Member Info for Voiceofreason1

Right here’s my idea - we all meet up in pub of choice in London - instead of name badges we put the anount of shares we own on our badges (bring proof :) )

Then we get much drunker than we should

Biggest badges buy some extra drinks

Therapist i am multiples of that so lets name a pub and get drinking - i’ll buy 2 to your 1 :)

It is bonkers when you think about it - 17m crude deficit when you add spr and crude draw - us bombing iran this morning and israel back bombing lebanon - with iran launching at US bases and downing a us helicopter

And oil futures flat after all this news (after big decline yesterday)

Hormuz still functionally blocked and (depending on your viewpoint) 7-10m barrels lost per day to world

It just illustrates to me how the futures market is just so far from the functional reality of actual oil and how this stock has to be replenished which seems to be entirely discounted in the futures curve

I dont doubt oil could drop on a dip but long term average in 2026 (and even 2027) i feel is another case - i dont think there is much disagreement anywhere that the future is basically pricing a hugely benign (and fast) reopening and no restocking of reserves price pressure which seems weird given the massive run down.

But i cant tell the future so who knows - i only am going on newsflow from actual oil market participants who seem nonplussed by the rosey picture painted by paper/future market - every extra day this goes on another 8m barrels of shut in flow has to be restocked in future

Also no adjustment for any physical premium in market

And 75 oil assumption for 2027

So they raised target to 25 but their nav is 39 which is interesting - and their oil price deck is 85 for oil this year

And as an extra kicker they admit their nav doesnt even include the SEA expansion plans at all

I’d love that to be true but my feeling is the over production at seliga was already in built in to their estimate as we were already ramping up (those discussions were already in place with malaysian gov when they re-iterated guidance)

My take on this is relatively simple - to an extent the enquest recent outperformace over sqz and hbr this year hasnt been about dreams of further aquisitions but about fact they still printed positive ebitda and fcf last year (at 68 oil) and production held up well - then add in the magnus final buyout which even at 70 oil is arguably paid for in year 1 and as oil prices have ramped has just looked better and better.

Both the SEA expansion and recent oil price increase has (again arguably) been pretty much ignored by most serious investors due to the 430m debt risk and perceived uk ‘risk’ (ignoring another aspect of SEA expansion as well as the defensive quality of the SEA profit share dynamic - ie ENQ bring protected from lower oil prices by the nature of the Profit share agreement)

As i have said before i hold enq, sqz and hbr - in that order regarding size invested - and i am comfortable in that weighting due to the investment cases of each of 3

The Sqz valuationis sky high right now but its seen as gold standard on balance sheet terms but unless all expansion comes through pretty much perfectly or even above then its upside has limitations although divi policy helps clearly

Enq is clearly the option play - as (and again i have checked with my analyst who covers stock) pretty much has totally discounted the SEA benefits as well as the last 3 months of oil price uplift and i think even Stevo is coming round to point that the market generally (if you are guided by futures) has been underestimating length and effect of hormuz closure - replenishment of reserves (and probable increase) as well as delay to 100% normality even if war ended tomorrow. In short there’s pretty much a disconnect between insiders (physical oil) and traders (futures) outlook to market going forward into as far as 2028 (and literally every day makes it worse)

If enquest normalised to even half of sqz fcf multiple or ev/ebita (which is clearly a function of being seen as debt prisoner against sqz being seen as cash generator) then you are looking at ENQ going up multiples rather than percentages in which case the beers are on me!!!!

So i am materially more bullish for 2 main reasons -

1. I think brent futures underplays physical market which enquest gains from both in hedges being priced at brent futures and raising prices acheived on unhedged - so for example with hedging at 71 and oil brent futures at 90 - and lets assume a 6 buck physical premium (lets see how it plays out over year) - this means hedge is at realistic 77 and unhedged at 96 - this raises price realised to 89.

2. Analysing newsflow and opinion from insiders brent futures seems near universally seen as overly optimistic on how quickly everything resolves (and production hits 100%) with rebuild pressure of inventories being priced very benignly. Hence my take on average realised oil as year progresses being higher than current brent futures ‘floor’

Given both of these facts i am materially higher on pricing expectations

In short - I expect fcf around 450m and net debt at end of year around 100m.

Again i checked my thinking with my oils analyst and asked him about potential rerate levels of debt and below 300m is his main barrier to rerating - with 150m being another positive step change. So safe to say i am bullish (as i really see the brent curve as a floor - with risk skewed to upside -hence any probability matrix you build would basically always be above that level and therefore raise figures)

So i think this comes to 2 camps - proven by news flow generally as well as reality on day to day markets. We have 2 markets - the paper futures one and the physical one. Headlines to retail and man on street is the brent futures but for people in industry the physical matters arguably much more.

Inventory levels/spr releases/ and general newflow managment from trump espeically have dont a sterling job on topping futures market but physical market has fluctuated a little more on upside.

I think its releatively fair to say futures market reacts very quickly to good spin but physical market is much more opaque and therefore not as well published and much more professikanlly focused

On this front when you get oil onsiders (from all parts of service chain) they appear pretty much universally much more bullish on prices as opposed to the futures market assuming normal function is simple to regain - points like the refilling of all these reserves (and addition like the 20% plus plan for the spr), difficulty in attaining full production for a number of reasons that are much more boring and structural than the news likes to sell (insurance/restarting fields/shipping locations/lingering doubts on safety/getting stuck again etc etc)

So my gut feeling is listen to insiders who all seem pretty surprised by lack of jump now but all point to a longer tail of support for oil for potentially years - as example my analyst reckons oil in the 100 range to end of 2027 is much more likely than people are willing to say for fear of being branded madmen/traitors etc

Stevo the point is a fairly simple and clear one - agms dont do debt and fcf - only if you accompany with an update - as shown when both serica and enquest published basically same level of data on their agms. Now enquest has published updates in the past but they are completely distinct and seperate events (again as proven by serica not doing theirs on the same day). Now your doomsayer approach has always argued that no info means terrible news in background where as given this lack of update has been in calendar for a long time (pre iran war) i just dont really need to go down that particular plughole personally. You could argue it is down to amazing progress on paying down debt which is clearly massively down from the dark days so doubts on survival dont really need ENQ to reassure market as often (case in point is latest bond refinancing on better terms - pre agm and with no update in calendar)

I think on this chat we all know the camps we are in - you’re clearly classicly negative in views on average on this board - kraken is wildly positive (dont hate me for that kraken) - i am by trade a stock trader so love a bullish call but like to think more middling in analysis

On another last note in agm and imaginary updates - i did make the point in a past post that actually a surpirse update announcement would probably be a bad thing as ENQ would have to announce anything meaningful in the nagative sense or the market would kill them long term

I do feel the issue with this chat generally is we can lose sight of important fact in that the us/iran war/clash and following oil price madness has only really been going on for 2.5 months which for a company like ENQ (unlike some retail investors in it) is really pretty much a blink of an eye. They (in hindsight very obviously) said there was no update yet we all (for our own reasons) wanted one and for the record i would like them to be more like serica or harbour although with harbour especially thats driven by professional investor demand as a ftse 100 firm - so we are comparing apples and oranges and pears there

I mean looking back at this there’s just so much of people just trying to spin stuff their own way - stevo mentions sqz being more open but at their agm they said nothing beyond production figures (which enq also mentioned) then saying they’ll provide more detail later - erm ok

Then we get projection from some that lack of fcf details in agm was something new for enq but thats either lack of genuinely reading the agm or just a straight mis sell of negative spin (if not just an outright lie) as a cursory look at 2025 (or 2024 if you really want to pick stuff apart) doesnt do fcf details……

So to be fair it could be ab trying to hide something (but he’d get smashed if no rns on bad news) or could be him just doing what he does every year - which is give an agm not a trading update. I realise the majors and basically index players report data every quarter (as they are obliged to do) and i personally would love ENQ to be more like that but hey ho

My personal opinion is fcf - given open production stats in march and april of 50kish - means they’ve done quite nicely but i suppose i could be wrong

I do think some people are a tad overly bullish on this chat sometimes (you know who you are) but i suppose i prefer the positive to the bending of truth to be overly negative

I am a big holder and a big bull on ENQ but fact is that coomunication is relatively disappointing. The ‘increase’ divi is just a continuation of this years - gets a headline but no-one serious is fooled by that. The production figures everyone knew. The confirmation of 35k goal in SEA by 30 is good but a long way away. The deal talk is very bland as well imo

The market is waiting for concrete moves in lowering net debt - it has been for a while and is still doing that. Until they say something about that ENQ is stuck where it is.

Now to be fair keeping divi at 20m is fine in reality as special dividends/buybacks will be method of payout if we do make some inroads into debt and AB has always said debt paydown is the most important thing for ENQ so thats fine. Added to this i think its a terrible time for AB to be saying ‘we’re making buckets of money’ given the political climate so i also understand that as well

But as it stands - without some more info released in questioning at AGM the stock stays where it is until the glacier like effect of high oil becomes impossible to ignore for market generally

All just imho obvs!

Hopefully the updates coming out of sgm can take this guy out!!!

As to KO’s point of weeks passing we also have to take into account not only does this add to cash generation now but it is hammering inventory levels globally - us SPR announcement they would buy back withdrawals plus 20% bonus means oil is going to be supported going forward to a much greater degree than analysts are allowing for in present research (i asked mine and he agreed it isnt priced in at all). We are starting to see brent futures curve move out a little longer term but it is short term in nature as a pricing mechanism - look at inventory depletion and you will see the replenishing of this (if not the increasing of levels) will provide a massive support going forward

The reality is pretty much none of the oil price surge has been priced in as market wants to see an actual change to net debt trajectory - the share performance so far from the massive lows could be fully attributed to the magnus buy out (worth a ton of cash especially given high oil prices flex it - we are talking paying for itself and possibly more year 1 at 100 plus oil - and the SEA diversification which makes Enquest a much safer company even in low oil). When you add in decreased funding costs from the new bond then its clear the direction of travel is good even without an upcoming (or even in process) aggressive net debt paydown

We all know the oil orices - what will be interesting is the production levels and how well they have held up

There is a decent seller out on the offer at 20.5 - thats the one who has been keeping price down for a while now but the volume behind it is decreasing so its a matter of time imo

Depending on your size (and desire for us dollar exposure) you can buy the HY ENQ bond that they just did - its not on HL but is on others (i bought through interactive brokers)

Just as a slight correction/adjustment to steves assumption of harbours 76 as average for enq we should take into account sizeable decrease in jan/feb production (low oil price) and sizeable increase in march as magnus came back online with increased pressuress noted in 50k+ production in march with average oil much higher than jan/feb. I feel that would skew the arithmetic for enquest to probable 82-85 territory not mid 70’s. Not going to change anything in an earth shattering way but for enq could matter

Its the near future - i think thats the accepted logic (after all its normally pretty close and is the recognised benchmark)

Saying that no harm asking at agm