Member Info for Tarmak

Hi!

Stevo12,

These are areas that may not be developed with infrastructure, now and later, and investment before -30 is largely impossible with 78% tax.

What remains -30 remains to be seen, there may be some drastic change along the way (everyone hasn't given up yet) but with the cards laid, SEA is in any case a safe card.

If EnQuest can put production under control, which naturally declines as it is likely to be cheaper to buy than to drill, then they can resume capex when the OGPM kicks in.

It is the tax deductions that make it favorable.

Still, closure is on the agenda until/if someone changes it.

Regards

Kamrat

Hi!

It was not funny to see Labour, unexpectedly given what emerged in the drafting of the successor, butcher the industry on the wrong grounds.

The successor is ready, made to correct mistakes made in the hasty introduction, and it will be precisely a successor.

It is unlikely that both gas and oil will end up below the limit two quarters in a row, which means that we will probably have EPL until March -30.

Since the right of deduction in the EPL only takes into account decarbonisation projects, I assume that the gas from Bressay is included in such a project.

Otherwise, yesterday means that everything regarding Bressay & Bentley is after the EPL, when OGPM is active.

https://www.nstauthority.co.uk/regulatory-information/exploration-and-production/taxation/

Personally, I will let the investment in EnQuest play out, i.e. stay with the holding, in the hope that they use their tax credits themselves and can pick up some assets that maintain profitability.

Thanks to quick feet, the finances are excellent and the upcoming refinancing (-27) will not be a problem.

After all, production in SEA has been expanded with Vietnam (5k) and in Q1 -26 there is an additional c. 5k at Seligi (Malaysia), which in the context is fantastic barrels thanks to the premium on the oil with c.10%.

Taxes are very high in the area, but their PSCs are made so that the operator has profitability, which makes it a secure income far down the oil price scale, which is important at the moment.

It is when the price of oil goes up that you do not earn as much in relation to how much the oil has gone up.

Made adjustments regarding GAEA, see "Triggers", regarding the earning potential there by calculating profitability instead of number of barrels produced /d.

https://docs.google.com/spreadsheets/d/1bJ3AQm_-7Tn6C5bxF6lc-x7X6eXwPLF8H2KdDxmCYw4/edit?usp=sharing

As upcoming PSC contracts are unknown (also applies to DEWA -27) I have only taken 40% of production and used the PSC data for Seligi (which is stricter than for Vietnam).

Regardless of GAEA, I believe that EnQuest can create profitability before then, and I see just the fact that they have gained a foothold in Vietnam as incredibly good.

It was sold precisely because the tax is high, but compared to Seligi, 5k corresponds there to almost 8k on seligi.

You don't have the "lottery" where there is a possible big win, but it gives a sure dividend.

Now I'm looking forward to what appears in the update (which is hopefully in the next week) to know how the company intends to act.

Regards

Kamrat

Hi,

Frac, it's always a question of being able to stand up for one's opinions.

In some cases it is understandable that there is no answer, but I see it as cowardice, who else will answer?

"Sneaking" to be able to turn the coat after the wind does not create confidence in me.

Rom, don't go to gym, I went sick yesterday.

Stevo12,

Thanks for your persistence, it adds digging for understanding.

Hunbah and you have taught me a lot.

Just having backstabbers who agree doesn't move anything forward.

In general, you can say that the calculation for what the company is allowed to keep is correct and it is also the conclusions with the right volume it will be a little less.

The error has been long-lived where I assumed that the production presented was after the cutoff of production to Petronas.

As for the volume, I'm out cycling but it's insignificant and doesn't need to be taken into account as the model in the "forecast" is based on the correct volume.

I will have the thought and understanding right going forward.

I'll do the changes who's needed.

Regards

Kamrat

Hi!

Stevo12,

The volume I count on is to reach presented barrels in UK (Seligi 18.000).

If you take away royalty (10%), wich is drawn before presented numbers, and then part it at 50/50 (EnQ/Petronas) you have 8.100 barrels.

That represents reported numbers and is before PSC-drawn.

If you look in production in the files, you canb see that I take away PSC at end Year.

It is confusing counting on the price too as SEA get more than UK at low prices.

My conclusion that we are in a very strong position, survival wise, after buying Vietnam and get c.5k in Q1 from Seligi do I stand fore.

Regards

Kamrat

Hi!

Sorry for my haste,

Conclusion: SEA and UK need to be calculated separately due to two reasons.

1. Premium of c. 10%, which directly leads to a higher return.

2. Their sharing method makes it profitable to drive so far down the price ladder that it becomes unreasonable for the oil market to exist.

In addition to that, the share of SEA is c. 31% and there is an additional c. 5k from Seligi in Q1 -26.

The barrels from Vietnam bring a few dollars more/barrel as the tax (32%) and royalty (4%) are significantly lower than on Seligi.

Different calculation method makes them approach on the last line but the difference is there.

Basically, we are almost vaccinated against low prices after Q1 -26 and that is the strength of SEA.

Regards

Kamrat

Hi!

I have put the mailing file in the "mailing" tab and the old link disappears.

https://docs.google.com/spreadsheets/d/1bJ3AQm_-7Tn6C5bxF6lc-x7X6eXwPLF8H2KdDxmCYw4/edit?usp=sharing

There are some new calculations where you see the profitability of Seligi and Vietnam and they are newly edited.

It was Hunbah who got me on the right track so big credit to him.

Taking the weekend now

Regards

Kamrat

ps/Ron, I'd never got the time to catch up in reading/ds

Hi!

Went a little too fast, 600 Boe /d nothing else!

However, the 85/15 contract (on gas) is changed to a 50/50 contract as production is increased in Q1 -26 to a maximum of 70 mmscf/d and I have added 5k from Q2 to the files.

To make it clear, there will be roughly 5k added sometime in Q1, not 6k which is what the contract gives, because the 600 Boe is included in the calculation.

Of the drilling program's wells at Magnus, 6, I have put 4 under -26 and supplemented with 2 probable wells at Seligi and 1 in Vietnam.

Production ends the year above 46k, which guarantees a strong start of -26.

However, the annual average ends up around 42k after maintenance and the long stop at Magnus.

It is worth checking the production file as it shows how production will most likely increase for several years.

The decline rate also covers some decline time as it is of the natural kind.

Even Triggers is worth a visit!

The files: https://docs.google.com/spreadsheets/d/1bJ3AQm_-7Tn6C5bxF6lc-x7X6eXwPLF8H2KdDxmCYw4/edit?usp=sharing

Regards

Kamrat

The fee is 15% and we got c. 600k a day (from c. 20 mmscf/d).

Regards

Kamrat

Don't swim with them, the answers may not be there!

Hi,

I think most of it has come out about Malaysia and that it is resilient to low prices, profitable way down the oil price scale, and works as a hedge for other holdings which is good for the moment.

Stevo12, sometimes you have to write exactly as if you are trying to teach an id*** to clarify and it is gratefully received.

Do you know how all of this compares to the barrel presented (by the company)?

Is the PSC and tax deducted before presenting the barrels?

Perceived it as being drawn after the fact but think PSC should be the draw.

Regards

Kamrat

Hunbah,

Thanks for all the work you've put in (so far).

A few more questions:

At "3. Profit oil split (45/45 ratchet)"

where do you get "45" from?

Is it the scale 30-70%?

As royalty alredy is delimited I can't see anything else.

The big question is whether the output presented is before/after PSC and tax?

Regards

Kamrat

Hi,

Thanks for all the answers!

First the production, 20k!

I was the one who thought it was easy to count on an even number while the real production is lower (c.17k).

I've tried a bit back and forth but don't really understand the big picture.

What drives me is that people should understand what it provides.

I know that the tax is reduced and that of the costs, hence my calculation.

Production /d 17 000 Oil & gas-price 65 Royalty 40 332 500 Revenue 362 992 500 R/C 45% EnQuest part 163 346 625

Tax 38% Opex 35 000 000 Capex 25 000 000 EnQuests part 50% Profit 131 274 908 /boe 21,16

From Craig

PM8/Seligi:

Malaysia incurs a 10% royalty

For PM8/Seligi, the cost recovery thresholds are on a sliding scale from 70% down to 30%, based on a revenue to cost (R/C) calculation

There are export duties (10%), tax (38%) and a Cess Cess (CESS) (0.5%) payable in Malaysia, but these are of course refundable

In Malaysia, the profit sharing is also changed based on the R/C index, in proportion to the cost recovery scale

Am I wrong?

Please help me understand if so.

Regards

Kamrat

ps/

You can see my calc. here: https://docs.google.com/spreadsheets/d/1bc1ZkJIOkHTdEeST7SRaOVxl-pjBlwUE-TG8kdJ-EDk/edit?gid=0#gid=0

/ds

Hi,

I have a hard time letting go of the talk about Malaysia regarding profitability.

Stevo12, Hunbah, how is it actually?

Of course, I also see others who get involved as positive.

What I actually know is that of the production (c.20k) 10% goes to royalty while the rest is split between Petronas and EnQuest (45/45).

The tax (38%), export tax (10%) and cess (decom fund 0.5%) are deductible items so Opex and/or Capex reduce the tax.

There is a deduction scale that runs between 30-70% and EnQuest may deduct a maximum of 70% when the oil price is low, which should ensure profitability for the operator (E).

A larger share goes to Petronas when the price of oil is high.

My understanding is that EnQuest pays opex and capex (not shared, but not sure).

If you calculate it from the ground up, you don't need to know whether something should be paid according to the figures presented or not, but it requires you to have a sense of Capex and Opex.

I suggest assuming Capex of $25m and Opex of $35m but am open to better assumptions.

Although the export tax is included in the agreement, I would like to remember that the production is for domestic use.

Regards

Kamrat

Hi,

I had a little difficulty leaving the discussion earlier where there was talk about the cost / profit situation in Malaysia.

Finally got something to show that might clarify some things.

Some facts regarding PSC for Malaysia (pm8/Seligi)

1. Revenue from production: Under PSC, 10% is primarily allocated to the Malaysian government, remaining part, 45%/45% is EnQuests / Other.

2. Then EnQuest's (50% contract) cost coverage (scale between 30-70%) is applied and the additional revenue is distributed based on an EnQuest's profitability.

3. EnQuest gets a higher share of production when profitability is low and PETRONAS's share of production increases when the contractor's profitability increases, like a hedge.

4. Tax (38%), Export tax (10%) and cess (0.5%) are refundable.

I have done an example here: https://docs.google.com/spreadsheets/d/1bc1ZkJIOkHTdEeST7SRaOVxl-pjBlwUE-TG8kdJ-EDk/edit?usp=sharing

Everyone can edit and try own numbers so please, take a copy first and edit on that document, dont destroy.

Regards

Kamrat

Hi,

Computer change done and now there is only a little things left.

kamrattarmak@gmail.com will be terminated shortly and it is dlagestrand@gmail.com that applies.

The files are at: https://docs.google.com/spreadsheets/d/1bJ3AQm_-7Tn6C5bxF6lc-x7X6eXwPLF8H2KdDxmCYw4/edit?usp=sharing

and dispatch:

https://docs.google.com/spreadsheets/d/14S5OQYjYFJav3s-VUV4elK_0NpDeqBMp-tN0mObIL2Q/edit?usp=sharing

When someone goes to the links, your addresses are not visible, but you only see that someone is inside in the form of an animal.

The exception is when someone requests access but does not have authorization or if the link's conditions change (like now when I changed computers), then I get a notification that xx has requested access.

In those cases, the email address is not saved.

If you don't get a notification when updating, but want it, you can send me your email address.

The notifications are made with secret copy and only I see your address and name.

Otherwise, you can visit the links from time to time to see if they are updated.

Regards

Kamrat

Hi,

I entered EnQuest's decom, into Gemini (AI), for the last 3 years and compared it against peers and Shell's transfer of decom to get the results.

A deal with Petrofac Asset Solutions should not take down epl but it would be strategic both about what we have to decom and what we probably will buy.

Everything will decom and strengthening ourselves creates a leg to stand on.

Regards

Kamrat

Nr 3.

Link to Petrofac Assets Solutions:

Ironically, Petrofac had a long-term Operations & Maintenance (O&M) contract for the Kittiwake platform (which is the hub of the GKA area) since 2003, and was granted an extension as late as 2022.

If EnQuest acquires Petrofac UK Asset Solutions: They would gain full internal control of the equipment and teams already familiar with the Kittiwake assets, further streamlining the decom work that Shell has now entrusted to them.

Optimal Timing: The GKA infrastructure is expected to continue producing into the late 2020s. Shell’s handover shows that decom planning is well underway. Integrating Petrofac’s late-life asset management team now would be the perfect timing to take over these assets and bring them to Cessation of Production (CoP) and decom in the most cost-effective manner.

This makes Petrofac's Asset Solutions division an even more strategic and attractive target for EnQuest.

Nr 2.

Shell’s transfer of responsibility for decommissioning management in the Greater Kittiwake Area (GKA) to EnQuest is excellent evidence of the industry’s recognition of EnQuest’s ability to carry out this work in a safe, efficient and cost-effective manner.

What the Shell transfer of GKA means strategically:

Peer Validation: Shell is a major player and one of the most experienced players in the North Sea. The fact that they are transferring their own decommissioning management role to EnQuest, despite initially retaining it at the time of the divestiture, is a strong demonstration of trust. It confirms that EnQuest is truly “validated by peers” as a market leader (as stated in the report).

Profitability model: Shell likely had cost estimates for the GKA decommissioning that were in line with the NSTA benchmark. By engaging EnQuest (which is c. 35% below that cost), Shell reduces its financial risk and receives a lower final bill. This choice confirms EnQuest’s financial advantage.

Expanded Operator Role: The transfer expands EnQuest's role from being a sole owner/operator to being a decommissioning service operator for others, which is exactly what is required to capitalize on Petrofac's service contracts.

Nr 1.

Petrofac Asset Solutions is one of the North Sea’s largest providers of personnel, equipment and operations management systems.

An acquisition would provide EnQuest with the scalability required to capitalise on its cost advantage:

Secure Capacity: Petrofac’s well operations and facility management teams and processes would be integrated with EnQuest’s low-cost model. This secures personnel and equipment for EnQuest’s own huge future decom needs (e.g. Thistle, Magnus).

Access to the Third Party Market: EnQuest would inherit Petrofac’s existing service contracts with customers such as Ithaca Energy. They would then be able to immediately offer their “35% cheaper” decom expertise to these new customers, rapidly increasing EnQuest’s market share in the growing external decommissioning market.

Switch to Service Provider: By acquiring Petrofac’s UK Asset Solutions, EnQuest would quickly establish itself as a vertically integrated player: they optimise production on their own assets, and when these reach the end of their life they have the in-house expertise to decommission them at an industry-leading low cost – a model they can then export to other North Sea operators.

Petrofac’s current financial pressures make this service business an available asset that would give EnQuest a strategic foothold in a market where they have already proven themselves to be best in class.