Member Info for romaron

That was probably the debt holders forcing them to hedge. We have elements of that with the Oz loan and Mercuria.` If anything it's the lenders deserve credit for the hedge. They are the ones controlling shale now.

Watching this interview with Scaramucci: https://www.youtube.com/watch?v=JoD39KRTv9E
and he comments on the US market earnings which he said had dropped from 20's to 17.5 and could hit 14 which would be a further 15% drop. Made me consider our earnings which LSE says are 2.50 whilst doubling the 6m figure gives 3.50.
To believe some of the projections made here you'd have to assume we'll be giving the stuff away for free. Some may scoff but as our financial position improves I like to use the BP earnings as a target.

*FTSE PE c. 15.50

Imagine if the virus had struck in 2016? EnQuest certainly wouldn't have been here. Our projects have low capex and relatively short lives. Ideal in the current scenario. How the hell Kraken missed so many bullets I'll never know. It may well be one of the last major new fields in the NS. What did Napoleon say about AB? “I know he's a good general, but is he lucky?”

The author of Black Swan also wrote a not so famous book titled Antifragile. The concept is that certain jobs, products, and industries are survivors and not so brittle. They are flexible enough to withstand the battering that markets take from time to time. I'm relatively relaxed by the performance of EnQuest in this time of turmoil. Oil is a fungible essential product and will be for decades or even generations to come, it is antifragile. Forgetting CV it is all about transition and you can toss a coin whether it will be fast or slow. I think slow but others will disagree. There will be no straight jump to EV for example as there was from land lines (hardly any in Africa for example) to mobiles. The shale phenomena is due to an aversion towards long cycle developments that may be stranded if there is a fast transition. I believe that shale developers anticipate a much higher oil price in the future and a confused transition is part of this. Conventional oil is deemed rigid and inflexible. EnQuest is well positioned imo and has done well against its peers.
On 14/11 I posted this " Buy EnQuest sell Tullow makes sense to me" Price then EnQ 18.39 TLW 147.25
on 7/1 "Here's an arbitrage. BUY EnQuest, SELL PMO." Price then ENQ 22.78 PMO 117.75
I'm not bragging (I leave that to others currently taking credit for anticipating the virus) and would certainly not have dreamed of posting such negativity on either PMO or TLW boards. I think they help illustrate the performance of EnQuest. My negative views on PMO and TLW are well known and I don't short but do avoid. I think it does show how well EnQuest has done in what has been a difficult market for oil. Trends do change and fundamentals win in the end.

Build it and they will come. The sun doesn't shine every day.

9 green (filtered) and of the two I can read wisdom gets a tick whilst chilting says the sensible thing: life goes on. Acting like it's the end of civilisation doesn't match what WHO says but when panic sets in common sense usually goes out of the window. Spindok, I'm in the higher age risk category but somethings gonna get us all one day. Till then I'll try and stay healthy and expect to go skiing again. Going out today and it's snowing. Haven't got a face mask (hitman has run out; there's always a winner somewhere) and it's snowing but what the heck. A few drinks with old friends beckon and I reckon it's worth it. The world has always shown tokenism towards the old and of course they hold most of the money. Truth is you can't take it with you. The market will bounce back as quickly and as surprisingly as it goes down.

Be Lucky and wash your hands!

Impressive. Does your knowledge and being in the business of pharmaceuticals have anything to do with your confidence?

The market is acting like this is the end of civilisation. The virus attacks the old, weak and feeble so oil is a good target as that has been the narrative of fossil fuels. We're only 10 years old and very healthy. We'll survive.

Well that accounts for 2.15% of trades today. We know as much as anybody else and for those who are prepared to wait it seems a very good price to me. That timely prayer by Therapist suggests that the price resurrection could be around the 12th April this year.

Hi hitman, I bought some today. I bought £10k but got it done immediately and paid a tad over (21.868 @12.14.58). What is interesting is that these 2 modest amounts make up 1.25% of the total trades so far today.

*a month after 9/11 the stock market was higher.

Up today and they have to pay a dividend.

Yes, calm down. The filter is the answer if you are a long term holder and base your decisions on fundamentals. I have found that those I filtered never added to my knowledge and I seriously doubt they are holders and suspect they are actually quite timid traders. Do you think Warren Buffet anticipated the virus or sold out on the early news? Of course not. If you invest and follow message boards you cannot avoid day or fantasy traders. I was a trader once and it was and is a full time job. What most do here (I'm guilty) is join in a race without altering our diet or putting in the training. In fact the race is more of a marathon than a sprint so unless you're prepared to follow a regime with total attention but long, long periods of stasis then you have to accept the market's reactions to trends and news. Day traders who haunt these boards will not have the amounts invested that many LTHs have so when this current panic is over the price will climb. It also has a culling effect on the less profitable oil producers or those pitching a new, long cycle development. When this is over EnQuest will be in a much stronger position.

One thing for sure is that market's always overreact. When I was broking the easiest way to get a Director to move away was to say "sorry, can't talk, we've got a position". They hated making decisions because in the short term a coin toss is usually as accurate as an experienced thought out decision and owning responsibility for a loss is to be avoided at all costs. The market's can't forecast the future but they do know how to mitigate and keep their jobs.

Build it and they will come.

"For ever and ever Amjad" - brilliant. I think this is the second coming. Hallelujah!

https://www.youtube.com/watch?v=R-OoIvgtuzs

The bonds held up better than the equity today. Not so febrile and not held by the fantasy traders who get a kick out of ambulance chasing.

That was suppose to be gallow's humour but I've just checked the price of Dignity (DTY) and it has held up well against today's carnage but here's the really funny bit. A hedge fund, Granular Capital, has actually built a position here (RNS).

I see the virus as an arbitrage opportunity: SELL Werther's Original - BUY Dignitas

Found some more Tullow Bond prices and they make more sense:

6.25% 15/04/2022 83.907 (15.96%)
7% 01/03/2025 75.28 (14.05%)
6.25 15/04/22 83.675 (16.96%)
7% 01/03/25 75.301 (14.04%)

I used a bond calculator and assuming they're paid semi annually the figures in brackets are the approximate yield to maturity. I trust these figures more than the one I found on the Italian site. They come from the Luxembourg Stock Exchange https://www.bourse.lu/listing-bonds-euro-mtf. From a bond perspective we are a much safer bet than Tullow but you didn't need me to confirm that. It underscores what a good job the EnQuest management have done.

Our yields using Friday's closing are RB (10.22%) and HYN latest 89.563 (11.19%) . Quite a bit cheaper than Tullow debt and still too high imo. If this virus threat blows over EnQuest bonds are a steaming BUY. 11% in the midst of a possible pandemic shows a lot of confidence in the stock imo.

Build it and they will come.

The EnQuest message board was very quiet over the weekend and (imo) indicates that there is little to get overexcited about and is actually a good sign (I’m obviously not talking about the virus which is a “Black Swan” event.) So for my fix I read the Hurricane board. The general level of ignorance is as high as the posting activity there. What really intrigued me was the discounting of any mention of debt or bonds. I’ve held share that have gone into administration and it is always the bonds (debt) that force the decision. Posters continue to defend the stock and a hardcore element always go down with the ship. Any dissenting voice is drowned out by accusations of being a shorter or atroll. We went through a similar phase but are now through it and paying off debt rapidly with no heavy repayments imminent. I’ve no particular view on HUR and have never held them but the signs are similar to when I had an investment in Xcite. It is flashing amber imo and I wish holders well (I have friends invested).
HUR bonds are convertible so more complicated than ours. It also plays into the share price as the bond holders are protected on the upside at C.40p so shorting the stock is slightly safer as there is always a danger on the topside. For me it would be an interesting arbitrage or hedge for a bondholder to take out. Remember a hedge is also a form of insurance. I believe that bond holders can protect their investment at the expense of equity holders. Once the price went below 40p it gathered momentum. I believe equity holders are easier to manipulate because basically they are amateurs playing professionals. I’d go further and say they are excluded from the bond. At least the RB means we aren’t totally in the mushroom club.
I wondered if I could find a price for the bond which is why I posted that link. Not perfect but all I could find. I was very surprised to see how well HUR (and TLW) were holding up. The HUR bond was once worth 130 ish so the convertible bond and equity are entwined. Whatever the connection I wouldn’t want to be invested in something I cannot understand and who are the bondholders? I was also surprised at the TLW price which is higher than I expected as they really are in trouble.

*we closed at 91.85 RB and $92.041 HYN

Interesting article regarding the US and High Fashion in the Sunday Times. The US lacks craftmanship and heritage but knows a lot about discounting and hitting short term growth targets which is, of course, the fastest way to destroy a brand. It was followed by another arguing that many US unicorns are turning into dinosaurs. That is because they become ex-growth and ugly thing like dividend start being discussed. I immediately thought of shale.
The ST also lists the UK top 200 companies. I wondered how many were in the oil industry?
1. Shell
5. BP
104. Centrica (exiting 2020)
Then there are those involved in servicing.
57. Halma
122. Weir
135. Wood
If you follow fashion then it is fair to say that energy (especially fossil fuels) has few equity followers unless they are of a certain scale and pay reliable dividends. In oil they are as rare as hen's teeth.

I found this more interesting elsewhere:
https://www.exane.com/italiancertificate/produits/details/Gn76Vdl-jJ7dUTj2gu-5rw

Regarding a potential takeover by a major "And Orsted would argue we don't need it. We transformed ourselves. Look at the multiples. Orsted is trading over 30 times earnings, I can't see any oil companies trading at those levels," he said."
Well, I'll agree with the PE comment. In a nutshell it sums up the oil/renewable argument. A PE of 30 is impossible for an oil company and that includes EnQuest.
https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/021920-big-oil-missing-the-point-on-renewable-energy-returns?mkt_tok=eyjpijoittjkae5qttvpr0uztudkbcisinqioiiycezykzbvagtcege4edhvrvy5owr3ckfhxc82snyxxc9ketnoulqwamuxt2dhdfozekg3rzhzbzfrswtct2hpnwe2b1nlt1litllqc2pcuhlzofwvogvlrej1wezyb0jnc1vwrvbssvy2tkc3zfncl05azjvnzfjkm3dzzkfkt2zxttqifq%3d%3d
Mark Lewis is head of Sustainability Research at BNP so some may argue he's talking "his book" but as always there are kernels of truth. I think it changes little with EnQuest but I'd be very worried if I held RKH, HUR or any company that displays "Exploration" in its mission statement or is looking for large funding. The market is overlooking EnQuest and that is not surprising with the narrative on fossil fuels. We have carved a niche and whilst a PE of 30 is unattainable imo a PE of 10 is quite achievable and modest (look at the majors). With an industry that many think is ex-growth we'll be judged more on a bond type assessment and the numbers will force investors looking for reliable returns in an era of low interest rates to consider EnQuest. The management are well aware of this and the clincher is likely to be a dividend announcement in the not too distant future.

EnQuest is now a really solid company and ideally placed for growth in transition as majors divest of older fields.

If you discover an oil field your share price will go down. The investors have fled. It immediately becomes a "white elephant".

But those remaining will have a clear field due to this lack of investment as the promise of cheap alternative energy fades.