Member Info for romaron

Forgot to add. With all the respect shown to 'professional' players and analysts the amount reportedly shorted in Amigo shares (above half per cent) was .62 and shares on loan was 2.85 in July. They missed Amigo and they will miss PFG, but in the opposite direction.

Amigo is number one in guarantor loans but who is number two? Our old friend NSF. After all our tribulations adherence to FCA guidance and employee control is paramount (pooh-pooed when van Kuffeler was actively poaching agents from PFG). You could almost say that the Sub-prime market is seeing a flight to quality.

BP selling out and quitting Alaska to "further strengthen its balance sheet". It then either buys more shale or its own shares. You can argue that share buy-back strengthens its BS but shale?
The only way it makes sense to buy shale fields is that they see the oil price being higher and their horizon (in years) is much further than the average PI. The push back from environmentalists is only likely to strengthen so huge capital investment has a growing risk attached. Better to adapt to new forms of technology and let oil in the most difficult or politically sensitive areas stay in the ground. The world will take decades (if ever) to wean itself off oil and will be a managed decline. I realise the Prudhoe Bay field has seen its best days but BP will quietly carry on milking fields that are out of sight of the environmentalists. Lets face it, the North Sea has never been a holiday destination and the industry has a deserved record of being environmentally responsible here. Shale can be turned ON/OFF quite quickly which has its benefits yet we know it is marginal at the present oil price. That is now - not 5/10 years down the road; maybe a lot sooner. I do wonder what might happen to shale once Trump goes but the US has always put itself first so don't imagine much change there. Shale is important to them strategically whilst other countries have different priorities.
Of course another reason to buy your own shares is that they are ridiculously cheap. A lot of companies did this in 2011/12 after the financial crisis had overshot valuations. Shale has put a cap on oil price rising but inherent costs also puts a base on operations. Too low and they go bust.

Next, solving the Israel/Palestine conflict.

How weird is that. I did too. You're right.

Or maybe not. I don't follow trades too closely on the basis that they're extremely dull and trades are often titled subjectively. For example, if I had knowledge that would send the price soaring once it became public the following day. I would make sure I had the highest bid for most of the day but never hit the offer. Every deal I did would have the annotation of SELL. If I bought enough then the price might even end up higher that day but the SELLS would heavily outweigh BUYS.
I'm speaking from a FX background where my experience was. Most here will understand LIBOR and how honest that was. what many don't know is that because of the amounts traded and to achieve an honest mid-price there were also spot FX fixings at the foreign bourses. Partly it was to avoid customers being ripped off by wearing the highs and lows of the day depending on their order.
I don't follow the PFG trades but today's UT (a kinda fixing) seems larger than usual. It might even indicate that somebody wanted to deal in a decent amount which in a thin market might be better achieved at an auction. It is encouraging and with enough turnover interest it might take people's mind off Woodford's position. I sense changes afoot.

*I'm in a minority it seems that doesn't think Woodford is useless. Sure, he's out of form but that happens to everybody.

There is also the point that for excitement and activity you need the equity. That attracts punters.

The equity is more liquid but the bonds follow interest rates and credit agency ratings. They are connected but not like conjoined twins. I think the RB is relatively bomb-proof to the equity. I've been looking for signs and basically found little except the different pricing between our RB and the PMO RB. It is unexplained so far.

Glad to be of assistance Londoner. I've been giving the RB some thought and this is where I am. It is the tail end charlie of the RB's and the worst performing of them all (next worse is the Wasp's RB-no jokes please). EnQuest equity isn't for widows and orphans but the RB unfortunately strays into that area. I looked at this https://www.londonstockexchange.com/exchange/prices-and-markets/retail-bonds/company-summary/XS0880578728IEGBPUKCP.html?lang=en
and see that the unusually large trade on 26 July seemed to distort the trend which had been ticking along nicely until then. There is also the impact of accrued interest (a kinda ex-dividend effect) which according to the link is c. 15 July. My hypothesis is that the seller saw that the bond was incorrectly priced. The buyer/s may be rather static and hold until redemption so don't lose any sleep. The amounts aren't really that large for traders but I suppose a profit is a profit. A maximum potential profit of £10k ish. In a market like this you will see opportunists and I'm not sure if you can short these bonds so I'm guessing here that the seller is either out or averaging with an almost guaranteed profit? There are traders who trawl for mispriced (technical) quotes and I think this was one. The good news is that it happened because nobody cares and scarcely trade. You shouldn't read too much into it and there are plenty of hoops to go through that protects holders. I'm a bit more concerned about the HY Notes but cannot access them to track but feel there is also little trading with them. The current pricing of the RB says that if you hold until maturity you'll get 50%. That's the equivalent of what on equity; 28P?
I still expect to earn a multiple of the returns on the RB by holding the riskier asset which is the equity. The RB is a reminder though of what our debt is currently priced at and that must concern the management.

My account was credited with cash value 19 August which means $65 was achieved. Not sure if it actually averaged that rate or benefited from hedging.

A fully developed hurricane releases 50 or more terawatts of heat energy at any given moment, only about 1 percent of which is converted into wind. The heat release, Landsea wrote, "is equivalent to a 10-megaton nuclear bomb exploding every 20 minutes." The entire human race in 2011 used about a third of the energy present in an average hurricane.

So bombing a hurricane might be about as effective as trying to stop a speeding Buick with a feather. [LiveScience]

and this from NASA: In fact, "during its life cycle a hurricane can expend as much energy as 10,000 nuclear bombs"

Nature beats our puny efforts. The Rodeo clown in the White House does though help highlight the global impact of fossil fuels and imo it's manageable and less than environmentalists say. Oil has a future as I don't see the rest of the world putting its money where their placards say it should go. Maybe a few very rich societies/countries can assuage their conscience or guilt over being free from poverty but even in the UK there is uproar at any attempted raising of fuel duty. It is telling that one of the early moves from Boris Johnson is to cut fuel duty for the first motoring tax reduction in 8 years. Predictably described as 'irresponsible' by environmentalists.

Whilst aware of the Woodford influence on this share commentators have not commented on the opposite view. Woodford is long and under liquidity pressures that are not all PFG related. Lansdowne Partners have been having a better time of it and made a pre-tax profit of £119.2m to YE March 2018 and manage $21bn. In August they bought 3,340,000 share (1.32%). Why is this important? Well, they've been short since 2012. I would describe them as "smart money" and they bought back what they shorted. It is a decent amount and August is the 'dog days' of summer with low turnover but they took advantage of the Woodford position to cancel out most of their short (they may be totally out now). They see PFG higher. They have moved on to weaker prey. Not wishing to be rude but suggest they are better at this game than most of us here.

I started to read the prospectus and soon got bored but came across this: "As of the date of this document, all of the Existing RCF Lenders and all of the Hedging Banks have entered into, or acceded to, the Lock-Up Agreement pursuant to which they have agreed to vote in favour of the Proposed RCF Amendments. Additionally, Existing High Yield Noteholders representing approximately 61 per cent. in value of the Existing High Yield Notes have entered into, or acceded to, the Lock-Up Agreement pursuant to which they have agreed to attend the Scheme Meeting in person or by proxy and to vote in favour of the Scheme."

What intrigued me was how granular this all becomes. I did't know exactly what the term "Hedging Banks" meant. This is the definition later. "the Existing RCF Lenders and their affiliates which have acceded to the Existing RCF as "Hedging Banks", which satisfy certain qualifications under the Existing RCF and which have entered into Hedging Agreements which are secured by the Existing RCF security package." I'm not really any the wiser so will not go off-piste again and leave it to those that can read this stuff or have experience at this level of detail.

I've got a headache.

A few of us keep in contact via a whatsapp group and one of the group pointed out that PMO have an extremely large percentage on loan (22.34 July Euroclear and 5.29 reported shorts 23 Aug 19). Whatsapp has its limitations which for me is the keys. I don't have Trump sized hands and struggle with small keys so prefer to answer here and also draw some fresh comment as I know a few follow/hold PMO (I don't). It doesn't make sense to me. The PMO Retail Bond, although for a shorter duration, is a wet finger comparison and if I started from the short position would expect to be similar to ENQ.
So we have a stock that is actively shorted more than us (ENQ has no reportable size shorts) yet has debt that is priced as though there is little to worry about.
I suppose you could argue that PMO is under no solvency threat but shorts are following POO. If there was any connection then you'd expect ENQ shorts to be rising ; they're not. I'm putting it down to the PIK/$65 link being an impediment to the stock rising and include the HY notes which have also had their conditions altered. Is it possible that our equity is rated higher than PMO (less shorts) but our debt structuring overpowers our ability to climb cancelling it out. PMO is the opposite with a better debt structure but concerns over the near future? The market in bonds is far bigger than the equity market and we should pay more attention to them as it follows that their research and analysis is as important if not greater. Another consideration is debt restructuring. If it was imminent the costs would be prohibitive judging by current rates but this will still impact on any new venture unless we can get a loan similar to BP/Magnus or the like. I don't like the recent direction of the RB (HY are more or less in lock-step) and afraid to say that we have to wait until their direction changes or recover before we will see the same in equity. In mitigation they are both almost lock-up paper and with no event to power them one way or t'other will follow the POO so perhaps they can be ignored to an extent as the maturities are still pretty distant. Maybe there'll be something in the 5 Sept update to get us moving?

Final thought. Our EV shows that debt is far bigger than equity as a percentage and we should be viewed through a debt lens rather than concentrating on the share price. Until the debt reaches a better percentage with EBITDA we will remain in these doldrums and avoided by the market.

I suppose what I'm trying to say/suggest is that with the provisos attached to the bonds some will argue that the conditions that created them still exist. I'm pretty sure that the company are well aware of this fact and it is up to them to educate the market and the only surefire way to do this is to pay down the debt.

That title alone is enough to want you to slash your wrists but I believe we have something like that with the Retail Bond and HY Notes which are a lead weight to the equity rising. Everything is interconnected and to keep on about the debt without discussing the bonds is ingenuous. The bonds are larger than the equity in value and obviously get paid before we would in the case of failure. The RNS 13th Oct 2016 even mentions RCF which repeats the "everything is connected" of above. This part is most telling: "amend the maturity dates of the High Yield Notes and the Retail Notes to April 2022, with an option exercisable by the Company (at its absolute discretion) to extend the maturity date by one year and an automatic further extension of the maturity date to October 2023 if the Existing RCF is not fully repaid or refinanced by October 2020; and
o amend certain of the financial indebtedness baskets under the High Yield Notes, remove the financial covenants under the Retail Notes, add new cross default provisions and restrict the Company from paying any dividend or distribution on any class of its shares until it has repaid or redeemed all capitalised interest (if any) accruing on the Notes in cash at par, together with any accrued but unpaid interest thereon."
I've answered my own question earlier. The PMO RB is vanilla by comparison. The RNS uses 'scary' words like 'lock up agreement' and ' the Scheme is subject to the Company obtaining recognition of the Scheme under chapter 15 of Title 11 of the United States Code.' That is why the yield is so high. In a world where best paper has negative interest rates you can earn 16.5 per cent on the EnQuest RB if it is still there at maturity and you still run the risk of them extending another year.
What is worrying is that 2022 isn't really that far away and it gives you an idea of what rolling over debt would cost. Am I alarmed? No. My reasoning is that at our darkest hour we were acting out of desperation and the RB is a hangover from then. Maybe we could buy back some bonds or confirm there will be no extension? Even drop the $65 oil link? That would give a huge boost to the equity as everything is connected.

*I suppose you could also argue that PMO are worth more and closer to the golden FTSE 250 than EnQuest and that their CEO [PMO] probably knows more about bonds than he does oil. We are possibly the opposite. I'll stick with oil knowledge.

Bull Case - Credit agencies giving EnQuest higher ratings. I just looked at the Retail Bond and its returning something like 16 per cent. I compared it to the PMO RB. Not exact comparison but the PMO return is closer to 6 per cent. The bond criteria is (imo) much more formulaic and there is something they really don't like. Remove that and we can soar. Soder if you're around; any comment?

Well, as a cost saving move this is a simple lie. More money will be spent in taking it private than savings from AIM because lawyers will be employed to avoid individual negligence claims. There is some value but will its sale value be more than the remaining debt? If down the road a vulture fund buys some of the debt they might hit resistance from the 3/5 largest funds if they're still invested. They have some converted debt as equity and would (I imagine) want something for it even if only scrap value. It is probably a forlorn hope but will depend on their decisions. If they see some value in the equity or move between the two for accountancy tax benefits/reclaims then it might be worth them keeping the equity as a tool in extracting any future value when disposing either in a managed sale or a forced sale.

The 10 o'clock BBC news led with the refinery story. The BBC has been supplied with many documents regarding potential shortages. The Govt have responded and said everything is tickety-boo and they are ensuring there will be no problems with supply. The aim is to avoid any inflationary upside and there will be a zero tariiff on petrol and diesel imports. The countries refineries meanwhile have been thrown under the bus.

*They didn't say the last sentence which is my interpretation.

Hi Londoner - excellent post. I'm jealous of your ability with figures and I'm guessing that you realised I was joshing with you. The thing is that you are a relatively latecomer to this BB and we are at the end of analysing the entrails of the last production update and it does become torturous. That means the figures are due for a refresher with new information and yours will be one of the first posts I read after the announcement on 5th September. It is also true that all carefully constructed models will collapse if a black swan lands. I meant no offence and I hope you didn't take any.

Be Lucky

HMH - It was a 5 minute piece presented by the highly respected Business Editor of the BBC, Faisal Islam. The 6 refineries in the UK will be uneconomic with a 5% tariff on exports to EU. The Govt. in its wisdom has granted a 0% tariff on fuel imports to stop us freezing this winter and being able to drive to the shops. Unlike other sectors e.g. farming, ceramics which will have protective tariffs. This will mean that according to WTO rules we must now offer 0 tariff to the rest of the world. Russia is the biggest, nearest and cheapest alternative source so that will make our (other) industries competitive because the Russians are to be trusted and there is no need for strategic concerns. Unfortunately it will be the end of the refineries. They will immediately lose their market in Ireland for economic reasons. Councils throughout the UK are bunkering fuel with Scotland and wales being particularly concerned.

Still we've got our sovereignty back which means we can now do exactly what we could before but without EU interference. I fail to see the difference but am reliably told by Brexiteers that there'll be more white faces and less funny talk. Increased costs are worth it and it will revive the old 'blitz' spirit (apparently).

*I have a pal in Ireland who buys his domestic fuel in Northern Ireland where it is hugely cheaper. The fines are also high and transit vans riding on their axles might indicate a bowser inside. I have no idea how this will turn out. At my age cliff diving isn't advisable.