Member Info for Sekforde

Enquest is hugely leveraged compared to Harbour. The latter should buy the former for around $450m and then use its superior borrowing facilities to pay off Enquest's expensive debt. It is an excellent fit with huge savings to be made from such a takeover. Harbour can make good use of the vast tax losses.

The FCF using the company's own guidance and assuming average $77 brent and average 85p a therm gas for 2023 is $562M . The market cap with 822,898,792 shares remaining is $2.406bn to give a dividend yield of 8.35%. Thanks to its very low levels of debt and low cost of production neither the dividend or current buyback programme is in the slightest danger.

1. Average price of Brent so far this year is about $82. Assuming the average price does not fall below its current level for the rest of the year we should (just) meet our contractual commitments and stay within our covenants which rely upon a 2023 average of $77 brent. 2. The argument for an abandonment or substantial modification of the EPL is utterly compelling. Prices are well below the level they were at the time of the Russian invasion. I think the Government is listening. 3. The Us will need to refill its strategic reserves soon. 4 Saudi has already indicated an intolerance for anything below $80 brent. A further trimming of production will again send oil higher. 5. If we can get through 2023, 2024 and 2025 look so much easier and $100m a year in dividends and or share buybacks look very possible for each of those years. But what a torment we must endure before salvation! Keep the faith.

There has been a decent chunk of very good hedging for 2024. Production is biased toward the first four months of the year when prices of oil and gas have been much higher. These much lower prices will help reduce inflation, and reduce interest rates and stimulate world wide economic growth. They also augment the prospect of a reform of the EPL. Any M and A will now be on even more favourable terms and we have plenty of cash sitting ready and waiting to fund it. All will end well.

Hi Megla and Stevo you may well be right and I may be wrong. It is undeniable that substantially more revenue will come from gas and oil in 2024 because of the ending of bad hedging. But I concede that the historic tax losses will have been utilised soon into 2024 and so this may have a greater impact overall on FCF. I have never entirely worked out the impact of the capital allowances (91p and 109p in the £!) and the timing of tax payments remains a mystery to me.

Megla I have taken into account hedging and yes I have assumed same again production. I am not sure what the total tax bill will be in 2023 compared to 2024. The simple point is that in 2023 we will, post hedging, achieve about 58 p per therm and in 2024 that rises to around 110p per therm, post hedging, if you use figures from the forward curve.

And I agree with you. I should use forward prices for gas which are much more meaningful and would mean a greater disparity between 2023 and 2024.

Megla I simply took the guidance for 2023 which showed a sensitivity of $120m for every 25 p fall or rise in the price of gas per therm and assumed it held good into 2024. Any reason why it should not? The guidance was with 65% hedged at 41p. In 2024, and assuming same again production, we have only about 33% hedged at 68.85p. So post hedging we should obtain around 58p a therm in 2023 and around 84p a therm in 2024. $120 x (100/35) x (26/25) = $356.57M additional FCF attributable to the higher realised gas prices. There is also an improvement in the hedging position on oil which should have a modestly positive impact. But I am studying your posts and struggling with your figures for tax. With only fairly modest profits for this year we should have plenty of historic losses to deal with all tax other than of course the EPL. Is that not so?

Texan please just filter him/them out. If you comment it just produces more of the same. Green is good.

Sorry $1.8bn

Who knows what will happen to oil and gas prices? But for this year if present prices hold and we achieve mid range production we have a FCF of $600m. Taking into account the fact that around two thirds of our gas is hedged at just 41p a therm for this year and around one third is hedged at 68.85p per therm next year and the present market price is around 90 p a therm, I think the additional income on gas alone should be of the order of $1bn in 2024. There is then a nice chunk of hedging on oil at an average $84.37 for 2024. After allowing for the EPL the FCF for 2024 looks like it could be around $1.2bn. So $600m plus $1000m gives us $1.6bn FCF in just two years against a present market cap of just $2.45bn.

I always use a working assumption that gas and oil neither rise nor fall from the point of any analysis. If Brent remained at $78 for the rests of the year, we would average around $79. If gas remained at 91.7p a therm we would average around 95p a therm for the year. Applying the company's own guidance $372M comes of the central forecast of $1bn FCF. $628M would pay a dividend of $200m fund the $200m share buybacks and reduce debt by $228M. The lower level of profit/FCF leaves the historic losses available to use into 2024. I still hold that 2024 will be a transformative year as over 60% of gas production this year is hedged at 41p a therm far less than half its current market price. I also think that we will manage to get well into the top half of the guidance range 185,000 - 200,000 barrels. Every additional 1000 barrels beyond the mid point of 192500 adds $28m to the bottom line at today's prices.

$2.5bn of course

Evening on the beach. My screen is a sea of green. Filter and ignore. Never ever ever engage. The plain fact is that we will have another bad day tomorrow as we trace the oil price down. BUT we are virtually debt free. We can make roughly $800m to $1bn a year for the foreseeable future. And we have a market cap of $2.5m. Just nonsense. As the AGM is a half mile from my house I am going to attend. Will report back.

With Brent now below $80 the big chunk of hedging at an average of $84 for next year is looking quite smart. Gas price now around 90p a therm but really bad hedging ends in just 8 months.

Investment in the UK is almost free because of the 91% capital allowance. We can do both given the strength of the balance sheet. But terrific news. 300 million barrels have a gross value of $25.2 bn when produced. A 30% share is $7.56 bn and our entire market cap is just $2.5 bn.

Y11. Why bother saying that? Filter and ignore!

I love the sea of green. But to be frank I am thinking also of filtering those who engage with them. It also disrupts the board and is quite boring. Rookie/Jeff/Slater etc should simply be filtered and completely ignored. Looking forward to the trading update when I hope we will learn that production is expected to be towards the top end of the range. 197500 rather than 192500 . It would add an additional $150M to FCF.

But by commenting on these posts you encourage more of the same. Just ignore and filter.

Don't respond. Don't engage Just filter