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Hi Chilts, let me help you with your concern over ENQ and the EPL. For 2022 I predict it wi be around $10M. For 2023 it harder to predict as the variables are greater (PoO, Prod Volumes, Government changes, new prod deveolpments, decom cost etc.) but it is still small beer.

Thanks for sharing that Romaron.

It sheds some light on one of my questions around the 1H results. I wondered whether the would pull out all the stops to pay down and close out the RBL in order to avoid any additional hedging. I could be wrong ,but it sounds to me like they are looking at the option of renegotiating the RBL at a lower limit and reducing the hedging requirement going forward.

Hi Lytham, the Kristos bid for Serica is an interesting one. SQZ knocked it back and made a counter bid for Kristos who in turn knocked that back. Kristos now gone hostile, SQZ shareholders board will not accept K's offer as it's using SQZ's cash in bank to fund the move. If it turns nasty ENQ could be a white knight with the previously discussed on here ENQ / SQZ merger. A long shot I know but the two companies one gas with cash and one oil with debt would be a nice fit.

Hi Kamrat, thanks for the update..
One question re the RBL and hedging. The RBL was down to $330m in mid March. Given that the retail bond raised about $50m and with 3.5 months production to go to end of June I'm wondering if they could have paid down the RBL and avoided the additional hedging. It's perhaps a bit of a stretch but may just have been possible. Do you have a view?

Patience is a virtue Banana. I'd also add that as far as this year is concerned it would do us no favours announcing 1H results before the EPL bill is agreed.

KO, re the quarterly earnings I agree it would be useful however it is only a US requirement ( possibly with a mkt cap criteria - not sure ). The US QE reporting are often seen as encouraging 'short termism' so not all are in favour.

Kamrats, conservatively biased s/s's are a very decent stab at how things are moving along.

Hi Tigar, you are correct however the hedges are 'set' so even if the RBL is paid off today the hedges will remain until they are fulfilled over the next 12 months or so. Given this scenario it means
ENQ can make the decision on what debt to pay down or investment decision to make without having to factor in hedging to their thoughts.

Hi Pelle, what I stated about the way the hedging requirement works was correct however the RBL
formally ends Oct 23 and there is no requirement to hedge beyond the end of the RBL. I thinks this ties in nicely with your observation about a change in Sep last year ( where the RBL hedge requirement of 24 months was 'clipped' by the Oct 2023 end date).

My fag packet calcs make me think that we currently have sufficient hedging to satisfy the RBL so we should not see more announced unless it is either a small tweak relating to volumes or a voluntary hedges by ENQ to take advantage of high oil and/or derisk the balance sheet further.

Fair point Pelle, I may be misinterpreting what is being stated. I've asked for clarification.

Hi Kamrat, I'm happy that you enjoyed the handball, I have a similar love which is a bit of an opposite...it is football, and the season is over.

Thanks for the Suncor update.

I agree with your numbers on the 60/40 split ( I think..as long as it only includes ENQs own production).

I think you may be wrong, if I understand you correctly, on going forward however.

Firstly let me say that hedging has worked for us in the recent past so it can be a bit churlish to complain about hedging now. I have had a response to my question from IR and they have confirmed that my understanding of the hedging requirement was correct with respect to #1 and #2 in my post was correct but my hoped for understanding of #3 was wrong.

Essentially the position is that even if there is only £1 drawn on the RBL at the 6 monthly test (end of June and Dec) then 60% will need to be hedged for the next 12 months and 40% for the 12 months preceding that.

Unless you can see us without anything drawn on the RBL at the end of June we will have new hedges stretching out over 24 months.

I attach the relevant part of the response below..

On point 3, please note that the RBL hedging covenant is focused on the requirement to hedge the requisite level (60% of subsequent 12 months, and 40% of the following 12 months) of entitlement barrels, and is not limited to the level of RBL utilisation. In the worked example you have presented below, the hedging requirement would still be to hedge 60% of the subsequent 12 months’ entitlement barrels, based on production up to June 2023, or until such time as the RBL is repaid.



In agreeing terms on future RBLs, we would look to introduce more flexibility to any hedging arrangements that may be required.

Can anyone confirm or enlighten me wrt the specifics in relation to the ENQ hedging requirement ?
From what I read/understand ....
1) Heding is required by RBL facility.
2) At the end of 2021 RBL was drawn to the amount of $415M +$53M (LoC) = $464M
3) From ENQ site..
'RBL requires 60% of net entitlement production volumes for the 12 months ahead, and 40% of the following 12 months net entitlement production, to be hedged'

It's clarification on #3 I'm looking for..
The way I (want to) read it is that if at the end of June 2022(6 monthly covenant test) the RBL is drawn to $64M ($400 reduction in debt) ENQ only needs to have $38.4M (60% of $64m) hedged in the following 12 months with
$21.6M (40% of $64M) in the 12 months after that?

Is my understanding correct or is the requirement more onerous than that ?

Hi R, unfortunately my friends son would not have that level of knowlege or information. He is electronic/instrument technician who takes on relatively short contracts on power stations, rigs, etc doing fit ups..so he's on the tools rather than at a overall project level. What he did say re the Enog FPSO was that he'd heard that they had to pay a 'shed load' before the yard would let it leave. I assumed this was due to all the delays caused by covid etc.

Jan, agree completely.

R, re the oil companies 'posturing'.
It may well be just be posturing but it looks interesting and all are doing it.

I think they are all sticking together and putting on a united front to the Government on this so it will be interesting to see what happens to the EPL bill as it progresses. My own view is it will almost certainly be ammended and a compromise agreement will be reached.

What I do think it means is that wrt the talks between ENQ, HBR and EQNR next week on Bressay is that there is zero chance of announcement to proceed being made ( even if one was taken). As you say a decision not to proceed, if made, would not be the end of the world.

https://worldnews.upexampaper.com/norway-threatens-to-abandon-4-5bn-north-sea-oilfield-over-windfall-tax-more-trending-news/

As my old Granny used to say ' Look after the pennies and the pounds will look after themselves '

Thanks for the update and your commentary and reflections R,

I guess we need to wait and see regarding Bressay but it sounds like a tight call may have got even tighter with the EPL. Was there any news on Bently or is it linked to Bressay do you think?. I guess if Equinor and Harbour and involved and they decide to go ahead having two such large partners would be a plus from the funding side.

The shrinking pool of financiers is interesting and not new news I guess but I do wonder in this post-Ukraine world if that will change. The strategic importance of O&G has been underscored and I think if I was in Government I'd want to ensure we maximize our options going forward with regard to these strategic assets. I know this flies in the face of what BJ&RS have done of late but I suspect they will not be around for much longer,

I think we are Spinbike.
14p is pretty much what I calculate the value of the latest load (per enq share) is worth that the Petronordic will sail away with (and there are 3 to 4 loads a month). :-)

Hi Auson, departures could be for any number of reasons, personal, career, better offer etc. and we don't really know why. If I was forced to speculate and make a guess I'd opt for ENQ entering a new phase of its development as a company. Covid, Debt finance, etc are all pretty much in the rear view mirror and we are accelerating away fast. We are about to enter a more steady and stable phase so the skills and challenges required will be different from what's gone before.

Yes Pelle, I suspect that's the tone set for the AGM.