Member Info for romaron

To our kids. Solar panels on school roofs. "Dad, is it true that the solar panels were made by slave labour?"

It means all the numbers that EnQuest and Serica were using are now up in the air. As it stands we are NOT benefiting from NO EPL. The ESIM mechanism requires a 6 month period for BOTH O&G to be below thew benchmark. Gas isn't. Gas was set at 54p a therm, so with inflation maybe 57p. Yesterday it was 89p the NBP price. The NBP price includes LNG which is 3X the cost of our gas so I'd argue that the benchmark price is an artificial figure that disallows the UK from benefitting from its own sovereign natural resource. The pernicious effect of this spiteful and unfair tax further impoverishes this country and pushes all heavy industries closer to the cliff edge.

That's us. I just looked at LSE and we haven't traded a million shares yet. I don't follow the Bonds every day so imagine my surprise when I checked our HYNs. On 25 March they were 103.125 and yesterday dropped to 98.25. A 500 point drop which equates to around 2% making a YTM of c.12.5%

I was worried because I am out of touch with the trading carnage around us and have no wish to get involved. Getting regular bond prices is not easy as paywalls get in the way and unless you are in the business a cost too far for me. Helpfully EnQuest are quoted here https://www.luxse.com/ and for comparison the only one I could find was Tullow. They were down around 1400 points from the last time I looked. That is a YTM of close to 40%.

HYNs are also called junk bonds and in actual fact we did pretty well yesterday amongst the bale out. There is panic about but you'd hardly expect us to be untouched or improve. We did though possibly just get marked down rather than traded down. On the bond front we're OK I'd say. If there's a hurricane expect some minor damage.

Price Discovery of NBP gas pricing used for construction the ESIM benchmark that was brought in to give "certainty" without mentioning of course a "higher guaranteed price for gas".

Based on market supply and demand, including:

Domestic UK gas production

Imports via pipelines (e.g., from Norway, Netherlands)

LNG imports and regasification capacity

Weather and heating demand

Storage levels

UK export flows to Europe via interconnectors

The ICE NBP Futures contract is a major source of price discovery.

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Why the refusal to use cheaper and cleaner UK gas going forward? The NBP price isn't the price of UK Natural Gas! The green blob have successfully conflated NG and LNG with assistance from the renewable industry and a silent (to the public) O&G industry.

The car industry was quick to respond to yesterday's Government reactions. It isn't always about the rocks and minerals below your feet. Hopefully, oil and gas next. Maybe EnQuest should open an office in the NW? This is behind my thinking as pragmatism tries to dislodge ideology:

“The Ferrari F1 team fired their entire pit crew yesterday.”

This announcement followed the UK Government’s announcement of extending Net Zero deadlines for performance cars and helping depressed areas of the UK.

Ferrari announced that they are to replace their entire pit crew with youngsters from Liverpool. An unemployed bunch of youths from Toxteth had shown superior skills and were able to remove a set of wheels in less than 6 seconds without sophisticated equipment, whereas Ferrari’s existing crew could only do it in 8 seconds with millions of pounds of high tech gear.

It is considered a bold move by Ferrari as races are often decided by split seconds and this gives them a clear advantage over other teams.

On top of this, at the first practise session the new crew were able to change all four wheels in under 6 seconds but, within 12 seconds, they had re-sprayed, rebadged and sold the car to Maclaren for 8 cases of Stella, a bag of weed and some photos of Lewis Hamilton’s bird in the shower.

Asked by The Telegraph whether Sir Keir would consider further changes, such as lifting the ban on gas boilers in new homes, Sir Keir said: “We will work with all sectors, as we’ve shown today, we’re not ideological, we’re pragmatic, if there’s flexibilities that help which is what we’ve done today, then of course we’ll take those steps."

Not ideological but pragmatic! Have I missed something; has he sacked Ed?

Thanks L7. The earlier tax credits we gained I suppose you could argue were off mistakes EnQuest made. Bit of history here. Around 2015/16 I went to an AGM of EnQuest and spoke to Nigel Hares who had been a founder of EnQuest and was there I guess as an investor? Anyway, I was on a mission to find out more about Bentley and Xcite. I find it easier to get info sometimes by asking a competitor or another industry participant because of governance considerations. When I mentioned Bentley he replied that "they had looked at it but chosen Kraken". It probably means they looked at Bressay too or have known a lot about it since before 2010. There is another piece of info that Statoil paid $15mio for info from Xcite's data bank c.2016

These 3 fields are interconnected (how close I don't know) and Statoil was more interested in getting Mariner started anyway. What I'm saying is that whatever deal we did to get Bentley makes it either being a total waste of money if its oil stays in the ground or a masterstroke by AB. All it requires is an acceptance that the UK need's oil for the next 30 years minimum. I couldn't care less that the likes of Uplift say that oil is sold globally as though it brings NO benefit to the UK. Three quarters of our car production goes for export so is there NO benefit in making cars?

Bentley on the face of it cost us next to nothing because it is considered by some as worthless.

I believe we hold a well run company in EnQuest and a Lottery ticket.

Thanks Dick, we need to let the dust settle and get back to the potential merger. As things stand presently the sweet spot for us would be about as close as you can get but below the ESIM level (if it was split - say $75 so $74). However, I expect that the current upheaval around tariffs will speed up the fiscal mechanism which needs to be improved if there is to be a future for the NS. I expect movement as no government lets a good crisis go to waste.

I'm very hopeful (but not relaxed) that we are coming to a denoument of both the future of the NS and the NZ movement that bring back realism and stop the religious fervour surrounding the weather.

I am slowly changing my mind on Serica. I think that Tailwind was a strategic deal which puts them in a position similar to where EnQuest are tax credit wise. Whether we are better together is above my pay grade but it did get me thinking. Are there any other companies out there in the NS with a sizeable tax credit? Possibly not as new fields in the past decade are as rare as hen's teeth. Comment here from others would be appreciated.

BTW - I totally agree with you on BBK and Asia needs us. If you have O&G you can be a bully. That is why Trump isn't being so hard on us. We only have to give him a fraction of our dinner money whilst Ed Miliband would rather increase our payment or starve on renewable rations.

*Dale Vince admitted that gas was still needed in Sunday's interview. He qualified it by saying only a small amount. Not true and if you include gas central heating then gas becomes an even more critical commodity for the UK. He cannot retract that.

Introduction to yesterday's BBC Sunday Morning Live : https://www.bbc.co.uk/iplayer/episode/m0029sl8/sunday-morning-live-series-16-06042025 and well worth listening to from 34:30. Guests for the debate was Dale Vince who manages to look even scruffier with his ridiculous haircut against Malcolm Grimston from Imperial College.

I haven't come across Grimston before and he was impressive. He gave examples of the weaknesses and failure of renewables around the world - he even mentioned physics as being an actual real science unlike renewable fantasy.

Grimston destroyed Vince with his summing up - "it [renewables] doesn't tend to affect people like us well heeled middle classes - the people who get hurt by high energy bills and jobs destroyed are those who can least afford it".

He calmly had placed Vince in his true place. He pretends to be an eco-warrior from the streets (and dresses like one about 30 years younger) but is just another fat cat enjoying the grift.

It was a great way to end the interview. Vince wanted to say something but was cut off. The interview went poorly for him. If anyone can interpret Vince's mumbled response I'd like to hear it.

More please.

My feeling is that we needed this painful reaction to globalisation. Without access to fossil fuels the poorer citizens of the UK are moving closer to their 3rd world cousins. The real world is making an appearance. The 3rd world won't give up on fossil fuels and I doubt the majority of voters want the same standard of living as those in the developing world. Neither does Vince but he is well insulated and basically just a media tart and grifter.

Starmer will today announce measures today to help car manufacturers. Will there be anything for us?

"The move will raise speculation that the Government could scrap other net zero measures to boost growth, including restrictions on new homes and a requirement to install heat pumps."

and then this:

"On Sunday, Mr Miliband said that the Government had “strengthened” its EV policy by retaining the 2030 ban for most cars, and argued the rule would “benefit UK consumers by expanding the market for cars that are cheaper to run”."

Miliband could polish a t*rd. If he was a surgeon telling a patient he was having a double amputation below the knees would add "but there is good news, the man in the next bed wants to buy your slippers."

Oil is now where it was before the Russian invasion of Ukraine. I hope NZ zealots go where they belong. Standing on street corners handing out scriptures stating they are saving the world. The planet will always outlast us.

Many years ago people went to the stake for their beliefs so basically there is nothing new in this and these committees are rubber-stamping events in praise of the zealots. They are largely made up of the 'green blob' and questions are soft (unless you are from the O&G industry - remember the evisceration of Linda Cook) The only comment that references us is bland and meaningless - "On the big parts of the puzzle, the main uncertainty is the cost of oil and gas in the counterfactual. That is inherently uncertain. We use the Government’s projections for that. Of course, the savings you get on running costs depend on the cost of the oil and gas you forgo. There is uncertainty around that. It is very difficult to do much about that, in that we know that these are very unpredictable markets." Eh? A statement of the bleedin' obvious and the persecuted O&G industry gets a mere byline in passing.

Actually I think we've moved on from here and this is becoming theatre. This morning on Kuenssberg, Kemi Badenoch said "If globalisation is over why are they closing oil exploration in the North Sea" followed by reference to Govt (guessing Starmer?) - "he's talking about using more of our resources."

Labour won't want to lose out to Tory/Reform so I'm expecting them to use the smokescreen created by Trump to change a few things and blame "changing world events and security".

Not looking forward to tomorrow but it is clear that renewables are not the answer.

Ah that was quick. It does sometimes pay to ask a dopey question from the back of the class. I made an elementary mistake that I've made before (slow learner) and that is that the EU Gas Price (TTF) is quoted in Euro per MWh and the UK Gas Price (NBP) is pence per Therm. So one source knows I'm a numbnut and only 3 more to respond to confirm it.

However, I've made a simple job more difficult but it has NOW finally got through. ChatGPT didn't help which suggests everyone is an expert and has never needed to ask my question or it is like the small print on your mobile contract - never read. I have a nice little chart now which unfortunately I am unable to produce here but can confirm from a VERY reliable source that "UK and TTF gas prices tend to move in lockstep, with UK prices usually 1 or 2% below TTF."

That leaves us with a very simple question which is if EU and UK gas prices are similar (in fact we are slightly cheaper) then why do we have the highest electricity prices in Europe? Secondly, as the 'green blob' for some reason keep on about gas being a 'Global Price' why does it impact us so unfavourably compared to other countries? It also seems to point in the direction that LNG is included in both. We have unilaterally decided to head for a 100% reliance on LNG and Norwegian NG. I didn't and would not vote for that!

This is a mixed blessing. It puts pressure on the Government to throw the UK O&G some slack but particularly favours EnQuest if it does exactly that by replacing the ESIM with something that accepts that O&G are like apples and oranges - both fruit but not exactly interchangeable. We have suddenly shot up in attractiveness. IF oil stays a t (say) $65 many companies will close fields quicker and exit the NS basin. They won't pay EPL but will be making losses. They have little to offset their losses against.

We on the other hand instead of making 22% profit with EPL are now making close to 40% with tax credits on a decent chunk of our business (over to you Dick and Stevo). What I'm saying is that $65 oil is bad for the whole sector but MUCH worse for those without tax credits. It makes both EnQuest and Serica very attractive. Are we better off merging with each other or with different partners?

I'm not sure you're correct there Stevo. I've tried ChatGPT and I'm getting a qualified response and of course it is subject to 'hallucination' but I asked it a question of why (and I may be wrong here) we use NBP pricing to calculate the ESIM mechanism of the EPL and Europe uses TTF. The reason I ask is because NBP is 89p a therm and TTF is 30p.

For EPL to be removed both O&G need to be below the chosen benchmark which was $71.40 for oil and 54p a therm for gas as at end of 2022. They're allowing for inflation now but you'd still need below 60p?

I am asking my sources if I am on the right track. Other comments welcome. I am hopeful that they will split O&G and possibly replace the ESIM with something less punitive and spiteful.

Aye Frac, it's an ill wind and every cloud... you can't get away from effing renewables! Our time is coming.

And you have of course the unavailability of any ESIM benefit because whilst oil is below the benchmark gas is much higher. No expert but convinced that LNG influence and other artificial taxes will make sure that ESIM as it stands will destroy the industry. Ed's masterplan?

Can't be making it any easier in the papal conclave.

Could this be the result following border discussions -

"I have to tell you now that no such undertaking has been received, and that consequently this company is at war with Serica".

Always a drama with EnQuest.

Hi Dick, thanks for the explanation and you’ve illustrated the crux of the problem in the UK with renewables and Ed Miliband. Energy is fiendishly complicated, and most people struggle to understand their energy bills (I do) let alone the complexities of the Global energy market and the various suppliers with their claims.

They say a half-truth is worse than a lie. Ed Miliband has stretched that saying to limits that Trump would hesitate to use. Miliband will quote anything that furthers his missionary work and no longer is the truth just halved. He will make a claim with a scintilla of truth or just a trace of ‘truth DNA’ in a claim. The 9X cheaper line was bad enough but he has also claimed “FREE electricity”.

Free electricity though does exist as you’ve mentioned it in your post. It has a close resemblance to a glut and is the result of too much at a certain time. Too much availability and not enough demand. It's free because there is too much and nobody wants it. Batteries have a role to play here but only at the edges presently and of course they don’t come free. Free energy is possible in the UK but so too are blackouts. A forest fire brings free warmth but is usually inconvenient and in the wrong place. Renewables are just intermittent and hard to control. Bit like the weather really. It isn’t simple or economically possible to replicate what Sweden and Norway have.

Ed jumped on what Sweden and Norway can do without mentioning that we cannot compete. You need the cheapest form of renewable energy which is hydro and that sadly needs mountains whilst wind needs a lot of “Moose (Elk) pasture” and a small densely populated country struggles here. We are smaller than both Norway and Sweden. Scotland has some of these advantages but the demand of a much greedier and bigger neighbour to the South. Ed would like to put windmills in Hyde Park but it will never happen and mountains are expensive to build.

If you are a Messiah you can make it up as you go along. If Sweden can do it why not us? You’re a miracle maker and your cult members understand you’re saving the planet (which isn’t in any danger). Where are the promised floods? Has anybody built an Ark? No, this is ideology and pseudo-science (modelling).

Unfortunately, we must let this run its course until Ed and his followers run out of excuses as to why electricity bills continue to rise as fossil fuels stay cheap. Eventually the public will reject him and his party because promises remain only promises. Maybe he’ll be reined in by his pal Keir.

Surely this madness cannot continue?

No, Ed and his congregation will include the US as another despotic petro-state and wasn’t he far sighted in moving fast towards renewables. The man is a messiah.

Arguments are now getting through and renewable costs will be pushed higher still. Govt is scared of raising fuel-duty. We’ll see how they handle this. War of the spinners.

US LNG will be undercut by others. Aren’t Norway clever!

Tarmak, you forgot to mention that 40/45% of your electricity comes from hydro - the cheapest and most reliable renewable source. Not much use to Modestus unless they start building mountains in Belgium. Fell walking in Flanders’s is not an option.

Over here we’re expecting physics and science to be overturned to make it look like renewables work. Did you know a 100gm cabbage has as much energy as a 100gm of bacon? That’s the kind of idiocy that comes out of the green blob. They will soon start trying to catch CO2 with a net.

TBF to Chris Cox he was within the rules. AIM companies are under softer rules in terms of corporate governance and financial reporting. They are also not required to publish a full annual report.

An example of the difference at our presentation is that we had Steve Bowyer our NS GM in attendance. Serica left it to the CEO. You could say the SQZ is more efficient. I’d say from having met Steve Bowyer that he is equally open and just as knowledgeable. AB also doesn’t do the office cleaning.

We are the bigger and more senior company. Basically, from the SQZ side it is Mercuria calling the tune. They are pragmatic and not in the least sentimental. I’d suggest Chris Cox is a locum.