gk10
28 Nov 2018
Out again hit man, My money would be on an update tomorrow not Friday if one is coming. Still watching for now.
hitman1
28 Nov 2018
Out again Enquest will be judged by its past actions… but i agree Romaron., DC4 and more drilling on Magnus keeps the average in the right range… still can’t help feeling it only replaces that lost over the year via natural depletion… again… no evidence to suggest the average ( ex new Magnus bit) will be higher than 54k in 2019, other than Moody’s implying it might be possible…
hitman1
28 Nov 2018
Out again Hi Romaron… I’m not familiar with Faroe, but the SP today even with a bid is still below that of 1 October. Enquest have to show the market real deleveraging… not shuffling and dancing with OZ. etc… so even though the debt tranche is due in April 2019, there is still a chance EnQuest will opt to shuffle again… They have to make real reductions. so if they reduce by $50m, each month from Jan 19, then the market can extrapolate forward and see the company has genuine real earnings… A lot would have been disappointed with the earlier RI and OZ shuffle… and that’s after the AGM highlighting some early debt repayments. I don’t want to give them the pack of cards again, even if they are the dealer… I just want the debt paid. That’s when we see the higher prices : 50p plus ranges or higher but not before. At the moment the market has priced in another shuffle in April 2019. There is no evidence to suggest otherwise… Patiently waiting for what they said they would do, but Brent isn’t that great at the moment… and it’s quite shocking most OPEC ministers are still deliberating with only a week to go…
romaron
28 Nov 2018
Out again Hi Hitman, re your post with point 4 ‘Faroe Pet bid helps sector sentiment.’ I 'm surprised you didn’t take it further. I’d suggest it shows Enquest as seriously undervalued by comparison. I know the finances of Enquest are complicated but we are more than twice Faroe’s size on production and reserves. With DC4 and Magnus our production and reserves will take another leap next year. The H1 2018 production figures compared are: Faroe 12,402 boepd EnQuest 53,990 boepd Reserves: Faroes - 98mmboe EnQuest - 210 mmboe (with Magnus c.250mmboe ?) Faroe’s get a better price for their oil it seems but their opex is higher $27 v $24 I know these are broad strokes and you’ll say what about the debt? My accountancy abilities aren’t high so these are wet finger in the air assumptions. For a start you can make an argument that you’re not comparing like with like. A more accurate assessment in comparison is EV divided by EBIT. This is where I get extremely flaky. I took the latest 6m figure and used EBITDAX of $77.2 (£60mio) for Faroes and EBITDA2 for EnQuest $311.9 (£244mio)hoping that they are reasonably close to EBIT. I doubled them to make it a year figure (wet finger method) and for EV Faroes got 373 mio shares at £1.52 (the bid) plus $100 bond =EV £645mio and for EnQuest 1.694bn @ .23shares and debt $1.9bio = EV £1.874bn This attempt to simplify and read through different capital structures may be wildly inaccurate so feel free to shoot me down. I get a ratio of 5.38 for Faroes and 3.84 for EnQuest. DNO are likely to raise the bid and it is the latest NS valuation. Using a ratio for us of 5.38 would value us at 67p if my calculations are not ridiculous. I also fancy we have an attractive tax position.
hitman1
28 Nov 2018
Out again Got a little more at 22.77p. Lower than any Director…, all of whom must be showing a loss (apart from those shares they get for free), …I guess the smartest ones haven’t bought any yet… Brent $65 target post G20/ post Opec: 6 Dec. I wonder how many Boiler repairs Kraken will need over winter…
hitman1
28 Nov 2018
Putin impersonates current shareholders U.S. – 28 Nov 18 Putin says Russia ready for cooperation with OPEC if needed President Vladimir Putin said on Wednesday Russia is in touch with OPEC and is r...
hitman1
28 Nov 2018
Out again I guess most people anticipate a drop on Ops update on Friday am, but perhaps this time is different. Enquest reminds me of my first buy to let… it didn’t really make any money initially. Interest rates were too high… capital expenses on start up… initial void periods… further unexpected expenses to make is ready for letting etc… all reminds me of Kraken… but eventually once you start receiving rent… and make capital repayments… annual interest charges come down, and it starts to show profitability, especially after a few years when the rent increases too… We are just about there where the overall company will show a different picture to the last few years, but I still think JC should find some cheaper finance … I really don’t like the current interest rates… so we need solid capital repayments in 2019. First one in April 2019 with higher Brent prices nearer $70 and the buy to let gets perceived in a different light… ie I wish I had 20 more…
hitman1
26 Nov 2018
Out again 2018 AGM Q&A confirmed Enquest has the relevant resolution to buy back own shares, but it was confirmed from answers that it wasn’t going to be used to support the SP. At least today’s RNS re Double A purchases at 23.3p act’s in the same way as a Company buy back… but we would still need to see Brent at $70 to see SP 30p, without any deleverging.
hitman1
26 Nov 2018
Out again Bought a little more at 23.5p… will continue buying for 8% to 15% gain for target 27p, based on Positive Enquest Ops update at end of week ( worth 1/2p) Positive signs from G20 meeting at weekend (worth 1/2p) Opec meeting confirming G20 news with Brent rising to $65… and a little further in Jan, ( worth 2.5p) Faroe Pet bid helps sector sentiment .
hitman1
23 Nov 2018
Out again CNBC – 23 Nov 18 OPEC reportedly plans quiet oil output cut to avoid Trump's ire OPEC and Saudi Arabia are reportedly planning to throttle back oil production but will attempt to message the output cut in a way that does not antagonize President Donald Trump. GL
hitman1
23 Nov 2018
Out again Bought 1k at 23p earlier today… cheaper than any Director, …apart from those they get for free… Now approaching 22p… Might as well wait for OPEC outcome, the Ops update has become less relevant., unless they release some hedging info… which must be above $66. Brent will either go to $45, or rise to $65… (currently $59), depending on OPEC action… effect seen in Jan 19.
hitman1
23 Nov 2018
Brent down again Bought a nominal amount at 23p and it promptly fell to 22.5p. it’s helping the average, but most people don’t want to be in this sector without some expected recovery in Brent. Only 2/3 chance apparently R-OPEC+ will do something… So long as there is a 1/3 chance R-OPEC+ will do nothing or not do enough … then the price of Brent will continue to fall. Still 2 weeks to go… and very quiet on the news front.
hitman1
23 Nov 2018
Brent down again Thanks for the link… certainly highlights the capex issues facing the industry. Ops update should firm up the annual average production… no more loose bands… as we only 4 weeks left… IF the ops update is negative… then yes, I see 2p lower and so like Russia it’s wait and see. All I know if that even with Brent at $61 the turnover is huge compared to prior years when your doing 70k/day including Magnus… I believe Enquest should be a £750m market cap company based on 2019 numbers and solid reserves, rather than £400m based on historic numbers.
Shotry
23 Nov 2018
Out again [link]
hitman1
23 Nov 2018
Out again Probably best as we are now Brent $61… and no news articles mentioning a supply issue any time soon, certainly no easy 2p upside, and no real strength in buyers at 23p, but US shale producers spent their Q4 2018 budgets in Q3, so we should see the active rig numbers come down in Q1 2019. That’s why we see a surge in US production now… OPEC can’t mention price for fear of being sued by US over cartel ops… so will just say very little before and after meeting. They may not even mention how many barrels they will take off the market… no numbers… I’d expect this to be in the flexible 2m bpd range for some time to reverse the oversupply. Wall street won’t like the lack of info, as we can see the US speculators imv decide the price. I quite like the Russian idea of wait and see… but surely they will sign up and help. it may be this is the only news that comes from the meeting. I anticipate Brent at $65 plus after OPEC meeting. If I buy at 23p, maybe a chance of 25p plus on ops update… but it’s likely to be sold into.
