Member Info for romaron

Hi Londoner 11.23 - My conclusion was that the sector is out of fashion. I was trying to find some connection but gave up. Perhaps they shouldn't mention 'peers' as coming from that direction is almost as confusing. Glad ito see you're researching the debt structures and covenants as your skills in getting into the detail far exceed anything I can do.

*I didn't wear Cuban heels or flares to the AGM. They would have clashed with my gloves and handbag.

Hi HMH 13.16 - interesting thought about the Oz loan. I'm enjoying discussions now about the debt and I appreciate the help I get from others in reading/understanding the small print. The accounts are complicated and not only to me. Oz being a good example. Having said that, BP were involved in the Magnus deal and no one is accusing them of making the deal fiendishly complicated. Oddly enough the last post jogged my mind. When I held MOG Och-Ziff were also holders and no one has ever accused them of being mugs. They don't lend to lose money but have a higher risk threshold than some of the standard lenders.
When we were on our uppers we didn't always have the strongest negotiating position and as the saying goes -"beggars can't be choosers" which created some of these covenants, PIK being one of them.
I think we may be entering an interesting phase as our options widen with the revenue we are achieving.

Be Lucky.

Hi in4cedros 11.32 - blimey, I'd almost forgotten LGO. I never held them but got a couple of holidays out of shorting them. I'd never touch a Lenigas stock but if (and I doubt very much) any of the holders have made any money out of LGO or its reincarnation as Columbus then good luck to them and I genuinely mean that. I know Lenigas resigned and they eventually dumped Ritson but haven't followed the company in years. I actually attended the court case in 2014 which started my interest as I held some Meditteranean Oil & Gas which got taken over by RKH. I only hold one oil stock now and this is it.
I did get 2 benefits from it though. I became friends with a helicopter captain who was at the court case and who works on servicing NS rigs and got filtered by onceatrader who was a total fraud but was slavishly followed by most of the bulletin board groupies at the time. Are you a holder of EnQuest or was it my reference to the Gatwick gusher that made you post?

"Operating loss US$182m from the impairment of Kraken following downward revision in reserves; net loss after tax US$1.1bn resulting principally from write down of Cairn's investments in India" 12 March 2019"

My opinion at the time was that it was an opportunity to throw in some additional luggage on a bad news day (India tax) although it was disconcerting to say the least. Looking at it again it didn't make much difference to EnQuest and we appear bomb proof on both sides. Nothing seems to shake us up and how recent the event was. I was trying to get some sense from tracking CNE as it is supposedly a peer and we do share an asset.

Conclusion: CNE is no more popular than EnQuest . CNE is back to about it was before the impairment and so are we. You can almost overlay them by looking at the 6M chart on these pages (lse). The sector is out of fashion. It's not all about us. Fashions do come back (the flares and Cuban heels still look almost new). Dividends are always in.

I think AB promotes the company very well. Maybe he expects the numbers to do the talking? His thoughtful and understated way of going about things is what saved us in 2016. If he was prone to hyperbole and pronouncing on every event we could have been undone as things went from bad to worse. A steady hand on the tiller is more important than cosying up to analysts who are not noted for their loyalty or interpretation. Sounds like some wish he behaved like a David Lenigas who claimed that the 'Gatwick Gusher' c.2015 was of 'National significance' and was even picked up by the BBC 6 o'clock news. DL claims there is over a 100bn barrels of oil there (similar to the reserves of Iran). It drew in thousands of PI's but the smart money never turned up. Death spiral financiers watch DL with interest. All the charlatans in oil harp on about STOIIP. Much stays in the ground & anyway the Weald isn't moose pasture.
I mention this because it brings me back to question I asked last Friday about "movable oil" (Slide 24). As nobody helped I asked IR and now know what it is.
It isn't STOIIP and it certainly isn't 2P but sits somewhere in between. STOIIP should generally be ignored as most oil is likely to remain where it is. The c270 MMbbls in Magnus of "movable oil" is a further asset that can be accessed over time, largely through drilling but also through EOR techniques. Of course they would have to assess the economics of each investment decision at the appropriate time.
That for EnQuest is the equivalent of shouting from the rooftops.

Build it and they will come (mind you, the signage could be improved)

E121 9.24 - Worcester bosh!

Sorry, couldn't resist. Good news is I'm going out now. I'll get me coat.

I think this helps:
"Portfolio Management: agreed to farm down 15% WI in Chimera to DNO, agreement with ENI to swap 15% WI in Block 10 Mexico and agreed sale of 10% WI in Nova development to ONE-Dyas"

Because of problems with Kraken we went for the convoluted Oz deal/loan when trying to farm out 15 percent. I think it was the right decision because it would have been at a fire-sale price then. The analysts don't like narrow portfolios. All our bets around that time were on Kraken.

E121 wrote: "We'll see if the question does get asked on the call today by the sell-side."

I bloody well hope so otherwise there'll be cries of "infamy". I could carry on.

Hi HMH - You've got E121 wrong. He's not a spring chicken and he holds a decent amount. I was corrected by him and Pelle when I misunderstood something around the accounts. Neither of them were rude to me. My reference to the hedges was more to do with the accountancy recording of them. I dealt in financial instruments and there are no guaranteed winners. To win big you have to leave a part unprotected. As for timing, E121 and I are in good company. Both George Soros and Warren Buffet admit to being terrible at it (timing). Arbitrage can only lock in a brief mismatch or advantage you have. I laugh at those who claim to be masters of the 'dark arts'.
I cannot remember what his estimates were, or anybody else for that matter, because I have my own wet finger in the air guesswork for that. I read E121, Londoner, Pelle, hitman posts and yours. I enjoy the granular detail even if much goes over my head. Between you I get a better sense but also accept that you are all blind to inside information but it does help pass the time between updates. I sense you are a much nicer guy than comes over and have good knowledge and experience to add to this board. We need more like you but give the personal attacks a break, please. If somebody irritates me by posting puerile rubbish, showing off or wasting my time I simply filter them. You're too good to suffer that and I hope you'll agree to disagree. You can be as rude as you like to me. I quite enjoy a verbal joust.

HMH - why so aggressive? If you are an investor then you should be pleased that your calculations are being checked and vice versa. There is a certain amount of flexibility and treatment of accounting items, evidenced by the regular scandals in the business pages concerning negligence by the big accountancy firms. On top of your confidence in accounts you appear to have other skills which could be valuable to the discussions here. I've met E121 and you couldn't wish for a nicer guy. He is open about his calculations and has an excellent understanding of the hedging process. All of us here stand little chance of accurately guessing the final figures unless you can predict the oil price, hedging activities or independent outside action. Let alone breakdowns or individual personnel actions.
What do you mean by "I'll send a proxy to AGM." That sounds pretty cowardly to me.

....and it was Helmut Langanger who ran the rigorous and successful succession process for the new Chairman, Martin Houston.

There were two presentations before the HY results on 5 September.
12 Jul Investor Meeting
07 May Research analyst meetings
Possibly a PI could go to the Investor meeting but suspect both were aimed at professionals. There are subtle differences with each but one that jumped out at me was that Eagle was in the May and July presentations but not the HYR (unless you include one green tick on slide 35). Eagle is not insignificant as 80% RF of c.62MMbbls STOIIP is 50MMbbls. I'm wondering if that is intentional because it contradicts reducing capex and concentrating on debt reduction.

In the weekend press there was this about Intu Poperties suffering from retail insolvencies: "Intu's shares are trading at 36.5p, down by two-thirds since the start of the year and at an 85% discount to its net asset value." I'm no expert but I suggest that the net asset valuation could be wrong. It got me thinking about our valuation and is it based on a false premise.
I think we have commonalities with Intu and really are at a ridiculous discount to our asset value. The common ratios that shares are judged by show us in a very good position and I tried a comparison with our peers.
The first comparison made my heart sink.
https://markets.ft.com/data/equities/tearsheet/profile?s=ENQ:LSE
I don't think that is a very good choice of peers but what if it is correct? I then did it from the direction of Cairn Energy.
https://markets.ft.com/data/equities/tearsheet/profile?s=CNE:LSE
and these are of a similar size. Our peers are different from our direction but looking from Cairn's view we are in better company imo. We know it is difficult to make comparisons and I assumed that Tullow were carrying less debt but it is similar (net debt & gearing $2.9bn and 1.8x; no near-term debt maturities 2019 HY). The difference here is what exactly is meant by 'no near-term debt maturities'. Perhaps this is where we struggle?
I don't wish to waste time torturing figures but it does kinda reinforce what AB was saying on CNBC. Strengthening the balance sheet is necessary to get a better profile and achieve the metrics that sound companies have.

The US has a huge bloated military but unfortunately the rest of the world isn't impressed or cowed enough. They are exiting Afghanistan (pop. 35m) with their tail between their legs. I read that Russia has offered to help move oil via the Caspian sea into Turkey and Syria https://www.thetimes.co.uk/article/russia-opens-new-route-for-iranian-oil-to-skirt-sanctions-k7xqlg386 . China is increasing its imports from Iran via STS transfers and paying with currencies other than dollars. The US speaks loudly and wields a little stick. They are seen as increasingly ineffective. Their security (US) is no longer threatened so why not curl up into a ball. I suspect that even Saudi Arabia is wondering WTF and they (and Russia) seem to have leverage over Trump from before his election. The US threatens NATO when they were the biggest beneficiaries of WW2 in Europe. They want it all ways.

*Putin taking over Crimea beginning to make more sense.

I was gonna post this: "Surely, when PIK is triggered debt increases. A cynic might say it's kicking the can down the road. A feckless company might decide to spend the (false) saving on salaries or a vanity project unless a repayment date on RCF is imminent. It is a safety valve but remember they are put in to stop things blowing up."
but it got me thinking. You can argue the case back and forth. Is it a Peter Paul transaction? Is it an impediment to a better credit rating? and so on.
I think it might well be a major reason why the bonds are currently priced so poorly. A constant reminder of the events leading up too the RI. I think it's a clever device for cash flow reasons but a terrible advertisement of the company's credit worthiness. I'm no expert but I imagine the Bond market doesn't like PIK.

Hi Londoner - you write "We refer to free cash flows. In Enquest's case they are not free." But other companies say FCF and have existing and continuing debt? I know what you mean though.
All concerns should be swept away after next weekend though as on Saturday it's the St. Leger.

Typo - in 2016 we couldn't have attracted someone of the calibre of Martin Houston.

I've got the 2014 glossy brochure from the AGM. It was my first EnQuest AGM and one of the people I spoke to was Clare Spottiswoode a NED appointed 2011. I remember being a little disappointed in her oil knowledge and guessed it was a governance role and gender policy. She served on the Audit, Nomination and Remuneration Committee. Another NED was Jock Lennox appointed 2010. An ex Accountant he fulfilled a similar role.
Between 2010 (launch EnQuest) and 2014 I could have run an oil company (average over $100). Oil fell off a cliff shortly after the AGM (my timing has always been good).
2016 was a crisis time for EnQuest and Jim Buckee left to be replaced by Jock Lennox who stepped up. CS resigned too but I'm reading nothing into that.
https://www.macrotrends.net/2480/brent-crude-oil-prices-10-year-daily-chart
Compare 2014 - 2016 to now from the board perspective. In early days governance insisted on independent NED's and without being rude the two I've mentioned lacked industry experience and AB was not battle scarred. I'd go as far to say that in certain respects he was wet behind the ears.
This week it was announced that we have a new Chairman who was actively head hunted and wasn't desperate for a job. He has an impressive CV and reputation. In 2014 we couldn't have got someone of this calibre.
The 2018 Board are all industry veterans except for Laurie Fitch who is ex investment banker and speaks Arabic.
The future is bright!

I looked up the list to see how far we are from the FTSE 250 because once it seems confirmed that we are closing there would be additional stock buying. I can see all our Christmases coming at once. Good news will be cumulative. If the oil price holds this is inevitable.

Hi hitman - I rack my brain too. It's as though the investment industry has given up on oil and only the majors are worth investing in because they pay dividend and have a wide portfolio that can absorb most shocks; hence their higher rated debt. Do they think our latest impressive performance is a flash in the pan? AB has a lot of skin in the game and we are now throwing off cash. Look at this list. Do we deserve to be where we are?
http://www.stockchallenge.co.uk/ftse.php