Member Info for Walter479

Anyone know how much they spend to capex and fit-out a primark store?

Unimpressive Q1 trading yet CEO is showered in share awards at the bottom tick when energy is at an all time low. No wonder 18% of shareholder voted against the remuneration.

I think it may or it may not. Why do you care about the markets opinion in the short term? You either believe in the medium or long term earning power of the company or you dont. I am not sure what the merit is in speculating as to why the results are delayed. Its probably a mixture. Delays because of live bank discussions and 'lets wait for the cash to roll in from heavy high street footfall''

which period do you think i mean? how about the period when the business could operate versus the period when it was forced to close.

on what basis? zero, i assume. It could be good news in that the next time they report, they can show a pay down of debt and some great comps.

Lloyds better start releasing reserves. This ''yes but we are a risk-free bank''.....No.......you are tying up capital that is not yours to tie up unecessarily and you over-reserved last year.

Londoner, yes i did notice the BP assets on sale and ENQ taking a run but there are also other horses in that race so who knows. I certainly think for Bressay, the development will cost money and the state of the balance sheet matters. My point is more around how aggressive ENQ can be on drilling, which ultimately rewards the equity holder given cash flows further out are discounted back versus the debt holders interest (RCF and bonds) who are only concerned about getting their interest and principal back. A simple way of them enforcing certainty would be overly conservative hedging and capex constaints beyond what is required to sustain production or stop declines. The covenants and restrictions will be interesting once they come to light. I think people are overly comfortable with Magnus. I am not sure why. There clearly needs to be improvement as its been a disappointment thus far. Walter likes to worry and look down not up. Good debate though X

Londoner. Thanks for your post. I have learnt a few things. I agree focusing on the material impacts is wise. On that basis, how do you feel about the new RCF? Specifically I am interested in the bank's attitude towards the inevitable intervention work and new drilling that ENQ may need to perform in 2022 and 2023, to stop declines in Magnus and Kraken or on the upside improve production? Do you think they will simply let ENQ maintain autonomy over the amount of capex it spends? This is problem when E&P company's have a lot of leverage. The cash outflows below EBITDA come into the limelight and my personal opinion is, the banks will not simply turn a blind eye this time around. They may want approvals, they may want a say in hedging and they may adjust pricing depending accordingly. I hoped that production was going to be bang on in Q1. It wasnt but i have said my piece and i am not looking for an argument.

I guess my question is. What areas are people most focused on regarding the new refinancing? This can not be put into an excel spreadsheet but they are very real outcomes and impactful. Again, happy to debate with civility.

i will turn the question around mrc. Do you think production being at the very low end of guidance is a net positive for ENQ in current live discussions with banks or a net negative?

Point taken re net debt. It was not reported so not a fact. My point was if production had been higher, fcf would be higher and if fcf is higher then net debt is likely lower. If net debt is lower, it is likely company report. If net debt is higher unlikely company report.

Happy to debate sensibly and Walter does not get emotional.

I only read the information the company releases. The production numbers for Jan and Feb is in the release. 46,635 Boepd. This is at the very low point of guidance range per Feb's OU. This probably explains why the range is so wide in the first place. At 13.7 boepd, Magnus is significantly down on inferred 2018/19 guidance. The last point is my opinion....I think this is the reason, more so than Kraken, why the market is concerned. I am not saying all will not work out. If things go right there is massive upside. But things could also go south if the banks choose to use the production problems to take their pound of flesh re covenants, pricing and general optionality. The equity can therefore only be a speculative bet imho.

They confirmed Jan and Feb production was down which is a fact. Kraken offloads have also been poor. - that is a fact. Slower paydown of net debt is also a fact, hence why they didnt report net debt on results day. The catch-up production to make up for the decline is not a fact. Its prediction from management. Or............... do you want me to tell you Magnus is meeting its initial guidance that formed the basis for ENQ to do the Magnus deal in the first place, Kraken has been offloading every week, net debt is down $250m in 2021...... and the market is stupid. This should be £1 a share. Lets all join hands and sing kum ba ya.

Agree, there could be plenty upside IF things go right. But taking a balanced view the there are also clear downside risks that we can't ignore. Production has not delivered as expected in 2021 and decline concerns have unfortunately came at a time when ENQ are trying to renegotiate an RCF. I suspect the market is waiting to see if ENQ will pay the price for this through more restrictive terms in the new RCF as the current RCF will not have been paid down as quickly as they first expected. On the flip side if Brent starts to climb, it will move discussions back into ENQ favour as the current RCF gets paid down. Basically, the refinancing discussions matter and the outcome of those discussions will be there for all to see as part of the OO. So no, i do not think the market is 'stupid'

i am not one for regular pointless updates, but no announcement for 4 months going on 5 is a bit much. Particularly given changes in the industry. May not bode well being honest.

https://www.worldoil.com/news/2021/3/17/bp-fields-final-offers-for-north-sea-oil-and-gas-assets

thats already priced in, hence 50-60x current year earnings

Rio - sensible and objective comments. This is a great business but I think many are looking at the historical share price graph rather than what you are currently paying and what you are getting. If you take a beverage company like Monsters, when they were valued at £3bn, they were hammering out way more in earnings and revenue growth rates were in the 20-30%. FEVR is priced as if 20% earnings growth is banked. That would mean £100m in net income in the next two years and a p/e of 30. That wont happen in my view. You can not make the numbers work currently if you take out the emotion. £50m of earnings as guidance in 2021 is not great - sorry.

I would hold if i had bought in significantly lower. I would not enter here though. I agree, even if they smash it out the park, it is already priced in. With a market cap already approaching £3billion, that is a big business. And its ultimately producing £50m in net earnings this year.

I believe humility from investors is sorely missed during these strange times so i would like to share my mistake. I was considering CARD last month and i completely missed it. Well done to those that didnt. I believe this is the reason why many of of us missed the opportunity.

....In Dec-19 the market cap of CARD was £557m and net debt reported (ex-leases) per the TU was £171m. Thats an EV of £730m for a business generating £60m in cash flow. Lets say 12x which is on the cheap side given where interest rates are but not outrageously cheap. After a trading update hit the market in Jan-2020 from the company saying LFL's where marginally down, the market threw a tantrum and completely sold off in a panic. Lets not even consider COVID. The share price collapsed nearly 45%. In january 2020 the market cap went from £557m in Dec-19 to £318m in Jan-2020. Assuming the same net debt, thats £490m for a business doing £50-60m in free cash flow. Thats now 8x FCF. Ok this is now ALREADY CHEAP. Its at this point, when COVID hits the tape, market participants have not registered that CARD already collapsed and there is another round of liquidation to 30p reducing the market cap by a further 70%. with a free cash flow yield of 20%.

Someone quoted Paul Scott on here saying this is a story stock. It shows that some people are bitter and envious about other people's success. It shows elementary understanding of free cash flow versus the price paid. CARD is now still very cheap but it is nowhere near back to December-19 when it was slightly cheap but broadly fair.

In summary the Jan-2020 sell off is what caught a lot of people out here. It was before COVID and the drop was huge. In fact from memory. didnt Neil Woodford have a big position in CARD and have to liquidate at that time? Who knows but it paid off big time in March 2020 and Jan 2021 to buy this

Just thought i would share my mistake. Its about where the price is, at a certain time and what you are getting. Ignoring share price charts.

Well done L3. Speculative reasoning re 'getting its act together' or is simply inevitable with tullow and enquest! I am not invested in Tullow but to follow your thesis here, the expected probability of ENQ getting 'their act' together and forcing a similar move is quite high. I suspect prospective buyers maybe looking at the recent rise of ENQ and psychology justifying the idea of a pull back. A recent rise in market cap on a 80% levered O&G producing company means nothing atm. It is irrelevant in many cases. Instead, ascribing an expected probability to a conclusion of the refinancing, a strategy or plan communicated by AB and brent staying above $60 is sensible, ignoring the past. If those three conditions work out well, this is exploding. But without them, i still think we will snooze here.