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Quick run through them and company isn't in same league as HBR or SQZ, hope that finally puts to bed any idea some have of buying them especially as majority holder probably wouldn't even consider it unless over twice current valuation.
Well for starters they won't be talking results up and the gas price has been nowhere near the £1.50 hoped for albeit we would be paying 75% of the difference in tax so not a huge blow. Looks like a case of deferring spending, lowering production for the start of next year and generally painting a bleak picture.
Gas prices look to be averaging £1.50 for 1st three months of year and with onerous hedging off we should be well into net cash and able to buy production somewhere outwith UK with Norway my bet if one of the wells being drilled this half come in, suppose it depends on the read across for using capex costs in different fields but if available would make sense. So not expecting much either way for now but should be a steady climb if gas prices stay high.
Megla you gave the bare bones on information to come to FCF for $300m and you've the cheek to mention my gas guess of 86p against your 70p?
HBR have hedged around 35k at 72p a therm. Based on the best information availble via futures market, we currently have gas at around £1.40 for 1st Half 2024 as per below. That gives £1.14 for the 1st half 2024 based on 92k bopd equivalent. inclusive of hedging.
BoA updated their Brent price for 2024 at $90 yesterday
https://www.zawya.com/en/markets/commodities/bofa-expects-oil-price-at-90-in-2024-as-markets-remain-balanced-g7vokiry
I doubt there would be more than 10% of holders on this forum who don't expect HBR to make an aquisition if and when they go net cash, many want it yesterday but it's certainly something to be expected.
As for tax, I've yet to see a company fully report with the EPL applied therefore how the $900m capex and decommissioning costs are applied to the various levels is a bit of wait and see although I expect a ballpark in region of 60%.
If and again IF gas and oil average as above, pre-tax will be around $2.5B so do your condescending best and then tell me how you got FCF of $300M and where and why you plucked 70p a therm out the air?
https://www.ice.com/products/910/UK-Natural-Gas-Futures/data?marketId=5253318
Https://seekingalpha.com/article/4586665-harbour-energy-plc-pmoif-q4-2022-earnings-call-transcript
I found the above helpful for comparing against the numbers albeit the following is a bit wooly
Alexander Krane
Yes. Thanks, Matt. So just very quick, what is happening here is that as you probably know, Matt, we have different legal entities where production is sitting. And for one of these entities, where we have quite a bit of tax losses as well, there's -- we -- and I think maybe this is in a very tiny footnote on Page 24. But what's happening here is that the EPL payment here, it's -- it will not fall due until, I think, it's October in 2024 as opposed to the normal cycle of 2023. So some of the legal entities will be paying EPL in October 2023. But one of this will probably not -- most likely not pay that until October 2024. I think the amount in question here is approximately $250 million. So that is the sort of the numbers -- yes, the number effect of this. So -- but clearly, of course, it's a forecast, but that is then the adjustment.
If we move into net cash in 2024, I expect HBR to bolt on something of at least 25k bopd, they've already agreed $84m for the Vietnam assets as non-core therefore I would expect something similar for production as we seen in 2022 of 208k bopd.
I would use an oil price of $90 and have no idea where gas will go but 86p seems a decent guess based on forward prices for winter and spring 2024.
As for Tax, not got a clue, HBR have the extra $250m EPL due mentioned above in October 2024 so it will be a case of how much Capex they can fit in the 91% bracket and how much at a lesser band to give an idea of FCF on an estimated pre-tax figure of at least $2B but certainly way north of $300m FCF.
Most predictions are for oil around $90 for 2024 at the moment Megla therefore I was scribbling my sald down for notes and came to the conclusion that for 2024, I think the oil and gas prices achieved by Harbour will be above those in 2022. If they move into net cash position, they will probably buy production possibly in Norway therefore I'll expect similar production.
I've nailed my estimates as $2B+ for pre-tax therefore up to you to justify why you have a post forecasting FCF of $300M, it's not my issue which way the curve bends, you posted the figure.
Current Energy Prices 185k barrels, 50/50 spit, Oil price $75 Gas Price 70p a therm - WITH EPL (blended realised price $63)
FCF = $300m
The above was your forecast around 9th June I think.
I've put numbers on my post of pre-tax profits being above $2B in 2024 based on the onerous hedging now finished and current hedging is $84 oil for 20k barrels and 72p for 35k bopd gas. I don't think we'll be far out either side of the realised prices for 2022 and if making a prediction I would say we'll exceed on both by a margin to square up on lower production therefore you'll have to refresh my memory on how you got from $2B+ post tax profit to $300m FCF?
It's just about every oil & gas producers sp that is being smothered. At the moment there just isn't institutional investors putting money into the sector but plenty taking it out. Once we get to clear net cash then it's time to spend a bit looking for another 25-50k bopd but in the meantime with NS tax up in the air depending on which party in power, it would be madness to chase tax losses.
Maybe a couple of discoveries in Norway wil give us a base there to expand which is the more likely option?
1) Assumptions $85 oil, £1.50 gas & £1.20:$1 for 2023.
2) 2022 results were based on 86p gas and $78 oil received after hedging.
3) 2023 Total Capex $1.1b of this, $200m decommissioning with $135m international and $765m NS.
4) In 2022, HBR spent $450m on financing and lease costs.
4) We need guidance on CC, how profitable will it be based on a reply at the last results below?
On Viking and what do we need in Acorn is in a similar story. But Viking, I think, a bit more far advanced, and so the needs are clearer. The Viking system itself doesn't need government funding. Now our emitters do because they're looking for financial support from the government so that they don't lose money by capturing their CO2 emissions so that they're ready to give to us.
5) Going back to 2022 results, FCF $2.1B, as mentioned based on $78 oil and 86p a therm. Capex $900m and Tax $551m, Production 208k bopd. It's worth throwing in here HBR currently have 8 years NS production covered.
Right ignore the above I was just taking few notes. We need to determine the Operating profit before tax before we get an idea of FCF as seems it's the tax bill we need to understand?
With the hedges mostly off in 2024, I'd like to think with production around 195k bopd, operating profit will be similar to 2022, there are finance costs and possibly a FX gain that could be reversed but I still think we are looking at ballpark figure of $2B+ operating profit. Now we just need to know how the £200m decommissioning and $765M capex in NS will affect the tax bill to see if we can get that down to some of the ludicrous numbers I'm seeing banded about this thread?
Its not very predictable when you can get Amazon and many other US companies come in, pay low wages to employees (and conditions) that require government top ups to those with families, they then pay little tax as their main aim is market share and to bankrupt their competitors. It's time turnover was taken into account for multi-nationals who are draining the wealth from the UK rather than small independent chains that are being squeezed from all sides in the current environment
I suppose shorters will be thinking Harbour have guuidance for results based on £:$1.20, Oil $85 and Gas £1.50 from memory so probably think results will disappoint at end of the month? I think HBR will look to taper down UK investment or hold it steady whilst tax relief is in place but at worst you would think they'll start 2024 with zero debt and in a position to return $500m a year to shareholders in Dividends and buybacks so that's good enough for me to hang in there.
Jeff
You're p!ssing into the wind here unless you are just copying and pasting the same message on multiple boards and platforms.
Look, I and probably many others know things are controlled and rigged but this is certainly not the place to vent on it. I now accept it and trade with it in mind.
I 100% believe they changed the old shareholder rules to nominee accounts so they could manipulate the markets. Pre-2000, the market always made sense. Now there is little chance of knowing who puts trades through compared to 30 years ago.
Do Harbour and many other oil company sell off before the oil price drops like today, 100% and connected to one country IE US.
Is US bankrupt and UK for that matter, of course they are, there isn't a chance in hell either could get to a position of surplus for years and pay back debt.
Did US overheat Japan in 80's then pull the rug on them, totally
Did China learn the lesson on fixing currency and investment in and out of their country to prevent this, 100%. Is this now a mega huge problem for US especially with Saudi and few others looking at joining BRICS totally.
Are media just parrots for those to push the stories they want pushed out to you daily 100%.
Is climate change now at the top of that list because we are running out of oil and US no longer has any influence on controlling the swing production, 100%.
Don't get me started on the big seven in US, was Microsoft started in a garage? When Google have every single street, every single voice, live updates on streets via Amazon who strip every countries high street whilst paying no tax, who now want to run the health centre and allocate your drugs along with social media giants who have connected every persons network, who have complete control over advertisement to you. Arghhh that's better, now go forth and find a real audience, we're already converted 😁
Harbour will not be buying Enquest.
On the other hand, what is Equinor's UK NS output?
If they get the go-ahead for Rosebank that they own 80% of, could it make sense for them to buy Harbour or Enquest for that matter and have their Rosebank Capex for a pittance under the current tax regime?
Tommo
HBR have made it clear they are moving out of the NS so won't be buying anyone and doubtful that any of the minnows will be bought over in the near term due to Labour previously saying they would abolish the tax breaks on capex.