Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Acchi, L3 - what do you consider a suitable proportion to be hedged? The prospectus issued in June says ENQ is currently hedging 9.9MM bls this year (around 55% of total production this year if we ignore golden eagle) and 3.1MM bls next year. Personally I'm comfortable with the amount being hedged this year but need to increase the amount for next year. But how easy/expensive is it to hedge production so far in advance?
Good find Pelle.
Although the document is a little out of date (26 Feb) I find exhibit 5 on page 3 to be a very useful chart for comparing us against similar oil companies. Very interesting to see how our 2P reserves compare, despite such a low market cap. Also how they've determined our PE ratio for 2022!!
Hedging in the 80s was considered a pipe dream only 12 months ago. Can you imagine what the SP would look like if we find ourselves in that position?
Also great news on the GE front. Hopefully we get an indication of the increase in production figures at some point. Is anyone monitoring the current monthly production figures from GE? I'm currently assuming the previously reported figure of 10k per day.
Pelle - keep the calculations coming. Would be good to see what you (and others) think of year-end debt assuming 60k/$65 average production/POO for the year.
We always knew the restructure was on the cards but seeing some of the detail now at least is encouraging. A few thoughts/questions from me:
- The new facility would suggest that a lot of the complications surrounding the old borrowings are now gone. The clarity, whether good or bad news, must be a good thing.
- There is no mention of SVT. Whilst the amount outstanding at 31 December 2020 was less than $10M, the fact it is not mentioned suggests we have paid this off since year end?
- No mention of the interest rate on the new facility. Whilst it may be immaterial in $ terms given the current POO, the rate we are given can be considered a good yard stick to how lenders value us.
- Whilst we're likely to have the cash available to fund GE outright I wouldn't be too annoyed if $50M needed to be funded by OO. The acquisition provides an immediate increase in production and c.18 MMbbls to net 2P reserves. So at least 4-5 years of continued production. Do we know what the break-even cost is for GE field?
Has anybody tried to speak to IR today to ask any questions? Whilst they may have their hands tied by regulations/prospectus any further information we can eek out of them can only be a good thing.
GLA
P.S at current POO we're making c.$2.2M FCF a day. Long may it continue.
Ironpyrite - my reading of it was we've hedged 9.0 MMbbls for 2021 and have 6.2 MMbbls remaining at 30 April 2021 (so used 2.8MMbbls for the first 4 months of year). I suggest asking IR to clarify though, unless someone already has?
Hi Jan
A lazy question from me as I should be able to check myself but do we know what kind of interest rates our peers are currently getting?
Any reduction on the current rates would be welcomed, although nothing comes for free so I'd hope we don't give up too much for the sake of reducing the interest rates by a few bps.
GLA
Prime - I'm not concerned given Brent is still above $65. Given the hedges already in place if we say we average $63 oil for the whole year and 46k boepd production (lower end of guidance) then we still get (63-22) x 365 x 46k = £688m FCF
All very crude and a number of assumptions linked to this but a significant number regardless. I'm not going to account for GE or any other potential revenues until signed, sealed and delivered.
I agree; a relatively boring read but overall am content with what I read. A few unknowns still though that would be good to understand:
1. Magnus performance - can we exepct a turnaround in production once the well intervention program is complete?
One to ask IR or continue analysing the monthly production figures.
2. Enquest producer - no news currently, which is fine, but I hope that we're able to sell/make use of this in the future.
3. Refinance of SCF - no mention of what this might look like, though that's probably because still being discussed.
I believe the market is already pricing in 2 and 3, so any improvement on this will see SP increase. However if performance at Magnus continues to underperform then the SP could be dragging its heels a little longer until we're able to increase production via other fields.
Those who are looking for a quick buck here are better off investing in dogecoin/catcoin/horsecoin. A case of sitting back and waiting for this one.
GLA
I would be very surprised if this year. My own priorities for this year are paying off the RCF, reducing the debt further with any excess FCF and another possible acquisition provided the price is right.
News of a dividend though would certainly wake up the II's
Jan/Kraken - come join me on the dunce bus! There's Benny Hill music on repeat and AB has paid for a clown to entertain us. Although the captain did say we'd be allowed back in the LTH cabin on accounts of good behaviour.
So I got confused between Eagle and Golden Eagle developments. Starting again...
1. So the Eagle development is currently a non-producing field that would have required cash to deliver first oil
2. The cost of getting to first oil around $50m - this is off the back of us being 'carried' $7.5M for remaining 15% stake
3. On completion would have delivered around 8.5k of oil and 3m cubic of gas per day
4. Now ignoring the gas part for now (someone better than me can quantify) the oil would have delivered FCF of around $90M of FCF during the year based on 8.5k production and break-even of 30 - though I suspect would be higher
5. Therefore after a year we would have been $40m better off.
6. Instead we've got zero income to releasing it but have no costs associated plus around $30m of FCF each year as we do not have to worry about OPEX and assuming 1.5k x 365 x $60
Therefore I think it is an OK deal. The fact that many of us have confused Eagle with Golden Eagle highlights the fact that the field was immaterial to use and allows us to focus on other areas. Hopefully we can be in a position to strike similar deals with other dormant fields of ours and focus on Kraken, Magnus, Bressay, Golden Eagle and Malaysia - unless other well priced opportunities present themselves
Apologies all, only now seen the RNS and trying to come to terms with it - like the market I am currently on the fence. Whilst I try filling in the gaps myself, can I check my understanding is correct
1. We initially bought Eagle for $325M
2. We're now selling 85% of it for nominal $1 but free carry on the remaining 15%. So until first oil achieved we're down basically $325M - correct?
3. Once first oil is achieved (September 2021) then we can expect the entire field to produce 8.5k barrels of oil and 3m cubic of gas per day. So we get around 1.3k barrels of oil and 450k of gas per day at no cost. How much does this equate to in revenue per year? The oil is around $30M. Gas I'm unsure on?
Is there anything else I'm missing, or any other revenue that we now get from selling off the 85% stake?
I certainly don't think this is a fire-sale as at current POO the FCF is only growing but does make me believe that other M&A activity is on the cards
Jan - how on earth do I get myself in the LTH cabin? Even when the captain asked for the password and I told him "repairer spike" he wouldn't let me in. Is there some secret ENQ premium you're paying and not telling me about?
Another great day to scare off the lockdown blues!
A coiled spring I agree but given the last RNS i'd say there is a fair reason for this. My biggest concern is the lack of communications/direction from AEX (although arguably this should be coming from ARA/Zubs now). We all need reassurance that progress is actually being made before we can release the spring
Great day all!!
Great to see the talk of us hitting the higher heights but without meaning to sound like a right old Neil Hannon (where is he/Ammu btw?) then what are people's reasons behind say "we'll see 40p come Xmas"? Whilst I see the SP continuing to rise with POO around the $60 mark I am marginally skeptical about seeing 40p this year. What price/production are you allowing for here? What is your predictions for 2021 y/end debt to come to this conclusion?
Let it be know that I would LOVE to see 40p by the year-end and would happily buy the first beers at the 60p party if we do see it this year - or has Pelle agreed to get the first round from his dividend penalty fund?
Chilts, mrc - thanks for your comments.
mrc - you mention that BP Andrew is on sale; is there a website/list/source of known assets up for sale? I appreciate we have no influence over the decision making process for ENQ but would be good to know what opportunities currently exist.