Member Info for Tamovv

Don‘t worry about oil prices (yet). 70-80 usd are perfectly fine. UK politics are in motion and what we are currently experiencing are not Windfall conditions. An EPL -> OGPM from April 2027 announcement will make us jump another 20%+ and bring us over 30p.

So fingers crossed the UK will (finally) get a sensible chancellor (preferably non red-headed).

Sorry, I meant BP ETAP package.

It would be a stretch, but think they could do both. Management confirmed on yesterday the 400 musd LC tranche is still available (important for ukcs m&a).

100 musd accordion could be added.

Net debt / ebitda would stay inside 1,5x ceiling, assuming Like 500 musd Price (coming from bps desired 2bn full package price)

Would be a pity to leave those juicy tax losses unloved, so go ENQ, give us one more deal!

Haven‘t presented some own math here recently, so i‘ll give it a shot as well.

Cavendish models (Updated 2d ago) ENQs old business with 85 mUSD FCF for 2027.

The new package had 200-300 musd after tax, before capex in 2025 acc. to yesterdays Management presentation. This was at about 73 realised Brent. 170 musd capex will be required until end of those added fields service lifes (2033-38), so Lets say 20 musd per year (if true, Great Feature of the deal). Thus Midpoint FCF for 2027 still is 250 musd (capex spent to be payed from 73 to 80 Brent uplift).

So the combined FCF before additional interest from purchase price debt increase is 335 musd.

That 554 musd purchase price will obv. increase interest bearing debt, but only by actual the rbl usage. 269m Cash end of 2025 + 120m 2026 FCF given sensivities provided by ENQ Management, leaves a rbl draw of just 165m, Lets say 200m to stay conservative.

Interest: Bond 68 musd + 32 musd rbl

Interestingly the 2027 FCF fc from Cavendish is already based on 100 musd interest. So normally I don’t need to deduct that 32 musd rbl interest. I do it despite the double counting to stay conservative here.

85+250-32‎ = 303 , so 300 musd FCF 2027

Applying a 5-6 FCF multiple i get to a 1.650 musd valuation or 66 pence a share.

This does not assume:

A) BP EPAL package purchase

B) EPL to OPGM Shift

I wouldnt be surprised to see Both, so wont be selling below 1,00 gbp.

PS: forgot to drop my congrats to stevo earlier today for jumping back into ENQ Equity just in time (if you recall my posts here from 09/25, I was too early (as usual) at 12,3 before the drop to 10 pence, but am still very proud of my entry and subsequent balls to stick to my very oversized position. Only sold ITH at 2,70 after the start of the Iran war, so ENQ is my only remaining ukcs o&g pos.)

Hi Stevo,

Many thanks as usual for providing some sensible math. I get very close to your deal Numbers.

Just wanna add that You dismissed second order effects on the old.ENQ Part.

Before the deal, ENQ was priced as a UK-concentrated two-hub micro-cap with concentration risk, AIM listing, political uncertainty, and execution skepticism. The market applied a deep discount to whatever cash flows the existing business generated.

After the deal, ENQ becomes a diversified international mid-cap with execution credibility, FTSE 250 scale potential, and proven M&A capability. The justified multiple on existing ENQ cash flows increases substantially.

During yesterdays call management emphasized the increased resiliance of the new business, because of the tax structure providing a floor in case of loser Commodity prices.

Total debt Level is still reasonable, so a discount for over-leverage high-Risk operations isnt justified in my Optimion. So net/net the acquisition should also add value to Todays pre-deal enq.

After fees, discount to par, call premium on old notes, etc. the cash raised should be more or less exactly sufficient to redeem the old notes and retire the retail bond (if desired, they´ve chosen the language carefully to maintain flexibility).

So at least the full RBL is availbale for M&A with the option for not retireing the retail bond to use this cash on top for a big one.

Now since this is solved, all eyes back on UK politics. Fingers crossed Reeves > Miliband.

Hopefully after local elections, labor loss and Miliband reshuffle we´ll have something tangible on taxation soon to remove the "M&A blockage" the UKCS is currently in (with so much promising but without decisions...).

Good, actual result much better than yesterdays price talk.

I was too optimistic, agree my costing based on the retail GBP nominated bond was not perfectly correct - as I admitted, not an expert in bonds.

However, solid results.

Stevo, any comments?

I would check the box now for:

[X] solve refinancing risk

Would be interested in Stevo´s thoughts, he seems to a bond guy.

My 2cents are as follows:

4,25%+ USD treasury yield

4,5%+ credit spread requirement for ENQ (given indirectly by its retail bond current yield)

0,25%-0,5% new issue premium

= about 9,0-9,5%

Everyhing below 9,0% would be a huge win, implying bond holders value the altered brent reality post Feb. 28th / SoH (and probably also that positive fiscal rhetoric by UK gov.).

Think we will know within 9 working days from today via RNS.

Yep, Same here. There were some familiar sounding newspaper articles Today, but I opt for choosing this one to post here, because of Davids Quote.

Furthermore, the JOG Stock Functions as my personal Indicator for political climate (hence they have no Production yet, so o&g prices don’t influence them too much). Total of 2x5% buyers on yesterday causing one rns each… Hope this proves some people know the tide has finally turned.

Talks on reform of offshore windfall tax to take place within days - think we finally got it.

https://www.pressandjournal.co.uk/fp/news/6970204/windfall-tax-reform-replacement/

Hmmm… per se very boring, but Hopefully they have been working on a not so boring project involving shareholder votes, when they noticed this error back then ;)

The Magnus transaction is very positive and the reason for this years sp performance in my opinion (beside the positive brent price development obv.).

60 mUSD should roughly equal two years of variale profit share annual installments. People called ENQs situation "distressed" given the upcoming refinancing mid of this year. I would argue in the opposite direction: Voluntarily investing 60 mUSD into the cancellation of a profit sharing agreement aiming for 100% own exposure of future cashflows shows confidence in the asset and own operations.

Net debt increased by 49 mUSD. Against that, we had some one-offs and adjustment items in my opinion:

- 22,7 mUSD Vietnam

- 20 mUSD RBL refinancing

- approx. 30 mUSD EPL cash outflow (against 2024 with stronger brent pricing)

- 15 mUSD dividend

- 20 mUSD adjustment for missing Q1-25 lease payment savings

So before dividend the business should have generated like 65 mUSD FCF on a normalized basis in my opinion (or approx. 4 USD/boe). Brent was roughly at 69 (we will get to know the actual realised price soon). So FCF breakeven should have been in the mid 60s rather than low 60s, so Stevo wasn´t too off again we have to admit.

Anyways, I hope was hoping for M&A to be the reason for the "delayed" TU. Now it seems like they waited for the succesful restart on yesterday, before immediately releasing today, so M&A remains a blackbox for now.

Nah, it might be just Stevo12, finally rotating from his bonds into Equity again.

If I recall correctly, the discussions mainly failed due to last years oil price collaps after "liberation day" and OPECs reveral of production (ceiling) cuts starting shortly thereafter. From a SQZ shareholder perspective, the agreed merger ratio (presumably close to 55/45 in favor of SQZ) didn´t fit any longer.

Back in Q4-25 I was rather pessimistic about potential continuation of merger talks, given the oil price and "oil glut narrative" for 2026 weighing on ENQ. SQZ managed to come up with some pretty nice M&A moves completely outperforming ENQs sp performance last year. So for them and their shareholders it was the right decision to walk away from that merger back then.

However, from a macro perspective, I am very bullish for oil for the remainder of 2026, whereas gas futures look weakish (especially for Europe with US LNG capacities ramping up). So the heavy-oil overweight of ENQ, which was perceived as a weakness back then, could become a strenght going forward.

ENQ recovered quite nicely from the 10 pence low with >40%. I was a little too optimistic about the autumn budget and increased my position to my absolute limit at about 12 pence already - best regards to Stevo who was right (again) being more pessimistic. But let´s do the equity vs. bond comparison for ENQ at the end of 2026 again (:

Long story short, SQZs extraordinary M&A success probably made a 45/55 not realistic any longer, but maybe both partys can continue discussions this year, so ENQ would gain some more strategic options next to mature UK 2P additions (hope Linda Cook of HBR still wants to dispose some mature UK assets after the disappointing budget, aiming to bring down HBRs debt after their Gulf of America addition...).

Ideally we scope up some mature HBR.UK assets first and sit down with Serica thereafter aiming for closer to 50/50 again.

I don´t see them reducing dividend guidance for 2026+, but rather think we can hope for 600m (14,5% forward yield as of today).

Given "the most anticipated oil glut in history" didn´t materialise (yet) and their 2025 exit production rate, I see them carrying home like 2,3-2,4 bUSD of EBITDAX.

Liquidity is quite ample, high capex phase depends on final Cambo share, so why would they adjust down top end from 15-30% CFFO framework. Of course sudden large scale M&A could change the picture here.

Cash tax was very low in 2025, like 15% effective tax rate. Even with higher cash tax burden in 2026, CFFO (after tax) should result in 1,8 bUSD+ in absence of commodity prices collapses (maybe weaker phase ahead like March to July, but I am very bullish oil starting from H2-26). I recall somewhat optimistic statements regarding dividend, so hoping for a postively surprising guidance next month.

Furhter US/Iran escalation not considered.

I was wondering, how the new 800m RBL with its 400m LC capacity section, does fit to ENQs UKCS M&A plans, so others here might find this reply useful too:

„5. Strategic interpretation

This structure strongly suggests EnQuest is preparing for:

Late-life North Sea acquisitions (20–40 kboe/d packages)

Examples:

• parts of Harbour’s UK portfolio

• aging BP assets

• Repsol Sinopec disposals

• Tailwind-like small packages with high abandonment obligations

Deals where decom obligations are 300m+ and LC capacity is essential

A 400m LC line is perfectly designed for the type of acquisition ENQ wants.

6. Bottom line

Although the cash tranche drops slightly, the new structure massively improves EnQuest’s M&A ability, because:

1. Almost all M&A packages they target require large decommissioning security.

2. Increased LC capacity means they no longer need to tie up cash in security.

3. New structure makes ENQ a credible buyer for large late-life packages.

4. Effective cash available for acquisitions actually increases, not decreases.

This is a very bullish sign for upcoming A&D activity.“

DYOR. (and don’t fully rely on AI, haha)

As much as i would love to agree to Orcadian Energys Assessment, thats not the case as its written. The old mechanisms treshholds, Both, Need to be triggert. Of course there room for the government to manually adjust (i.e. Russia Ukraine Peace), but thats not certain?

Surprised we are Holding up so Well Today, given the disappointing Budget.

New taxation from 2030 looks good, but obv. comes very late.

My question rather is, isnt todays announcement of certificates not a big blow for cambo? Was there really no Value assigned to cambos 100% 2Cs for Ithaca or am I misunderstanding something?

Sad day for the UK, good day to buy HBR UKCS assets.

Don´t agree, too strong of a market reaction to be based on that downgrade only. SQZ is suffering as well.

Hopefully it´s still no leaks (bad news for Wednesday), but rather based on brent spot pricing (Russa/Ukraine) and also that drop in UK gas.

JOG is holding up strongly, which I use as an indicator for politcal climate towards UK oil and gas.

Great Post! I did a very similar 8 weeks ago, was wrong with the Timing (yet).

See HBR Board, Media reports about US Expansion, move to US Stock exchange etc.

PE backed Harbour and LC are done with the UK.

I am sure discussions were halted because of government consultation and industry hopes for the better. I trust the disposal of a meaningful part of Late Life HBR UKCS Assets to ENQ will Happen after the budget (Price Discovery).

Recovery in Brent from H2-26 will be the cherry on our cake. Double from here within 12 Month (I sold beloved ith/SQZ shares to rotate into ENQ even further).

DYOR (: