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Good post. Thanks Romaron. Looking forward to what the build up to the H2 report will bring. Most of the items have been put on display but keen to hear BE number and updates on Bressay and the Golden Shower.

I have been mulling the update over the weekend and the postings regarding a coming oil price increase. Interesting to read that hedge funds are moving in and Goldman Sachs are calling oil consumption at the 100M mark soon. I think that the tide can lift all boats including Enquest. I have been in Enquest for 6.5 years. Way too long. Never intended to remain longer than 2 years but world events and ABs foolhardiness have conspired against me.

I think that Enquest probably needed to do a OO regardless of the deal because they were not going to pay off in time and so AB thought - what the heck Ill throw in a Golden Shower as well. The deal is most likely a good one given the price (75M below the figure quoted last year) and Brent moving up.

I really look forward to the greenies getting punished with high oil prices. They explain all weather events as being the result of global warming. Artic weather in England - well that is the result of carbon emissions. The earths climate and temperature has changed constantly over the millions of years the earth has existed. Indeed, the world population was 1.5 billion in 1900 and now it is well over 6bn. That is a more direct driver of carbon dioxide. 6bn humans breathing instead of 1.5bn.

Be interesting to see where that lands. $14.4 at the half yearlies. $5 for the Golden Shower. Assuming this holds then I get around $12.5 for an annual production of 56k - 62K. I don't think we will hot a BE of $27 but maybe $30 especially given the present to the shareholders of additional debt. That should give us a FCF of $650M with Brent averaging $60 or there abouts. PiK of about $110M should enable Enquest to pay down $500M against a net debt of $1.6BN.

Glad to follow your musings and logic Romaron - I think we are going through much the same thought process. I have gone through surprise, shock, disappointment, irritation, anger, despair and moving onto apathy. This is a dead dog. I think that AB and JS were low beat as they knew very well they were serving up a t*rd on a plate to the shareholders. I can well imagine that the institutional investors don't answer when AB calls and some may well have blocked his number.

There may be some upside with this field which would be nice.

PRDaynes - the Golden Shower investment should help accelerate the use of the tax credits (of which there are many) as well as enable them to write back some or hopefully a majority of what they wrote off in the half yearly 2020. "A net tax charge of $317.1 million (2019: credit of $41.7 million) has been presented as exceptional, representing the
non-cash de-recognition of undiscounted deferred tax assets of $432.6 million given the Group’s lower oil price
assumptions, partially offset by the tax impact of the above items. The exceptional de-recognition of the undiscounted
deferred tax asset balance is made up of de-recognition of previously recognised tax losses and allowances of $363.5
million and the immediate de-recognition of the notional tax-credit of $24.4 million arising on business performance in the
six months to June 2020 and ring-fenced expenditure supplement uplift of $44.7 million recognised in the period to 30
June 2020. EnQuest continues to have access to its full UK corporate tax losses of $3,086.8 million at 30 June 2020."

This may be the raisin on the t*rd that AB and JS have served up. Enquest had a net loss of 619M that brought us down into negative equity (-57M). A big part of that was the write-off of 432M for the deferred tax assets. Now if Enquest can earn 18M x $25 or $35 a barrel with capex at $20 and opex at $5 then they could show earnings potential of $450M. Not sure what that would enable them to write back.

For me it is a little 50/50 how the market values the deal. Bondholders once again get a fantastic deal (even larger cushion) and let's not forget that AB owns a lot of the debt so he is happy too. I will vote against the deal but I am sure AB will get the deal over the line so it is more symbolic on my behalf.

The market values it according to the confidence which they have in AB which is negative. He has shown no capability to deliver value that he has promised. He bandies around figures of 100M and 500M NPV to motivate these deals and the Share capital is -67M - says it all. He and Jeff Bezos are like chalk and cheese. Jeff has made billions for shareholders and AB has lost billions. Is he milking the company to pay for his allocations. I will motion to have an independent auditor come in and audit the accounts.

I was looking at all those deals that were mooted last year in the North Sea and Malaysia - this deal wasn't even on the list. I can imagine that AB came to the table and they asked what he could offer and he opened his empty pockets and powerpoint pictures and they said. You know what - you can have this damaged item that we didn't even dare offer the market.

Yeah they say that it is green energy when in fact it is oil and dirty Brown coal. Lol

Eco friendly?

Hi Romaron. I agree with her response.

I always speak my mind and am quite direct and forthright as all know. The dust is still settling. I really hope that Brent bursts into life so that all these "eco idiots" who think that we can power cars, heating, aeroplanes and so forth with captured carbon will be forced to pay big time at the pump. That will be a cigarr moment :-)

There is probably an element of trepidation on the part of AB. I understand that CNOOC needs guarantess but I think he also understands that he does not have the majority of shareholders behind him.

You have triggered a thought in my mind. I see no clear plan from AB to create shareholder wealth. Why buy this pile of s*** from CNOOC. There was a lot of speculation regarding Malaysia and Faria and Richard Hall. What are they going to do now with 4000 boepd??? When do we get to vote on this?

Please do Krakenoil. Another successful low-ball OU from AB yesterday. Would love to know what his agenda is.

Hi Romaron. Thanks for your post. What is your opinion now that the dust has settled after yesterday's note? I noted comments around the question do we really need a RI were Enquest to generate FCF that was sufficient to pay the $50M.

I agree that it could soon be time for AB to move on like Jeff Bezos and fine tune his golf game or devote time to his wine collection.

217 posts today. Must be a record. Romaron must be over 40 of them!

Chilts - you are a raving greenie with a perverse interest in kraken loads lol. I Will leave it at that ;-)

Romaron - if this was the first time that we were doing a RI and I was hearing talk of 100M NPV then I would be rejoicing. This deal stinks, I don't trust AB (don't think many on this board do any longer) and the company cannot rely on shareholder and bond financing to make up for cash short falls. Something is not right in the portfolio.

Good post Twallbyoff
I agree with your points. We need some clarification as well as to whether those claims of $27 a barrel for 2021 are realistic or hold. Looking at the midpoint of production 49K I got an opex figure of $14.2.

There are a lot of cloak and daggers. Doing simple maths. Market cap is roughly $300M give or take. So 1/6 more shares that is to say approximately 300M more if we assume an RI price of 12p. So 1 additional share for every 5 held?

How quickly will AB try to push this through? I imagine quickly so he can mop up as many as possible. We now get the answer as to why he was not buying last year.

In terms of the SFA, Jonathan Edwards was talking about it being around $377M including PiK. At half year last year it was at $441M and they paid off $40M at last OU. I think they were mumbling something regarding early payment of the April interest of $65M so I imagine they have paid off an additional $25M.

Net debt - $1280M. Sculptor should be around 60M, Bonds $1,020M and SVT $11.2. This means cash on hand back around $186M. Interestingly this deal means that the contingent liability to Magnus will be rolled up into a debt transaction.

It is becoming clear to me that AB's plan is to take Enquest private by stealth. Doing a s*** deal and RI for $50M that he is prepared to backstop. The guy comes with unclear statements such as probably and likely. He is a failed businessman!

Yes AB is passing around the hat but he is including a back-stop

I am trying to get my head around this deal. Does the production forecast for next year include this 10K barrels. Has AB had a stroke and lost his marbles. This is basically a f*** y** to all the shareholders

At the end of the day I am not surprised by the Equity raise. I was preparing ammunition in the case that this would arise but not sure about the participation terms. Not sure either about the logic of the acquisition. One can't build a long term business on the basis of going to shareholders for an equity raise every 2 to 2,5 years. The market cap now is essentially money that has been raised through RIs during the last 4,5 years. Let's see how the market receives it. I personally question the value of AB as the CEO. This has become his personal play thing. Regardless he is failed as a CEO of a public company. I will leave it at that :-)