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Hi L7
Thanks for reply I think I have my head around my Magnus query / thoughts, it is 37.5% shared profit and the tax element is reflected in the fact that the $1b cap on profit share is actually capped at $600m net of 40% tax to reflect the fact we operate and can use our credits. I think however well Magnus does it will be some time before we clear that BP entitlement.
"the date on which the aggregate amount received by BPEOC under the profit share arrangements
equals $600,000,000/(1-TR), where TR is the rate of Corporation Tax in force on date of completion
under the Magnus Call Option Deed (not to exceed 40 per cent.) (the “Profit Share Cap”);"
ATB
Hi Tarmark
Thanks for your workings I have a comment / question on Magnus your workings treat BP share as 37.5% gross FCF but from my reading of Magnus prospectus it is Enquest that have the tax credits and they will be benefitting from their use not BP that is why the cap on profit share was $600m net of 40% tax.
ATB
We have good FCF at the moment Not because of hedging in fact it is holding us back, AB went down the hedge path to get the 4.25% refinance deal it means we are doing well despite the hedging losses he was unlucky when he chose not to hedge and has been unlucky with the present hedges.
Share price is being controlled just like when you are in discussions with the Bank over finance, reckon it could be Bonds soon.
Offshore 25/03/21
"A new round of development drilling is planned for Magnus in 2022, and following the award of block 211/12b under the UK’s 32nd licensing round, the company will launch subsurface studies to investigate future opportunities."
Hopefully they did subsurface studies and are ready to test with the development drilling in 2022?
Hi epiphiny121
I know BP get 37.5% but it will be after the reclaim of the $59m Enquest paid in advance they said April 22 but with the problems with production I expect it could take longer, and capex will be higher on Magnus this year and 75% of that will be recovered before any payments to BP of course $100 oil will speed that up.
Hi L3
I agree with squif and your condemnation of AB over Alma/Galia a lot money down drain! kraken was wrong time but he pulled it out of fire with cost reductions etc I think Magnus was a very clever deal that gave us a field when we couldn't afford one. Shutting down fields last year I thought was mistake but he used the low oil price to secure GE that wouldn't have happened if we had kept thistle etc open. And he has secured two giant potential fields for the future should the oil market play out that way. Unlucky possibly but luck turns.
Hi Londoner7
You probably have a better handle on how Bonds are renegotiated, my reasoning has been that Enquest have stated they wish to reduce and extend Bonds and it seems cheaper and cleaner to clear RB and consolidate the required amount in one arrangement be it a reduced or just an extended amount. It may be HY bondholders would not like that? but am sure it will come out soon with the plan , It seem Enquest are being very conservative with plans and sticking with debt reduction as the target $1222m was I believe a good figure after 2021 outlay.
ATB
Hi L3
Many thanks I agree with your summery of GE for 2022 and your Londoner7 ref to Eagle I respect his posts as well, I believe he also has hope that ENQ test the Tiger prospect as a Magnus tie back. I also have hope they will drill the Magnus gas prospect BP identified, the time seems right although that will consume much of Magnus cash this year we still have the imported gas to sell on till 2023 I believe? I noted Londoner7 thinks RB will run I thought it was likely to be payed up early but will be happy with another year of 7% if he is right?
Hi L3
As usual your accounting is proof fag packets don't work but a figure from you would have been appreciated with the explanation. Yes the tax payable would have been less than a fag packet $60m but to counter the negative of that I note in GE accounts they only received $50 a barrel in first 3 months of 2021 hopefully 22 looks a lot better.
The assets get used up as we produce 19m down to 15m in 2021? but these will have to be revalued with the change in oil prices and reassessed with each new well drilled. I watch your posts with interest and am glad you hold some if your posts turn from pessimistic to optimistic not sure if that will be time to sell or buy. A joke. ATB
FCF for GE during 10 months of purchase with the costs of drilling wells gave us a $75m reduction in purchase price this was after 40% tax so for a 12mth period would have been $150m before tax. As we will not be liable for that tax in 2022 that is the sort of figure GE should add to our FCF with oil at $67 as in 2021 so $200m FCF /debt reduction from GE is very plausible.
On Hedges I believe they are a financial contract that means money changes hands not physical oil and it is for our trader to limit loses in a high price environment as the date ranges apply? And we will have to pay BP 37.5% of FCF of Magnus but that is after capex so you can argue that if we put in $100m capex it is recoverable from BP's 37.5% I am hoping they expand capex lets go after Magnus gas and Bressay's gas cap asp at the very least. Kraken western flank should maintain it's production 22/23 and have news on Bond refinance looking forward to update as an end to doom and gloom!
Picked up another 2k at 21p in ISA from a Divi just kept enough for a bottle of red tonight so looking good.
Tullow is too controlled by the banks for me, they are fairly safe but will need high oil price to ever reward shareholder's?
Enquest have I hope just escaped that position the finance deal last year showed that, we now just need to close that refinance of the Bonds from strength, to be able to move on to reward shareholders.
I am not a great fan of Hedge's as that is just another lining the pockets of banker's but it has been better to be secure with debt level and lose some of the topside of oil, we can get to a position of 5% loan interest on our debt this year and long suffering share holders can get a doubling of share price and a 5% divi based on that, with oil at $80 with $90? and at over $100 I am in favour of hedging to the hilt!
Why would the market know Magnus is not producing 100% Enquest are known for running tight ship and we are about to have operational update, if it was just Enquest's share price we could suspect a leak of info but we are fairing no worse than the rest? .Magnus may provide a lot more gas in the future I remember comments in 2019 about undeveloped gas discovery,
"At the end of last year, the company estimated remaining 2C resources at around 50 MMboe, but it has also identified various drillable targets that could lift remaining mobile oil in place to 270 MMbbl. These, and a potentially large gas discovery made by former operator BP, could form the basis of a long-term, low-cost development program. EnQuest plans a new round of drilling on Magnus later this year"
Enquest did confirm production restored, I presumed that was the panic to get new replacement gearbox control. as it ment flaring gas that lead to environmental breach and shut down.
https://www.upstreamonline.com/environment/enquest-admits-magnus-was-north-sea-platform-shut-in-on-orders-of-oga-over-flare-breach/2-1-1118929