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I am confident we will have a deal this month. All the signs are positive including the silence over the past 5 or 6 days.

No probs either R, fwiw if it was my business (oil or airlines) I'd hedge but I'd want the flexibility to do it when and to the extent I wanted to at that time rather than be tied to a fixed formal agreement/percentage.

I think prior to the RBL enq had stated somewhere it had the ability/authority to hedge up to 75%.

L, thanks for the link and I found the reference you make.

As I said in my last post I was speculating on why it was 40% but as I was unsure I dropped IR a note and here is their response...

'The hedging requirements set out in the RBL are based on saleable barrels as opposed to production barrels. This means that adjustments need to be made to production to reflect Malaysia entitlement, as well as a reduction for the barrels associated with BP’s effective equity interest in Magnus through the contingent consideration/profit share mechanism. Accordingly, the hedging requirement therefore represents a smaller percentage of our reported production.

The RBL is scheduled to be repaid by the end of June 2023 (October 2023 is the effective date of maturity of the facility if we don’t refinance the high yield bond), and we are significantly ahead of that schedule, so our hedging requirements in 2023 are reduced given that we are only dealing with half a year.'

It, therefore, looks like under the current 'rules' the good news is that hedging will not increase beyond what is announced(unless due to refinancing, renegotiation, etc) and that the 40% calc was a 'coincidence'.

Thanks L, will try and quickly scan the 370 pages a bit later.

Hi R, it wasn't aimed at you or anyone specifically but it was one of your comments that prompted me to express my view which is different from yours.

I called it a 'loss' because that's what ENQ will call it (they will likely even call it a 'realised loss' and it is very real.

It's entirely up to you to find it boring or otherwise that is your choice.

P.S. I was working from memory (something I need to reduce at my age) and got the number wrong, it looks like the loss will be $142M (not $160M) for the first 6 months of 2022.

Hi Londoner, been away but to respond to your post...

What is the RBL end?
RBL Final Maturity Date which is currently 1 October 2023. (this could of course change)

If the Bond is refinanced before 1st Oct 2023 then it could run for several years. The idea that the hedging condition ends with Bond refinancing is refuted by this element, “If Bond refinancing has occurred, the 12-month requirement drops to 50%”.
It could but I know that ENQ would look to replace it with more flexible terms. The current hedging terms are not flexible enough as only £1 outstanding on the RBL means the hedging requirement remains at 60% + 40%.

“The hedging level is set at 6 monthly intervals”
RBL terms refer to quarterly periods, “a minimum of 60% of volumes of net entitlement production expected to be produced in the 12 months following the relevant quarter date”
I'm not sure where you pull the quarterly statement from and would be interested if you could share a link.
For my part on the website (investors:debt) it states that ..
Covenants tested at the half and full year, they could of course still test volumes every 3 months. It is a bit of a moot point for 2022 so far however as the prod estimates have been unchanged since the start of the year.

The part I'm speculating on is why hedging is 'frozen' I'm sure it's related to the end date (1/10/23) and if it stays at 40% (and not increased in Sept with the 1H results) it must mean that the final 2-year hedging window remains frozen at 60% for year 1 and 40% for year 2 until the conclusion.

I know some others may think this is trivial and that it's all swings and roundabouts but (from memory) the 1H hedging loss was $160m and if repeated would be FY $320m. That is about 30 x the impact of the EPL for this year.

Hi Londoner, my understanding is as follows..

Hedging is required by the RBL.
The RBL ends (unless extended) Oct 23.
The hedging requirement is 60% for 1st 12 months and 40% for the following 12 months.
There is no requirement to hedge beyond the RBL end.
The hedging level is set at 6 monthly intervals
This time last year it was 60% for 12m plus 40% for the last 12 months.
We are now in the final 12month period so it looks like requirement is only for 40%.
Enq prod forecast just issued was 44-51 boed, the midpoint therefore is 47.5kboed.
47.5k boed x 183 days × 40% =3.48mmb.
Enq statement yesterday was 'c3.4mmbls' for next 6 months and 'c 3.5mmbls' for the following 6m.

Hi Tommo, re the hedging...
I suspect the requirement has changed as we are now in the last 12months of the RBL (which stipulates the hedging). Requirement was 60% of prod for current year and 40% for second year. Now we are in the final year it looks like it's classed as a 'second year' which means the requirement is only to hedge 40%. This ties in nicely with a 47.5kboed figure which is the mid point of the latest update.

As you say as long as oil prices remain above 78$/bbl then the profit margin will grow in the next 4 quarters.

'Solid' update....and not a million miles away from estimates on here front Kamrat and others.

I think you are 'broadly' correct. Their split the last time I looked was 70/30 in favour of gas over oil. The bulk of the gas from karish in Israel waters ( they also operate in Italy and a few other countries) is signed up to long term contracts but they do have export potential via a pipeline to Egypt and LNG facility. The long term Israel contracts are what the dividend payments are based upon which will start this year.

The interesting point in the news article is the the proposal from Hochstein ( the American mediator ) is that the deal looks to include ENOG in drilling the new fields in Lebannon which is new news and I suspect may even tie back to existing infrastructure so would be great news.

Fantastic news for ENOG if this is true..
https://www.naharnet.com/stories/en/291378-report-maritime-dispute-on-brink-of-solution

My guess would be some profit taking...

Sorry, said hedging, meant to ask about fixed term pricing contracts if there are any.

Have you taken hedging into account in those figures?

KK, was openly against the EPL so they will be pushing at an open door.

RNS reads to me as KIST does not have the firepower to take out SQZ.

*wife

he's almost as bad as my wide...

£4 would be meagre and less than a 5% increase on an opening low ball bid.

http://www.breakingthenews.net/news/details/58253952