Member Info for romaron

If you hear my accent squif you'll be in no doubt. I am definitely at the barrow-boy end. My family came from here and I worked at Norton Folgate for a while:
http://blog.gorozen.com/blog/adam-rozencwajg-talks-oil-markets-on-financial-sense-podcast-may-2020

*you mentioned Bob Davenport. I also value him. I was musing whether there is a triumvirate of executive control as with INEOS and it's AB, JS and BD.

sorry Mac - the spread for oil should be 57-107 so if we get back to the average we should settle at around $82. Seems outrageous now but in a years time who's to say?

Hi Mac - it was on the 19th. Here is the link:
http://blog.gorozen.com/blog/adam-rozencwajg-talks-oil-markets-on-financial-sense-podcast-may-2020

listen from 21.30.

Modestus finds a lot of interesting stuff. The guy also said in the podcast that oil has never been cheaper in relation to gold. Gold have been around forever but the tracking only goes back 160 years. That's good enough for me. Some on here over complicate the investing scenario. I much prefer the simple stuff. I traded for many years in the City and can assure you the requirements and skills are often more to the barrow-boy end of the scale than to the PhD end (neither anticipated Covid).
I think you can guess what end of the scale I was at. As for accountants - don't get me started!
If the ratio is a good guide then oil should currently be around $57.

Six trades so far. Might not sound busy to most but it doesn't even trade most days. Bond holdrs are more cautious and have a lower risk threshold. They don't really day trade. They like EnQuest at this level. Still plenty of scope imo. Different dates I know but choosing between EnQuest RB and PMO RB is a no-brainer imo.

What is the intrinsic value of oil? The answer is that it is impossible to establish just as it is impossible to value copper, Amazon or M&S. What we mostly do is play around and expect their prices to revert to the mean whilst trying our best to select those companies with a promising future. Warren Buffet basically made his money this way. Then you have to try and anticipate trends and read accounts with special attention to debt and cash flow. The simpler the better.
Finally there is the management and I gave few reservations about EnQuest on that score. We didn't expect much today other than a steady and experienced hand on the tiller. Today's update reinforced that imo. This is a management in control. Not the creditors or a group of activist shareholders.
A few days ago Modestus posted a link that gave another indicator that I particularly liked. It was one ounce of gold to the number of barrels of oil. I think that is important with Covid still around. The propensity to prefer cash is still high and if you think that way then nothing really beats gold.
The ratio they used was 10:30 and it went back about 150 years. At 10 oil is through the roof (sell signal) and at 30 it is time to fill your boots (buy). Today the ratio is around 48.

*I'm thinking that holidays will restrict trading in EnQuest shares especially as Sweden is shut. I don't know but I imagine Swedish shareholders will have to wait until tomorrow? I remember a neighbour of mine who traded in oil for Lehman's had to travel to Scandinavia (Norway from memory) to take stockbroker exams to be able to trade in their stocks. They are interconnected and them being shut today cannot help any rise today. I doubt it's that simple for them to trade the London market.

Hi hitman - my neighbour's decorator used a cherry picker and halved the cost.

Although it's only 6 weeks since the last update the world has seen a lot of changes in those weeks and the oil industry has had some unprecedented events. There is little that a company can do other than ride the punches until the worst is over. It does look promising to me but then I only speak for the glass half full team.
I do have sympathy for the day traders as with betting offices shut they are even more desperate than usual. EnQuest just cannot replace the buzz they get from (say) the 3.30 at Pontefract. I'm saddened that EnQuest cannot offer the thrills that an investment in a David Lenigas company offers or PMO with its bumbling CEO so if any are reading this I suggest there are better toys elsewhere.
Did anyone else notice the unusual trade on the Retail Bond today?
13:29:59 20-May-2020 46.75 GBP 42,850 20,032.38 Off-book ACTX XOFF
It looks like either a broker having a punt or an extra layer of anonymity. I'm not overly suspicious but with the thinness of the RB it is probably significant. Maybe the day traders can't play but there is an undercurrent of people dealing that by and large know what they're doing.

Build it and they will come.

For me the best action today was the buying of the Retail Bond (RB). There were a dozen trades which is more than is traded most months. You cannot day trade the RB due to illiquidity and spread and dare I say it; the bond traders are more cerebral. They are unarguably more cautious. This is a sea change. The EnQuest RB is now investible to braver bond investors. The price is still a steal if you compare it to the PMO RB which is inflated by a gas controlled from Hongkong.

OIL (ENERGY) IS BACK!!!!
Donald J. Trump
@realDonaldTrump

Don't know about the rest of you but I find him just as irritating as BTFATH.

"Brent looking strong, could the market and everyone have underestimated the "come-back" ?"

Not everyone Jan. It's early days but the sentiment seems to be turning. The Retail Bond seems to be out of the ICU too. I bought some of those puppies on 25 March at 31.87.

Hi L7 - regarding zombie companies being helped by the government. In the UK we are if anything pragmatic and expedient. The opportunity to get rid of struggling companies and restructure (sack people usually) will be irresistible under the cover of the pandemic. These things don't happen every year and they won't let this once in a lifetime opportunity pass by imo. But that wasn't the main import of my thinking. I'd rather go along with your idea of them thinking they're taking action when their impact has been irrelevant or at best marginal. New York and London are massive cities and will always behave differently to the surrounding populations. What has happened is that we've compressed time. Many of those who fell to Covid were in the waiting room anyway.
I'm on a medical trial/study for dementia with Imperial College which I volunteered for (Chariot). I'm a sucker for freebies and got an MRI brain scan for free; plus they have to tell me if they find anything. I'm also doing a lung function for another trial with additional testing so I've got 2 organs pretty well covered. I was asked on 11 May if I'd be prepared to assist with an investigation into Covid. I am not kidding myself that I was chosen at random but because I'm more likely than most (age) to have a bad reaction to the Virus. We're all gonna go with something but I'm with you on watching your diet and exercising. At the moment I'm more a contributor to the health system but the time will come when I'll need them, that's for sure.
We don't know the immediate future but I feel it [Covid] struck a mortal blow to many marginal shale companies and they were the parasites feeding off subsidies and another (conventional oil) industry. If we're lucky and things go well the oil industry is set for a highly profitable future. I'm betting that Covid actually helped the company by having a disproportionate impact on the weak and old oil reserves. It destroyed a chunk of production and left the world with little appetite for a return to shale which has shown its limitations. I'm looking forward to a healthy future for EnQuest.

... in the next few weeks the Virus goes into steep decline? After indulging in a great deal of breast beating the authorities agree that the pandemic is over and it is time to go back to normal. Most of those who died would have gone sooner or later anyway and the care system now has excess capacity whilst hospitals have no bed shortage. Care homes have new preventative systems installed (closing of barn door) whilst test kits are available in Boots. The NHS officially replaces the Church of England as the official religion and larger churches with parking are turned into A&E centres leaving hospitals to care for the chronically sick.
The short lived recession has cleared industries of zombie uneconomic companies and those remaining reinstate dividends and start hiring. There have been casualties but the recession lasted barely two quarters.

H Beerbull, that doesn't seem an excessive number to me and we don't really know if they had an underlying condition. In today's Sunday Times Luke Johnson states that "If you are under 60 and do not suffer from an existing illness, the likelihood of your dying from Covid-19 is very slim - lower than being drowned in fact. So it makes no sense for most of the population to be locked up, terrified by relentless scare stories and government propaganda."
If you read about the plagues in the Middle Ages the death toll was incredible and ranged from 10-50 percent. This is nothing like that. We have become neurotic scaredy-cats with an obsession towards "safety".
if more people switch to the Luke Johnson view then we may see a speedier recovery.

There was a fantastic BBC programme earlier this week regarding the Virus which concerned the Royal Free London NHS Trust. This covers the hospitals in my borough and adjacent ones covering around a million patients.
Statistics can be manipulated but I can narrow it down to numbers that directly affect me and make some sense.
https://news.sky.com/story/coronavirus-how-many-people-have-died-in-your-area-covid-19-deaths-in-england-mapped-11969852
So far in my area there have been 473 Covid deaths out of a million. I know it's not over but the risk to me is slight if the disease is close to being defeated. Yes, we could have handled it better but we seem to have arrived at the same place. I'm in the higher risk group because of age but am fairly relaxed about it. If I was younger I would begin to question what all the fuss was about. I'm not being provocative just presenting another view.

*This speech by a nurse of 50 years is Churchillian: https://metro.co.uk/2020/05/12/nurse-50-years-gives-emotional-speech-thanks-nhs-colleagues-saving-life-coronavirus-12691255/

Hi Pelle, I imagine we'll get an update early on the day. I did consider asking a question but they're so skilled in deflection and hiding behind "commercial sensitivity" that I decided not to bother. I don't mean it as a criticism but an AGM is lower on the scale than (say) final figures but you do get a chance to meet the management and fellow investors which sadly won't happen this year. I'm hoping we'll be able to listen in to a kinda webcast for an update and hopefully a QA at the end.
I did consider registering (deadline 18 May for voting, 19 May for questions) but there are too many hoops for me. I agree about the the formalities. Most resolutions go through in the high 90 percents.

What's the feeling in Sweden regarding the Virus. Is it considered in the past? Statistically the risk is getting smaller and smaller in London. The Swedes went out on a limb but have done as well if not better than the UK, Spain, US, Italy.

The Virus has effectively pushed the fast forward button>>>>> on oil and sped up the demise of uneconomic shale. There is too much analysis about but I did read one where the author said most shale was uninvestible. Rather than a death of a thousand cuts the credit market can hide behind the guillotine that was effectively dropped. Like September 11 the Virus gives a smokescreen to creditors pulling the plug on zombie companies. A good time to bury bad news along with problem loans. It will also impact conventional oil with even super-majors cutting dividends. They will take the opportunity to divest of problems behind the excuse of the Virus and blame it on something/somebody else. There is a lot of scape in this goat.
Our situation will be a bit clearer on Thursday.

Hi spindok - do you live in Northern Ireland? Was the "live different worlds" rhetorical in that I live in London and you live in NI? Leaving that aside I am likely no more informed than you or anybody else on the impact of CV but the wartime analogy does help explain one's opinion. I was born when rationing was still in place (1949) and by and large the British do as they're told. The blackout was followed no doubt by plenty of late night revelling when it was over. We are unfortunately in the black-out phase. The real question is how long will it last. I'm going for a short time for various reasons. China is coming back. Sweden went all-in and whether it was reckless or not will be argued over for years. It does though give room/excuse for others to play with their [Swedish} model. The US has a remarkable tolerance to unnecessary deaths (gun laws) and a callous disregard for minorities that are taking the brunt of CV. It does though mean they are prepared to take heavier casualties as economic achievement is valued more highly there than elsewhere.
People hark back to the "Spanish flu" which had plenty of mitigation and it is worth mentioning that the first vaccine for flu wasn't administered to the public until 1945/46. I nearly died from measles as a child yet it is now a simple childhood jab meaning it is no longer a threat. The elephant in the room is that CV the elderly and those with underlying conditions. Nature likes to remove them and whilst it's OK to say that in the past "hospital matrons quite welcomed a bout of pneumonia to free up bed space in their wards" to say something similar about CV attracts vicious opprobrium and could cost you your job.
Using the war analogy, once peace is declared economies fly. That's what I'm hoping for. At the moment we're penguins on a melting ice floe being circled by killer-whales. We're shuffling forward and tipping the outer ones in. Once they stop getting eaten we can all jump in. The herd/flock instinct is as common with human beings as it is with animals.

*America is the world's most profligate spender on health care. Spending two and a half times the OECD average yet the average American dies 1.7 years earlier. But that isn't as surprising as the fact that around one quarter of America's spending on Medicare, or health care for the elderly, is spent during the last six months of life alone. It's a crazy world.

The tweets of SCROTUS seem to be losing their effect - "Crude Oil prices going up as Saudi Arabia cuts production levels. Our great Energy Companies, with millions of JOBS, are starting to look very good again. At the same time, gasoline prices at record lows (like a big Tax Cut). The BEST of all Worlds. “Transition To Greatness”
2:27 PM · May 12, 2020
I was hoping for better news from PMO today but it weighs heavy on UK oil sentiment. RKH is obviously affected as well. The good news is that the current travails of PMO exemplify why EnQuest is the better investment. The lack of posts on here is another good sign.

https://www.youtube.com/watch?v=wEBlaMOmKV4

Good post HMH - Maybe the title should have been 20/20 with your vision and I don't disagree. Whether by luck or good judgement we restructured at the right time. Thanks for simplifying the FCF models so that the likes of me can understand them. Now all we have to do is wait for demand return. It looks like supply has stopped defying gravity.

Something else to throw in for the Brain's Trust to peruse. Reserve Base lending (RBL). I wonder whether down the road our reserves will be deemed good enough to attract RBL. We haven't heard a lot about it from AB/JS imo and that may be because our reserves weren't suitable enough and the one that was (Kraken) had already been mortgaged to Och-Ziff for 5 years (2023). I know it was foe 15% of the field but it would make the field encumbered and might put off other lenders; then there is the point that currently we're paying off debt not looking to increase it. I don't know but I imagine end of life fields aren't what RBL lenders are looking for. RBL loans are considered among the safest and that doesn't really apply to an ageing, wheezing well. I suggest we are looking increasingly attractive to both lenders and Moody's.
We weren't in the best financial health at the time of the OZ loan and the terms would have favoured OZ imo. Every month moving forward reduces the amount owed to OZ (now Sculptor [name change]) and it may lead to a change to RBL financing at the next round which the Credit rating companies consider a seal of approval.