Enquest Live Discussion

hitman1 25 Jul 2018

U.K. Offshore Production: Summary For First Quarter 2018 I think they need another 4 or 5 cargoes from Kraken to get the time interval between tankers down to nearer 10 days apart. ie 50k/day… signoff: eta end of September… Should see some improvement in SP along the way over summer back to 44p nearer October… and some more SP improvement when confirmation of some debts have been repaid… Barclays said 58p, and that’s being conservative. Saw a good interview the other day on Bloomberg… American said WPP and Royal Mail were good bets… ie business from Google and Amazon, and dividends… They focus on companies that have Free Cash Flow and said a third of Russell group don’t, so won’t invest in them. When it becomes more evident we are positive FCF, then we might attract more larger investors… AB said at AGM these were missing from our shareholder base… . tbh we have a long way to go before larger investors see this as being better than what they have already…

Beatley 25 Jul 2018

U.K. Offshore Production: Summary For First Quarter 2018 Hi Romaron, I’m aware of George’s posts on peak oil barrel, he does seem knowledgeable about the industry and has done multiple posts looking at current and future production for a number of key basins. Other than that I have no idea about his background etc. The fact he’s posting on a site titled ‘peak oil’ might tell us something about his view points, but his posts are very informative and as you say, the quality of the debate over there is generally pretty good. As for the Kraken, I’m not sure whether this is an issue or not. I’m not an oil man, but my understanding is that fields typically start off with a low water cut and that increases over time to the point where the extracting the oil is no longer viable due to the economics of the field. From what I can gather, heavy oil fields typically have higher water cuts to begin with but not sure whether being at 60%-65% is to be expected at this stage. I’ll fire off an email to IR when I get five minutes and draw attention to the article and see what response I get.

romaron 23 Jul 2018

U.K. Offshore Production: Summary For First Quarter 2018 Hi Beatley, some interesting reading following the article. You have probably been following this guy longer than me and the rest of us need to get some context here. Who is George Kaplan? He is clearly very knowledgeable but is this his real name? The post seems to have been picked by or associated with Ron Patterson who has strong views on Peak Oil and is always knowledgeable and informative (as is George Kaplan in this case). Is the narrative more to do with their views that peak oil is close or may even be passed. The difficulty going forward is uncertainty and economics of further development. They emphasise the decline and difficulties associated with mature fields and the lack of new fields being sanctioned. I particularly liked the comments of posters at the foot of this article: [link] Most of the contributors seem to know their stuff and it isn’t the cat-calling you usually get on most bulletin boards I’ve read. It opened my eyes. I don’t know about Enquest but the flavour you get from reading these two guys is that higher oil prices are pretty inevitable unless demand plummets.

romaron 22 Jul 2018

U.K. Offshore Production: Summary For First Quarter 2018 I’m certainly no expert Beatley but water cuts are a fact of life and the worldwide average appears to be 75% so we’re doing well by that yardstick. It could be the injudicious use of the adverb “already” which tries to attach a problem to what is actually a part of standard operations? There are ‘already’ enough factors to worry about with oil and water cut is just one of them. Sand, ESP, Finance etc… the list is long. Something seems to be holding the price back but I doubt it’s water cut. There might be something in the FDP if you can access it?

Beatley 21 Jul 2018

U.K. Offshore Production: Summary For First Quarter 2018 Seeking Alpha – 18 Jul 18 U.K. Offshore Production: Summary For First Quarter 2018 By George Kaplan UK C&C It was expected by many, me included but more importantly UKOGA and a couple of the bigger oil and gas consultancies, that UK offsho I’ve been looking at Enquest as a potential investment, but the comment here about water cuts being 60% is somewhat concerning (pg2). Is the author correct, is this to be expected with a heavy oil development?

hitman1 13 Jul 2018

Make hay Sign off? Not dependant on DC4, but I assumed plateau and sign off were linked together… of course we were also told well performance was better than original plan estimates. AB said aim for 50k/day, so we are still a bit way off. Expecting it to increase to this over Q3. We will get the SP rerate to 40p plus soon but its taking longer than expected. Even Enquest must be disappointed.

romaron 11 Jul 2018

Make hay I worked for a public quoted company in the 90’s that was in trouble with its creditors (mainly Citibank) and they were getting worried. It resulted in Ron Sandler being helicoptered in to prepare it for sale and was sold eventually to a smooth talker of the Dominic Chappell variety (he brought with him ‘Beano’ Levene). I was middle management and what I was doing was very profitable and I never worried about survival because our team would have just moved. I doubt that out of a staff of 400 plus less than 10 percent knew (or cared) about the bigger picture. The Board would have been more concerned. I think that some of what I learned is germane to our position. The Enquest executives are getting on with their job and share options, whilst being generous, are considered a bonus. They don’t look at the share price because they know what is happening and are anyway too busy with the day job. The board though were under attack from their creditors. It ended up with the CEO digging deep and part funding the rights issue. Close to two years on the position, on the face of it, hasn’t changed much. Share price moribund, dragging against its peers and debt hardly moving. What would you do in AB’s place? I think I’d do the same. There are no shareholders able to force the board to change course because the most influential holder is the CEO. There are elements of a private company here. There are no referendums in shareholdings in the sense that small PI’s have little power or influence. On that basis any question asked will be politely answered without worrying too much about recourse. I have been lied to twice by AB; or have I? He said in 2017 that production declines were typical and around 10 percent. The declines were much higher but what could he have said. ‘We’re trying to stay solvent and there isn’t any spare cash to do workovers?’ At the 2018 AGM I asked how close we were to sign off on Kraken. He replies ‘imminent’. He’s safe now until the next time he meets me in 2019. My definition of ‘imminent’ is different to his but maybe he’s talking in glacial terms? Not necessarily a lie but quite easily defended. I believe Matrix Observer on LSE has found examples that throw a different light on hand overs and don’t forget we get a lower lease rate until we are happy with the performance of the FPSO. So this is a CEO who has had probably the hardest couple of years in his working life. He did appear tired and older the last time I saw him. Jim Ratcliffe of INEOS is still smarting about how the banks ‘gouged‘ him in the financial crisis. Their debt went as low as 10 cents in the dollar. I think Enquest weren’t far from that in 2016. AB is too sharp to publicly say anything similar but I doubt the banks were any kinder to him. Bearing all this in mind I think AB just sees opportunity all around. The oil price has exceeded his expectations so why aren’t we paying off debt rapidly? I suggest it’s because he’s taking advantage of the situation and breathing space created to get workovers and fresh drilling done. I also think he has not given up on potential deals. He is spending rather than paying off debt imo. He can get away with it but would not say publicly because (like a politician) it can rebound on you. When new CEO’s move to a troubled company they lay as much blame on their predecessor and produce all the bad news at the outset. AB hasn’t that option but at the same time his priority should be to get this company were it deserves to be. He should not pander to impatient PI’s and the creditors are for now are happy and the small improvement in debt rating is (imo) only the first. He is taking advantage of this period and 2018 is all about rebuilding for the future. This kind of strategy will not please analysts who love their metrics but usually ignore potential and opportunity. My main point is that he doesn’t have to listen to us and for now, the creditors are cooperative. Take advantage. Next year Rodney!

Shotry 06 Jul 2018

Added I’m watching it now. From the daily chart 31.3 looks possible as a decision point. From the 2 hour chart, price closed a gap to 34, but has carried on. I don’t have any true gaps after that (at least from June 19th which was a recent low at 30.4ish). There are supports at 32 and then 31.4/31.5 on the 2h chart, whether these are of any value we’ll have to wait to find out, but price does seem to want to push down a little yet. I’ll set a descending tl on the 2h chart from 1500hours on June 5th and alarm it. I’ll pay more attention if price breaks above this. I’won’t buy back for the moment even though price is almost 10% below my sell as current price action appears to favour more downside. Falling knives and all that. WTIis still dropping also.

hitman1 06 Jul 2018

Added I might as well stick with it over the next quarter… should be the best one… Wait for some of the debt to be repaid in Oct 18… which will be a very big positive, that can’t be changed… albeit would like to see more frequent tankers at Kraken in Q3 as well. In many ways, it’s just now down to cash generation… but as yet, Enquest haven’t delivered what it said on the tin… imv…

Shotry 05 Jul 2018

Added I dropped my ‘add’ today around 35.3 or 11.5% profit. Moved to about > 30% cash for the moment.

romaron 05 Jul 2018

Barclays upgrade to 58p Interesting that they went straight from underweight to overweight without stopping at neutral. Looks like the Chinese walls work at Barclays as the price didn’t move prior to the announcement. They called it pretty well in the past and Mark Lewis of Barclays (left in April) wasn’t a big fan but the research notes will not have changed so I take this as a big plus. Like Keynes reputedly said “when the facts change, I change my mind.”

hitman1 05 Jul 2018

Barclays upgrade to 58p EnQuest Energy and Tullow Oil in favour as Barclays upgrades oil sector 123 05 Jul 2018 Barclays now increases its sector view to ‘positive’ from ‘neutral’, meanwhile, analyst James Hosie highlighted the upside for EnQuest and Tullow Oil oil and gas operations Barclays has a 58p target for EnQuest and 285p for Tullow Two lasting ‘truths’ of the oil business no longer apply, according to Barclays Capital, which has today upgraded its view on the sector due to improving conditions in the crude market. “After a decade covering the European E&Ps, we believe two long established ‘truths’ have dominated sector sentiment: (1) E&Ps will reinvest cash flow rather than return it; and (2) spot commodity prices have a disproportionate influence on market valuations,” analyst James Hosie said in a note. Tullow Oil nudges up production guidance “Our base case outlook essentially assumes neither of these “truths” are still valid - valuations remain anchored to a long term oil price of $65/bbl and companies prioritise returning cash over reinvesting it.” Barclays now increases its sector view to ‘positive’ from ‘neutral’. Along with the sector view rising, Barclays also upgrades EnQuest Energy PLC (LON:ENQ) and Tullow Oil PLC (LON:TLW) both to ‘overweight’ from ‘underweight’. “Both stocks benefit materially from our higher oil price expectations for 2019-20 and are trading at a relative discount to peers,” the analyst added. EnQuest Barclays has a 58p price target price for EnQuest, suggesting some 60% upside to the current price of 36.05p. Hosie said: “The stock is highly levered to the oil price outlook, and we therefore expect it to outperform its peers in this improving oil price environment. “The company can generate material free cash flow in 2019-20 at $80/bbl oil that enables it to accelerate debt reduction and pursue new investment opportunities in the UK North Sea.” Barclays has an upside case valuing EnQuest potentially at 100p whilst the bank’s downside case is set at 24p. Tullow Oil For Tullow, Barclays has a 285p target, which suggests a 21% upside to the current price of 234p. The upside case sees a price of 375p versus a downside case pitched at 210p. Breaking down his view, Hosie said: “Tullow is generating free cash flow and we see this accelerating over the next two years as it increases production in Ghana. “We believe the improving financial position means management has the financial flexibility to increase investment and return cash to shareholders from 2019 onwards. Proactiveinvestors UK EnQuest Energy and Tullow Oil in favour as Barclays upgrades oil sector EnQuest (NASDAQ:ENQ.L) - Barclays now increases its sector view to ‘positive’ from ‘neutral’, meanwhile, analyst James Hosie highlighted the upside for EnQuest and Tullow Oil

hitman1 05 Jul 2018

Barclays upgrade to 58p Barclays still being cautious… but might have had some recent extra insight into the current issues… Q3 should be fine . and then another upgrade as they gain more info on Enquest and confidence in the price of oil. I think they were too pessimistic on the price of oil in 2H 2018 and 2019… GL… 36p. …58p seems miles away at the moment. Cheap enough to be taken over.

hitman1 02 Jul 2018

Lazarus Apr 18 Kraken numbers look back to normal and we have the average data from the last ops update anyway. Still think we could get to 70k on a good day… If only Kraken could produce 50k/day for a month. ? seems like a mission… and no real idea of when it might be achieved… The market and SP are thinking the sign off will happen and Bumi will say it can only produce 40k/day consistently. ( even though in Jan, the update said it had run at 50K/day). Keep working at it I guess… but the impression at the AGM was we were close and should expect 50k/day out of Kraken. Note : Magnus seems to be weaker…

hitman1 01 Jul 2018

Lazarus I looked today at the OGA March 18 production numbers for Kraken and thought they were worse than expected. Certainly explains the low SP.,