Member Info for SlickMongoose

He comes across as desperate to be liked.

He's the CEO of an oil company, nobody is going to like him whatever he does or says, and the sooner he realises the better.

It's really a question of labour costs, where labour is cheap i.e. China it can be done more cheaply with people.

New Cenkos note, ups price target to 174p from 166p.

Cut the capital budget in half and use the funds for mass buybacks. Turn the low valuation into a positive as the share count disappears.

Another 11m shares gone.

With net debt looking well under control, at what point do they decide that the debt is fine and just start really pumping up the buybacks?

I think there's some short term pain still coming for insurers with inflation affecting claims (see: DLG results today). Long term I like the company and think it's probably the best of the UK insurers.

Whole market is having a good day today. China talking about reopening plus US payrolls seem to be the main talking points.

Last year was ex-div on the 25th on Nov and payment on the 31st of Dec so I would expect something similar.

They need to stop trying to predict their profitability. Nobody can really predict oil and gas prices so why try? Just guide on production and report income after it happens.

The market is also sending a clear signal IMO to boost shareholder returns and reduce investment in growth. Cut the capex budget, leave the north sea, and do buybacks or increase the dividend.

Crikey, what an enormous amount of ignorance.

The price of oil obviously bares a relationship to the investment risk. Sometimes the price of oil is well below the cost of producing it, sometimes well above. It's a cyclical commodity. Oil companies do not control what they sell it at. It's a global market where oil is sold at auction. If oil companies controlled the selling price they would not have been selling it so cheaply in 2020 (or for most of 2015-2019 for that matter).

Petrol stations are about as low margin a business you could possibly get. The price varies with location for a variety of reasons such as varying rents. It's an ultra-competitive business where any customer can very easily drive down the road to the next one, so they have to stay competitive. The price of fuel is very close to the cost of selling it to you, and they make most of their money from selling you chocolate and cigarettes at the attached store.

Guys, these are not arguable points. They're the most basic of investing knowledge, truisms that any first year economics student would be able to tell you. If you actually believe the nonsense you're spouting you should seriously question the sources you get your information from.

Oil companies don't control the price of oil. This is the most basic economics.

Even if there is some liquidity issue with the pension funds, the increase in rates should have helped the long term funding position of the pension scheme significantly. It might accelerate a buyout.

There's a big table in note 7 of their year end accounts that breaks down the assets held. They have a tiny amount of LDI's but a huge amount in "total return products" which sound suspiciously like LDI's by another name.

And on a side note, these things don't seem to generate any returns. I don't understand why pension funds do all this complicated stuff instead of a sensible mix of government bonds, highly rated corporate bonds, and equities, which would generate a much better return in the long run, and surely it's the long run that matters for a pension fund.

I wonder if the recent LDI pension fuss is going to have some impact on the pension schemes here.

In terms of unhedged commodity revenue it's 8.6% oil for H1 2022.

You can see numbers on page 47 of the latest presentation:

https://d1io3yog0oux5.cloudfront.net/_96e8ab32b6a34c634f8c7c31bcfec33b/dgoc/db/557/4588/pdf/DEC_Corporate_Presentation_August_2022.pdf

ArK87, I would say the latter, and I hope no more money is spent on it.

Yes, that's right. It's easier to value this kind of company on cash flows rather than profit.

It's all very complicated and confusing, but I don't think it's LGEN who had to make the margin call, it's the pension funds who had to make margin calls with LGEN. Unless LGEN are justa middleman and then have to make their own margin call with a big investment bank, but I haven't heard anything like that? Seems to me there's some counterparty risk there at the minimum (what if the pension funds go bust?) but there could be more risk as well that we don't know about.

I really hope the company comments next week. If there's no material impact and everything is OK then say that.

I don't think anyone outside the company knows the exposure, they haven't commented yet.

The worrying thing would be if nobody inside the company knows the exposure either. Some of the stories from 2008 are along those lines, some big banks and insurers had management teams who had no idea what their bond traders were doing.

Wouldn't it be ironic if the pension funds that are being forced to liquidate other assets to put up collateral for LDI's are selling LGEN shares to fund it.