Member Info for AA2020

But HBR can’t use Waldorf’s tax losses right away, no? Don’t they have to wait a few years? If HBR had existing tax losses already and acquired production, they can use said existing losses against the acquired production. Look at the Serica-Tailwinds deal, similar thing in play there at the time. The exception is where existing production by acquiror and any acquired tax losses are already in the same production group. Like any of Waldorf’s Catcher related tax losses acquired could be used immediately by HBR because HBR already has Catcher production, but only to offset the Catcher tax.

Unless my understanding is totally wrong.

Re: the tax losses, my understanding was an acquiror can’t used acquired tax losses right away, there is a window, only after a few years can they be used against other producing assets? Within the respective tax loss entity, they can’t be uses immediately against any production acquired within that entity?

Https://www.ft.com/content/5f33855f-acc6-4d41-99cd-db889f1d2046

“RBC Capital Markets said in a note that many North Sea deals had been driven by companies looking to reduce their tax liabilities. “One of the key losers here is HMRC, with the combined entities likely to pay less tax to the UK government than they would do separately,” it said. “

I remain astounded every day by the idiocy and economic vandalism of this left wing socialist UK government. Absolute morons.

Clutching at straws I know, but… the proposed new OGPM will be included in next available Finance Act, as per the document’s “next steps” section. Acts of parliament of course get debated, go through different readings and stages, and sometimes get amended before becoming law. I do wonder if maybe the strategy is to slip in changes to start date during this process. It would fly under the radar and the news cycle would have moved on from today’s events. Just a hopelessly optimistic thought.

The backlash is going to be fierce.

https://oeuk.org.uk/government-budget-delivers-bitter-blow-to-uks-energy-workers-and-industry/

Trump needs to give little Starmer a spanking. Throw some tariffs at the UK to get him to bend. The stupid fools.

A much better system, but only in place after 2030 is just horrible

HBR need to offload the UK assets and leave ASAP. Enough of the nonsense.

Yeah my hope is if EPL remains, it does so in a reconfigured form. If that reconfiguration isn’t baked into the OBR report then there is still hope. And the NS Strategy paper still needs publishing, which rumour was that it would be published at same time as the budget. I guess it’s still wait and see. Makes sense though if they want to bury it and not have EPL changes be prominent on budget day or in OBR report.

Just been through the full leaked document, 200+ pages. Appears NO changes at all to EPL.

Great, thank you ValueS. Then there seems to be a reasonable gripe that BB volume isn’t higher.

Indeed, that was exactly the first thing I spotted when reading the article Ron, not a single person of the 14 member GB Energy task force openly came out saying leave it unchanged. Interesting.

Aren’t buybacks limited under UK listing rules to some mechanism based on recent volume? The lower the volume the less buybacks are possible. Quite different to the US market I think, no? So given the depressed valuations of UK listed oil and gas sector and limited investor interest, volume isn’t great. What would be interesting is to calculate the max allowable buybacks based on above stated listing rules, and compare to what HBR are actually buying back.

This is a material win and should be RNS’ed. Further details of the case copied below from the HY results:

(a) High Court dispute with Vallourec

On behalf of the Group and Tullow's Jubilee field joint venture partners, Tullow Ghana is claiming from Vallourec Oil and Gas France ("Vallourec") losses of approximately £256 million, arising from the supply by Vallourec of defective tubular goods, which Tullow believes constitutes a breach of contract from which Tullow Ghana and the Jubilee field joint venture partners have suffered loss.

In June 2015 (as amended in August 2015 and October 2015), Tullow Ghana and Vallourec entered into standstill agreements which provide that neither party will proceed with a claim unless a party gives the other 28 days' notice to terminate the applicable standstill agreement, which was terminated on April 21, 2023. Tullow Ghana filed the Particulars of Claim and the Claim Form with the Commercial Court on May 22, 2023. The case is funded by a third-party litigation funder.

Vallourec's Defense was served on November 17, 2023, and Tullow Ghana issued its Reply to the Defense on December 22, 2023. Tullow Ghana took part in two rounds of mediation on November 28, 2023 and March 4, 2025 to seek an early resolution as part of the pre-action protocols, in parallel with the commencement of proceedings to preserve limitations and the formalities of service being complied with. No settlement was reached at the mediation, but the parties will continue to keep the mediation route open for a potential settlement.

On April 26, 2024, a Case Management Conference took place where the judge decided that there should be a Preliminary Issues Trial on seven issues due to be held between May 20-22, 2025

What’s this all about?? Should we expect some cash out of this?

https://www.energyvoice.com/oilandgas/africa/subsea-africa/585707/tullow-wins-key-court-ruling-in-257m-dispute/

2P reserve value here:

https://www.tullowoil.com/application/files/7417/6400/1834/1H_2025_Reserves_Report.pdf

The 2P reserves apparently worth $1,535m. Add some peanuts for 2C. Add the value for reserves uplift associated with license extension. Add value of the Uganda earnout. Subtract HQ costs. EV should be c. $1.6-1.7bn. Net Debt of $1.2bn leaves equity worth around $400m. Ok, it’s an NPV10, should be NPV12 perhaps. But still, equity value is not negative.

And if the buyer had lots of tax losses to use, an interesting structure would be payment in cash and shares. The cash tax goes down massively under new buyer ownership and with HBR having shares in new buyer still has exposure to the assets on better monetary terms.

What do people reckon HBR could get for their UK assets? Looks like UK has around 300m 2P reserves. They’ve got no more UK tax losses, so paying the full 78% tax. Plus decomm liabilities. Given current trading comps, c. 5x EV/2P prob best they can get. So $1.5bn. Less interim period cash flows depending on valuation date. So $1.2bn is a fair ball park sum. Then use the proceeds to acquire US production (or elsewhere). Essentially swapping UK assets for something else. I’d like that. I’d like that very much. Especially if it results in a US listing.

Indeed! I saw the news headlines last night and thought right away uh-oh. Back tracking on several heavily trailed tax hikes. So much for taking the “hard but correct decisions.” This makes them more politically desperate for every penny. The whole rationale of “OBR forecasts are now better” is just total spin. My gut tells me they’ll just slightly tinker with EPL, with no meaningful change. I hope I’m wrong. Either way, I think a deal is lined up and just waiting for clarity. Silver lining if no material change in EPL could be we get HBR’s UK assets for a lower price. This Government is pathetic. An early election can’t come soon enough. Says a lot that a hardcore EU remainer/remoaner (me) is now strongly flirting with Reform. If it so transpires, here’s to hoping Farage once in power is more of a Georgia Meloni than a Trumper.