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The average brent price 2015 and 2016 when the price war was waged was $48. So that could mean $50 for Enquest during 2020. The major players don't have as much ammunition as they did back then as many had hedges at $80+.

An interesting question is how long can Saudi Arabia does this for?

Back in August 2014 SA had no debt and a Sovereign Wealth Fund valued at $750bn. Back in late 2019 this was down to $320bn and debt was at $181bn. So in the space of 5 years the Saudis have blown $600bn. This year SA has a budget of $272bn. I have heard that they need $85 dollars a barrel but if we assume they pump with all they have and get to 11m boepd then they need $68 dollars a barrel profit and it costs them $9 in production costs (cheapest in the world). So SA needs to get $77 a barrel to balance the books. Now lets say we have brent at $30 a barrel in my example earlier today for 6 months and the saudis pump for 11m boepd. They have a budget shortfall of about $100bn give or take. And if we go to $20 as some have suggested then we have a shortfall of $120bn.

MBS wants the soveregin wealth fund to be $2 trillion in 2030 that is to say 9 years. If this carries on for 6 months the net wealth of SA is $320bn - 181bn - 120bn = 20bn. If it carries on for 1 year then hey presto they are -100bn. Chances of MBS getting to $2trillion or even back to where he is today are pretty slim. Fact is SA has burnt through $120bn a year over 5 years. Indeed from October 2014 to December 2015 during the time when they declared "war" on shale their wealth fund went from$750bn to $590bn so with the debt that was raised those 15 months alone cost them $250bn!!! During this time brent averaged $53 but of course their break even was higher. That was expensive.

My take is that SA which is to be remembered the "strongest" member of Opec could do this for at best 3 months at a cost of $50 - 60bn. Then he will look an absolute fool with his 2030 vision in tatters if it is not already on its way.

What about Russia? They have $120bn and a National Wealth fund of $30bn. They budget for $42.40 a barrel. They produce 11.25m boepd. So if we go for $30 for 6 months they will have to borrow $26bn. At $20 they will have to borrow $46bn. A little sweaty. Their national debt is 216.5 bn with an economy of 433.7bn or 50%. Nevertheless if oil prices go down then their economy contracts. During 2019 brent averaged $65 so oil stood for $267bn of the 433.7bn. If oil prices are at $30 for 6 months then the economy will contract by $72bn or 16% and debt as a percentage of GDP goes from 50% to 60%. If we go for $20 then economy contracts $93bn and 64%. I think Russia has at most 6 months of ammunition. I am not sure about US Shale but as Hitman wrote earlier with Brent at $30, wti is at $26. Their budgets are based on $50 for the most part. Shale is estimated to produce 63% of US oil so at 13m boepd we have 8.2m barrels losing $24 a barrel or loses over 6 months of $42bn. At $20 then $51bn. I give them a couple of months. It is a game of brinkmanship but perhaps it will be the smaller opec nations that squeal first. The loses will be enormous but as Barkindo said talks are ongoing.

I think that anything and everything could happen and this could well play itself out over a very short period of time. MBS does appear to be a loose cannon and there are talks going on behind the scenes and most likely Numpty is also involved. This more or less typifies how the world works today. Some rich idiot decides to do something to get their point and agenda across and then it happens regardless of the consequences. For sure one would not want to be approaching the banks to renegotiate loans during the month of April and that is most likely what alot of shalers in America will be doing. It might be a conversation along those lines and maybe as you speculate Chilting Numpty may well play some national interest card and then MBS will say well then Im not buying your military equipment and meet my new BF Putin and Putin is coming up for some discussion regarding whether he will be able to rule for eternity or not.... All the while the other poor Opec countries will be squeeling and Venezuela will be feeling Numptys size 12 in their face and Putin will not like that as he has assets there and....

Welcome Mavrick. I agree with the sentiments regarding analysis for Shale. This whole blow out in the indexes has been co-ordinated to drive an agenda. As I wrote yesterday I spoke with a friend who works for one of the major investment banks and he informed me that this has been a "shaking of the tree" exercise. Investment banks and hedge funds are really criminals dressed up in suits. The media is also happy to play along with this. Corona is something to be wary of but quite honestly who is reporting on the number of people dying from the flu? This is scary because it is new. It is also a problem for elderly sick people.

Good point HMH re 100 dollar oil. This is not 2016 and GS are chasing money through their trading arm.

So I ran out of characters in my last post. So again we are now in 1st september after brent has averaged $31 during an unprecedented brent downturn and the money Enquest earnt during the first 2,5 months went to cover the loses and Enquest has 13 months to earn enough money to pay of $425m remaining on the RCF. That is $32.7m a month. Then Enquest needs a price of $56 with B-E still at $40. During 2017 Brent averaged $54.71. And then we have a little premium for Kraken oil say $2.

So OK one can come up with even more worse case scenarios and corona is new in the mix but I think that the above is quite a good stab.

And what about Corona? China has 80,701 cases with 57,325 recovered and 3,097 deaths. The number of new cases today is 50 and this all started on January 22 that is to say 6 weeks ago. China has a population of 1.4 bn and the number of new cases is going down? How can this be? Europe has a population of 700m so roughly half. So if we assume half the number of deaths before it starts to die down then we have 1,600. Today, 267 people have died in Europe with Italy accounting for 233 of these deaths.

What can we deduct? Italy has problems yes and that is why they are taking drastic measures. This has just started in Europe but is the world coming to an end? China is getting back to work. China has 3,097 deaths of 3,652 total. 3 countries (China, Iran and Italy account for 3,524 of all deaths that is to say that in the rest of the world 128 people have died. South Korea has 50 of those deaths.

China is getting back to work, people are getting cured. I am not sure how much oil storage has gone up and we knew that during H1 there would be excess oil but in my opinion the world will continue, we will have a challenging environment for a couple of months but we have a lot of QE on the way.

Hi Neil. Yes i have probably stated that - you have probably gone back through all my posts. Nevertheless i stand by my statements that enquest is financially and operationally sound now. Naturally if the low oil persists for a very long time it will be difficult but not impossible and enquest also has a fpso to sell that could generate funds. But you are constantly writing about the possibility of enquest going under and that is simply not the case. Indeed low oil prices leads to higher oil prices as emotions play a big part in this market. There are many other companies that will face much tougher economic situations this year than enquest as they have no more debt to repay this year.

Interestingly if one visits the Corona site the number of new cases in china today is 100. Of roughly 80000 affected 22000 cases are active and 55000 have recovered. This is obviously not reported. Why try and paint a picture of the ”war” being Won. https://www.worldometers.info/coronavirus/

Neil - that is what i have been doing - defending my point. And you are defending your point. You say that you havent written that enquest is going under but then you write multiple Times that they might go under and need to do a Ri.Do you not understand what you are writing? And you assume that the current environment will remain - oil never stays the same.

Yes makes perfect sense Neil. Btw - why are you here posting that enquest is going under over 20 Times a day?

All makes perfect sense to me Neil. Enquest has no debt payments due until september 30 2021 so of course we need to raise more Capital. Indeed when brent was at 25 dolllars in 2016 enquest kept pumping all Fields but of course now we should shut down. Enquest has 289m cash on hand and debt repayments of 425m in 1,5 years but we should raise the money now through a Ri. What do you think makes sense? Maybe a 1:1 so we get in 300m? GFY!

I did some simple maths. Lets say the sky does fall in - what brent price does enquest need to pay off 425m from 1 Jan to 30 sept 2021 - 65k barrels a day and 639 days with break even 40 - will be lower next year. The price is 50 - and with a kraken premium of 10 that means we need brent at 45. And why would they not refinance? Enquest survives my stress test

Thanks romaron. It is very sad all the deramping that we are subject to. There is no need for a Ri and there is no need for bondholders to step in. If so then we have not been told the truth which i doubt. Of course we cant do anything about brent or the wild speculation but the Corona virus will die down and in many cases Corona is not worse than a flu. The media and hedge funds are all over this. I really hope that this kills off some of the shale companies - that is a real ponzi scheme. Their debt is unsustainable - ours is not. We have a be of 40 and even lower if we defer non necessary capex but given the kraken premium we should be able to still make money with brent at 35. If wti gets to 30 then you will see carnage in the us oil industry. Of course a lot is happening that we are not privy to. Opec + will be having intense discussions behind the scenes.

During Q4 last year I came to the conclusion that Enquests operational risk was brought under control and when the operational update was released my opinion as to the financial risk surrounding Enquest was confirmed. I just reread the operational update from February - Enquest owes 425m on the RCF with 289m cash on hand. Production is estimated to be 61 - 68k boepd so given that AB usually hits the upper boundary I assume 66k boepd. Opex will be 525m and capex 240. Interest and leasing will be 200m meaning we have a break-even of 965m which equates to $40 a barrel. Kraken and malaysia will contribute 31boepd and with a premium of around $10 a barrel. I expect that AB will provide an update on the net debt up until end of feb and during those 2 months I assume that our net debt has improved $100m giving us a net debt of 1313 and 325m owing on the rcf. Brent will continue to slide and this will impact all oil companies but Enquest is in a sound position. I also expect the 2P reserves to have been improved (maybe not more than production last year but let's see). Does anyone have access to fresh ratings from Moody's?

Spoke to a friend who works for a major investment bank. His take was that this has very little to do with Corona and was an opportunity for the hedge funds to create chaos. They dont give a f;(k about Corona

Lets see. Would love to see some shalers go belly up and lenders feel real pain. See that premier had profit after tax of 160m - i think we can beat that

I think it is important to keep calm. As always this is a mass hysteria that the media is doing their best to spread. Yes there is short term impact. Supply chains in china have been disrupted but is the world going to end tomorrow? no

Another 35k shares. I think this drop is well over done. Sure if brent remains at these levels we will not be able to pay down the RCF but then again most shalers will be out of business. If they do not act there will be carnage. I still think that the annual report will show a very good profit (200m +), an increase in 2P reserves and even further debt pay down. Hopefully we can calculate what our premium is for Kraken oil. The shalers do not have a sustainable financial model and this will hopefully drive down production. This is a ponzi scheme

The mania really started last weekend when the number of cases in Italy jumped and deaths were recorded. The virus has raged for some time but why did the markets not respond before this? The number of cases in Europe is about 520 and 14 deaths. How does this differ from the annual flu that kills 600,000 people?

Anyway, I am really pleased to see shalers get shafted. I agree with you E121 that they are dumb wits who have not scaled back on their capex. That article you posted was spot-on. What brain does Continental think with if they expect fcf of 300m with wti at 55 bucks and it is now at 47. Of course this is painful but where is the perspective with Enquest. We have no debt payments remaining this year and we should already have an additional 80m to pay down the debt for 2021.

Hopefully there will be some serious and real blood on the streets in the shale Patch. Poor Dumb Texans - not only are they destroying their ground water and environment they are also flushing good money down the toilet. Not even the majors are stupid enough to buy that toxic rubbish. Its a ponzi!