Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Fernan
I think u need to provide a 5% for evaporation
Kraken heavy oil is also at a discount to Brent
That may explain for the 10% discount to Brent
Lately heavy oil is at a premium of as high as 2 bucks over Brent
Refiners in USA are storing in anticipation of complete shutdown of imports against Venezuela
Assuming nwi 48k bopd cash capex at 200m interest 200m Opex at 21 fpso lease at 400k per day and average poo at 65 fcf is by my estimate at 250m
40m to spare
If kraken can get close to 40k after dc4 that will be a great relief
But i think a better shot will be for enq to leverage on its huge tax credit
Which means to find another Magnus sans capital outlay
In 2018 headline is 54k bopd but 3k went to msia govt 3k to mercury debt and 4K to pay bp
So that’s only 44k and of course poo was low in first half after hedging
Headline 2019 is 63k to 70k bopd
What’s net to enq?
We know 3k again goes to msia and 15% of kraken is ring fenced for oz
If u hv the numbers for bp then u can start to do the maths
It’s not that complicated once u hv the real nwi
AB tends not to give u a straight answer
At high 20s bopd that’s 17 to 18 days every tanker
Watch jan 16 to 17 as key dates for hook up
If it is hooked up on 19th you are looking at 25k per day
It was viodage after the extreme cold
Now that they have done the necessary studies for all the wells well give them until feb to rectify and get production up back to low 30s at least
Once dc4 kicks in then we can be happy for 35k to 40k
A 20 to 25% below projection is non fatal
Do bear in mind this is a complex field and like any oil projects it’s not exact science
Oil majors have seen failures too
Chilling
Difficult to tell if it’s fpso alone though you are right on the recent outages
Bear in mind after initial 100m refund for delays the final penalty was only 15m on acceptance in sept 2018
Let’s cross our fingers
If it’s fpso technicalities that can be sorted out over time but if it’s reserves/reservoir and recoverability then impact will be more adverse
Fernan
That’s 2013 presentation before commissioning
Reality is that the new estimated production range is only 30 to 35k after dc4 based on latest operational update
Only consolation is the estimation is said to be conservative to reflect current below optimum fpso performance and field natural decline
At this revised volume and oil at current price expectation is for a major write down of kraken assets
Although such write downs are non cash flow but it reflects the underlying poor returns on investment in kraken. This impacts shareholders value which implies expected underperformance in share price
Magnus does help but npv of 500m is based on underlying average 70 oil price
In a nutshell we including me here as shareholders are now at mercy of oil price unless kraken surprises with considerable upside
After all AB has indicated that the estimation is conservative
Maybe AB can take advantage of the tax credit and conjure another Magnus
Can only hope
121
Not being negative but narrative reflects situation
Sure Magnus has life
Two new fully funded wells in 2019 and this will swell Magnus to magnificent 20kbpd
I can only wish AB pull another rabbit out of hat
No less sweet flow as Magnus
It’s in his interest to do so while we await olie to perform
Bumi Armada felt the force
Covenants breached and restructuring delayed
End result?
Share price tumbled by > 85% within one month
Both owners of Bumi Armada and enquest have one thing in common
Hey u ain’t going to get a direct answer
One is reclusive the other evasive
Itsaponzi
If it’s a restructuring and shareholders are wiped out what is left for AB who isn’t the largest single shareholder here
As it is with olie even at high 50s and kraken lagging outlook doesn’t look great
But AB has a pull a Magnus rabbit out from nowhere
Q is can he find another one?
It is to his interest to find one ain’t it?
Heather Deveron Magnus Central North Sea are ageing assets
Depletion rate is significantly faster
Look at heather
After sidetrack short surge and now is less than 2kbopd which is lower before sidetrack
Well I must say enquest has done a marvellous job in extracting every bit from these ageing assets but with limited financial resources where is the new source to keep up the wi 60k to paydown debt
That’s my biggest concern
Heather Deveron Magnus Central North Sea are ageing assets
Depletion rate is significantly faster
Look at heather
After sidetrack short surge and now is less than 2kbopd which is lower before sidetrack
Well I must say enquest has done a marvellous job in extracting every bit from these ageing assets but with limited financial resources where is the new source to keep up the wi 60k to paydown debt
That’s my biggest concern
At gross 60 Average what’s the debt paydown?
Assuming 5% normal evaporation and wi 60k cf is 766m
Assuming 200m capex 200 m interest and kraken lease of 385k per day after shave off and 10m adm n buffer that leaves circa 230m to pay down debt
Well that’s barely enough with no room for error
Enquest has no bullets literally against shorties now and completely at mercy of oil price which u and i can only continue to speculate
unless another Magnus saviour appears or kraken goes to 40k that’s reality
At gross 60 Average what’s the debt paydown?
Assuming 5% normal evaporation and wi 60k cf is 766m
Assuming 200m capex 200 m interest and kraken lease of 385k per day after shave off and 10m adm n buffer that leaves circa 230m to pay down debt
Well that’s barely enough with no room for error
Enquest has no bullets literally against shorties now and completely at mercy of oil price which u and i can only continue to speculate
unless another Magnus saviour appears or kraken goes to 40k that’s reality
Existing mercury loan is scheduled for full retirement in may 2019
That will free up another 3kopd of cash flow
Thought rcf amortisation is 275m in 2019 but I could be wrong here
No doubt if olie stays low at mid 50s another mercury loan is required to bridge but that leaves very little if any for long suffering shareholders
Olie price is beyond control except AB must hedge adequately prices are good
It’s the disappointment in production
Alma and Scott are failures and now kraken
If not for Magnus enquest is going to be in deep trouble with olie in 50s
Technically wi for Magnus is 62.5%
Two new Magnus wells in 2019 which is expected to bring in another 3.5kbpd
Looking at low 60s wi in 2019 if kraken hits 35k and heather recovers from low sept numbers
If only kraken performs as envisaged at 50k plateau but unfortunately well below
What is needed now is for poo to be at 65 average for next 2 years to pay down debt meaningfully
Good luck enquest investors
my apologies.
meant for enquest
Elephant in the room is sealion
U reckon how much has been sunk in and carried In the books?
Can anyone shed some light?