Member Info for romaron

Hi Pelle - .08.01, I don't know if those questions are rhetorical or not but I will answer them even though they are relatively facile. EnQuest isn't a one trick pony but Kraken is a large part of their production. The field appraisal proved its and the problem was the FPSO. It possibly resulted in Richard Hall leaving. We did survive poor performance as the FPSO was bedded in but that is not unusual on big projects (Crossrail, Heathrow Terminal 5, Sirius mine). A fail in the Kraken field would affect us negatively but that is becoming more remote as the field and FPSO becomes better understood.
I'm not an accountant so I'm surprised at your second question. For what its worth I'd go for 5. Certainty always brings a reward.
Re your 9.22. I have filtered 'no show, KO' for some time and must have missed your support or agreement with him. You are enthusiastic about EnQuest but I don't have you down as a whinger every time the price moves down a fraction. LTHs have had to be patient and I don't know many people who enjoy waiting. I also believe you are a shareholder. Trolls come in all shapes and sizes. Nobody has to read my posts and I highly recommend the filter function if they upset anybody. I only filter if the posters are puerile, predictable or add nothing to the discussion.

I can't be exact but it was either May 2016 or May 2017 and I'd met a fellow investor at the EnQuest AGM. We'd both suffered from being in Xcite Energy which is where we knew each other from. We had a drink after and he tried to get me interested in another stock that sounded a lot of fun. It was an Oil E & P company and the investors in it were evangelical almost in their support for it. So much so that they even visited sites in Morocco and had a lot of boozy fun. Almost like following a successful football team. The CEO was approachable, open and fun to be with. He joined the parties. On top of that he kept the investors in touch with regular updates. Exactly the type of CEO that some here, like 'no show, KO' think we need. I followed the company for a while but lost interest and it did outperform EnQuest for a time.

That company is Sound Energy. The investors are now screaming for an EGM to oust the CEO. I think I'll stick with professional and boring.

Wednesday: Tullow Oil
Thursday: Premier Oil

Could be something to glean across to EnQuest. If nothing else Pelle will have fun with the ratios.

Good point HMH 16.30 - The restrictions are there to keep us on the straight and narrow and protect the lenders. Once the cash is building nicely there are various options open to us and we can choose to remove them if it suits. It does appear to be coming together nicely. Regarding the genius quote. Another occasional poster here knows somebody who worked with AB. He used the same phrase.

The debt is important but under control. Apart from the odds and sods the RB looks like being run to Oct 23. The RCF will be gone by Oct 2021 leaving us with the HYNs. As in the earlier post it can be repaid earlier than existing maturity 15 April 2022 subject to the conditions. Presently we'd be mugs to repay them as we are in at par and there isn't (again imo) a huge discrepancy between what we'd be able to raise finance according to HMH and the original rate. We have got an additional 1.5% making it 7% but that is understandable and a masterful result by the EnQuest team after what we've been through imo. There is a huge discrepancy though at the current valuation of the bonds. There is a symbiosis between the RB and HYN and for all I know held by the same creditors; maybe not all but enough to be awkward and give leverage. These same creditors have cooperated with EnQuest in the past and would most likely want to be involved in refinancing. By holding the bonds down they do put themselves at the front of the queue for any new debt. It is unlikely that we could issue new paper with this stuff hanging around at a considerable discount. I consider it lock-up paper and the price is largely irrelevant if the intention is to run it to maturity. Unfortunately companies like EnQuest have to deal years ahead so there may well be discussions ongoing. I have no idea what time scales bond finance works to but the HYNs have 2 1/2 years to go and it may be sooner than we think.
On the other hand if alternate finance can be arranged then the charges for repayment of the HYNs aren't too onerous imo. That could be a good question at the CMD. What could we raise 10 year money at?

"At any time on or after 15 April 2019 but before 15 April 2020, EnQuest may redeem all or part of the High Yield Notes (HYNs) by paying the redemption price equal to 101.750 per cent, of the principal amount of such HYNs, plus accrued and unpaid interest. At any time on or after 15 April 2020, EnQuest may redeem all or part of the HYNs by paying the redemption price equal to 100.000 per cent. Of the principal amount of such HYNs, plus accrued and unpaid interest. If EnQuest undergoes certain events defined as constituting a change of control, each holder may require EnQuest to repurchase all or a portion of its HYNs at 101 per cent. Of their principal amount, plus accrued and paid interest, if any. In the event of certain developments affecting taxation, EnQuest may redeem all, but not less than all, of the HYNs."
from p. 293 of the prospectus
also p.285 the WCF BNP loan for £42m with BP as a guarantor. BP was falling over itself to help EnQuest.

Just thinking. Magnus seems by consensus a good deal. Bearing in mind we were a little cash strapped at the time it makes me wonder how we beat the competition. The vendor loan etc. could have been offered to others so could it have been SVT? Other parties perhaps weren't interested in taking on the commitment together with the publicity, T.U.P.E. obligations and the possibility of BP abandoning the site at a later date. Perhaps they saw SVT as a white elephant? The redundancies that EnQuest want to implement are targeted for January 2020. That isn't far away. I expect an update on or before the 21st..

* I'm not sure how much of SVT capacity is down to EnQuest fields. Personally I like the asset because it shows commitment to the NS and I like the idea of a landbase closer than the mainland.

cancel that - abba is a semitic word for father.

Pelle 10.22 - Why? Tell me one Swedish word, other than Abba, that has entered the English lexicon.

Nice to know I’m in the remedial class for Accountancy. The benefit of this message board is the different opinions spouted and the experience of different posters. I’ve no idea of ProdOpt’s, MO’s, or Londoner7’s financial qualifications but learn from their input. Hitman is an accountant and he is often critical of EnQuest but only uses accountancy as background. HMH seems comfortable with figures as does E121. I could go on but there is enough there to give me confidence that the financial side of the business has plenty of scrutiny.
My criticism of Accountants is that they rely too much on their formulas and correct home for an entry. If we go bust (it could happen) they will pore over the entrails and have all the answers of why it went wrong. The point is that who is to blame if the price of oil sinks or a killer carbon tax comes in? World trade and sanctions are always threats whilst cartel influence is paramount. The list of moving parts is long.
The emphasis on the debt/Ebitda ratio is quite meaningless imo as it ignores the lease commitment. If it was a BP FPSO the lease could be lost in the petty cash. The accountants will pontificate but I simplify everything. The variables have a major impact and they are the things that will make our fortune. To rely on accountancy is more to make a comparison with healthy companies. Accountancy is in a sense historical but often overrides the entrepreneurial skills required which is why I like Jonathan Swinney’s bio. Accountancy is only one string to his bow.
I think Pelle brings a fresh look to EnQuest and has a pretty good understanding of the accounts (better than mine, that’s for sure).
I’ve missed out quite a few other posters whose handle on accounts is educational and apologise for not mentioning all of you.
For the rest of us maybe ignorance of accounting will mean we invest in a winner that they wouldn’t touch. Is the fact that we have so many Accountants here a good sign or a bad omen?
My view is that they know a winner when they see one!

I think we're converging HMH. We ain't ever gonna win the beauty contest (a scavenger model) and the others in the line up aren't anything to write home about either (PMO, CNE, TLW) but if the present course continues we'll be swept off our feet by suitors attracted by our dowry in the form of regular cash flows and a dividend. We might still be an ugly ***** but dowries worked in the past in attracting worthless young men (analysts) looking for a fortune.

I don't have too high an opinion of Americans. Nothing to do with their achievements but their arrogance. I remember a tech stock I held that had never made a profit and I was considering bailing out. An American told me that I didn't understand these 'things' and I didn't look far enough ahead. Sometimes this is true, Ocado being one of them, but for some reason the US 'can-do' approach sometimes seems out of sync with reality. I wonder if Tesla will ever be a winner? It has spluttered but never made an annual profit.
That attitude doesn't fare to well in the world of commodities. I read somewhere that the world is not short of commodities but you play the cycle with the big bucks needed for Capex. In the UK Sirius is a good example. There is another cycle to contend with and its the credit cycle (Risk on/off).
In comes shale with its reduced capex against offshore or sands and the Americans swagger in because of course they are the best and like to dominate markets they're in. They also have a more relaxed attitude to regulations and the country is massive with lots of wide open spaces (few people). Individuals also have an added incentive as they own what's below their land. Something they missed is that they often steal ideas and early movers often make mistakes and run out of money. Shale is uniquely an American story. They've managed all on their own to f**k up.
The problem they face (imo) is integrating shale into the overall world production and it isn't as cheap to produce or the right type of oil as was once thought. To keep going, a la Tesla, there must be gold at the end of the rainbow but all I see is a glut of US oil. I couldn't care less about their finance because it's US money. If the finance taps are turned off then the shale industry will become just one area of production facing the economics that, for instance, we face in the NS.
Strategically shale is good for the US but why is that so important when you have the biggest and best military in history?
What it has done is ensure conventional new fields aren't being developed and there will be a shortage in other places whilst the US has to make some decisions regarding their glut.
I think I've looked further ahead than many Americans.

have their fans it seems. From a Platt article Wednesday. "London — An oil and gas discovery announced Wednesday by Norway's state-controlled Equinor and estimated at 38 million-100 million barrels of oil equivalent will go some way to alleviating concern about poor Norwegian drilling results.
The find, near the Troll complex, was hailed by Equinor as proof it is still worth exploring in highly mature areas of the North Sea. It said the field would probably be tied back to existing infrastructure, although an appraisal well is likely to be needed first. Equinor's partners in the well are ExxonMobil, Japan's Idemitsu, and London-based Neptune Energy.
Norway's upstream industry got a morale boost last month with the start of production from the giant Johan Sverdrup field. Another big project, Johan Castberg, is due on stream in 2022.
Away from "near field" exploration, Norway's industry continues to struggle with "frontier" drilling. Of 10 frontier wells completed sofar this year, just one has yielded a commercial discovery, Aker BP's Liatarnet oil find, estimated at 80 million-200 million barrels of oilequivalent, Hazel said. "Exploration performance has improved in Norway over the year after a poor start," he said. "The high risk nature of[frontier] wells, which have delivered a 10% commercial success rate, has impacted overall exploration performance."
Aker BP remains locked in a dispute with Equinor over how to develop the Liatarnet find, with Equinor promoting a relatively modest tie-in to existing infrastructure and Aker BP wanting to develop a new hub that it estimates could encompass 700 million boe of nearby discoveries."

Last para shows that BP still have interests in the NS but in bigger, newer fields. They like flexing their muscles which reminds me we may well have answers to 2 problems announced at the CMD. SVT and the Thistle platform.

"Norway’s new oil bonanza holds lessons for Britain
Norway brags about its green credentials but the Scandinavian petrodollar state still depends on exporting oil and natural gas for its long-term prosperity.
Its latest giant offshore oil field project is proof that the North Sea still has decades of life left as a major producing basin. The UK government should take note and support more exploration in British waters."
Earlier post removed because I gave a link.
EnQuest and Chrysaor get a mention.

Global oil companies retrenching? Brazil's latest round of oil licenses disappointing. The authorities had hoped for $26bn but raised c.$17bn. Arguments to include Brazil in OPEC. The only bidders were Petrobras and Chinese operators. International bidders deterred by high fees and contract requirements. Four blocks were up for grabs. Only two were bid for. The remaining two secured no interest at all.
It's only my opinion but I suspect this will have little effect on today's price but I know a few of you look beyond day traders timelines.

Pelle, to clarify. I was referring to his share buying. As for promotional stuff the retail investors are insatiable and there is something to be said for being prudential with both guidance and flowery updates. I think ABs stewardship is fine. He'll be advised by others but really it's the figures and share buying that do the talking.

Hi HMH - I'm thinking aloud here and won't be upset with any criticism but I think I'm closer to our predicament than before. It revolves around our debt. The RCF is really vanilla and you can't do a lot with that but bonds are different. Our current equity value is c. $403m whilst the bond debt is more than twice that $ 965m (HYN+RB). I have never been a conspiracist before but do believe that if you've ever desperately needed sub-prime funding then expect them to collect their pound of flesh. I don't blame AB because he never approached them but I believe many original owners of our bonds sold out in a panic leaving us at the mercy of these Vulture funds. These companies are expert at managing debt and squeezing every last penny and are pretty unscrupulous in their methods. They are usually American.
Because they have control imo of the bonds they can also influence the equity. We have all seen the fun they have with convertible bonds and VWAP on the AIM market. If they can control the Bonds then it might stretch to the equity. I believe there is a combined strategy between the two that is skimming a regular income from their actions. Don't ask me how, I can just about spell algorithm. I'd know how to keep the reins on the RB though.
The cure is consistent buying but with the debt in the doldrums you ain't gonna see Moody's get excited in a hurry. AB almost single-handedly is fighting back on the equity side. StockBoy asked if the RB was a good bet. Of course it is as the odds on EnQuest survival are as high as they've ever been. If there was a guarantee on survival the RB would be over 100 now.
It would be interesting if the company did issue new debt around the rates that you suggest. If the market liked it then you'd see the HYN and RB break par overnight. The holders of the Bonds are making a fortune imo and it may even be more prosaic reasons for keeping them lower e.g. keep in a dividend fund. I've seen opportunities missed because of account filing.
How to get out of this isn't easy. If EnQuest said anything it could be interpreted as weakness and 'they would say that, wouldn't they.' The CMD backed with an in depth knowledge and explanation of the current holders of the Bonds. They must have a good idea who the holders are as the renegotiations weren't that long ago. Having said that Nominee accounts are everywhere, shielded by contract lawyers. If it was me I'd lean heavily on my brokers/advisors and just not accept the answers that we get from EnQuest IR.
I was scoffing at your idea of a buyout but there are signs that we have unwelcome interests in our company and whatever their intention it seldom serves LTHs well.
AB should stop dicking about and find out why PMO are better at managing their debt than we are judging from the retail Bond. PMO have managed it with a massive shorting attack!
Which brings me back to how do you explain our current position. We're being attacked but it ain't full fron

...........I think it is possible there may be a more sinister connection between the RB and the HYN too. When the RB collapsed around end Jan 2016 it finally killed off First Oil Expro who had 15% of Kraken. When the RB was valued at 30p in the pound many larger holders were bailing out and those retail investors in funds/institutions had no control and were forcibly cut out as that was what prudent funds do. They have cut outs. My point 4. may be wrong. Who scoops up funds in times of trouble/implosion? Vulture funds. AB and Jonathan Swinney may even know them. I know that the RB dutifully follows the HYN's which are also 'lock up' paper. At that time a lot of the debt would have been transferred to death spiral financiers and some expected EnQuest to fold too. We didn't but what happened to the debt? You'd have to be pretty dense to imagine that original subscribers to the RB and HYN's are the same as today! Once bitten, twice shy means that the original buyers of the debt aren't queuing up to have another go.
Now, if you bought sub 50 there is a healthy profit but why cash in early when you have a healthy dividend that far exceeds anything around. These funds will have their own internal valuations but the RB has to be quoted. If you basically held the strings then you would have a vested interest in keeping the price lower. If you think the price is going to a premium then just sit on it. There is a dearth of buyers so be the only bid in town and if it starts to rise then sell a chunk. You are always taking a profit but controlling the temperature (price). They ain't called Vultures for nothing and always pick the bones.

*still doesn't explain the ludicrous equity price.

Hi StockBoy - The price of the Retail Bond is as hard to understand as the equity price. If HMH is right then there is a huge disconnect between our current price (c. 12.50% maturing Oct 23) of the RB against what we could raise new cash. I hold the RB because I believe in the company and you can hardly call it a diversification because I hold equity too. I expect the equity to outperform the bond. I thought I'd check our company rating around the time we first issued the RB (2013 - the RB isn't rated). We were B1 and we are presently one notch down at B2 but have been lower.
I believe the High Yield Notes are rated B3 (Nov 18).
How to explain the RB price? There are several reasons imo.
1. We were the first oil company to go this route and some holders have lost out due to forced sales or breaching mandates.
2. Oil and associated industries are unpopular.
3. The PIK is a badge/reminder of weakness.
4. The overall size does not interest the larger funds and is effectively 'lock-up' paper held by an army of small retail investors.
5. Trade turnover is small. The spread is wide.
6. The company doesn't care in the sense that they are borrowing at 7% (was 5.5%) which isn't that far from HMH suggestion.
I'm sure I could suggest a few other reasons and wonder why the PMO RB appears much healthier and is presently at a premium when it is the most shorted stock in equities?

I think commonsense has left the building.

upgrade of John Wood Group by Goldman's today: "We upgrade Wood to Neutral from Sell post -c.20% sector-relative performance over the last 3 months. The shares are now trading on c.5x 2020E EV/EBITDA, below the 8x 10-year history. While we believe a discount to the long-term multiple is warranted given concerns around the Amec Foster Wheeler acquisition, we think the market is now pricing in these risks and see a value case emerging as a number of the issues post the deal have already played out. Our 12-month PT of 445p (unchanged) implies 32% upside, slightly below the average c.36% upside we have for European OFS, leaving us Neutral." they also added this "We prefer upstream exposure as we forecast a moderate recovery in offshore spend driving a deepwater recovery." This was from FT Markets Live but I did find the comments more interesting. Somebody suggested WG was the most shorted was corrected by another commentator saying that PMO has more than a quarter of its free float on loan and that Fres, Intu, NMC, Sports Direct and Cineworld all have more on loan than Wood.
So, to compare stock on loan I used Euroclear October 19 because I'm too tight to pay a subscription service.
WG stock on loan 17.07 Shorts (above .50 percent 11.04)
PMO stock on loan 29.09% Shorts (above .50 percent) 4.99 4/11/19
ENQ stock on loan 2.89% Shorts above .50 ZERO.
There must be a hell of a lot of shorters below .50% in PMO. I don't follow the stock but I know some of you do. It has been remarkably resilient and I would love to see the shorters burned. They either know something we don't or they are following (herd instinct) each other. I think one of the problems with the EnQuest price is that with the huge overhang of PMO shorters they are a discouragement to buying. I think it may have infected the other oilies considered their peers as well, even Cairn. We need a brave Insitution/fund to break ranks but with this kinda narrative around you might want to keep your head under the parapet!

*I might check shorts tomorrow on WG to see if Goldman's note has had an effect and they may just have broken ranks?