Solid report10 Apr 2020 11:06
It always takes a day to digest the Enquest reports. I think on the whole this was a very good update, showing quick, decisive and bold decisions in the face of low oil prices. AB had an uncharacteristically determined tone in his voice - I think being able to read from a manuscript on a telephone is a lot more comfortable for him. Some of the questions left a lot to be desired and I think AB showed his frustration at their lack of understanding of both Enquest and for some the oil industry. I didnt hear that idiot from RBC but maybe he has been moved on to the post department. What a crock of s*** his analysis was. 1p target price. I think the writedowns were necessary but a heavy blow to the balance sheet but then again people were probably not valuing them anyway. It was good that AB made clear that thanks to a great Q1 Enquest has a cash break-even of $25 for the rest of the year and $27 next year. With my simple maths and a production of 57k a day for the remainder of the year and an average realised price of $35 (including Kraken premium which AB assured was very much in tact) we can generate positive cash flows of $150M. I can imagine that oilies will be under pressure during the majority of Q2 (have known for 6 months that this quarter would be tough due to oversupply) then Enquest will be setup for a good run at 60p next year. I speculate that maybe Enquest could try and refinance the debt after october 2020. There is mention made on page 17 that no refinancing of the SFA can be done prior to this date so as to ensure that the bonds can be extended to october 2023 which I am sure AB will do.
My question is therefore whether Enquest after october 2020 could refinance all debt and buy back the retail and high yield bonds at a significant discount on the nominal price (currently trading at a significant discount)? Romaron, Epip, L7 - any clues?
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