Member Info for romaron

L7 - good post. I wonder if there is any analyst at work to do the rerate? I spent a morning with a retail analyst who is down to 3 days a week and quite optimistic only because Bob Diamond and Rich Ricci have such good contacts. Unless it's in-house there is next to no market for analysis. I phoned EnQuest today on another matter and the answer phone tells you to email. The analysts wouldn't have been able to glean much I fear. My next door neighbour works for TP ICAP and works from home. He doesn't pretend that things are anywhere near normal. I remember that Xcite were getting down to (from memory) $35 a barrel on Bentley whilst EnQuest were $50 on Kraken c.2015. I had a conversation with Neil McCulloch at the time and he exhibited a level of incredulity. However, these numbers are history and there is a much more pragmatic approach and acceptance of the reality. I believe Bressay has been costed to death and there'll be no over budget mistakes that can bedevil a new project.
It is possible that EnQuest's flexibility and expertise make them an ideal fit. Chrysaor are also in Bressay and bought in from Shell with the help of a vendor loan. I don't try and double think because there are several reasons why EnQuest would be invited into Bressay and leave it up to the experts. One thing the analyst did say was that buying into older brands/companies to get quick uplifted EBITDA was becoming hackneyed so I like it that Bressay is a new project.
The majors like to have partners on fields and it not only lowers the risk it brings in new ideas and methods (INEOS?). I don't for one minute think Equinor are turning their back on the NS and good profits. Tokenism and hypocrisy from the majors is what I'd do too.
I remember once doing a comparison between Brunei and EnQuest. As usual it was completely unscientific but I was amazed at the potential profit when the stars align in oil. I'll start at the lower end of the 10:30 ratio against an ounce of gold and expect oil to be above $65 in early 2021.

We are certainly living in interesting times. A curse or time of creativity. I don't know.

I suppose you are responding to this. P.280 Affirmative covenant: compliance with the agreed hedging policy. Anyway you got there in the end. The Test reference date was from another investor I was talking to in a 5 way conversation. The message board has its limitations and disruptors so I develop alternative sources. I was actually being corrected on a misreading I made of something in the prospectus. I don't profess to know it all but spend more time than most on the calibre of the management. I wasn't worried in the slightest about the test. Any problems on that score would have necessitated a RNS.

I'm not looking for perfection and the swap at $31 was in the midst of a meltdown. I have seen some crazy things happen during financial crises. The negative price in WTI was unexpected and there was some end of the world prognostications at the time. Things like that are uncommon but not unknown in FX. I did Lira for 23 years and traps laid by Central banks created many similar events. Not pleasant but other oil companies have existential problems to contend with.

I found this whilst going back over Xcite. It shows how things have changed.

In 2014 Tom Dreyer VP of Exploration was asked about Statoil’s ambitions in the North Sea.
On being asked about their intentions and the purchase of the Xcite EWT data replied:

"Our business had investigated Bentley and Kraken – fields close to Bressay several times. However we had considered these two assets to be of the second division in terms of attractiveness as assets. When this EWT data was revealed detailing above average production it was Statoil’s duty to investigate.
Following extended conversations with DECC, the business was able to hold onto the license, take into consideration the implications of the test result and will be able to deliver a well development plan again at a later date."

So have we moved up a division with Bressay or is it only the play-offs?

Blimey chilting you are a bundle of fun. They aren't going to start drilling next week and this isn't similar to Magnus or the PMO/BP deal. With a partner of the likes of Equinor it is likely to stand on its own legs and by the time we have to pay serious capex we should be close to being debt free anyway.
Xcite couldn't raise the finance to proceed with Bentley but had lifted oil and sold it to BP. They also received $15mio from Statoil for data. I only mention this because the Bentley field had the heaviest oil of the lot. With the experience and technological advances it appears the time is right to develop another heavy oil field. Remember Jim Buckee said that Kraken oil was like champagne compared to the tar sands of Canada.
L7 - 11.36 The Test Reference date is a covenant compliance and I only threw it in because we obviously passed it otherwise there'd have to be a RNS. It is a coincidence that they released the Bressay news on the same day I suppose. Obsession with the share price and hedging misses the fact that the company continues to do what it was set up for.

I know something about Xcite who went bust and indirectly is my reason for being here. I went to an EnQuest AGM to actually ask questions about Xcite. I spoke to Nigel Hares (co-founder EnQuest) who said "we looked at Xcite but passed". Equinor [Statoil then] had 2 fields, Mariner and Bressay. Mariner is in production and clearly conditions mean that information and experience gleaned from Mariner and Kraken means the field is heading towards development.
What is often missed is that due to covenants (associated to the debt) EnQuest can only explore and make appraisals confined to existing producing assets. The link to Kraken may be tenuous but it means we have finally broken free and with a Major as a partner. Today is also the "Test reference date" [see P.282 prospectus] (thanks E121) on our financial ratios. We wouldn't have made the agreement without lender support. It all looks tickety-boo and who knows, we might have a home for EnQuest Producer?

Build it and they will come.

Platt's tonight "Iraq to import power from Turkey, Kurdish company to address severe shortages"

I doubt it's to do with the import of Teslas. If they've any electricity to spare Lebanon and Syria are in the market

Hi Therapist - I concur with your 00.17 sentiments and proportionately we probably have more of these types of posts because the turnover of stocks is so dire. We can almost guarantee the poster works from home and it is another sign of desperation. Those with an interest in increasing trading turnover regardless of direction are flogging a dead horse. It isn't scientific but the amount of AT's are down and the UT's a larger amount of daily trades imo. Most days are like the run up to Christmas and if you rely on movement then it is as active as a street corner hooker during lockdown. The open interest is down 21% since April whilst net long are up 24% and that indicates investors, not speculators. Volume is rubbish. The initial enthusiasm of day traders enhanced by newbies when the racing and football betting was unavailable soon evaporated as the 90 day rule came into play (90 per cent. lose 90% of their money in 90 days).
That day in April when crude went negative cleared a lot away and were caught by inexperience. Financial melt downs happen regularly and even fat fingers have their part to pay. I worked through many in FX and euro sterling overnight in thousands of per cents and central bank attacks on speculators were all part of the tapestry.
We have to grin and bear it I'm afraid but hopefully we are one of the survivors and I might have some good news in a day or so.

*I think the UT's are significant. In a dead market you can't get anything done and you stand a better chance using the auction characteristics of the closing trades. There is NOTHING really moving prices for the day traders and we all know they post like crazy when something stirs. They'll be back one day and of course you have the oddballs with personality traits that are attracted to message boards for the abuse they receive. It takes all sorts.
Yesterday our UT represented a quarter or a third (from memory) and BP something like a tenth. There is always some turnover as there is in domestic property (3 D's) but it is the exponential speculation that really breaks log jams. I don't follow trading patterns religiously so this was just a look-in.

Build it and they will come

True chilting and we don't know all the intricacies of oil trading or the restrictions if you're a producer. I've never thought that the answer to Enquest's success is to play at being a day trader. Then there is the financial/credit rating. Shell and BP play at the top tables and we just cannot afford the risk of trying to be "high rollers". It's like an indebted person approaching his bank for a loan and the advisor suggesting "have you ever thought of spread betting?"
I have confidence that EnQuest take it seriously and it won't be down to luck that we've survived. We will have cut our coat according to the cloth.
Even Taleb got it wrong. It is arguable whether the pandemic is a 'black swan' because they are kinda expected but hi follow up book , Antifragile, suggested that the safest job is a taxi-driver so maybe Covid is a 'black swan'.

'Fraid that's unlikely nick. Shell expected to announce a record quarterly loss next week and if anything they're leaning towards divesting smaller/older fields. There'll be one off impairments (kitchen sink time) and you can expect something similar from BP the following week with possible dividend cuts.
Having said that I did like this about Centrica and their Direct Energy sale. "Analysts welcomed the sale. Jefferies said that the price was "at least £1bn (35%) above our valuation", while analysts st Barclays said that it was part of making Centrica "investable" again." I wonder how they're getting on with divesting Spirit?
The gains made from their trading arms mitigates but will never be enough to save the day and it was a unique situation. We don't have the scale to participate or the funds to hire tankers for contango plays. Best to stick to what it says on the tin.
Testing times.

Hi L7 - I just thought it significant that Vitol was increasing their oil/gas production. Probably not worth clogging the board with speculation but they aren't as prey to the price of oil and will make money through trading whichever direction it moves. It does mean though that the direction and future price and movement of energy is important to them and they have backed their view with money. Whilst many company's are pulling their horns in they see this as a time of opportunity. They are proven and successful experts in oil.
Our minds obviously work differently. I think it quite significant that Vitol are sticking their toe in the water and they have the resources to grow quickly. Vitol is HUGE with a revenue of $231 bn in 2018 and a valuation of somewhere between $13-$20bn. Its management is fiercely independent and private. They are adamant that public equity markets force companies to become too focused on short term growth. Without being controversial I don't consider AB typical of public oil company CEO's. We are public but have some of the characteristics of Vitol or Ineos (skin in the game). It encourages some investors and discourages others. That's all I was saying.

Employee Benefit Trust - something around 5 per cent and options of course.

The reduction in posts and share turnover is to be welcomed. Posting activity without a major event or news release indicates weakness imo. Last weekend we were in line with BP for the number of postings and the hot money (for now) seems to have moved to other stocks where their shareholders are willing the price to rise or arguing with the makebates who are attracted by the volatility and pain (see: HUR, PMO, RKH, TLW) LTH's of these stocks are often defending the indefensible. We've been there and hopefully it is now in the past and our posting numbers indicate we are now "boring" and back on track.
This encouraged me: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/072020-vitol-creates-upstream-unit-to-target-mature-us-shale-oil-gas-assets?mkt_tok=eyjpijoit1dnevl6txlnvghotm1nmiisinqioiiwzknkc1vsk3nqsu9cl3bsaelwwmlivjvurdrwzss1ymv5btfoselmmerrzdnmzuthzxb6tgzzwxn2ejhrvw9wxc9crythd0zanvcretv6ug***3didthvnje4rw42qkjsmfwvnwlrm1dmmgxsvjmrtdlucnzdvetmdw5hbzm3akjibsj9
I don't think anyone has accused Vitol of not being smart and they have decided that selected shale sites are now investible. The fact that it says it is after "mature" sites suggests (to me) that they are buying distressed companies and centering on the Permian. We know that a mature shale play is only a few years and mustn't be confused with the old clapped out conventional fields. In fact a mature shale field may be a misnomer but infrastructure remains. There is obviously a strategy at play here and Vitol have the luxury of being a secretive private company that doesn't suffer from the leverage that disgruntled shareholders can apply to public companies. I've said before that the large influential holding of AB and the EBT cannot be ignored and will no doubt have some investors who see it as a barrier to investing. We are not Amigo but a large individual holding usually suggests a certain amount of autocracy in the running of a company.
I'm with Vitol expecting a higher oil price and they're better at forecasting than me.

Build it and they will come.

Escalation of the Libyan conflict. Potential Egypt/Turkey clash. Turkey has NATO backing. Egypt has Russian backing.

Gold broke $1,800 an ounce for the first time in 9 years yesterday. So oil should now be in the range $60 - $180. Sounds far fetched but so was the threat of a pandemic 7 months ago.

Perhaps your canoe needs a power boost. Have you thought of getting Mrs S a new paddle? It might get you out of the creek.

That isn't that uncommon with boats.

McDaniel have updated their price forecasts from July 1 2020. I have found them pretty reliable and would even go as far to say that their stabs in the dark are better than anyone on here can manage.
https://mcdan.com/
2020 (6 mos) 43.00
2021 48.96
2022 55.14
2023 58.90
2024 60.07 -2034 73.23

Yeah right. Join today and make an incendiary post. Straight to filter.

Hi Tom - maybe I should caveat that the AB holding might put others off as they may consider it gives him too much control. I listened to the last analysts presentation of RRE and it threw up other differences.
RRE is main market - we are premium listed and held to greater transparency and governance.
They have a tax paid history that means for every £10 of decomm they get back a rebate of between £4 and £6 from HMRC - we are in deficit but maybe worth remembering for Malaysia?
Lot of emphasis on DSA and surety bonds- we've moved away from that market and our commitment is relatively small.
Malcy attended - that's usually enough for me to lose interest.

I get the feeling that RRE was never going to set the world alight but it would have been a better investment than EnQuest. I think it is a poor comparison but it is all we have at this time. We are pretty bespoke in many ways and we may get better indicators from PMO (another Premium listing) when they sort out their pending debt maturities.

You may be comparing concrete to silk for all I know but I think it's a great deal for RRE judging from the chart of their stock price. There has been a collapse in the price of oil and Covid so to come out of that intact speaks volumes. I think there are other factors to consider as well.
RRE is 53/47 oil/gas and doesn't have tax credits that I know of. It appears to me that as long as you don't drop a ricket and survive the cycle oil production is highly profitable. There is an element of buying tired assets and making a quick turn on EBITDA out of them because the majors usually leave a little meat on the bone for the next owner. However, this is a safety first approach in some ways and you cannot expect the multi-baggers of an exploration success or a capex heavy project. We have survived Alma/Galia and we lost a fortune. That set us back for sure but aginst that you have Kraken and Magnus succeeding in difficult times.
Good luck with trying to extract markers from this deal but I have a feeling that this was capitulation by RRE because they'd taken it as far as they could. They have no debt and that could be a problem. Raising new finance in this market could prove near impossible and achieving a decent credit rating might be harder than most people imagine. Sometimes not having a credit history can work against you.
I think another point missed is that a third of the equity belongs to the executive and is another limiter for raising finance. I don't think the near 15% owned in house by EnQuest is always appreciated.
Nothing here has changed my view of EnQuest but it's always nice to see the NS still has a pulse.