Member Info for romaron

EBITDA can reduce faster than debt. See slide 6 , from 6.6 (2017) > 2.5

Decent volume and they ain't sellers!

I think they nabbed it there - "EnQuest, like several other UK listed independent oil producers, racked up high debts after the oil price crash of 2014 as they had already committed to capital intensive development
projects as income was dropping".

Not much you can do about the tide or sun rising but there cannot be many harsher tests of a medium sized oil company than faced by EnQuest in the past few years. The existential threat has gone whilst Kraken is profitable with huge upside potential.

Build it and they will come.

UK oil & gas reserves according to OGA: https://www.offshoreenergytoday.com/oga-uk-oil-and-gas-reserves-enough-for-20-years-of-production/

The current thinking is managed decline and decommissioning has a big part to play. Many discoveries will not be developed which goes to show how significant the Kraken development is and may be one of the last in the UKCS. 20 years is a minimum and far beyond the thinking of brokers, traders and most investors. With the huge sums involved I wonder if those last standing will become kinda infrastructure type companies that are increasingly attractive to the Pension and Fund industry? If you read the article it says the UKCS 2C reserves is 7.5bn boe. Broken down to (1) 2.1 bn new field development, (2) 2.1bn incremental in producing fields and (3) 3.2 bn in undeveloped discoveries.
I'm not sure the appetite for (1) is there and some may possibly be shelved. Good luck with (3) which leaves the only guaranteed support for existing infrastucture is (2) which I see as getting more valuable going forward. It is not beyond the realms of possibility of Kraken being sold as a stand alone project in the future to a financial company after the more reliable returns once the project has bedded in.
More reading https://www.energyvoice.com/oilandgas/decom/194809/uk-government-launches-call-for-evidence-on-decommissioning/ which is an area we are also well placed.

My 20.03 was intentional in that some might think it was written about EnQuest or I'd gone off piste again but were too polite to comment. I actually plagiarised bits from here:

https://www.ineos.com/globalassets/ineos-group/home/20th-anniversary-supplement/ineos_12pp_final.pdf

It was on page 9 and was about the Forties Pipeline which still transports (I think) 30% of NS output. Forget EnQuest and look at the prospects from a company that has been in a similar/worse position to EnQuest. If you like to back winners the Jim Ratcliffe has good form. He sees NS oil lasting and being commercial until 2040 and beyond.

We are in a good place. It has just taken longer than expected against very strong headwinds.

Be Lucky

Don't sugar coat it hitman - " Magnus is obviously the white knight that saved the company."

Not convinced that's the case but certainly a distraction and in this market there are always bargains. Just glad it wasn't us.

You're forgiven. I've had him on filter from the first day.

Sold by RBS for £2bn bought by FIS for $35bn. I know it's fintech but it does show their valuations against the banks. Cash is being used less and less and how long before even your window cleaner is forced to produce a machine? It makes a mockery of NSF and van Kuffeler's idea that he can solve the transition which will extend to clients of both companies (I don't think Amazon or ASOS do cash). There is a lot of expertise in PFG which saw the way the sub prime market was heading and attempted to drag themselves away from the Dickensian methods that van Kuffeler still seems to believe in. The jewel is of course Vanquis and we don't want to be forced into an RBS type situation.

*van Kuffeler was at PFG for most of the reign of Peter Crook.

Oi E121, I am in the real world.

The plan is to take unloved assets and turn them into a bigger and better business. BP were willing sellers and believed the assets would probably need to shut down in 2029-2030 because of shrinking oil volumes from the
North Sea. We want to reduce the rate of decline in the North Sea from about 10% to 3-4% and put money back into infrastructure and revive the assets. We have a very active commercial team chasing every molecule of business
to 2040 and beyond.

Electric cars powered by wind and hybrids if range anxiety scares you are a wonderful idea. In the comfort of the 5th largest economy in the world it is achievable. Not so sure about India, Africa, Indonesia and a few others. Plenty of life left in oil.

Somebody was happy to buy 3.5 mio shares. The bots don't have a day off to drink Guiness and Champagne so the programme cycle can continue. I suppose AB and other directors are pretty hamstrung by being in a closed period but there is the opportunity next week to rally the troops. The background of Interserve, Debenhams, Kier show what can happen when poor management ans hubris combine but we are a long way short of their problems. AB's sangfroid under what must be heavy pressure is impressive. It was less than 2 months ago he was in Davos looking pretty relaxed. Pretty pointless posting until Thursday unless some news breaks. It hasn't been a good week for EnQuest that's for sure. A year from now we could be talking about what a stroke of genius bringing Kraken to the starting line was.

Be Lucky

Hi Auson - could be a lot of reasons but the UT is a matched trade (as is every trade) and useful for shifting an amount where scrutiny should result in a fair price. Whatever you say this is a SELL in my book because of the day movements. It could be clients asking for the trade to be at the UT price because then there is no argument about the price. It could even be a fund preferring to trade here to avoid accusations from small investors of skimming the price using tops and bottoms on the day spread. A move down like this week could easily hit internal trigger points and be programmed in (for example) if the MC of EnQuest goes below a certain price. If the market got wind of it they would go into the auction with low prices because they know they'll receive. Underwriters at the RI work on a similar basis. It doesn't mean that the price is accurate but at the end of the day it is a market. You know yourself that if you go to a veg market or even M&S at the close there are bargains to be had.
This week's activity has (belatedly) shone the light on what the market professionals knew before us PI's. I'm fairly relaxed as we've had a shake up and it does look overdone if the production guidance and POO holds up.

Of course it could also be manipulation but I'd go with a fairly indigestible trade late on a Friday. Many traders and brokers would have been watching the Gold Cup at Cheltenham and not in the office.

Here it is:
London, 16 November 2018 -- Moody's Investors Service, ("Moody's") today upgraded EnQuest PLC's (EnQuest) corporate family rating (CFR) to B2 from B3 and probability of default rating (PDR) to B2-PD from B3-PD. Concurrently, Moody's also upgraded the senior unsecured rating of the $677.5 million high yield notes due 2022 to B3 from Caa1. The outlook on all ratings remains stable.

I don't subscribe so don't get latest updates.

Typo 16 November 2018

Weren't they already already upgraded to B2 stable on 6 November 2018? I've got a note B2-PD (Probability of Default) perhaps that is what has changed?

I've been researching (OK, googling) and the first problem I've had is that it is such an old field that information before 2003 is hard to find. In fact its productive life is older than some posters on here. I did bump into this:

https://www.ogauthority.co.uk/media/4283/polymer-eor-industry-starter-pack-ver3.pdf

I'd draw your attention to 4. Size of the prize P.11
If I've read it correctly the improvement of C.5% with Polymer EOR. What is more important is that it is 5% of STOIIP. On P.13 it talks about Captain. After 22 years recovery is 30% of peak and that is not insignificant. However the EOR will be sweeping the bypassed oil (STOIIP). There is a pretty picture on P.9 that even I understood.

I know it is years away and a lot can happen with Kraken but it does suggest that our portfolio of older wells could be very valuable indeed on a much shorter horizon. Clever money likes them! Brokers and traders concentrate on the present and avoid.

Brain fade - I suppose it might be germane to know what the FDP had regards production and the price of oil pertaining?

?Kraken has moderately viscous oil
?78 – 161 cp API 14

?Other heavy oil comparisons:
?Alba 7 cp
?Captain 50-150 cp API 19-21
?Mariner Maureen 67 cp
?Mariner Heimdal 508 cp
?Bressay 540 cp
?Bentley 1500 cp
?Government of Alberta classification
?“Medium Oil” 1 – 100 cp
?“Heavy Crude Oil” 100 – 10,000 cp
?“Tar Sands & Bitumen” 10,000 – 10 E6 cp

Buzzard API 32.6 crude sulfur level of 1.44

Maureen 1492m API 14.2
Heimdal 1227m API 12.1

*Jim Buckee says the cp is the most important consideration and that Kraken oil is like champagne compared to Canadian tar sands.

Thanks guys - I knew you wouldn't let me down. E121 9.47 this is the crux of the matter. The reference to Captain being similar in the oil v water respect is interesting. Captain started in 1997 and is still chugging away and they even reached a FID in 2017 for EOR. [In 2017, daily production averaged 28,600 barrels of liquids and 5.6 million cubic feet of natural gas.] Now call me a cockeyed optimist but I find this encouraging. I'll post some notes in another post re viscous oils. What CNE says is that ignoring the FPSO the production of the field according to the FDP is down 20% (40,000<50,000) according to their (CNE) latest models. So there are 2 problems. I would imagine the field is the more intractable. Problems get solved and technological improvements only goes in one direction. I am much more comfortable now after listening to the CNE webcast again. I do side with Auson with my suspicion of accountants and kitchen sink accounting. The contra entry is normally a lowering of the level in which Director's options kick in.

*I couldn't find the production of Captain over its lifetime or what the plateau was. Sounds like a job for MO

Accountants or people who can read balance sheets and income statements required (e.g E121, hitman). Ability to read an RNS also useful.

NS Kraken Field. Prudently valued at by Cairn Energy at $ 664million (Times yesterday: Cairn Energy cut its estimate of reserves at the Kraken field by almost a fifth and cut the value of its holding by $166million.) Total value of field $2,213million ($664million CNE, ENQ $1,549million)

My question is this. Is it the value as of the field as at 31 December 2018 or when the FYR results were reported on 12 March 2019. Part of the question is what value were they giving to Brent oil in the release? On 31 Dec it was c.$54.00 on Tuesday it was c.$67.00. I've run my amateurish calculations on production and still consider Kraken a success (not if oil collapses but then we wouldn't be alone) with only upside from here and I'm being prudent.

Can we extrapolate some indicators from the CNE valuation and use this as a worst case or base scenario for the value of EnQuest bearing in mind that Kraken is a large proportion of our reserves assets and production?

Build it and they will come

*Auson please stop feeding the trolls.