Member Info for Voiceofreason1

Just bought a decent chunk more today - come on lads - look at the opportunity not the problem :)

And encouragingly i am told by my analyst that forties trades at premium to dated brent (high single digits at present)

Calm down man - look at the substance not the trump induced mania

‘ we have mutually agreed that, while the Blockade will remain in full force and effect,’

All they are agreeing on at moment is the us cant open hormuz against irans wishes. iran now know they have usa over a (ahem) barrel and even if (and its a huge if) they do an agreement its tenuous at best- lets remember irans red lines as well as us ones - us has to leave region, they have to allow iran explicit control of hormuz, no nuclear climb down and reperations - i mean even if iran give up on half of those the trump admin cant accept the other 2

This is all another deflection strat of trump meanwhile i am told physical forties still trading in the 130-140 region (my analyst just checked) so conversely enq making more profit today than yesterday……

Today is my understanding - ie you have to have bought stock day before ex div

Key news this morning - aussie to build new fuel reserves using 7bn us dollars - this is the building ( not only replenishing ) reserves that will support oil long term into 2027. This type of longer term higher price is the secret sauce for us imo

So weirdly i used to trade index rebals all the time - after checking with mates who still do they reckon the flow into bottom end of 250 is negligible (weirdly top of 250 has more money in it than bottom of ftse 100 - basically people optimize a lot and dont own whole index as its a pain with 250 names) on a nominal side but for ENQ that might still matter - but arguably the signalling effect of 250 inclusion is where we get a lot of benefit

So in short its not a game changer but what is these days? But its definitely got some tracking money implications and also being in the top 350 names in uk matters to investors generally

It should also be noted on these index inclusions if people who do track want to ‘play’ they’ll start buying in advance (and selling the name dropping out) so you dont see the old fashioned jumps you used to when people did it all on the actual rebal day

For ENQ its all about debt level - when we confirm net debt lower than 300/250/150m the market starts believing. The real question is where we are now (i would assume around 380m-ish- and then how long to get to those levels above because at those points or ev/ebitda and fcf multiples will be recalculated.

To put into context sqz ev/ebitda is 5-6 ratio - we are in the low 1s and its pretty much all debt driven (i think we get to 4-5 with big debt paydown personally)

And i know its just short term but forties traded at 148-149 In last 48 hours - meaningful on top line even short term and also for hedge purposes - makes our hedge synthetically around 105 as i write this

Look at it for what it is Kraken - a great chance to buy!

Am interested 3 times more fcf in north sea at 90 oil? - given your earlier coments that north sea costs were in the high 60’s to 70 region you think malaysian netback at 90 is circa 7 a barrel?

It will be super interesting in may when the retail bonds are bought up to see how much gets shifted into Enquest stock - i dont expect a huge percentage but 2% would be over 12m shares - as case in point i plan to but a lot more than 2%

Backing up my big mouth - bought some enq this morning and moved market with 25k buy - god bless this retail market - might buy more later on and see how that affects price then :)

Tommo,

I have slightly differebt take to profitaker in that i am just looking at fcf a month right now - as the key short term figures we should care about is net debt of 300m and 200m for re rating

On that metric i can ignore jan/feb and the magnus shut in and just concentrate from march onwsrds - i see our fcf kicking along at around 50m-60m a month just now

I dont think my figs are massively different to profitaker but due to me concentrating on higher production time and top oil it looks very different right now as a snapshot (and god knows how long this goes in for - or takes to normalise even if they reach a deal)

PT,

Sorry i thought we’d all understand the 40 dollars was only on hedged anount not total amount produced - just took for granted everyone would know that. So yes hedge only covers a share of uk production

My point was only that its a hit that would (to be clear again barrel for barrel) higher than actual take in SEA so i always find the maths simpler to simply bank the Psc asian flow seperately and cleanly. But in real life enq will just put it down as a hefging loss generally so its all moot

On a seperate point (but connected) i think your uk production is punchy - i know post the magnus shut down our stats were higher than 50k in total but assigning that going forward is super aggressive even for me (and to be clear my position and therefore hopes for ENQ are pretty strong) - i asked my oils analyst (who isnt exactly einstein but he does it for a living) and that volume post a shutdown is prone to overly gloss capabilities. Clearly this matters with the averaging out of profit but you didnt mention the premium to north sea forties so we’re still well up from that anyway.

My dream scenario is 27k north sea for rest of year - which i still think would be exceptional from a debt paydown perspective as meaningful re-rating comes at 300m net debt level which is in touching distance

The issue with the hedges and asian production is that out hedges are simple financially settled contracts - so for example we have hedged at 71 - lets say brent is 111 - so we pay out 40 dollars per barrel. Now i would love to find out that we get 40 bucks a barrel after the psc in asia but the reality is its probably(hopefully) in the 30’s (i know pscs terms are not published but i cant find any analysis on chat gpt of other pscs signed by malaysia or vietnam (where we do know terms) that are more generous than that. Now to be clear i think its still great business in asia - its got downside protection loaded into psc but the cost of that is upside capping/tapering. But if we say 35 a barrel in asia that’s still 700k a day which is great for us.

Then we get to north sea (i accept your point that hedges are firm wide but this is the area with the torque to higher prices and no downside protection) - realistically its north sea production at these high levels that pays for the hedges as most of the costs we have get lumped in here (hence the clean netback in Asia we can ‘bank’)

With present 115-120 brent we are paying out 44-49 bucks a barrel to the hedge but when brent was 100 were only paying out 29. And the premium to north sea forties (which i am told by my commodities guy here in my bank is where enquest will be timing loadings to coincide with if we can) is down to 30 today from 50 before which we get to keep entirely.

But i suppose its all semantics - you could use the SEA money to pay the hedge as its all settled in dollars in reality.

What we all want as holders is north sea forties to hold its premium (due in part to our lack of homegrown drilling - thank you rishi mainly as we’d have volumes coming online now if he had dropped that tax) as brent futures are only really relevant in our hedge costs.

I bought more ENQ yesterday and will buy a lot more when the bonds get bought out as i have my retail bonds over a lot of different accounts so difficult to get a clip of 200k for the new high yield bond (although will get some) so i am bullish!! A really key point outside of oil price realised is production in north sea which i really hope comes in top end as thats the money for us with realised prices in the 140’s

Romaron - while dated brent is around 120 - north sea forties for pretty much whole of april has been mid 140’s and thats what we actually sell at (i think) - as i understand it dated brent is like a benchmark used globally but north sea forties is the name of the game in our case

Profitaker - i get your ratio but you cant really use asian flow in that (circa 20kbpod) as thats involved in the whole psc so we really just get a country by country (reduced) netback there - ie we dont get full upside but does protect us when oil is low so its kind of hedged inside the psc

Really the 14kish a day hedge is only against north sea - which when physical premium was taking us to 145 then thats great but at lower levels of production in north sea really limit our upside - saying that i believe we actually are doing really well in north sea production wise so that at least allows us to benefit from the ludicrous prices ex hedge - i really secretly hope we smash our production targets this year

Just to be clear i still think we are a fcf machine but those hedges are a pain right now

My thesis is our hedges are based on brent furtures price so much preferred days of 95 brent (ie 24 cost of hedge to 71) then get the 140+ available on physical market. Present cost of hedge is over 40 - granted still got kicker to physical noth sea forties but not quite as profitable

Maybe i am just s glass half empty guy ;)

Well kraken normally i think you are a bit overly positive on enquest but with combination of actually getting much more than 100 as north sea forties is presently around 150 and the hedges only taking less than half the upside as they just hedge to brent future (let alone the unhedged share). Add to that the diversification of asia with its downside protection for us (at cost of upside but we still gain something from present 150 prices for physical in asia as well). Then yes any modelling of even a much less positive pricing market would see us easily into the 40’s and 60’s as soon as we show the market the reduction in net debt probably with the half year update.

I do think all oil companies in north sea are remaining very quiet just now so as not to rock boat either with Gov’s positve sounds on ogpm and drilling - as its fairly clear enquest must be printing obscene amounts of cash in present market

In short i will be buying more next week with my enquest retail bond income :)

Stevo i think you’re being a little cute with that ‘won’ bet with profitaker claim which was based on the retail bond improving and not deteriorating as in your original contention that started the whole ‘bet chat’ off

Now i think to be fair profitaker would be heavy favourite to win that bet if it actually happened as the new debt raised is replacing the high yield dollar debt that enq had to pay 11.625 on and now (unlike your conrention) they have improved interest levels dramatically given much higher base fed interest levels (your main point not mine) - so in short - nice attempt but thats comparing apples and oranges imho but hey ho (reason i remember this detail is i was the first person to try to bet you on like for like retail bond but seemingly they wont do that now (who knows tho to be fair)

Seperately must be noted the fitch and moody recent ratings are based on 70 and 75 dollar oil averages which is probably fair to say is somewhat bearish

I think we need to look past the futures contract and see the price of physical deliveries - notth sea forties are in region of 140 (we’re a little discounted to that but not by a large amount in a tight market) and in SEA the physical deliveries are being bid on aggressively and in same range ie 40-50 dollar premium to (imo) the ludicrously priced futures which see to imply shipping and oil supply will magically fix itself by june

I base this on multiple reports with no detractors on the physical/futures disparity

As mentioned by someone else in another thread (forgive me for not remembering) this is actually gold dust to enquest as the hedges are based on the future so we are only paying the differential of 71 average to 95 today (all these hedges are financial hedges settled in cash not physical) for example while being paid 130+ for the physical deliveries. Now how long will this continue? Who knows!!! But its a welcome market divergence from our perspective