hitman1
08 Sep 2018
Borrowing from Peter to pay Paul Also the NPV of Magnus at discounted rate of 10% is rather high compared to current financing of say 8% , We know the OZ capital is financed at a lower rate. guess 6%… so why not use 6% as the discount rate… Reducing the NPV discount rate to 6% by online calculator improves NPV from $500m into $600m Yet the SP went down on Friday… ? ie: here is $500m free of charge, more likely be more with lower NPV rate and new wells upside, … just need $138m via rights issue and you get that back as well. Baffled the SP went down on Friday, considering $500m is approximately the same as the current market cap. ?
hitman1
08 Sep 2018
Borrowing from Peter to pay Paul Also, as we only have put options for 2H 2018 I expect EBITDA to be $400m in 2H 2018 I expect EBITDA for full year in 2019 to be $1,000m yes $1b dollars 50p looks very possible…(maybe more) , but for the next 2 weeks, let the underwriters and other forces play their games/ make money , etc… …whoever holds/picks these up/adds will make a decent return… within 6 to 12 mths, so long as Brent is near $75/$78. ie stable.
hitman1
08 Sep 2018
Borrowing from Peter to pay Paul Yes I has the same thoughts… too much time between now and record date, and Double A etc could make an offer in the future… I think AB went to University at 14 , so I assume it’s all possible. We are already at ex-rights price of 33.5p… so underwriter pays the least possible… New buyers would have an ex- rights price of 30p, so that’s our floor. Might as well wait to see if it falls below this price before record date… Magnus project should have added 22p to the SP… but nothing so far… weird/strange. Maybe Enquest thought the SP would rise on Friday on announcing the deal… Early sellers must have thought they had to sell to fund rights… not realising the nil-paid rights had value… bargain hunters turned up in afternoon to collect potential rights , bringing their average to 30p. Other points: No shutdown of Kraken in September,… Water voidage seems almost resolved, but is still there… so no 50k/day, but I’m expecting something near that over the next few months… I’ll accept 45k in 2019. Magnus effective interest is 25% plus 50% of 75% so 62.5%. Not concerned about paying $20/annum for 5 years. Current production of 54K, add Kraken (say) 45K, another 10k net from 22K, plus Magnus(20k), another 8k from 4k, moves us into 72k, plus other bits on Alma/ Malaysia… so I’d say 75k for 2019. I emailed IR a few months ago , and the expected new output from Alma once works completed was around 5k… so not expecting 10k etc. I agree it’s juggling… deferring the 2018 debt repayments… but what can we do… Kraken underperformed due to significant water voidage which to my knowledge wasn’t mentioned at the AGM in May 18… but the certificate has been issued, so efficiency and production of say 80% might be the target as per rest of assets… ie 40k for now , until DC4 potentially adds a little more… TBH. there seems to be a problem with water pressure… so not sure the voidage is completely solved, but it’s near. Interesting analysis on Magnus… couldn’t quite hear it correctly… but did they say Magnus was at 50% efficiency… and every 1% increase adds 20mb to the field? . something about looking at secondary and tertiary works on Magnus to give another leg up. Sounds like the old stuff is really in-efficient… new wells perform well and have short pay-backs… Could be really good for cashflow in 2019 and beyond… No doubt the SP will be pumped up accordingly when the time is right to offload/ ie profit release… hope it’s above 50p. ie £850m market cap… which seems ambitious at this moment.
gk10
07 Sep 2018
Borrowing from Peter to pay Paul Where do I start, an extremely bad day for shareholders, the company is again borrowing money against future production from hedge funds to pay its main creditors, payday loan springs to mind. Kraken has been signed off, on what terms we don’t yet know but we do know it isn’t at full nameplate capacity, what is the reduced dayrate? The RI was the sucker punch and with such a delay to the record date, have a look at SEGRO’s RI spring last year, the record date was the day it was announced which prevented any manipulation of the share price. In theory you and onlookers like myself now have a number of options available. You could sit tight and take up your rights if you have available funds. You could sell a percentage now in the hope the price will drop between now and the record date to fund your entitlement adding to the down turn. You could sell the lot in the hope the price will drop between now and the record date then buy back in on the record date for more 21p shares further adding to the down turn. You could sell up and hope the price drops to within a couple of pence of the rights issue price after the record date adding even further to the down turn and buy more shares than you would have including the rights issue shares. You could sell the lot the day after the record date, buy your entitlement and then reload on any dips. You could also just not take up your rights and pocket the cash difference between the 21p and the opening price on the 2nd of October. There are probably more options available. For those not invested the above also applies to differing degrees. The discount is staggering, from memory the share price was around the 29p area when the open offer was announced with a price of around 22p??? The share price dropped to within a penny or so of the open offer price before then heading up to 50p+. The way this is going AB will soon cross the threshold where he needs to make an offer for the company! Good luck next week, a great company with eyes bigger than its belly.
hitman1
07 Sep 2018
Nil Paid Rights Looking at the prospectus… these will become tradable on 2 October… I guess at 33p less 21p : so 12p/share. Seems like so long as we stay at 33p ish until 26 Sep ( cut off date) , then the negative 5.5p today is equivalent to the value of the nil rights. so still at 38p/39p really. I don’t know whether people want to increase their holding now… but looks like those that sold over the last few days made an excellent move, got lower entry today to accumulate until 26th Sep… Would have been fairer to have the cut-off date 6th Sep… Anyway, not nice to look at -15%, but there is value in the nil-paid rights… so not shafted by Enquest as much as it looks like. Of course any shares not taken up, will be sold. It’s all underwritten , so hopefully will be pumped up accordingly in Q1 2019… to 40p plus. market value £680m , rather than £525m.
hitman1
07 Sep 2018
1H Results/ Magnus Hello Shotry… $500m positive NPV on Magnus divided by say 1,700m shares is still 29c or 22p. But the SP has already been taken down to the ex-rights price… Well done on the 34p. Nothing got added to the SP for the deal… which is a bit strange… it’s almost like Enquest had a hole of $100m, and the stock market puts no value on the revenue from future production… Next year when another 2 new wells are drilled… Magnus could move from say 16k to 20k/day. Currently based on 14k with 25% in our 54k/day. Seems like the record date on 26 Sep means sell now to fund cheaper shares at 21p… unless people have more funds… 30p could be possible but Brent looks strong and earnings over next 6 mths should enable SP to get to 40p in New Year. But a lot to prove and some might feel Kraken has been signed off just for the sake of doing so, with full knowledge it hasn’t got to 50k/day and might only be able to do 40k/day… ( even though AB just said there is no change in target.)/ Maybe it can do 50k/day over the next few months with minor changes and water issues less of a problem. Jonathan seemed quite excited about 2019 revenues… I certainly am…
Shotry
07 Sep 2018
1H Results/ Magnus Makes sense on the face of it hitman. I re-entered at 34 today, having held nothing for a little while. I’m now going to look to accumulate over time. Typically, the SP drops on the day after the intitial fall (see SXX for an example from yesterday). So, although anything can happen, further falls to the 30 p area look entirely possible now. I’ve just dropped my WMH position at b/e to have money available for next week. General markets also look jittery for the moment.
hitman1
07 Sep 2018
1H Results/ Magnus Magnus. very good deal and the back dating aspect part of revenue… but another RIGHTS issue to fund it… wasn’t expecting it for such a small sum… I guess all of Enquest’ spare cash going forward gets put into debt repayment in 2019. Shame BP date couldn’t be extended. It would have avoided the rights issue imv. Shareholders disappointed. Kraken, AB confirmed Aug 2018 :36k/ day… and increasing , but had problems for most of year re water voidage. Finally an admission of problems… They did hit 50k/day earlier in year… so I guess aiming for 40k plus for remainder of year, sort out any final issues to maintain pressure, improve water voidage issues. Add DC4 early next year, drilling starts by early October. No guarantee production will increase above 40k/day … wait and see really… but water voidage issue seems to have been resolved… Deleveraging postponed and starts next year… the new loan on 15% of Kraken cashflow to pay the Oct 18 tranche is just another juggle, albeit at a lower interest rate. In effect no deleveraging this year. 2019 Production guidance: wasn’t discussed: but I’d say average 75k (includes all of Magnus). at $70net : $1.9 billion revenue. ( Currently 54k with Kraken at 32k, Magnus does 16k?) Perhaps even more if Kraken can do more than 42k/day. At least Magnus is online already… so cash comes in every week. etc. I’ll be taking up the rights , but DC4 and Kraken Western Flank just add more capability to produce at a certain date, not extra oil/day, as far as I can see at the moment… still very good to have in years 2 to 7. etc. 2019 should see some decent substantial cashflow… and the SP re-rate higher… assuming Brent near $77. GL. but disappointed shareholders have been asked for more money… the business really should have been able to avoid another rights issue…
hitman1
06 Sep 2018
Haliburton Reporting lower activity in Q4 2018 due to weaken order book… ie US oilers are calming down… which bodes well for oil price in Q4 remaining strong… OPEC also indicating strong demand. Enquest better not mess this up… they have spent so much and now it’s time to get the revenue flowing in… Lots of analysts on Bloomberg have started to suggest oil equities as a decent place to start putting money into… Earnings aren’t there yet, as we have only just got back to a decent number re oil price. but give it 6 mths for earnings numbers to be produced and now seems like the time to invest part of your portfolio in this sector…
hitman1
05 Sep 2018
Sell off?, but sub 40p looks too low for what is coming Sp followed the market sell off today and aided with those de-risking before results… but the 1H data is largely irrelevant now. Brent is still above $77 so very profitable. Entering Q4 2018 , with target of 68k/70k/day… a few niggles to sort out before signoff. about $10m worth. With net $70 ( if Brent say above $77), that’s $1.8b in revenue/annum in 2019… a completely different company to last year or even the first half of this year… Production at say 54k/day in 1H 2018, add another 10k/day for Kraken improvements in 2H 2018 and a bit extra each for Alma/Malaysia and Magnus. gets us near to 70K/day. Purchasing the remainder of Magnus would also be very profitable too. I don’t think Alma will give big numbers despite the recent work/pump replacements… maybe 5k/day . Have to admit it’s taken too long… but we can’t be far away from Kraken sign-off, . Compensation would indicate we can’t produce to well capabilities which we know was above 50k/day… Sign-off isn’t dependant on DC4, so how much under 50k/day is the question… Perhaps they will provide some detail on Friday… at best I think they will say we are still in low 42k/day on Kraken and anticipate improving in Q4 to 46k to 48k/day, once final improvement works are completed towards sign-off. There may be a bit of the infrastructure that prevents part of the pipework on board being used… hence the consistent constipation in production, until works are carried out. AB did say at the AGM aim for 50k/day… rather than well capability… , but the contract said Bumi needed to produce to well capability… to achieve sign-off. Anyone it’s old news now. Enquest will be compensated, but how close to 50k /day do they think they can get to… It could be above or below this mark. The current ship movement would imply 42k/day… but the final sign-off number has got to be more than that, otherwise the annual compensation by way of lease reduction payments would be much higher… Assume the maintenance is still scheduled for Sep. so the next tanker could be a while , if they shut down for a week. GL.
hitman1
29 Aug 2018
Stock Shortage re RNS 29/08/18… finally an admission the FPSO can’t do 50k /day… With the compensation and Bumi lease impairment… looks like 8% reduction… so potentially 46k is the max Kraken can do… AB did say aiming for 50k / day… despite my enthusiasm at the AGM about well performance being better and DC4 yet to follow… and looks like we could do 60k/day , but the FPSO can’t handle it… This does affect cashflow etc and deleveraging, but years 3 to 5 would now have better production , closer to years 1 and 2, than first originally planned… Overall, looks like end of Q4 for sign off… but a tanker every 12 days, rather than 10. Brent doing fine, so plenty of cash coming in now from all projects… . just a shame they spent a year and a half trying to figure it all out and couldn’t get to 50k/day. … Oil is not lost. Enquest scrimping and saving at the moment to make the October 2018 debt repayment…
hitman1
13 Aug 2018
Stock Shortage I had a dream last night… but more likely it was this morning. Enquest had reached £1… I didn’t know the reason why but after searching on another internet board, it was apparently because AB had said average production was expected to be 70k/75k per day. I then sold my shares, although was disappointed that I was no longer an owner… Reality hit me when I woke up… 36.5p… GL.
hhchu2000
11 Aug 2018
Hi All, can i check with you all, when do you think the Enquest will issue the Final full acceptance for Bumi Armada? Any ideas? Tq
Diesel
31 Jul 2018
Stock Shortage Just tried to buy £12k. Apparently stock shortage, had to buy in 2 tranches through AJ Bell… yet the price has dipped. Very strange…
romaron
25 Jul 2018
U.K. Offshore Production: Summary For First Quarter 2018 Hi Beatley, I’m not sure if you can access the FDP for Kraken but I would probably be lost if I could access it anyway. I listened again to the 2017 HY results in September and that is more relevant to your question. What I could pick out is that it appears to be a characteristic of heavy oil that water injection is sooner (even immediate, 38.30 in audio). There seems to be a huge amount of tolerance in that the FPSO can handle 500,000 barrels of fluid processing capacity a day and up to 80,000 barrels of crude. Using the industry average of 75% water we would be run of the mill if we produce 125,000 bpd (not possible according to FPSO spec). At 50,000 we are a long way from worrying about this and then there are polymers and other EOR techniques. I think the context of the article is that we are long past the period when oil jumped out of the ground into the barrel (Beverley hillbillies) and even Ghawar seems wrapped in mystery. Kraken wells have performed above expectations and I accept their word. Back to the article the view of GK and RP seems to be that the easy oil has gone. This explains the comment that Kraken starts off with higher water production. I expect this was built into the FDP model. I liken the explosion of Fracking to a kinds gold rush. The high price of oil meant that amateurs could make money and like anything to do with mining/drilling there are better finds than others. Logistics and distance to pipelines being a major constraint. Declines in fracking are steep and the only way to survive is to keep drilling. I think there was an over enthusiasm and fresh finance is harder to get this time around. Read the article/comments and posts seem to confirm this. If fracking is the solution then I wonder what Trump is getting so hot under the collar about? I think a lot of the talk about vast amounts of reserves just waiting for the frackers to turn up is more a kinda STOIIP measurement (Gatwick Gusher?) and unlikely to ever be commercial. Oil is not trendy but as hitman says, positive FCF will make Enquest impossible for larger investors to ignore. I think a slow creep higher in credit rating will help us too.
