Member Info for romaron

Having said that this site does have something called Moody's Analytics Risk Score:

https://markets.businessinsider.com/stocks/premier_oil_2-stock

PMO is 8 whilst we're 9 so perhaps that is the explanation.

I omitted that I went into Moody's to see if they rated PMO and that was the reason. They don't cover PMO.

Was the reason I went into Moody's free info. Both EnQuest and PMO have a retail Bond running. ENQ 7% mat. 15/04/22 and PMO 6.50% mat. 31/05/21. So roughly a 3 year against a 2 year bond. Not exact but a useful comparison except for prices Enq c.89 and PMO 103. Both companies have debt and production levels that don't explain (for me) this disparity. Anyone out there with an explanation.

O/T Tullow - they are having a few problems with shareholders thinking they're overpaid but I did come across something that although random is a positive for EnQuest. Moody's write that Tullow's rating is unlikely to go above B1 because of its considerable exposure to Ghana (67% production 2017) because its Sovereign rating of B3 stable. United Kingdom is AA with a negative outlook (Brexit but ENQ largely unaffected).

No, not the great track from Meatloaf https://www.youtube.com/watch?v=k5hWWe-ts2s but a Moody’s rating review for 3 European E&P companies in Mar 16. They were Tullow, Ithaca and EnQuest. Ithaca fell to Delek in May 17 after talks with EnQuest for a farm out of Kraken collapsed in Sep16. I mention this because it goes to show the parlous state of these 3 companies at that time (EnQuest was weakest). Delek was trawling for bargains and companies in trouble. They were (imo) vultures and the resistance shown by EnQuest made them move on to Ithaca. Why not? Maybe they thought they could get Kraken or part of it in a later fire sale.
The above is what happens when I try to do research. It meanders and takes me to cul-de-sacs and it is a truism that a little knowledge is a dangerous thing. Not all companies are covered by Moody’s and they aren’t free. Cairn for instance isn’t covered and Ineos are partly but that may be because of their notes and the fact that they are very large. They may or may not pay for Moody’s research. Cairn certainly don’t and neither do PMO.
The fact that these 3 companies were chosen is more a case of they were the only 3 paying for a Moody’s rating. I soon lost interest with all the B2’s & caa1 etc. but will do a separate post of what I was after.

Possibly a completed order that goes back a few days. Unlikely to have been done in one hit.

Th 25,000 purchase of the Retail Bond at 88.78 at 8.57 a.m. Unless it was held over from last Thursday?

Part 1. I got a message from another investor who is more clued up than me and works in the industry. He was opining the possibility that the company could now reconsider farming out the 20 percent of Kraken that was aborted in September 2018 if we really have reached the original plateau forecast. I suppose it would take a few more loads to really be confident but is now looking more possible than it has for several months. There would be some technical unwinding of the OZ deal (I suppose) but it would make a big hole in our debt which appears to be the biggest constraint on the SP. A successful sale could push the SP into orbit.
Part 2. https://uk.reuters.com/article/uk-enquest-m-a/enquest-aborted-sales-talks-for-kraken-stake-due-to-debt-deadline-sources-idUKKCN1LS22D
If Kraken is now running as per FDP it does raise some interesting questions. Jefferies who were handling the sale downgraded the target SP as recently as 9 April . I know there are Chinese walls within investment banks but does anybody really think that the analysts don't talk to colleagues in the same sector/bank? We have the interesting scenario that Jefferies DON'T think that Kraken production is solved. Could it be sour grapes that EnQuest may be putting out feelers and Jefferies aren't involved and are no longer privileged with info? I assume a data room was/is open and many people know what the problem was/is. Which private company was it that tried to gazunder a deal at the last moment and are they still interested? It takes two to make an auction.
I think we'll have to wait for a few more offloads but it does illustrate how important Kraken is and what a game changer it would be if the problems have been solved.
Against a farm out is governance and whether AB could buy stock if he had prior knowledge of a deal. It's getting interesting again.

*interesting that the 2 recent purchases by AB include the charitable foundation where he and his wife are trustees. That says a lot to me. I don't know about the rest of you but I wouldn't dare take a risk where my wife was involved.

Goodbody, the stockbroker, told investors yesterday that a takeover by NSF is now unlikely but that a tie up of the two lenders presents "compelling industrial logic". It could even generate a Pac-Man defence where the prey turns predator.

Source: Today's Times.

Chrysaor has bought the entire Conoco Philips UK oil & gas fields for $2.7bn which produce about 72,000 barrels a day. Add to the purchase from Shell in 2017 ($3bn) makes them the largest producer in the NS. What I found interesting is that Chrysaor have been around longer than I thought (2007) and is roughly the same age as EnQuest. They must know each other well. Its main asset originally was the Solan field which it sold to PMO in 2015 (they still hold a royalty and net production interest in the field). I wonder how the analysts would rate them?
It looks they cut their losses in Solan whilst we had probably passed tipping point on Kraken. The senior analyst at Wood Mackenzie said "Considering the company was a relatively small producer before it acquired a batch of assets from Shell in 2017, this is a story of incredible growth". The game changer appears to be the backing of EIG Harbour Energy c.2017 who own just under half the company.
Whatever way you look at it some folks still think that there's a lot of value in the NS and they ain't mugs.

Build it and they will come.

Just idling through my (not) in depth research and did a comparison with the Major notifiable shareholders at the RI. To save you looking them up here are the RI prospectus numbers:
Aberforth 105,292,001 8.88
Double A 103,141,033 8.70
Baillie Gifford 69,934,972 5.90
EnQuest $Employee Benefit Trust 51,628,456 4.35
Hargreaves Lansdown Asset management 51,375,063 4.33
Swedbank 48,204,048 4.06
Dimensional Fund Advisors 43,236,786 3.65
If you compare them to the figures at 8 March 2019 on EnQuest.com then LTH's can take comfort and pleasure from the professional support that has been steady and has grown. Many of us are amateurs but these guys usually know what they're doing and have better access to the company and industry than we'll ever have.

Hi spindok - We are coming up to Easter and the roads round my way are much clearer. It is the biggest holiday after Christmas so low volume is to be expected.

Hi hitman - "Everything you want, no compromise" - good to know you're consistent in oil and retail.

SQZ comment is rhetorical and doesn't need answering.

Thanks Pelle. Of course it's left me thinking that EnQuest is an even stronger BUY. I'm still searching for a reason for our unpopularity which is high compared to our peers in an already unpopular sector. Can I stop looking out for a longboat full of angry Scandinavians now?

O/T: Today SQZ posted YE results. They have no debt (market likes) but do have similarities to EnQuest. I had a token holding which I've now sold because of this; " Group profit after tax of US$74.7 million (2015: US$17.1 million) showed a 337% increase. This figure includes a bargain purchase gain of US$52.9 million on the BKR acquisitions calculated in accordance with IFRS"

What is "a bargain purchase gain"? A convenient technique for window dressing?

Hi E121 - thanks for that. I read it as the PIK only related to the interest payments, not capital. Apologies to Pelle and yourself for doubting your financial skills. Thank goodness we have people like you on this BB.

Hi E121 - so you're telling me that the 'consolidated' debt (p.281 prospectus) doesn't include the bonds? If that is the case then I am wrong. I assumed net debt and consolidated debt were the same.

I understand it better than some it seems. I didn't get involved on the BB when RBS made the mistake but it does go someway to explaining why she wasn't completely wrong and helps me understand why the analysts generally have a downer on EnQuest. I explained several times regarding the alleged breach. We did not breach a covenant (which I believe was what RBS said) which is very serious but we did fail the leverage ratio which is not so serious but it as not insignificant. For me it explains the wariness that analysts have shown towards EnQuest and low targets (once bitten and all that). We are still not within the leverage ratio and to pretend it doesn't matter would suggest that we can ignore everything else in the prospectus, including the CPR and the update in March. I'm actually quite bullish about our ability to achieve the ratio and believe that the board were underplaying our ability to get within the ratio in the March update. This attitude does to an extent get the analysts off your back as the company have set a low target imo and both sides can now get on with their knitting. AB's view is clear and he made it through buying stock. It was closer than many think but those sunlit uplands are on the horizon.
All imo naturally as I'd rather chew my right arm off than read that prospectus again.

Build it and they will come.

Pelle - P.281 of prospectus: Consolidated net financial indebtedness to EBITDA (the "Leverage ratio")

So you're telling me this is not the same as net debt which was $1, 774.5 mio and under performance outlook shouldn't be used when calculating:
"End 2019 Net debt to EBITDA ratio expected to be approaching 2x; EnQuest’s target is between 1x and 2x"

I take 'consolidated' to mean all debt outstanding at that time. I'm not an Accountant so treatment of the OZ loan is open to interpretation and different Accountancy treatment nothing new or illegal.

E121 - what I was suggesting is that if you had an option maturing in (say) 2/3 months that was in the money but a cash call next week that you didn't have the funds for then the temptation would be to cash out. In fact that is what I'd do.

I wasn't trying to suggest that options aren't a good idea, just that there is flexibility in having positions.

Pelle 21.06 - I threw something in because I think that the situation was far worse than realised and AB kept a cool head (I wouldn't like to play poker against him). Desperate times call for desperate measures and it was essential for survival that we raised cash. I merely hypothesised that it could have been a scenario. Options are taken at various times and it might surprise you that there are no guarantees. I have no idea what you are talking about regarding Net Debt being $680 million. It is clear from the prospectus and the update that they are talking about Net debt which was $1.774m at YE and you are telling me it is now $680m?