Member Info for Voiceofreason1

Right so we saw the rockrose money flow - coming through basically to pay off last years funding and a lot bigger than we expected

We’re clearly raking it in at over 82-86bucks a barrel (simple cost per barrel vs revenue makes this irrefutable) but i struggle with the 140m rbl pay off as its still pretty much down as existing everywhere else - did we use the rockrose cash (plus another 30-40m) or has that not filtered through to net debt yet?

Am i reading this right? 77m epl? Thats way lower than some were expecting- of am i just misreading?

Right well lots to digest - rbl which was showing on debt page at 190m but in year end update was down to 140 and is now zero - so from perspective of debt costs that pays for buy back on its own (190m was going to have 17m interest)

Also notable that net debt down to 410 means we actually paid that 140 RBL by the 70 cash flow plus lowering positive balances which just helps for clarity and lowers that top line total debt fig

So 15m buyback super conservative but monthly fcf is chugging along nicely and we’ve hit the 50% debt to ebita by Feb!!!

Be interesting to see market response and roll on rest of H1 as thats historically also been net debt paydown period

So re the whole negative debate vs balanced vs too positive - i think steve does prob err to negative a little (hence the bet!) but thats as valid as some of the posters on here who err to being too positive so all in all different views are a good thing - i know in banking portfolio managers love the dr doom anaylsts as it provides a counterpoint to a market that gets far too herd like

Now saying that i have noted before that bloombrrgs weighted analyst opinion has now gone to 186m fcf for this year ( for record it was much lower when i did bet!!!) so i do think the even the 110m new forecast from Steve is a bit conservative but hey ho. Lets see what Thursday brings - the bressay paymrnt negates any cash flow effect but even that cash flow effect i dont think is as weighty as some seem to make it as we had nearly the exact same scenario last year with no bressay payment and the wheels didnt come off in H1

My point earlier on the RBL being at 140m at end of 2023 and even conservative estimates of 25m a month in h1 means we save over 8m in interest costs on that alone but i absolutely accept i do lean positive so roll on the data

Lets all face it - a lot of this is guesswork based on oil, tax, timing of payments and probably some butterfly flapping its wings in south america

My estimate is 430m or better (year end 2023 was 481)

I actually thinks thats super conservative - i note from year end update rbl was down to 140m (still shows 190m on the debt page) so that would take rbl to sub 100m if i am right (and again thats on the conservative end)

But we’ll see in 2 days

So regarding my post - i am not discounting there are fees such as debt interest and obvs EPL but debt interest is disproportionately weighted to later in year and epl is 100% later in year

Its why we always tend to print great numbers at start of year then slow down in H2 (as i made clear i thought)

Proof will be in pudding i suppose next week when we tend to get update including first couple of months

I would point out for Steve that bloombergs weighted analyst forwcast stats on 2024 fcf have just been massively revised upwards from 50ish to 186m - so lets hope analysts are actually on the money this time as bodes well for our 100m binary bet on fcf!!

155.29k shs at 13.579? I see them - but they dont print on exchange they just report them on BATS. Way of the markets - you have to look at composite flow not just main exchange

So 326k has gone through exchange but 647k had gone through composite today as example

right so thoughts please

we all know the works and payments at enquest are back loaded to second half of year so if this pattern holds we make big inroads into debt etc in first half before the h2 drag comes into play (works/epl etc)

now this is proper *** packet maths but given our budgeted costs of $685m and our production being around 43k a day i reckon the front ended gross profit per barrel is around $40 in present 86 buck market

thats an enormous monthy cash generation in h1 on a month by month basis

clearly we then get hammered in h2 but depending on oil price (obvs) even that is fairly do-able

I am on for that bet Stev - not so sure how confident you are now bearing in mind you just more than doubled your fcf from your last top down post :) doesnt exactly scream how positive you are!!!

For record as i said earlier any divi or buyback (dont completely exclude possibility given the front end fcf will take us below 50% debt to ebita ‘goal’) also excluded - roll on the full year data and specifically the half year update

Fyi if sofr interest is at same level at end of year i reckon we’re in trouble in more than ENQ which should also clearly improve enqs finances

Anyway - lets see how first 2 months go and debt when full figs come out

Yeah stev i still struggle with the glass quarter full approach where everything negative is 100% set in stone but any positives seem discounted

We had the carbon copy last year at start of year on positive working capital adjustments at start of year so that discounts 40 right off as its an equalised measure . The cash flow of the bressay sale is just another 45m as a cherry on top which if paid off out most expensive debt is worth 5m in debt alone (added to notional 45’ clearly). I also struggle to find the 60m payment being discounted on epl in figs from the nov update so happy for a link there clearly. As to 150m on present epl thats clearly a worst case scenario as you yourself seemed quite creatfallen last year when actual epl adjusted for investment allowance came way under your expectations.

Then we get onto oil prices which clearly no one knows but we definitely do know cost of collars at sub market price which is what enquest paid last year. Then we have intra year cash flow as i mentioned - cash is king and that flows in early and gets paid out late - changing debt dramatically when your net debt is down in the 400’s. Additionally the interest earned on the 300m+ which was earlier checked on with enq by someone i forget on this board and enq revealed they realise 5.5% adds not an inconsequential amount

In short i’ll bite your hand off on a 100m bet which is double your fig (adjusted for any divs or buybacks that enq may or may not try to surprise the market with)

I await your bravery call :) - and let the noticeboard record these figs :)

Stevo i just dont see those figures working in real world

So basically in 2023 we paid down 236m in debt - production is basically flat - but income at least right now is up due to higher oil at moment and no collars unlike 2023

Now epl was 60m last year and is budgeted to be higher this year but even if 150 and pretty much no investment allowance thats only 90m delta

We also know that the 70m debt payment (i agree with that from debt page calcs) goes down as year progresses as we always front load debt repayment as all our costs tend to come in H2 and god forbid interest rates might go down at one point as well

So in short i just dont see the net 186m differential you seem to figure in

As noted below we are extremely fortunate to have our tax losses - ultimately we pay max 35% and thats before any investment allowances and thats clearly not awful for the time being

So really we just need to concentrate on what we can change - production, fcf, and new opportunities (which i am pretty happy with management to be honest - 15% sale of bressay and the whole ccs angle)

If oil prices remain at these levels its awesome really - pretty boring but would hedge a little more oil to have the surety if we could easily

Otherwise its steady as she goes i reckon

Dumbly - i am more of a cynic - the reason they launched EPL was to steal the clothes of labour and fact is they can tax uk oil to death with no net effect to oil prices at all (yes they lose jobs and energy security but thats not a real timw hit to most voters). If they tax banking super profits then banks can push up prices to show consumers it hurts them but oil doesnt have that power

As to extending and raising it - i think they will extend but the OBR claim a lot of people use is small fry when you look at nominals so the main reason is longer term to rob labour of room to change anything non hurtful to uk taxpayer when they get into power

Its an (both EPL originally and any change in budget) overt political and not economic act - trying to make sense of economics is just a fairy tale in my opinion (but as i say i am a cynic)

I do think you might see something Aim - as we’ll have first 2 months debt reduction which always has tended to be our strongest period. Oil prices for rest of year are clearly variable but first 6 weeks of year have been decent so lets see what the numbers are. Higher oil is a virtuous circle for us - increases fcf/debt repayments and also increases Ebita clearly

Not a huge amount to add - 481 year end not reflecting the additional 43 to come in for 15% bressay and a circa $80 dollar oil jan means another 20-30m being paid off - so end jan net debt is possibly around 400m - thats dangerously close to the 0.5 bet debt to ebita threshold…..

Stupmy - while i am no massive fan of Government military action generally i dont know what alternative to the action is against Houthis. They are firing missiles and drones at one of the most important seaways in the world

Kraken - i just dont see the ‘shorters’ here - you need stock borrow - and there is also zero short interest in Enq right now (i checked)

We’re borderline an irrelevance in an unloved sector - and i just think thats the driving factor here - NOW SAYING THAT these trades are always the ones to pick up the gems in as the potential is huge if you just pick up an unloved but strong cashflow business (buffet, private equity all agree there) and i realise we’ve all been in this stock too long to be entirely emotionless as we should be but i do feel we tend to blame a lot of things for Enquest price that, simply put, we’re not big enough nor important enough to make worthwhile

Ie algos that target us (simply not true) or short sellers

But thats just my opinion i suppose

Dumbly re AB and spin and ‘good year’

I actually think on a company level we clearly have had a good year and lets be honest we’ve all said a LOT that AB actually is too UN-spinny

We’ve paid down debt at a great clip - he personally owns loads of shares, but the share market is the market - i dont blame him for that

If at start of year we’d said he’s going to smash debt down just shy of 200m, value bressay and explorer and get a partner (well a start at 15%) and highlight ENQs green business with the new structure i reckon we’d have all been ‘awesome’

Right here’s my 2 pennies worth - i think enquest is a beast with 2 faces - on one hand you can be ultra negative and on the other you can be ultra positive

Net debt in 2020 was $1280m and is now $585m as we stand

2p resources were 200m in 2020 and at last point of record (end 2022) were 190m

What will the 2023/2024 numbers bring? I genuinely dont know - and to be honest i think grabbing onto reserve data is just a data mining issue - you can do what you want with statistics

The key issue is returns and continued capital/debt discipline (maybe oil price and gov tax should get a mention!!)- if Enquest get to the level where they can pay divis or buy stock in any quantity over 20-30m a year (which is tiny when you think about it on a fcf basis) its a game changer in my opinion

But thats just my opinion and ultimately i dont massively care what the odd person says - either super positive or super negative. I do enjoy the distraction tho on boring days and will happily feed the appetite of users with data from my bloomberg screen :)