Member Info for romaron

The Retail Bond has begrudgingly moved up from 85.25 on July 1 to 85.325 today. Since July 1 the equity has risen by 15.8 per cent. Maybe it's the summer dog days and holidays but it does show that they don't always move in lock-step. You'd expect a small increase anyway as interest accumulates so you could say that the RB is in stasis. The RB really requires a credit agency like Moody's to upgrade. The UT was unusually large today and I take that as a good sign. In FX some clients, (in my case Lira) afraid of being ripped off, would want their foreign currency rate fixed at the daily settlement in the bourse. I'm not sure if you can do the same at the evening auction but it would make sense that you get a fair rate and the amount won't be a problem. If there's been a buyer all day it might pay for him to use the UT auction as well. Too early yet but we might get an RNS that somebody has built up a reportable amount of stock in the near future.

Hi Londoner, I arrived at something similar regarding CNE and in fact 'kitchen sink' was used in an exchange on this BB. It doesn't mean either of us are right but always interesting to have another person's view. The data room reference was the 2018 AGM, not this year's. I held CNE briefly but decided that country's trump companies and the arbitration award might never happen. I wasn't hinting at bid interest but that the sale of the 20 per cent of Kraken has never really been off the table and might be a lot more attractive now. It would change our finances dramatically imo.

Hi Londoner, I can't match you guys in certain areas (especially technical/financials) but I have a reasonable memory and I know a lot about markets having been in FX for 27 years as a principal and broker. I like the different directions that individuals/contributors to this board come from and we do learn from each other. I'm the wrong person to ask about the smaller fields and afraid I have to pass there. I did go over my AGM notes and regarding the decline rates what AB actually said was "double digit or 'low' teens" for the fields. I did my own research and arrived at 'high teens' but I forgave him because we were in a hole at the time and what CEO wouldn't try to put the best spin on a situation? It's the incoming CEO's or those trying to change the news cycle about their company that really try it on [Cairn Kraken impairment?]. I speak to a few other investors and likened AB to a pilot. You get aboard and have to trust his professionalism but when you hit turbulence you need a top pilot. We hit that turbulence and the market is slowly awakening to this fact that AB and his team proved their mettle. People have been quick to criticise and downplay Kraken but I think it is a positive game changer.
He really is a 'top gun' among oil company CEO's imo. We were chatting this morning about the share volume and my pal remembered another question that I brought up at the 2018 AGM. I asked if the data room for Kraken was still open regarding the 20 per cent sale. It was. I doubt AB is sitting on his hands and I am personally not against more acquisitions but it is the larger shareholders he needs to convince. The LTHs here (that's us) aren't really relevant. I think that AB runs this company like a chess master and is thinking of moves months, if not years, ahead.

There is renewed interest in the NS and I found this from a July 18 post of mine on iii regarding Ineos: "Realising that bargains were getting fewer in the petrochemical world they turned their attention to the North Sea from 2014. After all, “oil rigs are basically are basically chemical plants on stilts whilst the machinery and equipment required is almost the same in both sectors – pumps, pipes, valves and steelwork”. This is all in the chapter headed ‘Against The Current’. One of their executives said that ‘if you stay in chemicals 10-15 years , you are always going to feel poor at some time, because it’s cyclical and your margins slim down’. He said this to criticise oil and gas where apparently ‘cost doesn’t matter’.
They saw bargains and have built up. A hint was dropped imo “Rumours circulate that it [INEOS] is now in discussions over a fourth energy acquisition , which could be larger than the first three”.
[ DEA, Dong & Forties pipeline.] Why put that in the chapter?."
I assume that the fourth acquisition was ConocoPhillips that didn't happen. Are they still looking?

Be Lucky

I can only see a brief spread of trades but it appears all the big 'uns are BUYS. They also don't have an A against them. Sentiment on EnQuest changing.

Hi Londoner, your common sense will get you into trouble on this board. Back to rocket science. At the AGM you get a genuine look of puzzlement from AB when questions over declines and maintenance are raised. Not that they are piercing and difficult to answer but a little bit naive (imo). One is physics and the other is necessary planned servicing of fields and equipment, or good husbandry if you like. At the last AGM AB commented on the accuracy of tanker watching (that is enough rocket science for me) and for the fans they can make an intelligent stab at the performance which includes the 3 week shut down later this year (from memory Sept/Oct) can be factored in as it is simple maths. At another AGM he defended the high declines as being "normal". Again from memory I think the rates were high teens. This is true if you don't spend money on maintenance on ageing fields but at the time we were basically potless, needs must! With cash available you can mitigate the declines and it becomes a commercial decision.

Declines and maintenance are facts of life and have to be accepted but I think your bringing it into debate is useful and I would not be at all surprised if we have healthier production across the portfolio. I think that between you and ProdOp we have better insight into what goes on under the bonnet.

Build it and they will come.

Today's ST: Sir Jim knocked up profits of more than £500m from oil and gas production last year, but wrote of £120m on a botched deal. The NS division of Ineos reported an operating profit of £522m for last year. That compared to a loss of £437m the year before, although the results are not directly comparable as the group has been reorganised.
Ineos was in talks to buy Conoco P)hilip's NS business late last year, but it walked away. The package was instead sold to private equity-backed Chrysaor for $2.7bn (£2.1bn). Recently filed accounts for Ineos show it wrote off £117.8m on a deposit for a deal, believed to be the ConocoPhillips talks.

I might add that these 10 fields produce c. 25,000 boepd so they don't have a Kraken (or a Magnus?). I'd imagine they're expecting to do work-overs and EOR to squeeze the last drops out.

Smart money still like the North Sea :
https://uk.reuters.com/article/us-total-m-a-hitecvision-petrogas/hitecvision-omans-petrogas-to-buy-uk-oilfields-from-total-idUKKCN1U50XY
whilst the Majors re-tailor their reserves. The numbers guys might find some cross valuation from this deal for comparison purposes. In The Times today this: "The French oil major acquired the assets as part of its $7.45bn acquisition of Maersk Oil in 2017. It said that the sale was part of its strategy of reducing costs by divesting "high technical costs" assets. The assets that Petrogas NEO are buying include four fields that are 100 per cent-owned by Total; stakes of more than 60% in 3 fields; and stakes of 32%, 5% and 2% respectively, in the Golden Eagle, Scott and Telford fields, operated by China's CNOOC."

*excellent volume today - the rise indicates there is new money involved that takes a longer view. AB has almost single-handedly hoovered up the loose shares that feed the algos and day traders. Onwards and upwards.

My reply was nothing to do with legality but the fact that Iran is not the only belligerent. To have foreign warships from thousands of miles away threatening you would be non-acceptable for most sovereign nations. I don't want a war but have sympathy for any country that wishes to press back against US hegemony backed by its allies in the region. They aren't as supine as we are when it comes to standing up to the US.

I didn't know this from gkb's post: "BP Plc, the second-largest oil producer in the Gulf by volume, is shutting all production at its four Gulf platforms ". It does though help explain why BP is reducing NS involvement and selling off assets there.
I'm hoping a war can be avoided as it won't help other stocks in my portfolio and you can never predict outcomes. I don't know about Iran being bellicose but I'd imagine we wouldn't look too kindly on foreign warships in the English Channel. The impact on oil If it does 'kick off' is being underplayed imo. If the US attacks Iranian assets I'd expect an immediate response by Iran on Saudi assets and forget Straits of Hormuz - I'd expect the Bab al-Mandab Strait to be attacked/mined whilst insurgents blow up refineries and pipelines in Saudi Arabia. Technology is great but low level boots on the ground attacks and WW2 weaponry still works very well. The stakes are extremely high. It isn't a video game with drones.

ProdOpt - You're going back a bit. Equinor was then Statoil before it became ashamed of the billions it made from oil and decided to drop the 'oil' from the name. Xcite disappeared and the field Bentley is unlikely to ever be developed as is Bressay imo but Mariner did get past the starting line. They are in the early stages at Mariner but I did find this on a quick google for Mariner:
"A 33km-long pipeline is laid between the platform and the Vesterled pipeline. This 6in gas import pipeline will supply the additional gas that is needed to meet the energy demands of the platform. Diluent to the platform will be supplied from the FSU through a separate 6in diluent import pipeline measuring 2.4km in length." Not sure if that plan was ever employed.
It sounds like gas import would lower power costs for EnQuest but not an area I know anything about.

Hi MO - I'm not that heartless so maybe I should have said "the market usually reacts favourably to employee reductions". I've been involved in TUPE myself and it's never pretty. On good staff retention this from the Ineos takeover of innovene.
"One of the biggest early issues was that most of the thirteen senior executives working with Alexander [Innovene chief] had a 'change of control' clause in their contract, which meant that, if BP was bought by another company, they were guaranteed a large payoff if they didn't want to stay with the new owner. 'You had these thirteen senior guys, some of whom we actually wanted to keep, who were all going to get multi-millions to leave'. many were perturbed by the restructured hierarchy. 'Lots of guys threw their toys out of the pram.' One senior figure from BP said to Jim Ratcliffe: 'You don't understand, I don't report to people!' Needless to say, he didn't last long. Eventually there was only one Innovene board member kept on in a CEO position at INEOS.
This was obviously at a senior level but it goes down the chain. Get it right and you will be rewarded. I'm happy to see that EnQuest doesn't sit still. I think SVT has a lot of further potential. We know that a lot of NS infrastructure became bloated during high oil prices and this is another part of the cycle.

Hi MO re your 20.18 - Agree and speculating is largely wasted effort. It's about negotiation. BP couldn't handle the minutiae of a declining asset that they are not geared up for. Both sides have cards to play and future collaboration requires rectitude and I'd imagine that BP are glad that EnQuest are dealing with the Unions and the politics. In another deal involving BP the company that took over was planning the doubling of the company's EBITDA. One key measurement figure, mis-estimated by a CFO to the tune of some £20 or £30 million, was justified to them with: "Well, in BP we were regularly out by a hundred million, and no one ever noticed!" Source: Chapter 4 'The Alchemists' The Ineos Story

I guess they would say things have improved since then (2005 take over of Innovene by Ineos) but the Majors often have a culture that repeats itself. Whatever your view the dice have been rolled and we can only be bystanders. As a glass half-full person I have confidence that EnQuest are one of the best players in this sector. The staff reduction at SVT is a good sign.

The actual article is about James Bartholomew who writes (regularly I assume) "Diary of a Private Investor" allowing his portfolio to become unwieldy because of holding too many stocks (37) and is in the process of culling them to a more manageable number. He finds it difficult to research 37. He originally aimed at 10-15. He is working through them (14 so far) and is compiling those he definitely does not want to sell - his strong "holds". The short list is four: BHP, Yanlord, Lloyds and EnQuest. The sub-editor has headlined the piece "My portfolio has become bloated - but I won't sell these four stocks irrespective of Brexit or a Labour government"

Cursory research shows this guy has been around for years and published several books. He will have a following and supporters so more than just a tipster with a website.

Not a paper I read (a pal sent a picture) so we may get even more right wing xenophobes posting next week. This on Saturday by James Bartholomew:
"Finally, something far more speculative but nevertheless a hold for my portfolio.
Enquest is a British oil company. It has three major risks: it has the operational risk of getting oil out of the North Sea; there is the danger that the oil price might fall; and it has the financial risk of being heavily borrowed. Oh, and there is another risk - that an anti-business government might arrive in Downing Street and start taxing it heavily.
But on the other hand, at 20p the shares represent a mere 2.4 times forecast earnings per share this year.
And if the company uses its healthy cash flow to continue reducing its debt, it will appear less risky and the market may well decide to give a substantial boost to its value.
So there are dangers , but there is also the possibility of a big gain if things go well."

My pal is a cautious investor and doesn't hold Enquest but is thinking of dipping his toe in. I may have put him off by telling him that the CEO is an Arab.

"not a very positive action for us shareholders" - well I doubt you are a shareholder and note your consistency in being critical whilst pretending to hold. These are the "dead dog days" of summer and unless there is a reason to buy rather than hold a drift down is expected. LTHs don't like to sell at a loss or add so there is one side that holds a marginal advantage, the sell side. The funds and institutions will return when the promise of debt reduction become fact. The turnover has been miserable for some time but like the residential property market there is always a small underlying business. The "three D's "(Death, Divorce and Debt) means there is always some activity. I'd also throw in "a watched kettle never boils" or "Zeno's paradox" for the more cerebral.
It is impossible to know what is behind this trade unless it crosses a percentage holding or otherwise RNSable. All I know is that such trades are not unusual and if it was a sell then somebody was happy to buy them. I do have some experience of this and there are several market participants who want to know if unusual size (not regular market size) is around. I'll make a guess here. The seller sold for whatever reason but the buyer knows what he is doing (unless some on this BB deal in these kind of amounts?).

*it goes without saying that TheGoldenDragon is now filtered so I won't be responding if he posts again.

Hi Maxandmonty, I think it was one trade of 1.85 mio and the other two were a cancellation: see here from the London stock Exchange:
17:14:42 05-Jul-2019 19.00 GBX 637 121.02 Off-book TNCP XOFF
16:40:01 05-Jul-2019 18.96 GBX 1,850,000 350,686.00 Off-book AMND XLON
16:40:00 05-Jul-2019 18.96 GBX 1,850,000 350,686.00 C CANC XLON
16:40:00 05-Jul-2019 18.96 GBX 1,850,000 350,686.00 Off-book XLO

I kinda like it that we are in a backwater. The "noise" around a lot of oil stocks are just enticements to have a bet when nothing is happening. If nothing else the spread will damage you. Energean (ENOG) has had a couple of good days and has almost doubled since its IPO. The chat there doesn't even extend to a second page. I'll take that for now. Plenty of growth potential for EnQuest.

Build it and they will come.

Boring is always best. We get caught in the wash of the shares that are traded. Bit like Chepstow races when the Grand National is being run at Aintree. We'll move with a RNS or a world event we cannot escape.
The racing analogy works for me. The Aintree bets will dwarf Chepstow bets in size and number but there are always gamblers. The betting industry works hard to create encouragement to bet and it is basically a system to take money from mugs who believe they're in with a chance. They are, but not long term. We should all follow the bookies example and lay bets by having a portfolio of shorts to even out our chances. Odds don't lie and the algos can predict chances and behaviour. It is in the interest of those who make a living from trading to dream up stunts and advertise (possibly trolling bulletin boards on both sides); bit like Trump really. We may not like it but it works. The fact that we are out of the fluffed up world of the more volatile stocks is good for me. The stats are encouraging with the proviso that POO and demand are out of our control.

Be Lucky

*if algos can alter the US elections then what chance a small private investor who cannot access the technology trading in small stocks?

Technology and collaboration have reduced decommissioning costs across the North Sea. With out commitment to decomm every penny helps.
https://www.heraldscotland.com/business_hq/17745140.north-sea-oil-and-gas-decommissioning-cost-estimate-cut-by-billions-amid-efficiency-drive/
Throw in Sullom Voe efficiency drive and this isn't a company resting on its laurels. Echoes of Ineos and Grangemouth?

Build it and they will come.

Not like you chilts. Good news - shorts on Euroclear were down in June to 2.73% from 3.17% in May.