Member Info for romaron

Just a thought. The Cairn Impairment back in March. They didn't reverse their decision in the September Half Year Presentation but that may be because it really was too soon. There is some trailing with these decisions and the March 2019 decision is weighted more heavily to 2018 performance. My thoughts are that they cannot backtrack too quickly as that would indicate knee-jerk management and who is to say there wasn't an element of leverage on EnQuest as the Operator to prioritise Kraken? We know that “In 2018, gross production from the Kraken oilfield averaged around 30,300boe/d, below expected production levels.”
Unless the Cairn calculation on reserves is that with the increased costs of production (more heat) and other unanticipated capex for improvements to the FPSO their calculation of reserves is to remain or will it be that after a certain amount of mourning time the impairment will be reversed; probably around March next year providing the production at Kraken remains good. What I'm really trying to say is that this is the type of question that will be raised at the CMD. They look further out than day traders.

I hadn't read E121's 8.36 post. It just adds another layer of complication. It doesn't make EnQuest more complicated; it's just the way it is. Maybe that's why EnQuest produce such wide guidance figures. There are a lot of moving parts. I applaud you guys trying to make sense of it.

Hi Therapist - re your 22.45 "Can you repurchase a kidney?" I think the answer is no but if you're quick and your children are still in this country you may have an alternative.

Re Gas. I got in an argument over this some years ago. Lets say a company produced 10,000 boepd made up of 5,000 oil and 5,000 gas. The argument was around the energy value of gas v oil and there is a kinda fixed number making them equal. However, and this was my argument, the prices are very different. A glut of gas and a demand for certain types of oil can make this very important. Even shale oil v Brent is different with a higher amount of condensates in shale (cheaper). You can argue forever but once the economic cost of getting the energy out of the ground is higher than its re-saleable price you're in trouble. Another concern and hard to nail is the decline rates of old fields. I think we all accept that they require more opex and capex gives a boost if it's a new drill. I remember AB saying at an AGM that our declines were expected in old fields and that ranged into the high teens. The company's expertise is in EOR and exploration of nearby field areas (Seapulse). I think the value of gas we have is (to make life easier) turned into boepd which is the chemical/physical value of the gas but NOT its economic value.
I appreciate what you and gkb47 are doing. We have a nice balance of honest opinions here and it is very helpful to the likes of me who used to understand the OGA tables but gave up with the new presentation format.

Build it and they will come.

"Changed ETA to 6/11 12:00" - a day earlier and it would be fireworks!

Hi HMH - interesting conjecture. I believe a lot of markets are driven by the rear view mirror and one should never underestimate the expediency of politicians. I'm really waiting for CMD on the 21st with a new set of figures and guidance to work from. The indexes don't always paint an accurate figure with (as you say) certain sectors outperforming or skewed weightings. I suppose you could say "it was always thus". I was reading a quote from Jim Slater (Zulu Principle) the legendary investor who placed a lot of emphasis on Director buying. So we have insider trading advantage with AB and we fit in nicely with the Zulu principle which advocates focus on growth stocks. He possibly wouldn't have like EnQuest as he largely ignored companies susceptible to cyclical patterns.
He much preferred the PEG system for basing his buys on because he was always forward looking. That I believe puts you and me in the same camp. The analysts and pundits are trailing investors and with a risk averse and job-keeping strategy. They might miss a few but have no intention of going down with the ship and in their position you might be tempted to do the same. I wouldn't buy a parcel of oil shares because I think some are doomed to mediocrity or a slow death.

*In your 16.22 post you included Londoner7 with some questionable posters. I have the other 3 on filter but believe L7 is a genuine holder who like to stress test the numbers.

Ah well, there's always 2023 and the LTHs here will be able to afford to follow their team. It shows what a strategic and cerebral game it is although brawn has its part. The better side won. SA played to their best and we didn't. It happens and that is what makes Rugby such a special game.

When Etzebeth first appeared on the scene for South Africa one of their coaches described him thus: "he's like a human being, only bigger". He's not even their heaviest player today.

*c. 2001 i was a member of a gym in Potters Bar. I was getting changed and out of the shower walked a naked Francois Pienaar (Nigel Wray part owned the gym). To say I was star-struck doesn't tell the half of it. It was as though the Statue of David had just come to life and stepped off its pedestal. I've never fancied a man in that way but just for a second?

It's gonna be some match.

US China trade spat and Shell's 3Q weighing heavily today. Shell down over 3.50% but Cazenove had this to say: " Notwithstanding a major recession we come back to our feedback published after marketing our Bullish Oil Equity thesis on the road that an overwhelmingly bearish outlook seems to be the starting point in investor’s view on oil and oil equities. With that in mind, while Shell’s outlook on a slowing global economy is clearly negative, at a 2020 dividend yield of 6.2%, 2020 cash breakeven of $56/bbl, and FCF yield of 7.5% in 2021 (on $60/bbl Brent) we believe the risk/reward is positively skewed and reiterate our OW thesis."

an overwhelmingly bearish outlook seems to be the starting point in investor’s view on oil and oil equities.

I quite agree!

I met a friend Tuesday who said “I’d get rid of those oil shares you hold if I was you”. My friend isn’t an investor but did once work for Moody’s so not totally ignorant. However, he is an avid follower of news and politics. He, like many is inundated with Extinction Rebellion, Global Warming, banning of plastic bags and the emollient words coming out of Government and big business which reinforce the message to an extent. I took this as good news. The fact that it has now moved into a common acceptance that oil is bad.
The pundits and analysts are aware of this and if you want to keep your job, stay with the herd. Even if you’re wrong then the majority are also wrong too. To aggressively buy oil at present does kinda turn the spotlight on you.
I remember from my dealing days that once the news got on the front page of the FT it was all over. By that I mean the storm has passed to an extent and you always get overshoot. It is not an infallible system but it worked more times than it didn’t. Hence the phrase ‘buy the rumour, sell the news’. I’m actually a bit nervous of the CMD on 21st as we seem to anticipate higher production. That is actually a bit short term for me so I won’t worry too much and it will be good to recalibrate the numbers and they (EnQuest) will have interesting things to say.
So, even if you believe that oil is going down the pan why am I content to hold EnQuest? I reason that oil will not disappear overnight and the dense energy and portability of it will be hard to replace with a cheaper alternative for some decades. I doubt we’ll see many new huge capex developments and one thing none of us can avoid is ageing. We are one of the companies to go to for end of life fields and our expertise is valuable and remunerative. But that still isn’t the reason I hold. I expect the numbers to talk for themselves and as annuity providers cast around for near cast iron bets we will move into that category. With reduced or no debt we will be judged on our reserves and it will present an unarguable investment case. We have 3 world class assets and interesting acreage. The management have proven themselves through extremely testing times; what’s not to like?

Build it and they will come.

BP 3Q results. Brian Gilvary BP CFO said that US gas prices had "collapsed" and "the world is really awash with gas out to 2021".
He said: It's one of those difficult positions where you sit there and say'Given where the prices now are, do I say, "Strategically I want to get out of these assets because I want to stay focused on the BHP assets we bought, the oil-rich ones?' Ultimately, strategically you end up having to sell."

Doesn't sound like a ringing endorsement of shale to me.

When you hold the Conch(o) balance sheet to your ear do you hear:
(a) the sound of the sea, or
(b) the sound of dollars going down the sink?

*There is still a lot of smart and Institutional money holding their stock. Over 80%. Much higher than us. Of course the smart money may not be so smart.

Hi PO, glad to hear that EnQuest is using cutting edge technology. In the video you found, Steve Beamer of BP mentioned how nimble the smaller companies are. He didn't actually say that BP were plodders but I got the message. Bit like the NHS in its complex management and systems. When Ineos took over Innovene from BP they reduced the IT costs from $100m to $40m. It also had this interesting comment about the takeover.
"One key measurement figure, mis-estimated by a CFO to the tune of £20 0r £30 million, was justified to Reece with:'Well in BP we were regularly out by a hundred million, and no one ever noticed'". That was in 2005 but some cultures become embedded and you always have to fight against complacency.

*I assume that the typo of 2008 in your post should read 2018 as EnQuest wasn't around then.

"If they're going into Iraq, keep the oil" listen around 27.00 https://www.youtube.com/watch?v=6QaUzWFKc30
For a better understanding listen around 20.30 and 25.20>27.30
He really can't help himself. He was basking in the reflected glory of the US special forces and he had a set of supine questioners. He rambles, goes off script and embellishes and lies. He started off pretending to be a statesman but quickly reverted to type and acted as if he was at a rally of his fans. It is a condition imo. I doubt very much that al Baghdadi, 'cried like a baby' and Trump avoided the question about whether it (the crying) was picked up over the video link.
My point of this post is that if shale is so wonderful and the US is self-sufficient in energy why are the US so interested in Iraqi oil? At 40.10 he mentions that Iraq discriminates against US oil companies when issuing oil leases. He peppers sentences with 'securing oil', 'take some also' and of course 'keep the oil'. He can't help but point out that they have big oil underground and sh*t facilities to produce it. Add to the fact that (apparently) Iraq owes the US trillions of dollars! Remind me, who invaded who?
We all know that the question of oil is the economic price and shale just ain't that economic at these levels. Maybe a supermajor with huge diversified non shale assets and those with the best acreage can make a buck but overall it isn't a pretty story.
Middle East oil was the only reason the US was interested historically and they seem worried that their hold [on oil] is weakening. What have they got to be scared about? Maybe shale ain't all it's cracked out to be?

Thanks for the added information there ProdOpt. I did watch the video. Practically all above my head but if it gives me a smidgen of more knowledge about the oil industry, I'll take it. The subject is much more complex than a single article can explain but it points in the direction that big savings can be made. I hope we're given access to the data lake and a PI Historian. I'd imagine part of OGA's role is to encourage the cross-fertilisation and we seem to have a good relationship with BP. It shows the benefit of having individuals like yourself on this message board as they can bring clarity and explanations to the rest of us. You can also intervene when a malicious half-truth is posted or a poster has misunderstood an event. A brilliant example was last Wednesday when bassoonplayer skewered a troll. Thanks again for your comments and the video.

In the Sunday Times today, an article about BP and Palantir by Danny Fortson. I always read articles by DF as when he was based in London his scoops, accuracy and contacts in oil were of the highest order. In 2014 BP had its own problems with the Deepwater Horizon and oil heading towards $30. The BP CEO did an unusual move and turned to an unusual ally; Palantir, the secretive CIA funded data analytics business (the CIA used Palantir to zero in on Osama bin Laden 2011).
It was immensely successful at combing through mountains of data. This time instead of a war zone they went to Aberdeen (though I hear it can be quite lively on a Friday night). This unlikely alliance resulted in BP investing in the firm - a fact that has not been revealed until now.
Bernard Looney, who will replace Bob Dudley next year said in a private speech in Paris last month: "I believe we've travelled further than any other energy business" and Palantir was "right at the heart of that work".
BP had a "garbage dump" of data that had built up over a half century of operations in the North Sea said Lamar McKay, the deputy CEO of BP. He reckons that BP produces an extra 20,000 barrels - a 10% improvement. Previously they collected data and immediately deleted it. We have neither capacity nor systems to analyse it.
Palantir makes sense of constant changes to flow, extraction rates, compression and countless other variables across thousands of miles of pipes and risers and wells.
How much data have we got on Magnus? Is it ours? Has it been shredded?

There is a lot of mileage left in existing oil fields and infrastructure.

*Google’s Research Director Peter Norvig claimed that “We don’t have better algorithms. We just have more data".

The final part of hitman's post was rhetorical but I believe he's made a mistake in assuming that 6-8% is the going rate for shale.
6-8% is what I think we'll get if we renew but I think it's unlikely that it is what the shalers will get. If they get 6-8% then we should get 3% and we'd be entering the realms of BP and Shell at those rates. I think the shalers and their spokespeople are in denial. Some may know the truth but you're never thanked for telling it how it is and could easily become a pariah. Especially if you're a 'consultant' or a not very clued up interviewer.

*Trump's Pittsburgh speech on Wednesday has been examined by experts and as usual was full of lies and exaggerations. The biggest was that he has raised incomes in his short time as President to $7,000 per annum. The median was less than $2000 but the upper quintile did indeed receive the most. The average Joe was stiffed as usual. His performance was not much better than Obama's and you could argue that he is reaping the benefit of Obama's administration. The Saudi's and Russians must be quaking in their boots, NOT. Trump is either their puppet or the proverbial 'useful idiot'. Shale and burning the rain forest have some similar characteristics.

The Californian gold rush. The early abundance and hype ensured it becomes a contagious bubble. Damage to the environment and removal of Native Americans were pushed aside. It did though stimulate the world economy. Recent scholarship confirms that merchants made far more money than the miners. We’re much wiser now, aren’t we?
I suggest everybody watch the video hitman found: https://www.msn.com/en-us/news/other/shale-bonds-the-new-way-oil-drillers-are-raising-capital/vi-AAJa1zU
It explains just what a corner the shalers are in and we’ve been there. The shalers cannot issue equity or debt so are selling the family silver (existing reserves). They are on a death spiral in many cases. However, I think the video actually paints a far rosier position than is actual for the following reasons.
WTF is Harrison Williams and Core Energy Advisors? Is he a ‘Malcy’? How independent is he? You can make your own mind up but I don’t think I’m being controversial in saying that he cannot afford to upset the industry and has offered a banal and inoffensive view. The truth I fear is far worse.
The interviewer was hardly more challenging and I dispute the figures given. HW seemed a bit on the back foot when he alluded to a private bond with a 6% coupon. We know what the market thinks of EnQuest bonds (Retail 12% for 4 years?). They are talking about 2016 bonds maturing next year or 2021. Good luck with 6%! The coupon might be 6% but what is the market price? He then went on to suggest renewable rates of 6-8% coupon. That’s b*llocks imo. If you think a company is going bust you wouldn’t invest so the rate is irrelevant. If they seriously need money they won’t get it that cheap.
The interviewer mentioned a rating of BB- for shale companies in trouble. That’s a whitewash imo and not a reflection of the true position. We’ve never been higher than B1 (currently B2) which is lower than BB- and we are throwing off cash.

Superb! We suffered at the hands of Richie McCaw for years so step forward Sam Underhill and Curry wasn't far behind. I'd say it was the forwards what won it for us but the backs defended brilliantly. In fact all England players were at the top of their game.

I'll be posting about that other world beating team, EnQuest, who have reshaped and brought in some new blood. The future for both teams is extremely promising.

"Britain's biggest-remaining payday lender is on the verge of collapse, accelerating the demise of consumer finance providers in the wake of a regulatory crackdown." Sky News

Nobody ever said it was easy, well maybe Wonga, and this confirms that PFG acted prudently when changing it business methods. NSF 'poached' the agents who didn't like regulation from PFG. Expediency only ever works for a short while. Glad to see PFG's intelligent anticipation of the way the market was heading.

Only if it affects the full year guidance. It appears they have the situation under control.