Member Info for romaron

webcast: excellent pricing for Kraken and Catcher crude.

E - We may not have downgraded our reserves but the market did.
Webcast: Cairn have fully reversed the impairment. Kraken produced almost 40,000 bopd for first 2m 2020. Worcester are development moved from 2C to 2P

It knocked the EnQuest price when they announced the impairment so I make hitman right. All things being equal we should see a rise but these are unusual times. Listening to the CNE webcast. Apparently hardly anyone has turned up. CV or a need to be in the office?

60p - you may be right right but not if you played that trade in PMO and the EnQuest RB has proved a better bet than the stock to date. Don't forget also that in the case of administration the bond holders come before equity holders. I've got a holding in the EnQuest Retail Bond and think it's a better bet than the PMO RB. A kinda arbitrage that (I hope) works for me. The PMO RB is not behaving normally whilst the EnQuest RB is friendless at the moment. My equity holding to bond is about 10:1. I hope you're right and we see 40p come Christmas. At the moment the oil sector resembles an economic Chernobyl.

Be Lucky

I imagine Moody's will think it significant.

I don't think this has been posted here. Some commentary about TLW, CNE and PMO but strangely nothing about us:

https://ftalphaville.ft.com/2020/03/09/1583743334000/Markets-Now---LIVE---Monday-9th-March-2020/

A bit more colour. The parasitical behaviour of shale on conventional is because in the long run conventional is, say, 85 percent of the world's oil production. Parasites usually feed off a larger host and the aim is usually not to kill the host. We know there are different costs of extraction but even with Saudi Arabia the book price may be as low as $9 but the real cost is far higher. So conventional has a bottom line that really works well for shale. OPEC plus aren't happy that shale is basically an opportunistic harvesting/industrial process that actually undermines and weakens the host it feeds off. In fact you could make a good argument that shale is a threat to the environment and green movement. To discourage the use of fossil fuels and make renewables a viable economic alternative you need HIGHER oil prices; shale prevents this happening. You can see why the US is against the Paris Accord. Another problem is that even if the US Government wanted to do the same and curb shale production they have anti-Trust laws which make joining a cartel illegal. The US however doesn't have many inhibitions in using sanctions against countries that threaten its interests. By suppressing Venezuela and Iran it probably thinks its done its bit to suppress oil production.
It left one option which OPEC have decided to take and I doubt they'll end it so quickly this time. Conventional producers have plans that extend much further than shale and a well run company has to manage its debt just as well as its production. Whisper it quietly but OPEC won't shed any tears for conventional oil companies that go bust either.

Modestus - I've actually just had an epiphany. The link you found explains shale in far simpler terms. Because of the short time spans in extracting shale oil they can almost entirely remove the risk of the oil price moving. It may be an ON/OFF process but if you retain flexibility you can lock in profits. With conventional you cannot really do anything about production more than 1 year out. Kraken is 20 years plus and after the first year everything else is dependent on the POO. With shale you take your profits regularly and as long as they're above fixed costs it's practically guaranteed. I think OPEC will run this overproduction longer this time to ensure the shalers don't flick the switch back to ON.
My background is forward foreign exchange swaps and they are very thin and wide after 1 year. What shale does is almost a classic arbitrage where all risks are covered. An alternative that OPEC has is to cut production and if the shalers switch to ON too quickly they will also turn their tap ON. To gain ascendancy OPEC needs to drive the message home by squeezing their pips harder and longer this time. I expect Putin has given the nod on this.
You'll notice on the link you provided their swaps only appear to go out to Q4 2020. I doubt there are many (if any) for Q1 2021. If OPEC wished to crush shale once and for all they'd keep producing the rest of the year. They won't because the US also has some cards to play but with the present administration's ineptness it isn't that strong. Trump has managed to P off China, Venezuela, Iran, Russia, Iraq, Syria and Uncle Tom Cobley oil and gas too.
I'm feeling a lot happier.

"We have flexibility on all of our rig and completion crew contracts" their form of zero hour contracts? Still highly flexible. Rather strange that in this time of crisis the Unite union are going ahead with the strike at SVT https://www.bbc.co.uk/news/uk-scotland-scotland-business-51801380

Probablyt= only a coincidence and means little but the market cap of Enq, PMO and TLW are practically identical.

Bit more on Hong Kong. Most live in flats and the block our friends live in has rubbish removed twice a day and hourly sprays of disinfectant by the cleaners especially door handles and lift buttons. Most people are staying in and keeping excursions to a minimum. I just can't see it working like that in the UK. Enfield collects rubbish every fortnight now (food waste weekly still). Easier to herd cats.

Can Trump resist commenting?

https://ftalphaville.ft.com/2020/03/09/1583751996000/Is-this-the-worst-M-A-deal-of-the-2010s-/

E 12.45 - PMO continues to confuse me. Is there or isn't there a RI due? Their bonds have a convertible element and are controlled by ARCM. Today our 3 year RB had a yield of over 30 percent. PMO's has just over a year to run and is yielding c.20 percent. That's plain wrong to me. PMO is under a bigger threat than we are and when companies are in trouble the debt is always higher at the near end. To me they are the wrong way round and I'm suspicious that it is because of the ARCM short against the bond. They hold the bond and short the stock whilst the convertible element gives them protection on the upside. I'm not sure if PMO is rated anywhere (not by Moody's anyway) and well done to ARCM for spotting the weaker prey in the herd. Because of their size I expect PMO to survive but it might be a forced merger/fire sale. ARCM haven't really cut their short so think it may continue going lower. Their profit will be at the expense of the shareholders.
Although we aren't affected it does cast a pall over us.

Hi E - thanks. Not that pertinent but we have two doctor friends in Hong Kong. Today the wife told my wife to stock up on toilet rolls, soap etc.. They had a run on them in Hong Kong about 3-4 weeks ago but things are now back to normal in the supermarkets. She appears to be as much in the dark as us saying that there hadn't been any new cases for a couple of weeks but now some concerns over some vacationers returned from Japan and the odd one airlifted to/from China. The restaurants are deserted. I mention it because I don't completely trust the Chinese news but it appears they are now truthful. In Hong Kong schools been closed 2 months and unlikely to go back until after Easter, 80% compliance with masks and entering office blocks you're likely to have your temperature taken. So using them as a measure CV is c.4 months.

I'll jet wash tomorrow. We could have another flurry this afternoon. It's my experience that the US is far more excitable than the UK so there could be some wild swings. I think we'll be out of it but expect some wisdom from Trump that could do anything. He isn't predictable other than he will lie and move the narrative to whichever promotes his brand.

Last post made me think. Why has BP dropped lower than Shell? There's an over 6% gap. My immediate thought is that there are more retail investors in BP and they tend to be behind the curve and paying to much attention to media headlines and their hyperbole.

Hi E 09.55 - This week might be too soon. If you're contractually committed the penalty might mean you go ahead anyway. I've long thought that a lot of shale is dead men walking but when you're using other people's money you might as well carry on and keep contractors sweet and there is cash flow to pay wages. Problem is none will go back to the shareholders and the bond holders may only get interest and whatever is sold on when they go into administration. I'm strangely calm today. We've done better than BP today.

Topped up my RB. Bought 27,007 at 55.50. I fancied them a tad more than the shares as mandated sells likely and forced too low.

Fessed up to my wife. She doesn't follow the markets and replied "Oh, stop going on about it! It'll come back". She's far more interested in her 90 year old mother and my daughter looking peaky (hangover) after a heavy travel and work schedule. I really should jet wash the paving but this is more exciting.