to Evaluate the Efficacy and Safety of a SARS-CoV-2 Recombinant Spike Protein Nanoparticle Vaccine (SARS-CoV-2 rS) with Matrix-M1™ Adjuvant in Adult Participants 18-84 Years of Age in the United Kingdom
IRAS Number: 288793 EudraCT Number: 2020-004123-16 Sponsor: Novavax, Inc."

Spin - A tip. Sign nothing, they'll stitch you up. Tell them you'll answer the allegations in court.

Must be bouncing along the bottom for travel, hospitality and leisure sectors. Businesses that survive will have an advantage for sure due to a lack of competition in the future. To a lesser extent it will affect our sector too. It is already happening with TLW, PMO and HUR for example. We aren't immune. Breaking even is quite an achievement in these times. Making a profit is extraordinary in the worst affected areas of commerce.
When the good news (eventually) arrives it really will be fasten your seat belts for all stocks affected in a negative way by the virus.

Now that's a phrase you don't often find in an RNS or an Annual Report. Here's a sample of research from a hedge fund letter to clients.

"To solve the behavioral dilemma when people are no longer scared of the virus you need
them to behave as if they are still scared of the virus. You might be able to do this by
brainwashing (i.e. convince people risks are higher than they perceive) or by massive social
pressure, but the easiest way is probably just to make them scared of the police. That is how
China controlled the virus and is how Melbourne, Australia is currently controlling the virus.
In other words enforced lockdown works.
That doesn’t mean that enforced lockdown is the right policy. It would be with Ebola (huge
mortality). It almost certainly was the right policy with SARS (it worked, and mortality was
high). But it is not the right policy with say a seasonal influenza. We will leave open where
this virus sits (although we have our personal views).
You can however control this virus if you are prepared to trample civil liberties enough.
China did. Suffice to note authoritarianism is good for the virus and the virus is good for
authoritarians. The virus has cemented Xi’s power in China for instance.
Again, note that all of this is true for a wide range of virus severity."

He also goes on to explain why the Swedish response to the virus couldn't work in America. Here's the letter:
http://files.brontecapital.com/amalthea/Amalthea_Letter_202009.pdf