Enq 23 �pik Tog Discussion Threads

[ppceh] 26/1/2018 07:27

Are these QCBs?

[hpcg] 11/1/2018 10:36

Indeed, one always wants an equity back stop. I have to agree about ENQ getting more aggressive in the futures market at these prices as OPEC are going to turn the taps back on - I mean for many countries they are fully open as it is, but I'm sure KSA and Russia do not want to cede too much more volume to US private producers. On the other hand I Venezuela will keep on dropping, which if nothing else means a ready market for Kraken oil from Gulf coast refineries.

PMO1 is creeping up and it would not surprise me if it traded over par in the relatively near future.

[stevenlondon3] 10/1/2018 20:11

Suspect the price will go up on the increased security of ENQ more than whether we get interest or bonds. Hopefully ENQ are buying into oil futures.

[grahamg8] 10/1/2018 17:08

I was happy to hold in a rather passive way. PIK meant my holding slowing increased without a single click of the keyboard and as long as I could cope with the risk for ENQ as a viable business then the next 4 years looked pretty sorted.

But with the rising price I took a bit more interest. For example I hadn't really appreciated that the running yield was 7% regardless of trading price as long as the PIK was in place.

However if interest is paid as cash then the picture changes somewhat with a running yield enhanced with a price below par and reduced if the price was above par.

It all depends on the oil price and the terms of the financial restructuring. Not as easy to find out the details as I think it ought to be.

The payment dates are 15 February and 15 August. The record date for entitlement is 31 January and 31 July. The relevant oil price is the average Brent future price for the 6 months prior to the month before the payment date. So for the current period we need the average from 15 July to 15 January which is going to be below $65/bbl so we are going to have a PIK announcement any day now. However the current oil price is well above $65 - it seems to have crossed this boundary on 26 December and hasn't looked back since. So from 15 January we should become rather more interested in the Brent future than usual. Not just because it affects the financial strength of ENQ but will decide whether in August we get cash or PIK.

If the the ENQ1 price is below par cash would allow us to buy more bonds at a lower price than the PIK par rate. A nice potential boost to overall returns.

[steve73] 10/1/2018 03:30

Remember also that the "effective" date for holdings (if for PIK) and oil price average to date is now Jan/July 31st, rather than Feb/Aug 14th. And interest is no longer accumulating daily. Buy before the 31st and you'll get the full 6 months benefit, more like a regular dividend.

[hpcg] 09/1/2018 23:08

Very early days, and of course we are still in the period to the Feb 2018 payment so the current Brent price doesn't count towards the average for the next period, but there is perhaps some potential for the August payment to be in cash.

[grahamg8] 03/1/2018 20:43

Sold out of PMO1 today and picked up a nice profit, interest plus capital gains. Started a new position in MXF with a current yield pretty close to PMO1 redemption yield, but with income growth and capital gain prospects. It also reduces my exposure to oils. Still holding for me a large chunk of ENQ1 and am happy to hold as there should be plenty of upside with the potential for good news flow in 2018.

[spittingbarrel] 03/1/2018 17:34

I'm long PMO1 and ENQ1, hopefully I can forget about them and keep to redemption.

[hpcg] 03/1/2018 15:05

Markets were thin over christmas and new year so no one around to take note of the higher oil price and Kraken offloads. Even now I suspect they are taking a cue from the share price rise. PMO1 stuck at 96.75 clean to sell and I would think that is where these will end up once paid in cash, all else being equal.

I don't think these were outrageously cheap, but I don't I would be selling mine now. Figure of speech; I'm not, as per post 344, but I don't know why anyone would? These are better value now than at a lower price a month ago IMO, and I would want to buy more if more if the rest of my holdings weren't ticking along nicely and I didn't have a reasonable allocation already.

[spittingbarrel] 03/1/2018 13:08

Nice to see these finally ticking up, I thought they had been outrageously cheap.

[hpcg] 01/11/2017 15:56

I have both PMO and PMO1, the latter paying some pretty decent interest despite the greater gains in the shares. I like diversity; for me it makes it easier to run winners, even if concentration makes for larger gains if one gets it right.

[steve73] 01/11/2017 13:13

With around a 100% gain by the time they get to maturity, I'm planning on holding these until then...

But I was also planning the same with my PMO bonds as well, but switched them out last week at over 96 to shares at 65... so a well timed move there.

[hpcg] 01/11/2017 12:26

If we are likely to get a cash coupon then Kraken permitting I would say these trade at or very close to par. I'm accumulating the PIK as for me this is a holding to maturity even if it does get to par, i.e. it takes its place in the FI part of my portfolio even though I have bought as a value proposition.

[steve73] 01/11/2017 11:46

How much do you think getting a cash coupon would add to the price...? Everything else remaining constant?

For those buying now (at 73), and selling the PIK bonds (at 70.55), its effectively just under a 7% yield (due to the buy/sell spread on the bonds).
But if we were to get cash, then buying now gives a 7%/.73 or just over 9.5% yield.

Obviously as the OP increases, then the bonds should rise anyway, normalizing the above difference.

And once we have confirmation that Kraken is approaching its design rate, then this should give a further substantial lift to the bond price, perhaps close to par (which would represent around 35% gain).

I still think at this stage we could see almost as much of a gain in the bonds as the equity... although I note the equity is already up around 7% today.

[hpcg] 01/11/2017 10:25

Not out of the question we might see a cash coupon next August or early 2019.

[hpcg] 29/10/2017 10:48

Pretty happy here. Oil market in backwardation so very expensive to short, Venezuela struggling to deliver heavy of an appropriate quality, Mexican production dropping month on month, US shale producers having to live within the cash they generate, KSA and Russia seeing that their strategy is working. Obviously Kraken needs to ramp up for us to be paid back but the external factors are highly constructive.

[steve73] 28/10/2017 03:56

Bonds recovering nicely after this weeks cash injection..

Current price represent almost exactly 100% gain to maturity....or just under 14% APR.

[steve73] 26/9/2017 01:37

Full latest info on the bonds here...



includes a useful operational update..

[steve73] 25/8/2017 07:56

I suspect the bonds are falling heavily due to the last 3.5% PIK bonds now landing in peoples accounts, and then being sold...

I feel safer here than in the equity (although hold both), other than in the very short term.

[my retirement fund] 23/8/2017 15:41

This company sits on a knife edge. It has got practically no get out of jail cards left and no room left for any smallish mistakes or oversights left. Given the complexities of what it has to do and achieve over the medium term, that must rank fairly close to praying for a miracle.Holders here must feel like they are sleeping on a bed of nails.

[hpcg] 23/8/2017 14:31

Pedantic, or useful, informative and precise :D

[steve73] 23/8/2017 14:22

to clarify...It's the average Brent front month contract for the 6 months to the last day of the month before payment is made..

sorry hp, I don't mean to appear pedantic ;-))

[hpcg] 23/8/2017 12:30

$65 over a few months

[p@] 23/8/2017 12:25

What is the minimum oil price ,for the notes to be paid in cash please?

[my retirement fund] 23/8/2017 11:50

Cheap just keeps getting cheaper.