Member Info for romaron

"Electricity demand associated with U.S. cryptocurrency mining operations in the United States has grown very rapidly over the last several years. Our preliminary estimates suggest that annual electricity use from cryptocurrency mining probably represents from 0.6% to 2.3% of U.S. electricity consumption."

https://www.eia.gov/todayinenergy/detail.php?id=61364

Everything has a carbon footprint. Just been listening to a view that trees aren't as green as people believe. The plantations of pine trees aren't forests. They're tree farming and come with a decreased level of bio diversity. Apparently we only use about 20% of a tree the bark, roots, small branches are waste. We then use a lot of energy using the 20%. News about water charges going up in the UK. Well, if your infrastructure is centuries old in some cases and you've been saving on capex what do you expect? Building on natural flood plains (and roads, car parks, driveways etc.) means that water has to go somewhere else. I'm quite pleased that I can turn a tap on with ease or flick a light switch. I wouldn't mind it being free but then again I wouldn't work for free. what world do these people live in.

Free beer for the working class comrades.

I'd say they're scraping the barrel to find mud to sling. Show me an O&G company that hasn't been fined.

"EnQuest has been fined £150,000 for flaring an excess 262 tonnes of gas on the Magnus Field between 30 November and 1 December 2021, despite knowing that it did not have the necessary consent in place.

Equinor has been fined £65,000 for flaring at least 348 tonnes of gas above the amount permitted on the Barnacle Field between June and November 2020." From NSTA website.

What's the difference and they were fined at the same time? Funding the Tories is the difference and that paid off well with the windfall tax didn't it.

Spirit were also fined for this: "Spirit has been fined £50,000 for exceeding the maximum allowed production volumes from two fields over three years. Producing too much oil and gas can reduce the overall long-term production from a reservoir, to the detriment of the UK’s security of supply, so it is vital that when an operator wants to raise production it applies for a new consent so that its new plan can be assessed."

https://www.nstauthority.co.uk/news-publications/operators-fined-total-of-gbp265000-as-nsta-moves-to-enforce-net-zero-and-security-of-supply-requirements/

"Once U.S. shale is tapped, that's when the real oil supercycle begins."

The US has form on this and is why there was only one gold rush in California.

All a bit too complicated for me ukbbb however it does throw up an interesting connection. The failed Serica deal was with Kistos. The Executive Chairman of Kistos is a Mr Andrew Austin who in an earlier role built up Rockrose who were sold on to Viaro Energy. Peter mann who was CEO of Rockrose is also on the Kistos board.

Could there be a rinse and repeat with a different company (or companies)? The pool of O&G companies left in the North Sea is getting smaller and more challenged. The sharks are circling.

Today - Mitch Flegg, CEO Serica

5 January - Alan Bruce, CEO Ithaca

Change is afoot.

I'm out this evening so won't respond. The podcast has come at the right time for me. One of the niggling distractions to me with O&TG was the development of seemingly ever more reserves and the glut of gas. This podcast explained it for me.

There is a glut and that will always cap the price. Being fungible if gas is super abundant then so too will oil and coal have this cap and downward pressure. Germany may even move back to coal.

Something worth remembering is that the definition of "reserves" is not geological; it's accounting terminology. The reserves don't change but we've seen fields close because of RBL changes, EPL, impairments etc..

Doomberg says we look at things in too a linear fashion (I do) and that is wrong. He is also a great believer in technology and whilst a negative presently might be a massive positive with B&B in the future. He also says "get rid of wind. Wind is a parasite" and I agree. It doesn't compete at all imo; not on cost or pollution. He is also hopeful with CCS (I'm not but then I'm linear man).

To the crux. He reckons we've reached PEAK ESG and I agree. The reason O&G is a BUY is not because there is a shortage but because we've overshot on the downside by several multiples. If the UK only suffer a smidge of what the Ukranians and Palestinians are suffering then the rebound will be of tsunamic proportions.

He is right too on traditional media. Manipulation and aggressive tactics based on hearsay and lies is rampant and most governments fund disinformation against perceived enemies and the lines soon become blurred.

I think Ed Miliband is becoming a liability for Labour. I am hopeful for good news from EnQuest in a couple of weeks. The current price and movements are best ignored because they tell us nothing we didn't already know. Uncertainty is a bigger threat and at some stage it will reduce. Doomberg is also pretty disparaging about COP and Davos. They are both grifts in his opinion.

Hi KO - pointles trying to establish what is behind them although it does kinda back my theory that at the UT price there will be less arguing about pricing and the UT is (almost) a neutral price. It could mask stake building or divestment but does seem long-winded. I imagine stuff is going on in the background and the share price won't make a lot of difference to the big players who are looking months ahead. I wonder if it isn't an orderly transfer of shares in what is a very thin market. It doesn't really worry me.

I'm more interested in my 12:08. People are missing important insights if they don't listen to experts who say that mistakes are also part of learning. I'll add comments to the post.

12:10 :40 Rishi Sunak attacked KIeir starmer on Labour funding plans to decarbonise the grid by 2030. He pointed out that plans and costs (£28bn?) were sketchy but helpfully the Labour shadow energy secretary had helped out in the Sunday Times magazine last weekend. He [Ed Miliband] said they don't need a plan to pay for it as it will pay for itself. It will produce real savings and makes economic sense.

He went in for the kill saying that Keir Starmer doeasn't want to talk about it but it is the same old story. Once again the member for Doncaster North has cast a promise in stone and everyone else just looks away in embarrassment.

*I was concerned that the 9X cheaper quote was never pounced on by the Tories. Thta's why I couldn't be a politician. The Tories are keepintg their powder dry. It will be used when the time is right. It is on record many times - especially the 2023 New Year speeach by KS and repeated days later at Davos.

Https://share.transistor.fm/s/921629d4

Probably looking for money down the back of the sofa. On the other hand it could be tidying up in preparation for moving forward to new arrangements.

From another article today in EV: "Three-quarters of Scottish people back domestic North Sea production according to new polling ahead of a political showdown in Aberdeen tonight.

Polling commissioned by consultancy True North found 75% backed domestic production of oil and gas, and 60% saw a positive economic impact from companies operating in the North Sea.

The poll, carried out by Survation, had a sample size of just over 1,000 was taken from people of varying ages and voting intentions from across the country. The data shows Scots are split down the middle on the future of exploration, despite the industry arguing it would stem reliance higher-carbon imports from overseas.

As the Scottish Government consults on its draft energy strategy, which presumes against any new North Sea exploration, 35% of respondents said that policy is wrong, but 32% are in support of it and the remainder are neither for nor against (23%) or don’t know (10%).

The picture is clearer moving into renewable energy, however, with 65% in support of offshore wind farms being deployed and 61% in support of them being built onshore.

A total of 55% of respondents said revenue from North Sea oil and gas should be ringfenced for investing in renewable energy and achieving net zero. It comes ahead of a political clash in Aberdeen tonight between Scottish energy minister Gillian Martin MSP, Conservative MP Andrew Bowie and Scottish Labour MSP Sarah Boyack at the Chester Hotel.

More than 300 people are expected to attend the live recording of the Holyrood Sources podcast, in collaboration with the Aberdeen and Grampian Chamber of Commerce (AGCC)."

---

The politicians are on the wrong side of this one and elections are decided on economics. The world awaits. Some for the Second Coming - others for renewables to beome cheaper than fossil fuels.

From EV today: Waldorf plans to sell stakes in CNOOC North Sea oilfields

Waldorf Production is planning to sell its stakes in a pair of CNOOC operated North Sea oilfields – but wants to buy up larger UK projects soon.

CFO Aaditya Chintalapati told a London conference last week that Waldorf has already taken bids for its stakes in the Scott (21.83%) asset, which sits 115 miles off Aberdeen, and its 1.59% stake in its tieback called Telford.

As part of a bid to improve liquidity in 2024, Mr Chintalapati said Waldorf will be looking at that sell-off and an undrawn $45m Shell pre-payment facility.

The Waldorf CFO told the Pareto Securities E&P Independents Conference that the firm has plans to for more deals going forward.

Waldorf has built up a production base of non-operated UK assets of around 22-23,000 barrels of oil equivalent per day, notably a 40% non-operated stake in Harbour Energy’s Catcher Hub and 29.5% in EnQuest’s Kraken.

“We continue to look at accretive M&A transactions in the UK for large portfolios of assets that we can then slot in,” Mr Chintalapati told the conference.

He explained that Waldorf currently has “about $900m of nominal tax value that is uncrystalised on our balance sheet at the moment”.

“This is unutilised tax losses that would quickly be crystalised with the acquisition with tax-paying barrels in the UK and that remains our focus”.

A non-operator, Waldorf only pays the 35% windfall tax – not the ring-fenced corporation tax and supplementary charge – rather than the full 75% for the UK sector.

Using their tax loss position would “transform the capital structure and value uplift for the company”, through any deal.

Threre is much confusing crossover in the NS. I suspect we're involved. It might only be peripheral, or not?

Tip: If you get a chance watch 'Six Nations: Full Contact' on Netflix. You don't even have to be a Rugby fan to enjoy it. Rugby games are hard to predict and teams turn around and amazing things happen to an oval ball.

Nearly forgot. Some of the collisions make you wince but the reason I chose as the subject 'brutal' is because you get to see the training as well as the matches including half time talks and what the French defense coach does to the French language is not for the faint-hearted and can only be described as 'brutal' - a sample "quand nous avons the ballon in notre camp kick the f***ing ball; stop f***ing around in our own half". This isn't always easy to follow as explanatory notes (Wigan - English) aren't available. He [Shaun Edwards]says he learned French from audio tapes but from what I heard they were episodes of 'Only fools and horses'.

Just as amazing is that the French players understand and take notice of him. I would too. A scary individual.

*2024 Six Nations start Friday.

Only disagreement there is the use of "self fund" Stevo. You're playing with numbers and words again. I'd say everything is "self funded" initially but you may get a tax rebate at a later date. I appreciate the depth you and L7 go to but I'm happy in the shallow end with my water wings.

I've just watched this and seriously considering subscribing to Doomberg: https://www.youtube.com/watch?v=EDLeAC8OeJY

It really helps frame the challenges facing energy. Both sides are expert but neither consider renewables viable from an economic perspective. They both laugh at the EROI of renewables. It really demonstrates the ignorance of the eco-zealots who use cheapness as part of their argument.

I'm getting there Stevo - going for brevity sometimes means we don't always get our points across and misunderstandings arise. My anger is really at the likes of Caroline Lucas, Tessa Khan and Barry Gardiner who conflate and present the EPL incentives as taking money from the food banks and the homeless and giving it to fat cat plutocrats who either run or own oil companies when in fact most owners are pensioners and hard working individuals. They make it clear that shareholders don't deserve a reward. How they expect an economy to run is not their problem.

It is OUR money in the first place that goes into the pot and NOT a cheque from taxpayers. Yourself and L7 have dug deep and I'm finally understanding and it is fiendishly complicated to most of us. What chance do the public stand and come to that, many MPs who have never worked in a commercial profit driven enterprise? I think most of us know more than Boris Johnson the Tsar of Wind ever did regarding energy.

In your last post 21:56 you say CAPEX has been falling. Do you mean 'capex investment' because it certainly isn't getting cheaper? That is an example of leaving the reader confused.

In some ways I would actually prefer for Labour to be holding the reins because being in power is very different to being in opposition. I don't think it is hype either about the costs of wind power and intermittency. Renewables struggle to compete and the timetable for their take-up is insane. The world is getting more dangerous; not safer. I don't know if ideology will overpower common sense but it is worrying when we may have to rely on the Trade Unions to pull them away from their crackpot policies.

I got the gist of the last posts between yourself and L7. I wasn't allowing for the different timetables of delivery of rebates and how quickly they are paid. They do affect the overall cost but as you've just said, what will be a "proper windfall tax" and can they do something about RBL to get the industry going again are bigger challenges. At present we are ranked lower than arms dealers and tobacco companies. I think Labour will find out just how essential energy security is once they are in power.

"HMG sends a cheque to the operator for $91" - NO they don't. I have a personal allowance of £12,570. If I earn £10,000 I don't get a cheque from HMG for £2.570.

We have to SPEND the money FIRST. Then we have to make a profit to get any benefit. It is a tax break on expenditure and an incentive. The government will not write a cheque to anyone.

The other technicalities I leave to you and any other tax stroke accountancy experts.

I believe that the Government completely panicked in 2022 following the Ukraine invasion and the spike in energy bills. The incompetent Johnson was looking for a fall guy and the O&G industry fitted the bill, it was finally making money and friendless - a sitting target. They had run out of money (and ideas) and it is always the solution for populist governments to take the easy way out and find a scapegoat. There was also the problem that some felt it would be a fatal blow to the industry so the EPL rebate was invented. You can get a £100 of capex for £91. A kinda Tesco Club Card deal. The masterstroke from the Sheikh of Wind and his Chancellor was that they realised the industry was in intensive care already and no NEW developments were in the pipeline. They thought the industry would accept the sop of rebates for the next few years whilst milking the industry of any UKCS profits until 2028 thinking it'll take that long before any developments come on line anyway. If Labour would honour the agreement to keep the rebate and bring back tax on profit in line with other industries then that would work - but Labour have already said they'll do everything they can to drive a stake through the corpse of the UK O&G industry. It explains the current valuation of the companies with large UKCS assets.

Hi Auson, I think that's a given. Any company contemplating a big development would need to be in a financial position to do so or they won't get it past the NSTA or their lenders. Or at the very worse the possiblility that they'll be around long enough to start using the allowance out of future proceeds. I'm guessing here but suggest that some (or all) of our tax losses are the result of past capex allowances being rolled over until we hit the sunny uplands.

I'm not sure Bloomberg will be up to date. It depends on the shareholder advising the company andd some are dilatory or ignore reporting altogether.

* For those with too much time on their hands some reading. I'm sure it is important but so heavy it will only interest the nerds. Full of data but the politicians will know that hardly anybody with a vote will read it and even less will understand it. Does look like though that our electricity bills aren't coming down.

https://mailchi.mp/6074fd7af646/new-study-warns-of-soaring-energy-bills-200592?e=35cf3821be

Stevo - I'm a simpleton in these matters. I even struggle with Excel but my point is that Capex is still paid by the field developer NOT taxpayers that the likes of Caroline Lucas and Tessa khan like to pretend. Tax breaks and investment allowances are pretty common around the world and Labour (if elected) will be generously dishing them out for favoured industries. I think it is pretty clear that the economics fail once a field is below a certain size. B&B have the size but not the economics at present.

*on a different topic i wonder what is behind Biden's spin on pausing all pending export permits for LNG by insisting on updated criteria for the impact of climate change. Is it an appeasement to climate activists or is it cover for holding on to diminishing reserves of US gas thast the US administration can control the price of? They quickly look after number one when any threats appear. The world is getting more dangerous and I'm also suspicious of the stability of oil presently. It is creeping up and looks like being managed imo to keep it down. You can easily produce an argument to say it is the effect of weak demand. It could also be producers and governments (SPR type release) selling into the rise to stop panic and hide the true situation from the public.

"resulting in annual $45m return from a $60m investment" I tried to follow this reasoning and got hopelessly lost. Where am I going wrong? The capex is $600m magically reduced to $54m. I can see how the numbers work but who pays the other $546m. The net capex ($600m) has to come from somewhere. Stevo is talking about a tax allowance - the equipment and costs still have to be paid and it isn't the government paying. They are generously giving away money for a license that without development is worthless anyway and is the only encouragement a company has to develop in the UKCS. It is a tax allowance not a grant from government.

Over 13 years capex would be $46.15m per year (in real life much heavier at front end) and may well come from borrowing with associated interest costs. Imperfect but this could also be read as a loss from Day 1.

*I'm expecting to be proven wrong here but am confused, obviously.

Hi L7. I did FX swaps for a living and they are really only for the wholesale market. We did minimums of $20mio (back in the 80's) but banks would get customers calling for amounts varying from low 1,000's to hundreds of $ millions. Futures attracted retail traders.

Oil forwards are related to the futures market and the professionals can arbitrage between the swap and futures market. It was nearly impossible to get volume done in FX beyond the 1 year date and it gets exponentially riskier the further out you go. However, I'm sure some oil producer have long trade deals with refiners, military, shipping etc. that mean you could create synthetic swaps but out of my expertise. Interestingly, Energean have many long term contracts as have others for gas. I expect they assess the price/rates every 6/12 months or so like a floating rate loan.

Something not being considered imo is that the risk profile with hedging has changed and for once it is in our favour. Why protect the downside as much if the drop towards $60 means you may well be getting a 35% relief from EPL?

I really haven't answered your question but it may entice someone who can add colour or; just ask IR. It might be considered commercially sensitive and there are also the demands from the RBL lenders regarding risk and hedging exposure.