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Romaron, also look at the letters page excellent letter from Francis Brown matched by a letter from, I guess Ed Miliband's mentor Professor J Doyne Farmer director of complexity economics, Institute for New Economic Thinking at University of Oxford. He describes Ed's economic plans as "sound economics". "to ban new drilling in the North Sea and invest in clean energy is sound economics". Apparently this would save $10 trillion in global energy costs alone. No mention of how we produce the replacement when the sun doesn't shine and the wind doesn't blow. No mention of plastics etc.
He then by way of an analogy, says: " Investing in new oil and gas now is like investing in typewriters ten years into the internet revolution." This does not stand up to critical scrutiny.
Also on page 3 an interesting article about Rowan Atkinson who suggests we all hang on to our existing cars for longer he says "Electric motoring doesn't seem to be the environmental panacea it's claimed to be."
What I did not know is that Rowan Atkinson has a degree in electric and electronic engineering and a master's in control systems. Many talents indeed.
Please report back on the AGM.
Others will have noted today's tie up between BP and Harbour Energy concerning the Viking CCS.
Will they need to utilise SVT? Will they need to utilise some of our redundant 340km of pipeline?
Are there on going discussions with AB on going presently? Interesting times and will assist in establishing our green credentials.
I started Investing here in April 2019, the share price was 19p- I am into profit at 19.3p. The rights issue in May 2021 was at 19p and now net debt is at $600m. The share price is at an absurdly low level thanks to Jeremy Hunt. Some months ago I wrote to my MP and I had the response from an unknown Treasury civil servant who confirmed the EPL would be "reviewed in due course" I hope this means shortly after the 4th May. I responded by pointing out that the risk/rewards in the oil industry do not stack up when taxed at 75% and further that 2022 was lost for North Sea investment due to the EPL and unless they make a decision very soon 2023 will be lost as well. Mid October to early March is not the time for drilling work in NS. i await a reply.
Since investing here people who read my historic posts will know that my back of an envelope calculations give first dividends at end of May 2024. I stand by that. Whether this should be dividends or share buy backs depends on the price
Dividends would be madness if Enquest can buy back shares at 19p. Please buy back 20% and pay 20% larger dividends in 2025. If above 45p? dividends?
The Department for Business Energy and Industrial Production and The North Sea Transition Authority both have within them a dichotomy. On the one hand both have a responsibility for energy production and security on the other a responsibility to achieve net zero. There is an obvious conflict between these two objectives. A circle that can never be squared. It allows the politicians to argue in circles indefinitely. This is deliberate. Is Grant Shapps going to stand up to Jeremy Hunt to make it clear that Nort Sea production is in the national interest overriding net Zero? Let us hope so.
The 15th of March is crucial. A floor at $84.19 or thereabouts in the Spring Statement is crucial for all invested here. No doubt AB and Harbour are making this point to the Department and the Treasury presently.
Romaron,
We are not far apart; the way my mind is working-probably wrongly- is for HMRC to agree an average base cost of $84.19 boepd.
If at 31st December 2023 Brent averages $94.19 then the EPL would apply at 35% on the $10.00. this $10 would also be subject to Corporation Tax. If Enquest's North Sea assets achieved say 45,000 boepd at 31st December over and above Corporation tax the levy would provide an additional £24.64m to HMRC.
According to today’s Times She’ll has paid in aggregate $1.5bn EPL to the EU and HMRC but the figure toHMRC is not to be disclosed. I have suggested before that the likelihood is that any payment for the 26th May to year end is virtually impossible to calculate and without a base figure for oil which should not be subject to the levy has to be open to judicial challenge. My guess is there was a cosy confidential chat with Shell and a figure agreed and the tax paid. I think it highly likely that AB will be doing the same.
Hunt’s Sprin Statement is only 9 weeks away and I suspect that many points are being made to the Treasury presently and the point made that if oil drops below $x then oil below the floor price should not be subject to the levy at all. There was a post here a week or so ago saying the EU was adopting $84.19. Might Hunt do something similar?
The science and technology committee could have worked their conclusion out by reading previous posts. You have to follow the physics and chemistry. The first problem is that the hydrogen and oxygen bonds are very strong. It follows that it takes a lot of electrical energy to convert water back to its component atoms.
Secondly,at the same pressure as gas it has one third of the calo icicles value. A 20% mix of lpg and hydrogen only amounts to 6 2/3% of the calorific output.
Thirdly it is all but impossible to liquify. It liquifies at -253C.
The government has been advised to put off any decision until mid decade.
This leaves Enquest in a quandary. We need to improve our green credentials and hydrogen at SVT would help. A hydrogen powered power station at say Immingham would justify production. Experimental HGVs and buses would help justify production.
This country and the world needs to take baby steps with managed mitigation. Pursuing net zero when we lack the necessary physics and chemistry will be proved, in time, to have been a mistake.
There is nothing mor boring than paying down debt, Enquest has done just that over the last 3 years and the light at the end of the tunnel is there to be seen. UK PLC is where we were 3 years ago, and we are in for a minimum of 5 years of stagflation at best or recession at worst. No one on this board would have expected the UK government to drag us into this mess but with wft they have done just that. In all this gloom there is a chink of light for us. Shell announced yesterday it will be putting some of its North Sea assets for sale by tender shortly. Enquest has to be a potential bidder but whoever bids will do so on the basis of aggregate tax at 75% on profits. Shell can only expect tenders from any party on this basis. A very favorable situation for us. There will not be many tenderers.
If the share price remains low- and with the current state of Enquest's borrowing anything below 47p is low - then buy backs rather than dividends should be the order of the day. If the share price is where it ought to be or thereabouts then If I were AB I would be wanting to apply 1/3rd of profits to capex on existing wells, 1/3rd on exploration/purchases of existing wells eg another Golden Eagle and 1/6th on share buy backs and 1/6th on dividends
Jan24 thanks for the correction, I had assumed it ran from the date of announcement not the 1st Jan next year. It helps it coincides with our financial year.
Is there any significance in your name? I when first purchasing in April 2019, with the $1.9bn debt penciled in May 2024 for 1st dividend and stupidly thought that paying down the debt would mean if the debt was reduced to say $400m then the capital value of the company would increase in mor or less a straight line from a capital base of £333m when I joined to just under £1.5bn in May 2024 using a conversion of £1 = $1.3- a share price of about a pound. Covid and Putin sent the pendulum the wrong way and back again and without wft thought an outside chance of 1st dividend November 2023. WFT puts it back to mid 2024. Does your name suggest you have always had penciled in Jan 24 for 1st dividend?
Pelle thanks for your input. I think spot on. WFT. Though at 25% from the 26th May until the 16th November. Then at 35% from the 17th November 35% for the rest of the year. January24's tax estimate I think are there or there abouts. The knee jerk reaction to the SP is massively overdone, even with the WFT we should be over 40p. JP Morgan, not Barclays are on the money.
Let's wait for the trading update due roundabout the 28th. I hope AB will give some indication as to the amount of tax payable at 25% to and including 16th November. It is a new tax and significant accounting costs will be being incurred to work out the legitimate deductions before applying the 25% levy. My hunch is that HMRC does not want this tax to get bogged down in Court proceedings and as I have mentioned before, Enquest and HMRC will likely sit down for tea followed by a boardroom dinner a figure will be agreed an assessment raised and the tax paid. This dinner will not be until well after the end of our financial year and my guess is we will not know the precise figure until the half year update in September 2023.
Romaron, spot on as usual. Two days ago, at the G20 in Bali, Rishi Sunak met with The Crown Princ and Saudi Prime Minister Mohammed bin Salaman. To reduce oil prices he requested Saudi to increase production. Today he lets his Chancellor increase the energy performance levy to 35%. 55 years ago, our sometimes drunk on telly, chancellor George (not Gordon) Brown apologised because our balance of payments deficit was £2.5m (not billion) because the uk had just taken delivery of a single jumbo jet. No politician now cares and lives with absurd trade deficits. The penny will drop one day that it is better for the UK economy (particularly for Scotland) to produce as much oil and gas in the NS and to just pay the more reasonable 40% . The more produced in the North Sea the greater the tax take.
When will the penny drop?
So over 13.5m shares traded today. Bottom has to be circa 26.5p Windfall tax at 35% far from a done deal. Hunt may well make the point that North Sea oil and gas has a base tax rate at 40% and therefore the aggregate tax is 65% and 75 % will stifle future investment. He will talk of the need for energy security and a further 10% would be a step too far.
Kraken cargo of 500,000 barrels- $50m on its way to Scapa Flow am today. Late November trading update has to be good.
Following Magnus drill- live from late September- has to be positive as bad news would already have been reported by now. If Brent remains at or above $100 then I predict 35p+ for late January. January is usually good for us shareholders. Sit back, top up, if you have the funds. Thursday is unlikely to be as bad as some think.
Yesterday, I was at the funeral of the wife of a cousin of mine, she was a professional singer and a Catholic. There were about 500 in the congregation and a professional choir. With the permission of the Bishop, the old Latin mass was used and the setting of the Requiem was by Giovanni Anerio. Effectively we were transported back in time to the Sistine Chapel circa 1600. Very traditional, very old fashioned but very effective.
About 15 years ago at a dinner I was sitting next to the head of a tax department of Barclays Bank. He explained how Barclays then paid Corporation Tax. Due to the size of the Bank and the international basis of its trades nobody knew what the tax should be.
What happened was HMRC would call to discuss what sum it was seeking, Barclays would have in mind what it thought it should pay, afternoon tea was taken which then progressed to a dinner, wine flowed a figure was agreed late in the evening an assessment raised and the tax duly paid. Very traditional very old fashioned and very effective.
So it should be with EPL. The Government wants to raise £5bn. The profits of all the oil and gas companies added together and divided pro rata to give £5bn and we pay our share which for 7 months I hazard a guess at £6m for the 7 months and £10m next. A very traditional old fashioned way of doing business but very effective.
Londoner7, I am very grateful for your post-most informative. Apart from my view that I am invested in the right company with the right leadership is twofold. Firstly, it is always in the back of my mind to invest exclusively in sterling is narrow minded because politicians are very capable of messing thigs up.
Secondly, I took the view that contributors to this board were and are a sensible, knowledgeable bunch and a cut above other boards. With patience we contrarian investors will be proved right.Londoner7 thankyou again
Londoner7 is right the half year update referred to two wells successfully returned to service. The update then refers to the new well drilled at 1914 metres the longest drilled this century expected online at the end of September. There is only one drilled this year. The transfer of Magnus to Enquest predates my time on this board but my understanding is the maximum payment to BP is capped at $1bn. Further I understood that the actual payment to BP is net of tax with Enquest paying this from its $1.2bn of tax losses. Is this correct. I do wonder whether or not the whole of the $1bn gross will be paid. I think it might. 18 months or more ago AB spoke of 800 barrels of MOVABLE oil, not necessarily recoverable oil, but even if only 50% proves to be economically recoverable this will prove a very nice asset to have