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Hi All. Might have missed this. Has that monkey Stanton @RBC come up with some new drivel?

Whoever the f+?k has the handbrake on the sp - please let go!!

Trying to reconcile this and looking for help. As I read it Enquest owes $31.7M but according to page 29 of the Annual report following the termination notice Enquest will receive $50M during the course of 2020. So this should be +$50M to the net debt leaving Enquest with $1314M net debt. The debt side is certainly becoming more transparent. If we were to assume average oil price of $40 for the rest of the year that would provide $4 a barrel towards net debt reduction after assuming $3 towards PiK. At 60k on average (less 4K to Sculptor) that equates to roughly 50M net debt reduction on the SFA. If I do some simple maths with the hedges at $52 and assuming $20 a barrel net debt reduction to Sculptor that is a $30M reduction on the loan. My base case is that we have net debt at $1234 at year end with $375M outstanding on SFA. To pay that off in 9 months would require a profit of $23 a barrel which with BE at $27 next year equates to $50 a barrel (not unachievable)

Tom - AB is already providing more regular updates. Already 2 or 3 thus far this year. Anyway, I think we finally have enough information to hand to work these things out. BE is $33. During May spot prices averaged $33. At end of April net debt was $1364. They are probably getting slightly above $33 with hedges at $52 and Kraken premium so say $3 which covers debt so end of May probably as it was at end of april. Interestingly at the end of february just before Covid net debt stood at $1369. So during these 3 months as Covid has ravaged the net debt impact has been +$5M. That is impressive. I remember when Neil hannon was here singing his doom and gloom and writing that we would go belly up I thought that at best this would last 3 months and cost Enquest $120M. This has been lost on the muppet Al Stanton (who probably is NeilHannon anyway) valuing Enquest at 1p a share. What a joke!!!

Thankfully Saudis need $80 to balance the books so they are also uneconomic at these prices. Russkis need $45 so the same for them. As is said the oil markets don't work at these levels. Simple economics

Thanks for sharing romaron. Cant believe and wont believe They Will simply scratch it. Keep on thinking of that start up that enquest was partnering with - seapulse. Maybe it could be deployed somewhere.

The amount of money that AB has pumped into Enquest shares is nothing short of amazing. He owns 185m shares approximately. I have buying information for 152M of these shares and they cost him on average 51p. The 33M that I can't see are prior to April 2010 so assuming that he bought them in the float. Assuming they cost 80p on average gives an average buy price of 56p and an investment of over 100M. I assume he is also wanting 60p.

Hi L7 - it is indeed $33 and $25 the rest of the year

Romaron - if you listen to him on the calls he has a steady steely voice. I am assuming that reflects his personality

Haha. No I meant to write that if it didn’t go up 30% I would eat my socks. Anyway - I am sure they will be tasty :-)

Haha romaron. Assuming you did not mean the barrow boy end. The base case with EnQuest is strong. AB has made plenty of mistakes during the years but that is business. He has got it spot on with the three assets, Martin Houston, bob davenport and the aggressive cost cutting. I am adding to my holdings

Fully agree Tom. This is in a much better position than its peers and ab has invested his private wealth here. He won’t let it down. Also think the new chairman is solid. Jock was a joke

Hi Pelle. See that now. That is approximately 27% of the rest of the years production. I guess that is a good backstop but hopefully not needed.

Excellent ou. Must though call out Bob davenport. He is rock solid. Since he took over operations we have gone from strength to strength. Good with hedging. Although wonder about $45 now that brent is on the move it is probably a good thing.

If this doesnt jump 30% today then i Will eat my socks!

Hi Hitman, AGreed - I will take a new look.
Non-Current Liabilities less Lease Liability = $2.73BN
Current Liabilities less Lease Liability & Current Assets = $171MN
So all told Net Debt = $2.9BN

Enquest has 204 MN BOEPD (less production YTD). At the moment MCAP is $225 MN so valuing every barrel at $3.125BN/204MN = $15.32

Given that Enquest says that BE costs are $25 and allowing for PiK of $80MN per annum which is about $4 a barrel that means the market is valuing the Enquest company at a long term average Brent of around $45 which may or not be reasonable. Given that situation if we can ramp that up by $5 that equates to $1BN. It is only when viewed in this context that the cost cutting effort shows the true value IMO.

Hi Londoner,
Agreed - given that point then you are correct that we will have to add another amount for the march PiK. Regardless of the timing the capex spend should be captured in the $33 prior to 9th April or $25 BE. I know that we are also to get monies from Malaysia (was it $50M?). Everything helps. Anyway, we will have more colour on thursday but it is definitely evident that the major parties are doing all in their powers to get the price of oil up. Kudos to AB and the team for making the tough decisions and getting the cost reductions in place. I assume there will be a Magnus style deal down the line but hopefully we will generate the cash for that.

Hi Londoner,
I believe that the PiK payments were added to net debt in the March 17th update. That brought net debt to 1368M. The BE costs I have been informed by Enquest include everything (capex, opex, financing, leasing and decomissioning costs) but not PiK. So if I use $33 for March and $25 thereafter as communicated by Enquest I don't believe we should add anything more for Capex. Nevertheless, timing will differ but this will even out over time. I call $200M USD FCF for 2020 and I am thinking that March + April + May will generate fcf of $40M.

Agreed Hitman. Of course diappointed with 10p but tbh right now my focus is making sure that Enquest is rock solid and will survive and with these assumptions and prices I do not see an issue. I remember back in early March when Neil Hannon was carrying on that prices would be low $20 the whole of 2020 and it was doom and gloom and I did some stress testing for 6 months at these low prices and saw that we were ok. Now it looks like the worst will carry on for 3 months and now that the cost cuts have been implemented Enquest is quite honestly a low cost producer and well positioned. I will buy more shares next week. The SP will go up - just no clue when that will be.

I Also counted only 65% of profits from Malaysia. I think the above is a base case and would leave cash and available facilities around $468m year end and net debt 1168m. I also can understand why the Mcap is as it is. 213m barrels which if valued at long term price estimates of $50 and costs of $25 a barrel gives a rough profit of $5bn less debts of $4.2bn = 800m. Give or take a few dollars. Nevertheless i think enquest is undervalued if They can make it profitably through 2020 which i believe They Will after these dramatic cost reductions.

Hi All LTH,
I have been diving into the figures today as well as estimates for Brent to try and get a handle on what FCF could look like with moderate Brent prices and production estimates.

I take my starting point as 1st March. Then Net Debt was $1368.1 M and Cash and available facilities $268.2 M. During March I assume that 65k BOEPD were produced during March. The Ops Update on the 17th March indicated 65.5 k BOEPD produced year to date so this is more or less correct. Thereafter I assume 57k for the rest of the year and when averaged full year gives 59,100 boepd which is on the conservative side of estimates. During March the average Brent price was $33.6. From 1st April to now $28. For the rest of the year I assume $35 for Kraken and Malaysia and $30 for the remainder. I also assume $25 BE from 1st April.

March (31 Days)
Kraken (35k * 70.5%) 24,675 Malaysia (8,600) Rest (26,725)
Price $36 $34 $30
I also assume that 1M barrels @ $65 were sold. This gives a fcf with Production costs at $33 of $35M

April 1 - May 17 (47 Days)
Kraken 24,675 Malaysia (8,600) Rest (23,725)
Price $30 $29 $27
This gives a fcf with BE costs at $25 of $9M

Rest of Year [228 Days)
Kraken 24,675 Malaysia (8,600) Rest (23,725)
Price $35 $35 $30
This gives a fcf with BE costs at $25 of $155.4M. I also assume that the hedged barrels at $52 are sold during this period.

All told with these fairly conservative assumptions given the boost in demand gives a fcf of $200M. I think that Enquest is well positioned to weather the storm. Interestingly Premier calls 2020 as FCF neutral assuming price assumptions in line with above so that is very strong.