Member Info for romaron

I was idly comparing us to PMO. There are no exact comparisons but they are the only other oilie with a Retail Bond. They had production to 31 Oct 2019 of 79.4 kboepd and expect a 2019 Y/E net debt level of 2.3x or less (covenant 3.0x). They have a lot of debt maturing on 31 May 2021 (that's close in debt terms). This is important because there is a large shorter in the market who bought distressed debt (PMO Bonds) from Barclays. Some form of debt rescheduling is necessary it seems (RI?). Current reserves c. 194 mmboe and a recent presentation said they had 650 mmboe of net prospective unrisked resources due to be drilled in the next 3 years. They have half the number of shares we have.
I'm only posting this because I cannot explain why (a) PMO equity isn't lower or (b) why EnQuest isn't already at least 60p or higher?
On each of the metrics I've described we smash them and aren't far away on BOEPD.
It is also to highlight how prudent EnQuest have been in pushing the bulk of our debt forward to April 2023.
I'm annoyed that the media will probably explain our rise to "events in the middle east" when it's actually been a lot of hardwork and good management decisions. I don't blame AB and his team for the weather, natural declines or the world's geopolitics.
I hope with all the excitement around that the market does not ignore EnQuest's fundamentals. we are very underrated. I'm also wondering if CNE will reverse their impairment on Kraken

Build it and they will come.

Hi E - very interesting read. The US action does help explain the headlong rush to keep producing shale even at a loss. The US is largely self-supporting in oil now so that is another restraint they can ignore. The threat of nuclear weapons is a convenient excuse as Israel has hundreds whilst Pakistan being a Sunni state is a "friend" for the moment and has anyway promised nuclear assistance to Saudi Arabia if needed. There is no honour in threatening a much smaller state with vastly inferior defensive weapons but bullies prefer this situation. How the US acts going forward is the key. They will lose support around the world and other countries will start to think "who's next?". It looks very dark for Iran and as usual it will be the civilians who suffer. They are a proud race and I doubt they will succumb to the pressure and will gain support from many sources in time. As for terrorism and killing I think few can match the US in that competition. The mask of democracy whilst they reinforce their imprint upon weaker countries is tantamount to a modern day colonialism. Iran is unfortunate in that it is slap bang in the middle of US interests and military bases. Moving the country is not an option. Even the thought of higher oil brings me no satisfaction. I expect the US to fabricate an excuse to bomb Iranian refineries. It will bring me no satisfaction whatsoever. What a clumsy, belligerent and selfish country the US is!

Closings:
Retail Bond .90775
High Yield Dollar Notes .90326

My last purchase was on 25 Oct at 84.35. Stock then was 18p so the stock would have been the better decision.

https://www.londonstockexchange.com/exchange/prices-and-markets/retail-bonds/company-summary/XS0880578728IEGBPUKCP.html
The retail Bond hardly ever moves. This is significant! Biggest trades I've seen since I started following them.

The British were embroiled in Iraq until 1958 and resentment remains to this day. No country welcomes an occupying force that decides to stay. It is the height of hypocrisy to accuse Iran of "Regime change". What was the aim of the 2003 invasion?
Trump is a coward; his reelection and to be in control of the news is much higher on his priorities than the deaths of muslims.
With their military superiority what is the calculation. One US soldier is worth 25/50/100 *******s? What next; sending in the Navy Seals (headed by Gallacher?) on a humanitarian mission? The US praise their military for their scorecards in killing many more than they lose.
My sympathies lie with the invaded country. It is a US theatre. If Iraqi soldiers had killed Suleimani then that is their business. It is a thin line between terrorist and freedom fighter. I fear for the civilians caught up in this. Military prowess never wins hearts and minds whilst a scorched earth policy never worked for the Nazis and has even less chance in a region where suffering is almost welcomed. The Americans started this and I sincerely hope that the UK stays out of it.

WEIRD "Western, Educated, Industrialised, Rich, Democratic". I realise it may be a stretch for some but holding EnQuest will sort out the "R" and some on here clearly need help with "E". Apparently regions like Europe and the US score higher on various measures of individualism and egocentric thinking that appears to lie behind our biases.
The good news though is that we survived the "sunk cost fallacy" and those who held on will be rewarded. The future looks extremely bright from where I'm sitting. I see us going for a net debt/ebitda of 1 x but a jump back to 1.5x or higher if the right deal comes along (BP net debt/ebitda currently 2.87 x). An upgrade from Moody's will also help fill out the sails.

Build it and they will come.

HMHn 09.20 - "Have a nice one!"

Do you think his account has been hacked or maybe the long dark nights have got to him?

Several interesting articles.

"Households hit by 40% fuel bill rise in five years" further evidence that renewables are working.

Leading article on Investment banks favouring their own clients and a sell side bias. Shock, horror. Corporate customers being rewarded at the expense of small investors. Fund managers are less keen to buy equity research that adds much value.

US attacks ungrateful allies in Iraq. Apparently some Iraqis are upset that US forces have outstayed their welcome after a successful invasion. A US contractor was killed so they wipe out 50 odd 'militants'. A course of action the Nazis followed when unwelcome guests in someone else's country.

B P criticised for still sticking to its core oil & has business. Brand now toxic but hungry investors want BP to keep generating big profits. Pressure from some investors, especially US, to reduce expenditure on green energy.

"Era of making a quick buck from shale is at a close"

All coming together nicely!

Or....an agreed trade has been made and we might see a holding RNS (Swedbank?). There are more than two people involved in an agreed trade so there may have been a little leakage. Encouraging whatever has gone on.

LBC has changed the topic of "Climate Change" and moved on to internet bank fraud.
The callers weren't rabid but God it was boring. There is an element of Evangelism and soap-box oratory in many supporters of CC. Nature will laugh at our puny attempts to control the planet. The energy that earthquakes exert for example dwarfs anything we can do and there is always that meteor heading in our direction.

Hi Squif - I'm not convinced of climate change personally but just mentioning the ongoing narrative. I've got LBC on in the background and the topic? Climate change. If we banned all fossil fuels in (for example) the UK and Sweden we would still be richer than many parts of the world even if we commuted and holidayed by ox-cart. I actually think that AB has positioned this company well in a world that is handling the change from fossil fuels and is a survivor. The dense energy of fossil fuels is a boon to poorer communities. We've had our Industrial Revolution and some of this is pay-back. I think it is tokenism to a point as well. Raise petrol tax massively and see what reaction governments get.
This is creating a barrier to entry for any new company wishing to sell fossil fuels and we have seen something of this with tobacco which is also a pollutant but has been a very good investment since the attacks on it began c.1970 and is likely to be around for another 50 years too. I expect oil to be around for a very long time yet. Unpopular, sure but rewarding, yes!

From an interview with Mark Carney:
"Up to 80% of coal assets will be stranded, (and) up to half of developed oil reserves."

Mr Carney added: "A question for every company, every financial institution, every asset manager, pension fund or insurer: What's your plan?"

That's the background and it's holding all oil companies back. "Assets could become worthless." With this kind of hyperbole it is not surprising that the Institutions keep their heads below the parapet.

I bet Therapist can read the last line at Specsavers.

Found it. The magnifying glass did the trick. I think they had a riser they couldn't ignore. NS Deal covers almost all eventualities.

What page hitman?

Thanks Therapist 14.40 but it's not even in my copy of today's ST. It could be space filler and they've as much a clue as we have! Who is the journalist?
In Saturday's Times EnQuest didn't even get a mention. PMO got a mention with a 1% rise and another company (can't remember the name) topped the rises with 8%. I was quite pleased as it means that not only are analyst's ignoring us now but the media is indifferent to. There is nothing sinister but we have been so anemic for the past few years people imagine we've died or been merged. I did suspect that some news was out and I'd suggest the only thing going for it is that it is not bad news. I reckon if AB changed his hair-style that's be worth a 5 percent rise as watchers are so anxious for news. I am not getting excited. A little rumour must have circulated. It's impossible to keep everything quiet.

Q3. I asked about Bond prices but he admitted to a level of ignorance here. The amount of debt, ability to pay and maturities are far more important to him than the nuts and bolts. It does feed into my theory that bonds should be avoided where PIK, warrants, synthetic warrants and convertibles allow derivatives that few understand to manipulate the stock price. People moan about shorts but I think there is a fair amount of ‘arbitrage’ that is a hedge and a good earner which requires selling the stock to protect the bond by taking advantage of its senior status. When a company has been in trouble the bond holders often change and they set the terms of new rates and maturities with a few ‘specials’ thrown in (imo).

Not sure if any of this helps but it did for me. I have a cynicism towards the power that analysts can wield. We could well be out of kilter as it only takes a few analysts to have an animus towards us or not to be really interested in a company with such a small MC. I don’t get the impression that AB goes out of his way to flatter or show favouritism towards analysts. My analyst friend is not all-knowing and doesn’t pretend to be. I once asked an ex- partner of a big 4 Accountancy firm to explain DCF or NPV to me. He threw in so many caveats it was an almost worthless answer.

My conclusion is that as we’ve fallen out of the major indexes and don’t (to my knowledge) pay for analysts to increase our coverage we remain in the shadows. As I remember Leicester weren’t being touted to the heavens before they won the Premiership. We are doing better than ‘triangulating’ on this message board. We have so many intelligent contributors with different experiences and skills that we have EnQuest surrounded and I like what I read.

That’s it now until the New Year. Peace and good health but above all; Be Lucky!

I have known this sell side analyst for over 20 years and knew he would be at a drinks party on Christmas Eve. Like before an AGM I had some questions I was going to ask but it depended on getting him alone and not spoiling a social occasion. I got there relatively early and he was already there and glad to see me as the party hadn’t filled up yet. He was happy to chat and I asked him for an analyst’s view. He is a very well-known retail analyst and a qualified accountant. I first said that there were similarities between the retail and oil industry. They have challenges with internet shopping and debt-mountains associated with stranded assets and belligerent landlords. We have climate change and renewables as well as the ubiquitous debt. We invented stranded assets.

Q1. What ratios do you use? I said our flavour of the month was FCF/yield and Net debt/EBITDA. He didn’t seem impressed and said he played with PE and DCF but gave them low importance. Drilling down though is important. His own system was to ‘triangulate’. He would go to different presentations and meetings looking each time from a slightly different perspective. He said his role was to find what wasn’t so healthy or growing. They [the companies] can always be relied on to promote the good stuff. I got the feeling that in his experience a ratio ideology is interesting but not always a reliable guide. He said something along the lines that if you torture a number long enough….

Q2. How do you value a company then? He became more animated. Firstly it depends somewhat on who’s paying. You get an easier ride if you’re analysed by a house broker [If a house broker gives a HOLD then sell the sh*t out of it]. He pointed out that some very good retail companies have a good business that is undervalued because few know about it as the analyst coverage is very low (Halfords for example). He would know this as turning up at a presentation you can almost count those attending and he would know most in the room (he said about 9 turned up for Halfords [the example]) and I’d be interested to know how many we attract. This is partly caused by MiFID ll but also the growth of platforms and natural wastage as the pool of analysts reduces. This throws out anomalies and some companies go under the radar. He didn’t say analysts were any worse but you have to balance a shortage with the impartiality of paid analysis. His strength was his range of contacts. One thing that surprised me was his coverage of John Lewis. I said isn’t it a partnership and unquoted? He said that it reports regular figures and is something of a yardstick/bellwether for the industry. An important index.

Afraid I'm gonna have to grass you up hitman. Any converstaion/emaill/thought transfer breaks all the rules as I thought only me and Ajes had access to IR. If I knew how to do it I'd report you! I've just spent the afternoon/evening with an analyst and need to collect my thoughts. My wife and daughter are leaving me alone tomorrow morning as they go to Mass (I'm in charge of Bubbles who's not well; a 14 year old Yorkie) so will be at a loose end. I fancy posting on Christmas day.