Member Info for romaron

The post from Geo101 at 9.30 on Thursday says it all for me: "“EnQuest will have a chance to promote its portfolio at today’s capital markets day but the shares already trade at a premium to peers and we continue to see more compelling upside and catalysts elsewhere in the sector.”
I'd like to see the more compelling candidates and this quote smacks more of somebody whose mind is already made up. I'm surprised the BMO analyst bothered to turn up at the CMD as he had already formed an opinion and made up his mind It does help explain the frosty reception he got from AB and I've seen more knowledge and better questions on this BB than he asked.
I read something that I think makes a mockery of peer comparison and valuations. In future I shall treat EnQuest as more a stand alone company for valuation purposes. I'll post later.

Hi Squif, I come in peace. You have changed your tune recently but are still not a fan of AB imo but that isn't why I've responded. You wrote: "Premier Oil has an EV of 2.93 BN and 2P reserves of 673m. I think lifting 2P reserves will be key as well as a re-evaluation of the oil sector in general."

I thought that at last I had an explanation for the discrepancy between PMO & ENQ valuations, including their Retail Bonds. However, I think you're wrong.

From PMO 2018 Finals
"Full Year Results for the year ended 31 December 2018
At 31 December 2018, Group proven and probable (2P) reserves and contingent (2C) resources, on a working interest
basis, were 867 mmboe (2017: 902 mmboe), including the effect of 2018 production and asset sales. The sanction of
the Tolmount Main project added 46 mmboe to 2P reserves. In addition, Premier booked the 3 mmboe (net) 2P
reserves related to the Catcher North and Laverda fields while there were also reserve upgrades at Chim Sáo and Elgin
Franklin."
The breakdown was 2P 194 mmboe and 2C 673 mmboe = 867 mmboe of resources. I doubt that in the past 10 months the 2P reserves have grown almost half a billion mmboe.
I'm not attacking you as I think we are actually closer in our thinking than you'd imagine. I try to look at the bigger picture whilst others can do the minutiae. Some take it to extremes and would be arguing against the cost of polish to the railings on the Titanic when an extra look-out might be more valuable. I agree with you that a re-evaluation of the oil sector would help but I'm afraid we are out of fashion and we are currently on the 'clearance' rail (unlike Cuban heels and flares which are timeless).

I will post later about why I think many posters here have misjudged the CMD and AB. My thinking is close to the last para. in L7's post.

Hi hitman, re the decommissioning I was thinking more of us being the decommissioning partner for fields that we have no interest in. Practise makes perfect and we are ahead of the game is what I took from the presentation. It differentiates us from other companies in the NS. More a ramble than anything as decomms seem pretty piecemeal anyway but it might help focus the analysts on our potential.

Hi MO, why am I not surprised you are on top of this (that's rhetorical btw). Was I warm with my calculations?

missed one.
Laboratory testing currently for Kraken. Whether that's proposed new drills or EOR polymer not sure.

from Strictly on here. I listened again to the audio cast and picked up on a few points that interested me:
CMD held at Merrill's gaff (House Broker) which might explain why hitman's and my invite never arrived.
Thistle was due to have redundant tanks removed in 2020 anyway.
EnQuest top driller in NS - in number and efficiency.*
Drilling in house from conception to execution.*
Significant reliance on laboratory simulations(Magnus, Malaysia) .
David Brown (BMO) unlikely to get Xmas party invite (1.0340 decidedly peeved AB imo).
Financing looking tickety-boo and we'll soon be calling the shots.

*As EnQuest grows might there be an eventual split to gain more value? One part operating whilst a separate decommissioning company is launched. The Petrofac experience must be in AB's mind or is the existing framework good enough. I wonder what the Martin Houston effect might be?

Corallian Energy - just raised £300,000 to prepare for an IPO. It has 6 licenses from 31st round. It has net assets of £6.2mio and made a loss of £422,850 for the last 12 months to Oct 30 last year.
Source: Today's Times.

*Nothing in paper about EnQuest.

3 TCF in Seligi - meant little to me. I realise that oil is c. 30 times more valuable than gas (that's why they flare) so I've tried to put a value on these gas reserves. I found this helpful:
"It depends on whether you are asking for an energy equivalency or an economic equivalency. It’s an apples versus oranges comparison, how many apples equals how many oranges. If you are asking for energy equivalency, a commonly used factor in the oil industry is 1 barrel of oil = 6,000 cubic feet of natural gas. Therefore, 1 TCF of natural gas would equal 170 million barrels of oil, approximately.
To be more accurate than that, you have to do a chemical analysis of both the oil and the natural gas and determine their energy content. Both crude oil and natural gas vary quite a lot in their energy content depending on their chemical analyses.
It’s rather pointless to do that because if you are dealing with 1 TCF of gas, you are dealing with a number of different natural gas reserves, and a number of different oil reserves. Two digits of precision are enough for a real-world comparison. If you use more than that, you are kidding yourself. You don’t have that much precision. To avoid kidding yourself, you can use the 1 to 6,000 factor.
If you are doing an economic comparison, you have to compare prices on a commercial commodities exchange such as NYMEX. Some people use 1 to 6,000, others use 1 to 10,000, but it depends on the market and the market price, and the price varies a lot. Oil goes up and down in price, gas goes up and down in price, and the prices tend to follow each other but sometimes not. This is a much more complex calculation than a simple energy equivalency, and is best left to financial experts."
I'm far from an expert but here goes. So 3x170mboe = 510mboe divided by 30 = 17m barrels oil. That's still a c. $1bio dollars of assets at current prices. It also ties us closer to Malaysia. Having a Muslim CEO doesn't hurt either.

Kraken OPEX subject and you're talking about shale? Thanks for those links hitman as I'm not the most attentive in class and it made me realise that you have to differentiate between oil and gas rigs. DUC's involve a lot of sunk cash and are the cheapest and quickest way to turn the tap on (bit like EnQuest organic drills). I suspect the shale industry is forever wounded by the Saudi led attack in 2015 from which we suffered collateral damage. The Saudi's have proven they can hold their breath longer than the shale industry. I'd imagine the financiers are well aware of this and will be much more demanding and parsimonious when approached for fresh funds. Chilting's point must also be considered and things haven't been going too well for Trump recently.

*So impressed by Fiona Hill at the inquiry. She hasn't lost the accent. Sharp as a razor and as effective as a ninja.

That was what we got yesterday, but in increased profits - not reduced profits or losses. What other conclusion can you reach as debt reduces and FCF funds organically increased reserves at low cost, "short cycle, high return". On reflection I'm much happier with the presentation. I've pretty much given up on peer comparisons because it is near impossible to get a close match. Lets face facts and admit we're not even close to glamorous. I've found a peer in that sense. Accrol Group, who should have a future whilst I've got a hole in my *rse. I chose them because they produce what I consider an essential as is oil imo. OK, you could swap the car for an ox-cart or start using dried grass but personally I'm not changing and I suspect I might be with the majority. We then have the decommissioning requirements and potential of new systems for carbon storage and offsets. Decommissioning for Accrol is just a flush but like oil it relies a lot on pipework and refining of production. As I said, not glamorous.
As expected The Times didn't pick up on the CDM and maybe it's time to adopt the Millwall slogan, "No one likes us, we don't care". I'm not even sure that's true. Most don't seem to know we exist. There are many businesses that have a low profile but they are a safer bet than many glam stocks. Google, Facebook etc.. are ubiquitous and glam but they rely on servers and men laying cable who are essential but seldom seen.
EnQuest is a true contrarian bet. You won't be able to brag about its success because nobody will have heard of them. They'll be known and respected in the industry but have absolutely zero interest for day traders and those looking for a high. I'm fairly sure this is the attitude of the EnQuest mnanagement too. The CDM was low-key and if analysts don't like it, tough. I'm unhappy about market reaction but if fundamentals mean anything this is a value stock.

Build it and they will come unless they rate glamour or populism higher.

Some thought provoking comments. The AB performance came over a tad lacklustre and I doubt Therapist is in a hurry to book him but it was typical of his previous presentations. I've suffered some very glib CEO's and the salesman technique isn't for everyone. I agree Bob Davenport was better but it would not go down well for a CEO to delegate the whole presentation. Still a bit concerned by the Martin Houston no show. AB in person comes over a little humourless but also driven and always on top of his brief.
These presentations are really about the numbers and the best chance of changing a mindset might be in conversations post meeting. The BMO guy asked a question but we'd already seen his opinion in an earlier post on this BB.
Whatever way you look at it debt has come down pretty considerably. That wasn't plucked out of thin air and will continue. For once time is on our side and the company doesn't have to worry about creditors bleating. Give it a year and they will be queuing up to offer us fresh finance.
The volume of trades today was poor and I wonder if there might be a shortage if a large buyer appears. I can't see much reason for LTH's bowing out now or a few pence higher. Financial pressure is off and all we need now is some confidence in oil and fresh buying.

Nearly forgot. We are bidding for licenses on the 32 cnd block/round. I know little about this and suspect MO has more insight. That is about as exciting as EnQuest gets.

Hi L7 - when have EnQuest ever been anything other than sober? Afraid that in a world of Twitter, Trump, Boris, Farage etc... anything without a big dose of hyperbole seems rather tame by comparison. You miss the headline and a temporary move in the stock price but in all honesty the real money moves much more slowly. Those chasing excitement and movement could always move to AIM.
Looks like no resetting of reserves till March and that might stop Moody's upgrading. We could always pay for a CPR over the group's assets but what's the point? The direction is set and this is a company that is forging its own destiny. With Christmas in the middle we'll soon be there anyway. I think a slow build up will impress the market, eventually.
Regarding glazed eyes it'll soon be NPV8. The Retail Bond closed at 85.675 and the stock at 18.48. Last Friday they were 83.00 and 18.81.

Be Lucky

.....and I forgot our best of class in managing end of life fields. AB started as an engineer and gained invaluable experience at Atlantic Richfield and Petrofac. I couldn't care less that we are at the messy end of the oil industry. We are ideally placed for whatever direction the green movement, carbon capture etc.. goes. Even the cost of zero carbon will probably mean oil is still, as dense energy, more economic than renewables. Our base strengthens by the day.

It was excellent. I imagine L7 and ProdOpt understood it better than most (Engineers). Short cycle, high return - sounds like shale but we do have a better ON/OFF switch than many of our competitors. Maureen not in reservoir figures (could be a big one). BD mentioned 'movable oil' which I prefer to STOIIP. AB states our performance matches any sector. I took that to mean not just oil. We are robust because of our spread of assets [BP must have plenty of Thistle type events but it hardly effects the price.] Relaxed about bond debt as almost 4 years away and we only pay coupon so the price is irrelevant to EnQuest in some sense.

Downers: No Martin Houston, could we be vulnerable at this market cap?

"EnQuest will have a chance to promote its portfolio at today’s capital markets day but the shares already trade at a premium to peers and we continue to see more compelling upside and catalysts elsewhere in the sector"

I'd like to know which peers and how he compares them. It is very tricky trying to compare one oil company to another and a very narrow field imo. I hope they attend the CMD and can explain in more depth. Owning 69% of Spirit hasn't seemed to have done Centrica any harm today (maybe because they intend selling it?). I lean towards E121 and that debt is a kinda Ebola in the eyes of analysts. I think BMO have only given EnQuest a cursory glance, hence the quick opinion because that is all it is.

I expect them to react to these numbers. Meanwhile, for those upset with the progress of the stock price can I offer a suggestion that will return 35% for those with a lower risk threshold who expect the company to be around for the next few years (April 2022). Or a return of 47% if they extend until Oct 2023. BUY the Retail Bond.
Eventually the bleedin' obvious will be discovered. Institutions may not be allowed to buy junk bonds because of our rating and the amounts are tiny, though enough to attract retail investors (I wouldn't know how to buy the US$ HYN's with (likely) minimums of $100,000).
I am up to my gills in the stock and RB's.
If Moody's do upgrade us then I'd expect a very positive move in the bonds.

Kraken - "Group is starting to review the potential for developing the Maureen sands which lie directly beneath the existing reservoir."
Best place to find oil is in an oilfield. I may be wrong but from this it seems Equinor's Mariner field already extends into the Maureen sands.

https://www.spe-uk.org/aberdeen/knowledgefiles/SPE_Aberdeen_Mariner-250913-%20Final.pdf

Not now, but something to think about later. May even get a mention at the CMD.

https://www.youtube.com/watch?v=VY58inWev0E

Liked the SVT report. I think the decision was expected in Jan 2020 so ahead of schedule.
The Bonds weren't addressed but that isn't surprising; we are in at par and the current price suggests now isn't a time to renegotiate.
All in all an excellent update and the company has advanced whilst repaying the debt. Eventually the eighth wonder of the world will come into play; compound interest.

Build it and they will come.

Hi hitman, I was in Ikea Greenwich on Sunday evening and had fish & chips. I spent the next 2 afternoons putting together a bed and chest of drawers. When I finished I marveled at the engineering, simplification and accuracy of the instructions. I think we should get Ikea involved in the problems at Thistle. They may even have made a better stab at the FPSO technicals.
I quite like the tight rein on the price this week. Whatever we will say tomorrow its been kept under wraps judging by the price movement. An RNS at 7.00 and hopefully a listen to the CMD. I do hope some analysts turn up.

*I still had 2 plastic dowels left over and a small white thingy.