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Hi Hitman and pelle. My take is that SA and Russia never had the reserves to continue this oil war - it was done to possibly bring the US to the negotiating table. Regardless 10 days has caused a lot of damage to the oil price. I dont trust any of the headlines i read any longer - it is just many people´s opinions of what might happen and often have very little insight into what actually will happen. Talk of $0 or $5 oil is just *******s. I doubt we would ever get there because many things would happen as a result of oil going under $20 because at that price no one is profitable.

Anyway, I still think that it was a very good rns that Enquest sent out and as usual it has been completely ignored by the market. I think that we will have short term pain and then brent will rise again and the level of overcapacity will look completely different. Capexs have been cut a lot and we also have long term decline playing a role. The fact that enquest cut opex by 30% whilst production is to be reduced by < 10% bodes well. Obviously cutting capex is not good but what can they do. With opex, capex and financing (kraken lease plus interest on Oz, and the other loans) we should have to cover roughly $700m. I am not sure why be is at $35 but I believe that includes interest on the bonds and rcf which makes sense. These outgoings will not be paid with brent under $65. We should minimise production during these times obviously and ramp up later.

For every $ above 38 Enquest is generating fcf of $20 - 22M. If brent averages $45 over 2020 then that is $140M which would bring net debt down to $1273 by year end and $285M owing on the rcf. Next year with be at $35 and production around 56k (if capex cant be raised) would require brent to be around $53 which is not impossible. Regardless I am sure they can refinance if required.

But there are others in much worse states

Hi Ep - agree. Q3 possibly early in July is also my tip. Looks like Russians won't blink - it will have to be a heart to heart between Trump and MBS to solve this. This is almost as big an issue as Covid-19. This needs to be solved and rather quickly given the situation in the Shale patch as they will soon overwhelm the US banks.

Good points Romaron - I meant RCF or SFA. I will call it the SFA from now on. No clue what the S stands for.

Pure speculation from my side but reading the OU from February and the OU from yesterday I suspect that Enquest has pre-paid the loan payment for april 2021. Looking at Feb OU - Net Debt 1413M and 289M cash on hand and yesterday at end Feb 1367M and 268.2M. We know that PiK was capitalised on 20th Feb and that is roughly 35M. So net debt ex PiK was 1332 and cash on hand has gone down 21M meaning a net movement of 60M which is fairly close to the 65M that is to be paid. Let's see.

On a macro level I believe that things will move very fast from here. Donny has finally understood the gravity of the situation and that a low oil price is not good. He will push WTI up to at least $50 with his tweets and invisible hand (will be refreshing to read him complaining that oil is too low). I think we need to get through the glut that H1 will represent but around the driving season we should touch 55 for Brent and then we are back where we were on the 2nd March. So 3 - 4 months with an average price of between $35 and $40 should be roughly zero in fcf. That means 6 months of cash generation at roughly $20 a barrel. At 58k boepd that is roughly 200M. Personally I think that AB was probably right to not hedge more. He would essentially have been hedging for 3 months which with current target production represents 5.5M barrels - ok he has hedged 4M. This oil war was never sustainable and now we learn that even Rosneft has a big loan of 12bn maturing in H2 and they are bleeding.

The OU from yesterday was needed to calm the market in this state of fret but he has left himself the opportunity to overturn the Capex decision when the poo improves and restart Thistle about the time that it would have restarted anyway.

I have been mulling the OU during the day. Overall I think it was prudent but once again it was not well received by the market (today's sp movements are by in large poo related I would say). The good thing is that Enquest should generate positive FCF during 2020 even with the most bearish of analyses and I would suspect if things improve then the capex plans would come back to the table and even Thistle could be started again. I am targeting an average price of $42 including the hedges which would enable Enquest to generate fcf of 100m if I use their be of $38 however if I look at opex of 375m, capex of 150m and financing of 260m I get a BE closer to $35. Obviously missing something.

Glad that AB has taken decisive action. In the end it is a lottery how the market will receive this however I think they had no other choice than to stop production at the high cost assets. Good performance at Kraken (39K). Bringing Opex down by 30% is impressive. All told they should have total costs of Opex (375M), Capex (150M) and Finance (220M) = 745M. Of course finance charges relating to the bonds and RCF can be delayed with brent under $65 so the focus is on FCF. Net debt was still improving although not as fast as previously hoped.

This is a marathon but sincerely hope that today's prudent measures will secure the long term survival and eventual thriving of the company. I breath a little easier. Of course production at Thistle can be ramped again later on when conditions improve.

This is the advantage of having a CEO with significant skin in the game

The crims in the suits will push this issue until they get the response they want. The response will have to come very soon from the US because they will have carnage in their banking system very shortly and numpty does not want that. The bots are trading oil now and so human intervention is required. Trump will be speaking to MBS, Opec+ will be speaking and something will happen very quickly in terms of a co-ordinated response. Even Russia will be scared at the moment. MBS maybe doesn't understand the implications of his actions but there are some smart people behind the scenes who are formulating a response.

I would not be surprised to read in the next 24 hours of an extra Opec+ video conference in the next couple of days. The oil price drop I believe is scaring the market ahead of the shalers and bank loan negotiations. Everyone sees where the oil price is heading - this is well below what Russia is budgeting on ($42). There will be sovereign debt that is getting pummeled.

Well it is worth something and it is not needed at Alma after the summer so a deal maybe in the next 3 months. Could be needed.

Good point Neil. Well obviously they wouldnt get What they paid for it but it is an asset and there arrive imagine buyers in the market. Having it sit as an asset on the balance sheet is not worth much but selling it would potentially free up cash to pay down a large part of the remaining rcf

Does anyone know if there is a market for / resale value of a FPSO. Was reading that most cost around $600M and Enquest producer cost around $757M to produce. In one article it states that this will be released in Q3 2020 and they are looking for reuse opportunities. Could this be sold?
https://www.energyvoice.com/oilandgas/north-sea/217229/enquest-submits-north-sea-decommissioning-plan-less-than-five-years-after-first-oil/

This has been a new experience. The criminals in suits have once again succeeded in throwing the world into chaos. I know governments will not act but really we should collectively through all the goldman sachs, Morgan stanley's and so forth under the bus. They are the real viruses that have infected this world. They are having a ball now.

When I think about it Enquest has not even reported their 2019 results or shown cash position but we have been judged. Reflects the state of the world

Chilts - i agree it is political - pure and simple. It is Interesting to read that the opec country Venezuela is trying to broker a deal. This is definitely hurting the opec countries. Trumps move was perhaps obvious but unexpected. There Will be a lot of positioning going on behind the scenes.

So just some simple question - how are they going to increase production whilst they are decreasing capex? Or are the 2 million barrels a day coming from their SPR? And if so isn't it stupid to sell from the SPR when prices are low? Is it not better to do as the US is doing a buy to the SPR when prices are low?

We Will be Wiser on the 26th. I have it at $40 and also registered that capex is H1 weighted. The $40 includes capex and as you write hitman could be trimmed in h2. I think that ab Will be prudent - he does afterall own 10% of the company. I recalculated that vlsfo is at $40 so kraken is covering it. Bequest should have generated $100m in fcf so hopefully that will be mentioned on the 26th. No one is making money at these levels - sick!

Chilts - it really makes one wonder where the analyst houses have found the deadwood floating around dreaming up price targets for shares. They really are the lowest of the lows. Imagine that PMO must be forced to send out a note reclarifying what they sent out just a few days earlier.

This is not sustainable for any oil company or country.
https://oilprice.com/Energy/Energy-General/Big-Oil-Prepares-To-Suffer-In-2020.html

BP breakeven same as bequest at $40 and shell at $51. Exxon at a whopping $84. Saudis need oil at $83 to cover their budget. This is plain and simple insanity on the part of the saudis combined with corona virus I think that Donny will be making a call to mbs. It feels like a lot of the financial stress is being caused by this move by the saudis. The Russians were said to be willing to roll over the cuts which I assume are still in existence until end of March.

Even the fed action has not calmed the markets.

As e121 has picked up on the capex and dividends cuts have been large and quick.
https://oilprice.com/Energy/Energy-General/Crashing-Oil-Prices-Force-US-Oil-Firms-To-Cut-Budgets.html

It is impossible to get an overview of what this all means and there have been rumors that Donny would try and save the shalers given that he is friends with hamm. This will likely not get the support of the Democrats so he may reach out to MBs one would guess

Congrats Itsa. Good call with highlighting what was coming

No doubt chilts and yes I agree that the actions were coordinated to create maximum effect. But the situation is dynamic and I agree that no one knows what trump will do. I agree Enquest need to be prudent and trim hence the heather decision. How much do you think they could trim capex to?