Member Info for Sipp10

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

Correction-800 should read 800m

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

The exchanges between Romaron and Tigar prove the devil is in the detail. This brings me to Magnus the complex $1bn with BP has been chipped away at but still stands at about $950? That said it was never really that much because it is structured with Enquest paying the Corporation Tax which at 40% meant the real figure as a starting point was $600m. $400m to be set against our tax losses. Now it is a certainty that the Corporation Tax rate will be at 25% this will be 50% for Noth Sea oil producers. (A windfall tax in itself) Surely this means that the balance of the payment to BP has reduced to something under $500m?
On another tack the two new wells drilled on Magnus should now be producing and I guess being run at different flow rates and pressures to try and optimise production and collect other data. If they had been dusters there would have been an RNS by now, to my mind the delay in a RNS is good news as we await production data. Does anyone have any info on when a RNS might be forthcoming?

I am heavily invested here and will remain so. Like others I wonder why in all the current turmoil. I anticipated a rate lower than Tullow's and refinancing towards the end of Q2 2023. Perhaps AB thinks things will get worse. In the 41 months I have been invested I penciled in 1st dividend at end of May 24. I stand by that. Selfishly, when you look at the interest payable over 5 years, I would prefer debt at zero and wait until May 2025 when we would be debt free. I accept that others here may be unwilling or unable to wait until then.

I am not invested here but I read the report in today's Times. The resonance with me was with a company I am invested in which is similar in size in terms of turnover and historic debt but in the North Sea oil sector.
That company is Enquest .3 years ago its net debt was $1.95bn as at 30th June 2022 reduced to $817.6m. In the last 6 months trading net debt reduced by $342m. It is on track this year for a similar turnover to you of £1.68bn. There are 1.9bn shares in issue yet the share price is only 30p. It has a policy of deleveraging and will next year attain a target of net debt of $200m I know where I would rather be invested notwithstanding the wft.

Romaron's 1st spelling mistake. "thogh" should read "through". This is the first time in 3 and a half years I can take issue with him!

From the 6th September half year update the new well drilled in the north west sector should be coming on line around the end of September. Surely we await a RNS very soon to confirm it is on line and the resulting increase in production. Having been with Enquest for 41 months now surely al last some good news is due from Magnus?

The minnow Jersey Oil and Gas are looking for a partner to develop out their Greater Buchan Area. Rightly, Capricorn are having second thoughts about merging with Tullow. JOG must have approached Enquest who no doubt is running their slide rule over it. Capricorn has Egyptian assets and AB as a Palestinian would be an asset to them and their £650m cash pile would work for all three. The villain of the piece is the UK government with their WFT. Might a scheme be being negotiated possibly including BP with Fionaven to ram home to the English and Scottish governments the need for these sorts of deals with their support to assist balance of payments and help support the sinking pound? These sort of deals will not happen without a change in stance by politicians.

Those who attended the AGM may confirm. I thought AB was talking about GROSS debt at $500m not net. Can someone confirm either way?

The trading update of 2nd August gives a preemptive snap shot of the half year results. On a straight line basis extrapolating the half year figures means that the Group Senior Debt Facility (RBL) which stood at $115M AT 30th June is likely to be paid off in full round about 6th September. This leaves the high yield bond (pik). From here on I suspect AB will be buying in more. He has already bought in 1.7% of them. Net debt will likely reduce by a further $342m in H2. In the 9 months 1 January 2023 to 30th September 2023 a further $513m. The pik all things being equal (and they will not be) there will be no need for further borrowing. AB has said he wants gross debt going forward at $500m and with say $300m in the bank net debt at $200m. When will he refinance? At some time between 5th September 2022 and 30th September 2023!.
That said he will do it when he can redeem at or below par probably towards the end of Q2 2023.

On Thursday we are 2/3rds through Q3 (62 days) and H1 was 181 days. Ignoring variables ie shut downs on Magnus and Kraken in Q3 and on a straight line basis our position is excellent. Debt of $342m in H1 is $1.89 a day and this allowed for the Senior Debt Facility to be reduce by $300m in H1 leaving $115m. Over 62 days at $1.89 per day is $117.18m. By the 6th of September it is quite the Senior Debt will be paid off in full.
As at the end of June the pik high yield bond stood at $813m and over the period to the 30th September 2023 (395 days)from 1st September 2022) at the present rate this produces $746m. AB wants gross debt at $500m and if a prudent AB want $300m in cash net debt has to be at $200m. A net debt reduction to $200m by 1st October 2023 is not a pipe dream but should be realizable with first interim dividend of 4p a share in November 2023 at a cost of £76m followed by a final dividend of 6p in May 2024 (£114.00) has to be realistic.
Add in Pelle's point of corporation tax that does not have to be paid on tax losses of £3bn (£1.2bn) this share just has to rerate.

Romaron hit the nail squarely on the head when he said yesterday that "net zero is a wonderful aspiration" So easy for politicians to latch onto and then kick into the long grass to 2050 and meanwhile make everyone's life a misery for the next 30 years to 2050 when it is unlikely to be achieved anyway. The fact is presently, the world does not have either the physics or the chemistry to achieve this noble aim. It gets us into the stupidity of carbo offsets and bio-mass at Drax and achieves nothing. Meanwhile and understandably, from their perspective, China commissions a new coal fired power station monthly. Our contribution to CO2 emmisons at just over 1% is negligible. We need to take the same stance as Switzerland in this respect.
There needs to be a new approach and I suggest M&Ms, by this I mean Managed Mitigation. We can only deal with this issue around the edges. Carbon capture reducing CO2 from global shipping and many other tiny steps is the best we can do until we have nuclear fusion in a jam jar.

Romaron's estimate was 10,000 private shareholders. Sorry for the omission.

In a recent post, Romaron took a stab in the dark at the number of private shareholders in Enquest and this figure stuck in my mind. This figure may be wide of the mark but what I do suspect is that the private shareholders that there are own a disproportionate number of shares. Kraken oil may have over 2m shares. 900 of him would own the company outright. 2,500 SIPPs would own the whole company and my hunch is that both Romaron and Pelle own more than me. There must be others who never post.
Because the current share price is both illogical and Irrational along with AB and his 12% shareholding we indulge in Warren Buffet's strategy of benign neglect so it is the relatively few shares in circulation that set the daily price. There is well under 1.9bn shares actively in circulation which is why one day the share will take off. Romaron posted that he was running out or runway, rest assured, AB and his team are doing an excellent job extending it!

Romaron, thank you for sharing IR's email to you. The response from IR is one of the reasons we are all here. I bought in April 2019 because AB made it clear that his main priority was to get debt down and with production at 67boepd AB could achieve this by 23/24. Covid and lower oil production took us off course but we know that the priority of AB is debt reduction and we can all be pretty sure that deals are being done that will be finalised, my hunch, in Q4 that will increase production beyond 50boepd towards the 67 mark. I include in this figure a couple of RNSs advising of increased production at Magnus following the 20 month program which starter Sept 2021 and the additional Kraken drilling.
On our debt reduction for H1 and based on our 2019 share price in the region of 19.5p we should now be at about 43-47p.
If oil stays circa $100+ we must be on track for 1st dvi end 2023 or mid 2024.

LythamSlim8, thanks for your post this tax seams to have lost its bite. At the end of the day it is not going to raise the £5bn this year. Perhaps Looney will send them the cheque!

This Bill received its First Reading (procedural only) on Tuesday 5th of July and was to be given it's 2nd Reading today. Today was the day for critical scrutiny/amendment. There is no Hansard Publication available yet for today's sitting. Does anyone know if there was any debate in Parliament today? If so what? Has it all been put off until the Next Session of Parliament in the autumn?

We are all different. I am here because 80% of my SIPP is in property. Pays the rent and I can kick the wheels. 3 years ago I read the report on the year ended 2018 and I liked what AB was saying about getting debt down. Back then Enquest produced 67K boepd and I reasoned debt was manageable at 1.93bn and back of an envelope ought to produce a divi mid 2024 which tied in with my anticipated retirement. We are now post Covid and living with Putin and are on track for a divi late 2023/2024. The windfall tax may put us back to 2025 hence the fall in share price.
I take the WB approach referred to in yesterday's Times as "benign neglect". None of know how the market will perform between now and Christmas but over the next 18 months I would like to see net debt at £250m gross £500m. This I think is AB'S aim at the AGM.
Obviously, we could all have made a lot of money selling 6/7 weeks ago and buying back last Thursday, but any that did were just lucky Remember AB has just bought at 29p and 25p. He with hindsight could have done better.
Turning to the windfall tax there was a sloppily written article in today's Sunday Times reffering to this being Corporation Tax at 65%. Sunak's budget is supposed to be being debated in The Commons tomorrow will all the proposals go through on the nod or will the mini budget be put off until a new leader is in place?