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Important things to also note in the wild speculation that is ongoing;
Operators can share spares - it's quite common on capital spares for swaps and borrows to be made
Transformers may have many components and elements, it may be simple control units that have knackered. Thre should be sufficient condition monitoring of key kit that this would have been noticed way ahead of failure. The FPSO is sufficiently new that I'd expect the FPSO to have been equipped with the various CM sensors in whatever the latest "SMART" manner would be
Bumi may well hold insurance/capital spares since they are the duty holder and they will get massively penalised for not having all production trains available
EnQuest are decommissioning other assets and have another FPSO - spares may be cannibalised from there also. Thistle and EP both had ESPs which will have had large transformers/VSDs
Business interruption insurance is available. This will have various conditions to claiming. There will also be a grace period (30-90 days) and also a % cap on lost production (usually 60-80%) Obviously with higher caps and shorter grace periods come higher premiums, so I'd expect EnQuest to have opted for longer period to reduce cost.
Transformers usually have a long life and are quite reliable, so it's more likely that an element of the transformer package will have popped.
My $0.02
It's an interesting point you make and something I was discussing with a colleague at the weekend.
Is it possible that a company that is currently more downstream focused be a more likely suitor that another E&P company?
Such a deal would;
Avoid EPL
Provide vertical integration/raw materials
Allow access to raw materials at whatever the current ENQ breakeven price is - as opposed to buying on the market
Allow for that lower feedstock price to hugely multiply margins when processed/refined in to other products
Maybe, just maybe Amjad would pivot and buy a downstream outfit and then utilise our production as the feedstocks?
Certainly a good, If not complex way to lower you tax liability from 75% to 25%....?
Romaron,
Appreciate all the letter writing you do, it's always interesting and if we can have an increase in political visibility of the facts, then that's great.
Up here, we have our own poison dwarf, Patrick Harive, making ridiculous claims about heat pump installation;
https://www.heraldscotland.com/politics/23337309.patrick-harvie-says-100k-heat-pumps-year-will-revive-climate-target/
100,000 installs a year! Ambitious and possibly even a good aspiration.
But totally clueless in terms of resources, cost, labour etc.
Is the average GSHP/ASHP install is around £15k, you'd also need to fully insulate your house, which is likely running at an average of £25k+ so where is 100,000 x £40,000 coming from over the next ten years? £40B on a low end estimate.
Patrick Harvie, even if you ignore his dubious connections to PIE et al, is a second rate buffoon. I.e. a classic Political "Idiocrat" of the common modern sort.
interesting and worrying dumbly.
one factor i've never seen mentioned that i would regard as more important is the current account element of balance of payments.
as per ons:
the uk imported £30.0 billion of oil in 2021 (£17.6 billion crude oil, £12.4 billion refined oil), and exported £28.3 billion of oil (£17.9 billion crude oil, £10.4 billion refined oil)
if that export value falls substantially then a deficit of up to £30b is surely a bad thing?
another contributor to our woeful bop deficit.
but **** it, who cares!
This is an excellent point Roger and one that I cannot fathom.
In our business, oil and gas, all companies now have a duty to report their scope 1, 2 & 3 emissions.
Scope 3 is obviously the tricky bit, not only because it is out of our control, but also because it is possibly already being reported elsewhere and also because it is very hard to quantify.
Scope 3 emissions are also the largest by far.
Therefore I cannot understand WHY the government has such a blasé attitude to the nation's scope 3 emissions when increasing this effectively means outsourcing the nation's production.
Clearly there is a case of Emperor's new clothes, but when will they politicians be called out on this en masse and when will the population actually realise that net zero for the UK actually likely means an increase in global emissions?
Absolutely demented.
jesus, what a **** reply ko!
i also had a response from my mp (con) - i pointed out a couple of ukcs affected companies and that they had taken actions due to epl.
reply was long winded, but basically;
1.) cons are more supportive than snp/greens of the ukcs
2.) certain companies share prices have not fallen massively since epl introduction (enq excluded!)
3.) 40% was a suitable base rate for ct and the epl uplift is only temporary and helps everyone
4.) investment allowance makes it all ok
5.) banks already are paying 25% tax and the bcts mean they have paid over £33b in additional tax since 2011.
pretty deaf ears, towing the party line, nothing unexpected.
but still disappointing.
I do wonder if that's exactly what's been going on and during the readings/reviews of the bill, these amendments will be tabled and incorprated?
Otherwise WTF is the point in OEUK et al?
Logged in to the chat to see what's up, day ruined by Romaron's link and that pair of tosspots.
"Cost of living crisis brought about by reliance on fossil fuels" says James Skeet.
How will food be delivered without diesel? How would the cost of goods change and the availability thereof with an instantaneous move to electric trucks?
F sake these people are brainless reality deniers.
Should be rounded up and flogged and delivered to reality.
Hearing rumours around town that Cambo is going to be formally binned and project team and contractors given notice.
Ouch.
Great work on Energy security Hunt and Schapps. Slow clap.... Pair of hunts.
That's interesting Romaron
I have some former colleagues at operators who were telling me that they felt the NSTA was being tardy with various stage gate approvals just now. Suspicions that such tardiness was due to political pressure.
Also feedback from other industry stakeholders that the Treasury and HSE are aghast at the EPL but it was the very top that is resistant to change.
Interesting weeks ahead and hopefully all positive for us long suffering ENQers and the wider UKCS.
It's shambolic isn't it.
My dad says it reminds him of 1970s Labour. Before my time so I'll take his word for it. And all from an allegedly Conservative government. Shambolic. Good to know the bankers are alright with their reduced surcharge though.
I still don't think that it's clicked with the general public that the rush to net zero, instead of sensible transition, is not helping with general cost of living issues.
Hope Amjad buys a few million shares soon....
Hello Himmatsj,
FPSO charters usually always have option periods. However, EnQuest being EnQuest I would fully expect that they would try to renegotiate these option periods, offering a longer term to reduce the option rate perhaps? FPSO market is quite buoyant though, few harsh environment FPSOs available.
Knarr for example I hear was the only option for a Rosebank unless a new build was commissioned. Exercising options usually has a long notification period of 12 months prior to expiry of the current term in order to give the FPSO owner enough time to market the vessel. Could be longer than that.
I would imagine that the FID of Bressay and/or Bentley will heavily influence the EnQuest decision on the options. Kraken may need mods to process the fluids from those fields, so that would likely be added to the option negotiations. It would likely be done at sea with a W2W vessel to minimise downtime so that's an added complication.
Amjad loves holding contractors to strict performance as we saw around first oil time!
Sorry that doesn't answer your question, but let's you know the variables around exercising the options.
Stevo I agree with debt reduction continuing. It makes sense whilst as you say the tax shield exists.
You have to take the Bressay partners exiting in context;
Harbour had already said that big greenfield developments were not their bag. They have plenty of one or two well tie backs to existing infrastructure that will deliver material upside to production or decline protection, depending on timeline. Since EPL those opportunities are definitely more in the latter category.
Equinor made an **** of Mariner and got the lower reservoir completely wrong. Hence the huge write down they took against it. Enquest made a great success of Kraken after the alma debacle, so it's in good hands. Remember Equinor will also be pushing ahead with Rosebank (~$10B gross) on the UKCS alone. They've also got Bay du Nord off Newfoundland and tens of other development on the NCS and globally. The fact Bressay is less developed as a development plus above is why they dropped not necessarily due to it being a difficult development.
The fact the same team is involved in Bressay as a kraken is another salient and comforting point.
Just need to get on with FID and building it - make the most of the tax allowance whilst it exists!!
Tony B Liar eh?
If you're ever going to be great at anything, be great at lying, as then you are great at everything. This may or may not have been his mantra.
But seriously, if the Tories are this bad, I'd hate to see what Keir and his Clowns get up to. His speech about fixing Britain in Manchester yesterday was a bunch of guff and hot air. Not very inspiring. Politics is generally broken. Up here North of the border it's even more calamitous . Would be funny if it was destroying the future.
Round them up, give them hard labour and put someone competent in charge.
Auson, these are all sensible measures, I can't believe we're having to hope for them from a Tory government though. It's taxation to the level it was when Mrs Thatcher took the helm.
The fact it doesn't (didn't) even take in to account what Operators were actually selling production for (through hedging etc) was a farcical move that you'd expect from some sort of radical left wing student politician espousing "all private property is theft" or some such.
Fingers crossed there is a bit of common sense applied and the basis you propose.
I'll cross my fingers, but maybe not hold my breath - that could be terminal.
Sounds great Spindok - as long as we actually got a shareholding commensurate with the current ENQ holding, as the ENQ shares would drop to 0.1p in a single trading session, surely?
Would be an amusing two fingers up to Hunt, but rather petulant.
It's a good question Romaron. We have a long history of being socially and financially conservative.
In Scotland we used to be metaphorically given a fishing rod and taught how to fish. Now it seems being given a fish is the order of the day. Catalogue of failure on almost everything, apart from giving away free stuff.
I really hope Ruth rescinds her title and gets stuck in about. Most Scottish/UK politicians are useless. We need a return of morals, backbone and desire for personal improvement. Scottish Government is full of SNP idiots and Green Morons. I doubt Labour/Tories are much more use and the Lib Dems are a joke, but someone needs to hold the SNP/Greens to account.
Just when you thought it couldn't get any worse and politicians couldn't be bigger ****wits;
https://www.reuters.com/business/energy/davos-2023-starmer-says-no-new-uk-oil-gas-investment-under-labour-government-2023-01-19/
I wonder if this is Starmer angling for a new NGO job?
I had actually hoped for better from Rachel Reeves, she's seemed quite level headed up to now.
F sake.
Enjoy your weekend all.
As HBR have stated it's curtains for their involvement in Bressay, I would imagine Amjad and co will have, or will be working on a new partner in Bressay. I wonder if Waldorf would take a bigger non-op share than the previous ~18% held by Harbour? They could be partners in a BBK Hub. Obviously huge risk in anything ever happening there, but I would never write off Amjad's ability to pull rabbits out of the hat.
Romaron out of interest (and at the risk of attracting our resident green troll), what did the green deal domestic advisor qualification consist of? Was this around insulating housing stocks and U/R values etc and their interaction with various new systems or space and water heating?
Thanks