Member Info for romaron

From the HoT RNS:
Premier's $2.9 billion of gross committed debt facilities including Letters of Credit and the mark to market liability of cross currency swaps used to hedge the historic currency and interest rates exposure to be refinanced with non-amortising facilities, extending the Group's credit maturities from May 2021 to March 2025
§ Harmonised interest rate of 8.34 per cent[1] to be applied to Premier's cash credit facilities from the refinancing effective date

I read through the posts today and there is not one mention of the debt maturities which are at present current liabilities. If these proposals get through then the rate is not over burdensome if it applies to future debt maturities. I come from EnQuest and appreciate that neither company gets BP or RDS rates. It is unpleasant for holders and I cannot get prices for HYNs but the Retail Bond maturing 21 May 2021 is returning close to 50 percent which suggests there is some question of survival but even around 76.00 suggests that the company is unlikely to go under. Bond holders are always first into the lifeboat because they aren't usually emotionally involved and have mandates that make them abandon early.
I feel for you guys but until the refinancing gets underway only day punters will be involved. TD may be a useless oilman but he seems to have A list contacts in the financial world. I went through something similar with EnQuest but providing the oil price improves (which I think it will) this will in a few months look like a bad dream. I'm not invested here but your assets aren't gonna disappear overnight. As always in oil it's about the money.

Be Lucky

I think it's worth commenting on Bressay. I doubt Equinor chose us for philanthropic reasons whatever the press releases hint at. They've an asset, in UK waters, that probably wouldn't garner the best media comment if they developed it. Better to find a surrogate. The more blunt among you might even say "a patsy". If they didn't unload it now there runs a danger of it never being developed. Who else could have bought into the field? Majors not interested and many of our "peers" are in a parlous state and concentrating on refinancing. Others are digesting recent purchases still. I'm glad that Equinor will be a partner otherwise I'd have been thinking along the lines of the BHS sale to Dominic Chapell.

Sounds to me like chilting is talking his book. New and not so new technologies have yet to be more economic or as adaptable as fossil fuels. What about ground/air source heat pumps. They've been around years yet the take up is small and they work from electricity. Carry on discussing by all means but many parts of the world cannot get reliable electricity anyway.
Change always comes but at what pace?
Anyway my position is unchanged. Oil/gas has decades to run but the demand is on a downward curve; at least in the West. What will save EnQuest is lower debt and cash returns. That would (hopefully) move us into FTSE250 territory and upgrade remaining debt. Dividends start to be paid.
Having said that we wouldn't be anywhere special. Look at BP and RDSB. Their message boards today are full of gloom and despondency. Then you have PMO (figures tomorrow) TLW and HUR for example. If anything we have performed more like the majors recently than our "peers" who actually look nothing like us.
No, providing Covid comes under control and the world keeps spinning we have a promising future. The transition away from fossil fuels means that we are an even more important factor in the oil and gas UK industry. I can see a 30 year horizon for EnQuest and that is shorter than most annuities so that'll do me fine. We aren't gonna win any popularity contest but where there's muck there's brass. The majors (not Exxon or Chevron) have committed to the Green future and they need us as they practise the sleight of hand of offloading the poorer performing fields whilst they add clauses in case of windfall profits from them. Then there's Russia and China who I feel sure will play an honest hand and not take advantage of the West saddling themselves with expensive energy.
There is also the point that oil and gas can be refined into many products that aren't being replaced any time soon.
Nothing is gonna happen until September imo and spin remember "a watched kettle never boils". Our update is only 10 working days away.

Sadly Spin I recently found out (whilst tracing my family tree) that a distant relative of mine also died at the Battle of the Little Bighorn.

He wasn't actually in the cavalry but was apparently camping in the next field and went over to complain about the noise.

Good article by Oliver Shah about oil. It followed on from BP's mid-week Net Zero ambition announcement. CEO Bernard Looney said "We are a company that's 97% hydrocarbons today. That's where the cash comes from. Without the cash, there isn't the investment. Do you believe we have a role? That we should transition? The only possible way to do that is to maintain that existing business. We're not turning our back on it." BP are divesting of $25bn of old world-world assets by 2025. OS took it further by posing the question of what happens to those sold assets. It will make BP more attractive to ESG investors but do they really think that the buyers will mothball them in accordance with the Paris Agreement? The carbon mix will still be 73% of energy consumed in 2040. In the future oil fields will face higher capital costs because banks are leery about lending to them, but they'll throw off lots of cash and produce high yields - perfect territory for private investors; just don't expect your pension fund to pile in.
I mention this because I think we fall into this with Equinor and Bressay. Only 8 countries have so far submitted the updated targets they agreed to provide this year under the Paris agreement. The first 4 are The Marshall Islands, Suriname, Moldova and Norway. There is some suggestion that Norway may take less domestic action to reduce emissions and rely on buying emissions reductions abroad to achieve its targets. This is not unheard of and the Catholic church used to sell indulgences too.
The Norwegians seem to receive a pass from the r.o.w. with their tokenism and high taxes on booze. They can certainly afford to. I wonder if our Swedish friends think they are as "cuddly" as we seem to?

*Two big BP asset sales were to Hilcorp and Ineos - both private empires controlled by individuals.

I forgot spin - which beach are you looking at?

At least it means we aren't clogging the board from important EnQuest discussions. I was talking to another investor off line and I explained my reluctance to try and day trade. It's because I know what you're up against. To stand a chance you need excellent lines of information with live feeds and contacts because, even if fake, gossip can move markets. The cost of live feeds is expensive (e.g. Bloomberg terminal) and you really have to be live at all times if you want to protect your position and see flows. I feel like a retired casino worker who is under no illusion that he cannot beat the house in the long run. Plus you need icy self-discipline which I haven't got.
To increase my chances I hope to benefit from the ignorance that is displayed by many retail investors and Institutions driven by mandates. The hardest thing to do is cut a losing position because of cognitive dissonance. I'm not involved in them but the message boards of TLW, HUR, PMO, AMGO, NSF etc. are full of people saying that this is the base and next week, boom! It really is coin toss territory.
The "trend is your friend" doesn't work forever and it's easy to be lulled into complacency.
We're always still learning and a couple of things worth mentioning imo. I think the Bressay deal is symbiotic in this time of transition. Equinor are reducing their UK footprint which takes attention away from the money spinner that is Johan Svedrup. Any future heat is gonna hit EnQuest harder as the operator. It is a wee bit cynical but understandable. From our perspective I think we've managed to squeeze it past the covenant gatekeepers. Funding lines carry covenant conditions and they can be party-poopers. [No acquisitions or disposals without consent of SFA lenders P.280]
None of this is gonna happen in the next few weeks so for those whose pocket-money is burning a hole in their pocket I'd suggest that the price of EnQuest might weaken but it really is trying to pick up pennies in front of a steam-roller. I think it'll be Q4 for lift off but of course; "There's many a slip 'twixt the cup and the lip".

Be Lucky

Hi spin- I don't think it's a day traders dream come true. There is a total lack of action and day traders that haunt message boards aren't really that different to those that are regulars at betting shops. They will punt whatever the market and do prefer penny shares. They do however require a starter and we just aren't getting any movement. The runners aren't even in the stalls yet. It isn't just a lack of BUYERS; there is a lack of SELLERS too. The knee jerk after the initial Covid scare meant most stocks were oversold. There has been some recovery but still nowhere near the previous levels. Oil wasn't popular before but at least Covid means we now operate in dog years for transitional and structural changes that were long overdue in this industry. I hear that only one in five are going back to work in London. AB is going in once a week. Like property there is always the 3 D's but that only gives you tick over not the exponential movement and trading that we've got used to and is necessary for momentum. It will return imo but for now the world is in convalescence.
Traditions don't change quickly so most of Europe goes into shutdown in August anyway; "chiuso per ferie". The St. Leger is on 12 September and the HY results around 3 September (hopefully). It'll be busier then.
I bought last Friday on the news and was disappointed with the market reaction. I was 8% of the turnover that day but before you accuse me of being a whale the turnover (from memory) was c.1.2m and I bought 100k. The lack of ALGO trades is noticeable and I suspect the 2 Off-book trades of 2.000.000 on Tuesday actually related to the day before when the price jumped. Reporting trades is subjective (there are after all a minimum of 2 participants; a buyer and seller; who chooses the annotation?) but the price of the 2x 2m suggests they were BUYS which were shown on a day where the price went down. I'm pretty confident the deals were made on Monday. There doesn't seem to be any hard and fast rules for recording Off-Book trades. The amounts are often larger than the day traders who tend to play with AT/ ALGO trades.
Personally I am seeing encouraging signs but I've always been the optimistic type. The bunker mentality is a safer choice if you are risk averse but I have greater confidence in human ingenuity and greed.
The world now operates on algorithms but years of experience mean your decisions are based on an eclectic number of factors which many younger people think belong in the museum. Throw in fake news and making money is challenging at the best of times. Sure there are opportunities but first mover advantage and FOMO is no longer the driver it was pre-Covid. I think there'll be future changes we cannot imagine. TikTok can read our copy-and-paste clipboards (along with Reddit, LinkedIn and the BBC news app) but what really intrigued me is that it even understands keystroke rhythms when we type.

Build it and they will com

Therapist has turned on his blue light and is on his way to you. Stay strong.

Idly flicking through the message boards I glanced at NSF. We've seen car-crash interviews involving Trump but I didn't expect to see anything like it this close to home. NSF issued an RNS today which was paid for "analysis" by NSF. A bit like Trump going to Fox and friends. They produced an interview with an analyst from Hardman & co which can be listened to here: https://vimeo.com/442268734
Listen and enjoy. Van Kueffler's hubris is complete. Listen from 02.30 until 03.30 where they use PFG as an example of success in difficult markets and taking vicarious credit. The difference is that PFG are reducing their debt by tendering for £75 mio notes due 2023 whilst NSF are looking to raise money from long suffering shareholders. They are trying to pitch towards PFG and away from the likes of AMGO.

At straw clutching this is in the premier league.

Build it and they will come.

Hi modestus - what I took from it is the delay/lag between rig reduction and the effect on stocks of oil. With the day-trader obsession many think that overnight is long-term.
"As recently as March 13th, there were 680 rigs drilling for oil in the United States. In less than four months, the US oil directed rig count fell by 75% to 180 – the lowest level on record. There is at least a two-month lag between drilling a well and first production, suggesting hardly any of the drilling slowdown impact has shown up in production data yet. That is about to change. Between February and June, the non-US rig count fell by 40% to 800 – also the lowest on record. "
It also looked at it from other perspectives.
"Our models suggest that emerging market oil demand has held up much better than widely appreciated - between 1979 and 1982. The developed world made up two-thirds of all oil demand and fell 15% while the emerging markets made up the remaining one-third and grew slightly - Last year, emerging markets exceeded 60% of global oil demand – an all-time high. It is no surprise that global demand is therefore coming in much stronger than expected during this downturn as well. "

I liked this too "Goldman Sachs’s latest paper agrees with our assessment. They state, “We have entered a structural phase of no non-OPEC growth.” The result will be a much larger call on OPEC crude and higher prices. If anything, we believe that our original estimates that we published in the middle of 2018 were too optimistic and the actual declines going forward will be even greater."

Be Lucky

Hi Modestus - wow! truly contrarian. Probably 26 pages too long for most on here but extremely thought provoking. For those with a horizon longer than 6 months and without an obsessive attention on rear view mirrors this is essential reading.

"History is about to repeat itself and few investors are positioned to profit from it." from the essay.

People in the Mar Mikhael area heard a low flying plane before the explosion. From someone who was in the middle of it all and saw lots of dead bodies. The plane was so loud they went outside to look at it. A beautiful City that surely has suffered enough!

Hi chilting you posted "I guess that explains the SP movement today." How so?

I've found out who the big seller/s are. They are the Majors. Quite a different tone to the Exxon VP's comment but does throw light on Equinor's motives with Bressay. Today BP announced its "New Strategy To Deliver Net Zero Ambition ". It included these gems:
- no exploration in new countries
- production declines by 40% by 2030 through active portfolio management
- emissions associated with carbon in upstream oil and gas production 35-40% lower by 2030

Active portfolio management is basically selling off the maturing/declining assets. They don't give them away so not quite the green dream as the next owner will squeeze the remaining oil out until it is no longer commercial. Exploration will become more organic whilst carbon emissions will be emphasised in the 'newspeak'. Their 'production declines' will be offset to an extent by the production of the new owners who aren't under the same 'climate' pressure. They may be Indian or Chinese who are more relaxed about these things and may one day reduce their coal consumption. We'll need some local ownership too for strategic reasons.

The analogy between oil and tobacco is compelling. Very difficult for any analyst to promote what is seen (by some) as an antisocial industry. Pretty pointless going on a charm offensive with the weight of popular activism wishing us back to a bucolic past. I'm still very confident that EnQuest will be an excellent investment. Tobacco is and remains an interesting case study.

I think that we'll be judged on an annuity basis. Numbers don't lie and cash generated can be very persuasive.

The world is marching forward to a better yesterday as my blacksmith told me. I'[m not sure that the US, China and India have been listening.

*The market (what there is of one) liked it. BP up 7%.

From Exxon July 31 earnings call:
Amid concern the pandemic has hastened a permanent decline in the fossil fuel sector, Chapman (senior VP) said long-term predictions for global energy growth have not changed. ExxonMobil expects energy demand to grow 25% by 2040, and fossil fuels will be needed to meet it.
"The population will continue to grow, economies will continue to grow," he said. "This relationship between societal progress or human development and energy consumption is absolutely clear.
"In our business, which is a depletion business, it's not just a question of the growth in demand. It's the depletion as well. ... There is a need for hydrocarbons to come into the market and for people to invest in hydrocarbons to meet that energy demand."

Timely reminder that it's a depletion business.

"can there be a case for using EP in tandem with AK to increase water injection for example?"

Dunno, but what a brilliant question. If there's gas to spare then the EP can be powered cheaply too. The climate benefit for reduced carbon emissions is highlighted in the RNS but it is the cost reduction that will count once the accountants get hold of it.

Not sure about that but maybe - https://www.youtube.com/watch?v=rTMxZxI7-SQ

Actually the AK is oversized for current production so this looks pretty much a win/win deal. Bit like the speculative builder with big ambitions but you own the access strip!

Careful what you wish for PRDaynes - https://www.lse.co.uk/rns/XEL/collaboration-agreement-with-statoil-and-enquest-5wceml3sfu91jm5.html

This EnQuest RNS isn't the usual "fluffing" up that company's do in times of weakness or during a PR drive. It goes back years and careful analysis is involved that takes years and is beyond most investor's time horizons. It is worth noting that at the time of the Xcite RNS there was no reciprocal issue of an RNS from EnQuest. I suspect Bentley may never be lifted but you know what they say about "never say never". It is amazing but the solution to growing our oil reserves was on the doorstep.

?Kraken has moderately viscous oil
?78 – 161 cp API 14
?Other heavy oil comparisons:
?Alba 7 cp
?Captain 50-150 cp API 19-21
?Mariner Maureen 67cp - Heimdal 508 cp API 14.2
?Bressay 540 cp API 12.1 – 14.6
?Bentley 1500 cp
?Government of Alberta classification
?“Medium Oil” 1 – 100 cp
?“Heavy Crude Oil” 100 – 10,000 cp
?“Tar Sands & Bitumen” 10,000 – 10 E6 cp
Buzzard API 32.6 crude sulfur level of 1.44
Maureen 1492m API 14.2
Heimdal 1227m API 12.1
300mio ave. plateau production 55,000 bpd

These notes must have meant something to me at one stage. I do remember though that Jim Buckee said it was the "Centipoises" (cp) that count. As usual waiting for somebody knowledgeable to decipher. I get the impression that the Maureen field is massive. If they can move Bentley with 1500 cp Bressay should be a piece of cake. As always it'll be the cost of moving it. We might need to read up on diluents.