Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
If nothing else, it's a start that a floor is now put in. From memory hedging is around 70p and oil $80 for next year so if either plummets, we get the hedging price and pay only 40% so worth a rise on the sp especially if it's still 90% discount on exploration costs.
Sunak has dumped any long term deal with US LNG exporters and will discuss various options including agreeing long term prices with UK producers. This is exactly the hedging HBR and SQZ require albeit it has to have a safety clause that future governments can't raise tax rate.
Very positive news for Harbour.
This place is now populated with some absolutely nutters, I'm reading price targets, even bloodbath tomorrow when ftse futures are indicating 18 pts up.
There is not one person stupid enough to say Harbour won't make £1b+ profit next year and then low hedging is finished.
A company valued at around £3b so at worst case scenario a pe of 3. Too many nutter daytraders here and will come back at £3.50 and a solid uptrend in place rather than waste time reading the BS on here.
https://www.nsenergybusiness.com/projects/zama-oil-field-gulf-of-mexico/#
Hopefully but a recap and why we will be in no hurry to spend our money elsewhere considering we have Natuna and Timpan to finance.
Zama oil field is located approximately 60km off the coast of Tabasco, Mexico, in the Block 7 of Sureste Basin, Gulf of Mexico. Estimated to hold up to two billion barrels of oil-equivalent, it is considered to be one of the world’s biggest shallow-water oil discoveries in the past 20 years.
Operated by Talos Energy, Block 7 is Mexico’s first offshore block to be awarded to a private operator. The development partners of Block 7 include Talos Energy (35%), Sierra Oil and Gas (40%) and Premier Oil (25%).
First oil is expected in 2022 (Now 2024) and the offshore field is expected to produce 150,000 barrels of oil-equivalent a day (boed) by 2024, accounting for roughly 10% of Mexico’s total oil production.
Onedb
What are you not sure about on the tax kickback? The 91% tax deduction?
From Parkmead's results this morning.
Russia's invasion of Ukraine has increased the UK Government's focus on energy security and confirmed the importance of having sizeable and robust UK domestic energy production. The rise in international oil and gas prices has also strengthened investment appetite through enhanced economics. Parkmead has also seen a positive investment sentiment emanating from the introduction of the new UK Energy Profits Levy, whereby the associated investment allowance of up to 91% has created a powerful incentive for major producers to invest in new UK North Sea developments
Bit of a dilemma for the big oil Co's, invest £25b with 90% kickback for 2 years then a possible labour government with possible changes to the WT and it won't be down.
If you are referring to OPEC+ ramping up production, then you seen the result of a rumour on the oil price, OPEC+ want $90 therefore anyone with any ounce of intelligence will understand why they will not ramp up production.
Agree Stevo on gas returning to under £1 a therm. Flip side is we would hope to see the WT reduce or be removed as we've shown we require $82 oil and around 70p a therm for $2b FCF so I'd prefer the latter.
I have assumed 2024 revenue of $6.5b (200k per day at $90 pbbl equivalent). Operating costs at 15 pbbl equals $1.1b and admin, overheads and central costs of $0.4b. This results in operating cash flows (EBITDA) of $5b. This will also be close to the taxable profit before investment allowance.
Stevo
From 1st half results, revenue was $2.67B with oil averaging $82 and gas 69p
3rd quarter $4.1 B which gives $1.43B for the quarter with oil lower at $80 for 9 months and gas higher at 86p.
A look at the 1st half figures gives revenue $1.54B oil and $970 gas with UK gas accounting for $877m.
The oil price will look after itself and I would go for average $90 over the next couple years if OPEC are in control and gas is anyones guess but I think we are looking at higher prices than Harbour achieved above otherwise even the Tories wouldn't have bothered raising the WT last week.
There is currently 50k bopd hedged for 2024 at $84 oil and 79p gas therefore I would put revenue around $7.5B on a similar production number although since we should be net cash, I would expect a few bolt on aquisitions to boost production.
Couple points still remain unanswered here.
CCS investment, the posts suggest zero tax relief, is that correct or does it fall under the 40% bracket?
Stevo's prediction of around $900m FCF for 2024, how is this worked out, if HBR spend $700m capex on NS, is that $630m profit booked and just $270m on the other billions of pre-tax profit?
Stevo
Correct me if I'm wrong but for first 9 months, Neptune made pre-tax profits of $2375m and paid tax of $1523m for a profit of $852m. I'll look at the slide but can't see how they have anywhere near the $2b FCF that harbour have this year?
Still not convinced, so if Harbour have better hedging in 2024 with over 100k bopd gas equivalents, why are you predicting FCF of $900m for harbour with 75% tax and capex $500m more than Neptune? I had a look at Neptune and 135k bopd for 2022, are you sure they include tax payments in their FCF?
Are we likely to defer paperwork for capex into 2023 as much as possible for higher deductions so possible less debt at year end?
I'm not suggesting taking over Hurricane but think I read they have over £100m net cash and $370m tax losses and production still adding cash monthly whilst valued at under £150m.
Not sure on decommissioning costs etc and could be a money pit but worth running the maths for the tax loss for offsetting on the 40%?
I'm totally scratching my head at your figures Stevo?
In simple terms, what was Harbour's 1st half FCF in 2022 with 1 month of the WT at 25% and what is the expected FCF in the 2nd half of 2022 with the full 25% applied?
Therefore with an extra 10% windfall tax, how in god's name can you even suggest your figures for 2023 and 2024?
By 2024 we would have little or no finance costs, hedging is at substantially higher levels and we would be in a position to bolt on acquisitions yet you are predicting $950m FCF for 2024?
We'll be down to around 840m shares after this buyback, possibly down to 750m at end of 2023, we'll have a good idea by end of spring whether Europe has any chance of refilling gas reserves in 2023 but it seems pretty obvious gas prices will stay elevated for years.
Each to their own, added Friday and will do so again Monday as happy with bounce of lows on Friday and volume.
The $400m windfall tax for 2022 was from 26th May 2022. For a full year at 35% (all other things being equal) it will be $1025m.
Possibly could deducts ome capex from that, can't remember what we spent first half so worst case scenario $500m hit to FCF so looking at around $1.6B on like for like in 2023 and a lot higher 2024?
Minimum 5 times earnings for 2023 still gives a sp of £7.
Just to remove any doubt if it's out there, the free cash flow is after capex and tax, debt should be down by year end and then we should be on target for £1.8B FCF in 2023 before we hit the jackpot in 2024 when hedging improves dramatically.
At £3.85 and after this share buyback, we'll have roughly 840m shares and a market cap of £3.2b lol