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Hi Pelle. I guess ev is down even more because debt is valued at 45c on the dollar. But as everyone is writing these levels are not sustainable and when something is not sustainable then it is not sustained. Oil prices Will need to move up very quickly once the Corona virus is brought under control. China and south Korea are doing just that. We need to Do the same in UK and europe and we Will Do that and stimuluses Will be released otherwise there Will be chaos and no one wants that. The us shale is under severe pressure - that one can See quite clearly. They Will need to make cuts and there is an opec+ meeting again next week. Things are happening in front of and behind the scenes. This has gone on for all of 3 days. So during this time enquest has produced 200k barrels of which kraken Will fetch $48 and the rest $35 dollars and with break even of $40 Enquest has gone roughly even. We need to keep some perspective

The amazing thing is when Brent was at $65 there was a ceiling on the sp because the logic was this could not continue and now when Brent is at $35 (or thereabouts) the sp is priced as if it will be there forever and indeed this is 7 days since Brent dropped under $50. The stock markets are priced for a repeat of the financial crisis but as Buffett stated in the shared interview what happened on monday was nothing like that. So where is the longer perspective in all of this? It is a very sad reflection of the situation.

What is interesting to reflect on though is who are the one's currently squeeling re the low oil price? Well it is Numpty and the Shalers. They are talking about Anti-Dumping and Fed support. Many shalers have slashed Capex by 30% and I agree this is most likely lenders who are pushing for this. Enquest has decided to decomission a field that was producing 1000 boepd (hasn't been producing for close to 6 months). Enquest has brought Capex down to a very manageable level and is making some offensive expansions in Kraken, Magnus and Malaysia.

It is easy to get lost in the logic of all who look short term. Enquest has no more debt repayments for over 1 year ($65M at march end 2021) and $360M in September. Bunker oil is paying a very nice premium and this is covering close to 35% of Enquest production. It is somewhere around $48.

If this is the reaction of US Shalers after 3 days with WTI around $30 then I suspect who is in trouble at the moment. This was not the case back in 2015-2016 as banks were lending and investors were pouring money into the new Klondike. That is not the case at the moment. Donny is squeezed at the moment. Revenge is sweet. He will try and get bills through, tax cuts and zero-interest loans but there doesn't seem to be support for that at the moment. I have learnt not to underestimate Numpty because he has no morals so anything can indeed happen. With all these machinations I have difficulty seeing the status quo remain with oil prices a long way under where it is profitable for producers and opec.

Very Interesting. 54.5 usd a barrell. If we are getting close to that for kraken oil then that is not shabby

There is no point trying to make sense of all this or expect anything. Btw - anyone know Where vlso pricing is holding at? As i understand that is a good approximation for What kraken oil can fetch

Interesting persoectives hitman. I also believe that mark may be spot on and i think an element of precaution is necessary but i Do believe that enquest is well placed. The report Will provide more colour particuarly as Regards hedging during q2 which Will be a critical time. The short term pain is necessary as the shalers were / are still out of control. It makes absolutely no sense to produce increasing amounts at increasing losses. The message is being driven home ljud and clearly and i think the capex cuts are a healthy sign short and medium term.

I know chilting. I think that given the tripe they spout that they are youngsters with avery short attention span. They ignore all the positives. A bit like chicken little. Cairn is also under pressure but i suspect that is to Do with their large capex plans this year.

Be interesting to See if ab adjusts capex somewhat. I want to remember that thistle Will soon be back online and Will be interesting to hear What Worcester Will contribute.

Thanks for clarifying tom.

To be honest i have no problem with differing views as Neil and itsaponzi put forward but their lies and mischievous posts verge on disinfornation. Can we not have the lse board act upon this?

It really is Happy days for Neil and others. Of course no one knows how long this Will last and damage has occured but there is always a tomorrow given that the sky Will not fall in. The next two weeks Will be turbulent but hopefully now countries In europe are starting to take measures to limit the spread of Corona virus. Interesting that many are speculating that oil prices Will remain depressed for 3 months. Russia and saudis may also come back to the negotiating table. H1 was setup to be a period of over production so maybe opec+ decided that the rhetoric was necessary to put pressure on shale and others to cut capex. This Will have an effect. Naturally companies dont want to be in the situation Where they are needing to refinance as is the case for premier but as enquest wrote they have paid all debt obligations for 2020. They have debt of 425m due by end of september 2021 and this is fully possible. They can also forward sell production in an Oz loan setup but that is of course less preferred.

Epip - with these 20-30% capex cuts one would expect a sharp rig decline this week i assume. Anything from Continental or cheaapeake yet?

Thanks Romaron

That is interesting Romaron. Hopefully Enquest will give a similar update. At $60 Enquest is doing over 300m but unsure what it is at $40 but my analysis indicates that is B-E (including capex). Good news with Worcester coming onboard in H2. Hopefully Enquest will share an upward revision in production.

Hi 60p. Agree that although Enquest didnt downgrade themselves they were tarred with the negative sentiment. This should go a good way to lift that.

Just saw that Kraken revision upwards was 6.4M and that should mean 15M for Enquest

Hi All,
Haven't had time to read but saw there was a 2P revision upwards from Cairn. Was any of that related to Kraken or was it not indicated. If I remember right Cairn took a writedown on Kraken but Enquest did not so I am not sure this reversal has any impact on Enquest.

Interesting that russia claims they can live with low oil prices for 5 to 10 years. Certainly they can put up with this situation the longest. I think They Will most likely not participate in any more cuts so the burden must be borne by opec and the us shale. I am not sure how elastic us shale is but once again it is the thought of changes that drives oil price. I think it is prudent to count on low oil prices until june at least but this should also help push down break even levels

Interesting that they also call out a 3 month price war as the most likely. I think also given the highlighted over production in us in H1 this was going to impact prices. Maybe saudis may not even increase production so that when we come to H2 there is not an oversupply. Just the effect of getting the shale companies to cut capex maybe a victory and doing this ahead of the bank negotiations. A 3 month price war Will have Limited impact on enquest and should brent again lift itself over 50 in H2 as most analysts predict then we are comfortable with the debt payments. From the sp reaktions yesterday it seems that all eyes are on pmo, tlw and cne. We are not in the clear of course but i Do See the report being good and hopefully show 2p increases as well as some more hedging for q2. We would probably have the Oz loan production hedged around 52 as this is obligated i would like to remember.

Any news on the offload at kraken?

ColonelDrake - you may be right. I don't know how quick it can go and I agree that 50c is better than 0c for many of those. I guess the bondholders are involved in those decisions. Trump may give them a helping hand. An oil company doesn't want to have large payments looming in the next 6-9 months. By 31st March 2021 Enquest needs to pay $65M. So that is in focus.

I am not changing my targets. This is a short term correction in my opinion. China is overcoming Corona and there is no reason why the west cant either. The cases turning up now have incubated for up to two weeks. The chaos in italy now is due to the super spreader who tried to get help on several occasions but was allowed to roam around for several days. That was around the 20th feb. Quaranteening should help as seems to be the case in china

43 new cases in China today at 14:40 in Wuhan. Total cases are slowing dramatically and the number of active cases are now under 20,000 at 18,994. But nobody cares about that because it is mass hysteria in Europe. I wonder how much the criminals in suits have paid the media to hype up the situation? Must be peanuts compared to what they have managed to achieve. Maybe they could also use some of their profits to pay compensation to the victims? Anyway, I take my hat off to them. It has been well orchestrated.

Anyway, the price of oil has gone down very quickly so Trump is happy. Saw his tweet this morning. Not sure he grasps what this means for the shale industry but he can tank his car cheaply :-). I am not sure how long this will last but I tend to think less than 3 months - at least until the markets get visibility on blood either in the shale patch, Saudia Arabia or Opec. I was wrong in what I called the Russian economy at by a factor of 75% - it is $1.6 trillion so Putin can rest easy. I stand by my comments that it will be a question as to who blinks first - the Saudis, Opec or the US Shale. I guess Opec but it will cause damage to the Shalers ahead of their meetings with the banks and budget revisions. New meeting date set for the 18th March. Saudis are losing $450m a day right now.