Member Info for romaron

Who sadly died at 64. I didn't realise but I owe him a thank you. I have been going to a restaurant the Light House in Wimbledon for many years. The lunchtime menu is a steal both in price and quality. Apparently he lived in Wimbledon and was unhappy with the absence of a decent restaurant so created one. I may even have eaten there at the same time as him. He was extremely rich and I doubt maximising profit was his main aim. I hope the family keep ownership and I'll be sure to report back when it opens again if it remains the same.

They're using 15/04/2022 which is correct but ignores closer inspection. I don't expect that to be the maturity date and I've even heard AB use 2023 (I think on a Davos video).

Hi Dumbly - as long as we're around at maturity it is 100p. I would question your YTM calculation. I'd say it's more like 22%. You can play around with numbers here https://goodcalculators.com/bond-yield-to-maturity-calculator/
The PIK works pretty much the same as interest. If you needed the income you'd have to sell your allocation every 6 months if oil stays below $65

Hi Modestus - If correct this is significant "From what we are hearing on the street, US and Canadian banks are going to be pulling out of the reserved based lending model entirely. Cheap accessible credit for most producers will disappear after 2021. Alternative financing will be needed and given the balance sheet damage sustained during this downturn, most producers will opt to just pay down debt entirely if oil prices rise."
What happens over there will affect us too. However!
With EnQuest there is always a "however". Most things are interconnected and I've never got the exact definition of SFA , the nearest we have to a kinda RBL and the flexibility it gives. I assume that FA means Financial Arrangement but what is the "S"? Special maybe? If so it may be a bespoke deal and relatively unique. It seems to be a bunch of charges on our various assets which at the moment are in a state of flux. A few of us are expecting fresh deals stimulated by opportunities thrown up by the pandemic and demand crash. I'm in favour of growth though I accept others here will say concentrating on repaying debt is a wiser move.
It may well not be possible to raise or renegotiate finance though I suspect if the seller is a major vendor loans will be on offer. This is a field in which EnQuest excel and other sellers will have a gun to their head. It is going to be an interesting few months ahead.

There I was blaming the shalers for the inventory build when I missed the bleedin' obvious on Wed 17.36. From a Reuters article on the 11 June: "Tankers which loaded extra crude in Arabia in late March and early April, at the height of the volume war, are only now discharging the oil into the United States.
As a result, U.S. imports from Saudi Arabia last week were around 7 million barrels higher than the average over the past year, which essentially accounted for all the inventory build."

Mind you the shalers are in a hole that they keep on digging.

This helps. From Feb payment. "£6,014,794 7.00 per cent. Extendable PIK Toggle Notes due 15 April 2022 (the "Additional Notes") (consolidated and forming a single series with the existing £171,851,269 7.00 per cent. Extendable PIK Toggle Notes originally due 15 February 2022, as extended to 15 April 2022 (ISIN: XS0880578728))
Divide one by t'other and you get your 3.50%

Par - if you had 10,000 units you'd get 350 extra (PIK). If you did nothing then 6 months later you'd get 362 extra on 10,350. Little bit of fiddling with the number of days. You can always sell them every 6 months if you chose.
I suspect this doesn't exactly make them fly off the shelf and is exactly why I bought them. There is a lot of ignorance around them and a lot cleaner investments but of course they don't give the return.

Hi Thunder - The maturity unlikely to be 2022. If you go to the RI prospectus you will read this on Page 287.
"Maturity: 15 April 2022, save that the company may, at its absolute discretion, at any time extend the Original Maturity Date to 15 April 2023. In addition, the maturity of the Retail Notes will be automatically extended to 15 October 2023 if the SFA is not repaid or refinanced in full prior to 15 October 2020;"

I think we are looking at October (not April) 2023 as the maturity giving a YTM of around 24%. I doubt we'll repay the SFA in the next 4 months and there appears to be quite a queue forming for refinancing so the timing may not be opportune. Something else makes me think that the RB is not at the top of their "to do list". I am awaiting a response from IR with the latest $HYN price. I used to get it from here: https://www.bourse.lu/listing-bonds-euro-mtf but it seems to have jammed here: 33,048 i % 08/04/2020 12:58:21
It surprised me that the HYN price wasn't to hand but found it reassuring as you can see it isn't pressing and there are far more important issues to be dealt with. It is also shows prudence.
Having said all that the company is taking advantage of these unusual times and cutting out dead wood. A slimmed down EnQuest is unlikely to miss the opportunities that will arise so who knows what will happen to their debt.
They are safer than the equity and pretty much a "no brainer" imo but I am a LTH of both so allow for that in your decision. I'm winning on the RB and underwater on the shares. You might pick up some pointers by checking out the PMO RB which has less than a year to run. As long as the companies remain solvent their bonds are undoubtedly attractive.

Build it and they will come.

FTSE down 250 points today. Probably AB's doing.

Hi Jan - I'm not a day trader so prediction isn't usually my thing but one thing I did get right was filtering Mystic some months ago. I'm getting good at spotting troublemakers only here to be divisive.

I meant great posts on hedging. On the tracking theme you can compare quite easily on this platform:
https://www.londonstockexchange.com/stock/ENQ/enquest-plc/company-page
Over 5 years BP is -23%, RDS -28% and ENQ -64%. PMOand TLW are lower still which proves the old saying that there's always somebody worse off than you.

O/T they brought in "walking football" for those of us of a certain age. Why do some people of a similar age continue to run? I walk regularly but wouldn't consider a jog. A guy I know who was a champion runner has just had a leg amputated due to problems with a knee. I watched the Tour de France when they cycled through London. Whilst waiting I was watching on a screen and started talking to a group of skinny, lycra clad men with reinforced crotches. I commented on the fitness of the riders and one said "but many die young due to the stresses on their bodies". Everything in moderation as Oscar Wilde once said.

Great posts on this lads. Nothing much I can add except the Modestus link at 22.56 is essential reading. The only thing I'll add is that experts around the world have got the pandemic wrong and that has had more impact on demand than any model had factored in. Everything has been speeded up (including the demise of shale) so we may soon see oil on an upward track after half a decade of underperformance. Many will have dropped out of the sector including some ethical funds. They did something similar with tobacco but dividend (and smokers) saved it. Oil has more essential benefits than tobacco that far outweigh its [Oil's] harmful effects.

I tracked BP and RDS over 5 years. I doubt that any oil stock is in positive territory but obviously dividend mitigates.

*mind you I still miss smoking after 21 years. BAT has been good to me.

Thank you L7- you said and explained it better than I did.

Whilst here I was thinking about the misunderstanding that comes out of the IEA/API figures and wonder what E121 thinks. Others welcome to contribute but he follows them most closely.
I think we accept that most shalers are in trouble but they keep pumping. The only ones that can actually shut down are the larger companies who have been here before and have conventional options as well as strong balance sheets. If you're a near bankrupt shaler you either stack and lose the lot or just keep producing. A bit like poorly performing stores (when they were open) keeping the lights on with staff outnumbering customers. You carry on with a mixture of the Micawber philosophy and the fact that many costs are sunk (rent, stock etc.).
So the shalers might be getting $15 a barrel with costs of (say) $30 but that is a mixture of capex spending that's long gone. If you can close your eyes and forget capex never existed you can pretend you're in profit. Cash is coming in and if capital repayments are years away and interest payments months away what else can you do? At the very least you will pay wages and with skilful accountants you really can put lipstick on a pig whilst you wait for the cavalry to arrive (on backs of camels).
What will be the death knell of the weakest shalers is when they fail interest payments and later capital repayments. There are zombie shalers praying for $70 oil but the owners of the bonds and the bank lenders don't share the Micawber theory. Once the DUC wells have gone and the covenants begin to be breached will be the time when the production of shale falls off a cliff.

Thinking about it is it even a hedge? They had to sell and without knowing the details the post infers that it is over by September - not spot but near term. So now armed with hindsight we can say they'd have been lucky to get (say) $41. So on 3.6mio we could have made a potential $36mio dollars ($10 a barrel more).
Judging a company by just one of the moving parts is quite puerile imo. Did KSA and BP lock in the high prices? Actually the shale companies are the best hedgers. Bit irrelevant really as most [shalers] are uneconomic and have been for some time.

Build it and they will come.

Hi Pelle- I read it. Isn't hindsight wonderful. Might explain why Philip Holland left it until this week to buy. We'll be fine. You buy insurance and hope it's a waste of money unless the risk occurs. There was talk of oil at $20 - no buyers, no storage.

Staff discount?

I think it fair to say that Philip Holland knows more about the oil industry and EnQuest than anybody on this message board. I bought around 60k on 18 March at .079545. PH didn't. What happened between then and now to make him buy at close to double the recent low? I don't think the amount is that important as I'm sure has passed the stage of life where making money is all consuming but perhaps you don't look a gift horse in the mouth.

I think you all give too much credence to these soothsayers. Not one of them anticipated the pandemic, KSA Russia spat or the Trump effect. They all play catch up with events and even then make incorrect forecasts. I enjoy their balance sheet and debt research because all serious investors follow the same but the conclusions are subjective. Most are cleverer than me but it's also a bit like learning how to be a footballer from a book when it comes to breaking away from statistics.
There are probably certain exams you can take to be an analyst but most of them learn on the job and actually come through an apprenticeship type of training and learn from older and more experienced analysts (like journalists).
For several years I used to get in the same carriage as the Godfather of retail. We never discussed work (6.30 a.m.) and I was basically unaware of what he did. I still meet him occasionally and ask the odd question if appropriate but the answers always have caveats attached. He went to Cambridge and qualified as an accountant. His football knowledge is remarkable.

Hi Jan - Years ago we had a Swiss guy running the New York office and I was a visitor. He also headed the dollar/mark desk and his relationship with UBS was, let's say, "special". He had a big BUY order one day so everybody took what was available. It was chaos for a short while when he called a close. One guy a little bit slower and more timid belatedly asked him to add another $10mio to the total.
He replied in his broken English"the man, he blow the whistle, the train she goes". The poor guy had to wriggle out of the trade with his customer. Something similar has happened today and some are on the platform watching a train disappearing into the distance.
I hold more now than I did in March so enjoying the rise. The UT this morning was 14.50 (spooky). As long as Jeffery1979 doesn't enter the market we should be OK.

Build it and they will come.

Hi E - Your knowledge and tracking of shale far exceeds mine so I accept what you say. The last para. though is not about shale.
Derisked to the likes of TLW and PMO? You did say in the "market's eyes" in mitigation.
You know I'm pretty useless at reading balance sheets but I don't think the 2 companies you mention are something to aspire to. Even after Friday PMO is a mess. There is an article in The Times today on PMO that even I can pull apart but the "market likes it". BTW their debt extension still has to be agreed, there is a RI coming for $180 mio and the delay of paying BP $115mio is contingent on oil being above $55. What that says to me is that Andrew & Shearwater are unprofitable to BP under $55 so giving PMO a holiday on part payment makes sod all difference to them. ARCM have made their killing and can unwind at their leisure. BP also shot up and that was probably more to do with OPEC but maybe there was just a little bit of fizz in that they'd got rid of a problem?
As for TLW they were called liars back in 2013 and not much seems to have changed.
You do though raise an interesting point in that both TLW and PMO have a bigger and more volatile following than us. That is something I'm not in a hurry to achieve.
Out of interest you can chart the performance of equity of ENQ, PMOand TLW here:
https://www.londonstockexchange.com/stock/ENQ/enquest-plc/company-page
All 3 are below par but we are ahead. We are down -27%, PMO- 47% and TLW-87% Perhaps Therapist can make sense of it?

We aren't flavour of the month and AB will never court popularity but our time is coming.

Build it and they will come.