Member Info for epiphany121

Nice one, Savemore. A few days here and there doesn't matter in reality and as long as there are no impediments to the transaction closing, and it sounds like there aren't any, its all good. Whether the deal prints on 30/09 or 07/10 is of no real consequence, IMO.

"We should all be writing to IR and ask about the deal! They have a responsibility to us owners to give some update! At least why the scilence!"

it's market sensitive information - I can't imagine they'd be writing back to individual shareholders with the latest state of play on a key deal.

Yep, however nothing ever goes up or should go up in a straight line and so today oil pullback is welcome. NBP has also pulled back from 12% up on the day to under 3% now. Slow and steady uptick doesn't invite too much attention, which isn't what nat gas is doing. $80 average in Q4 isn't quite in the realms of fantasy - good for us (and them).

Agree Chilts - we'll now see increased rhetoric of runaway inflation and how that'll hurt economic recovery. NBP is continuing its inexorable rise to new all-time highs - up another 7% today.

We'll see noises from Biden team soon - not that it'll help.

Whilst we're waiting, popcorn in hand and all that, spot Brent (November contract) is well above 80 bucks now.

Hi Therapist,
I believe you may be correct. Looking at last year's AR and the H1 21 report, the average gas revenues were between 7 and 8% of overall revenues. Taking current gas prices into account and an expected uplift to Magnus/Seligi production in H2 - I can speculate we may get up to between 12 to 18% of revenues for H2 from gas - tidy, but by no means earth shattering.

GL

And for Enquest all of Gas sales is unhedged - OK, it's not a huge number (15% as Tarmak identified) and it's primarily from Magnus and Seligi, but let's not forget that there could be a nice revenue upside there. I do hope we get some commentary on this when we get our next update. Even Asian gas prices are very high - not as much as NBP/TTF, but still high.

Hi L7 - good to hear from you and that all's well. Your workings look good and you've thrown out a variety of hedge scenarios which make sense to me. Harbour's primarily got shafted with their gas hedges. Even as of 30/06, their mark to market hedge losses (PV) was more than $1.1 bill and it's likely they're looking at over $2 bill mark to market losses with gas prices being where they are. They've not taken those numbers onto the P&L, but I suspect will be recognising losses on the P&L when these hedges are settled.

For Enquest, I think it's worth looking at a put only model. I know you were never convinced that this oil rally would last and I've been the polar opposite. I'm not in the uber bullish $100 camp for Q4, but we may see a circa 80 average in Q4. A ot depends on how OPEC reacts in the next couple of months, once Brent sits in the 80s for a few days/weeks. Shale will be hedging ferociously and will bring additional drilling/production back on in 2022, and that's a near certainty. And there's Iran and Covid always lurking in the background. This is why I'd advocate at least 50 to 70% hedge at 70 plus - will save us pain if prices pull back.

I'm not sure if Enquest had advisors for their hedging strategy - it may just be an in-house 'hedge desk' run by the Finance team under the Salman brothers.

Hello Kamrat - "The price of gas sales was 41,91% of the oil price in -20.
In H1 -21 was it 65,41%. Therefore I make a new count there I use booth of these and my conclusion is that 51,95% of the oil price is useful."
No, if anything your H2 % should be a lot higher than H1. I wouldn't be surprised if H2 gas sale price on a BOE basis is higher than oil. If we conservatively estimate that NBP nat gas price has averaged £1.10/therm in Q3 - that's a BOE equivalent of circa $87. For clarity, today's NBP price is £1.93/therm, an all-time high - that $152 per BOE.

My suggestion is to model 100% of oil price as the gas price equivalent for H2 2021 and I still think that there could be more upside.

GL..

Miles - Yes indeed. I don't see the relevance of Sea Lion to Harbour anymore. They've decided to pull out of the project as it's been deemed as not a strategic fit for HBR anymore and that's all that matters. If the required investment in a Greenfield project and the subsequent time taken to see returns on that investment is deemed too long, in the face of the current ESG/Fossil fuel transition narrative, then that is the right call by the BoD. There are, I'm sure, plenty of acquisition alternatives available to Harbour rather than sink in Hundreds of Millions of dollars into a greenfield project like Sea Lion. I think that's the right approach.

I'm not sure I understand the reference to Harbour BoD as a secretive bunch - that's a head scratcher to me. I can't imagine any of Harbour or other listed company BoDs turning up at Poets' corner and give a discourse on company direction/strategy to whoever turns up. I own Enquest too in the UK O&G sector and I get frustrated with them being less transparent than I think Harbour is at least in terms of setting expectations to the market. Even US and Canadian listed companies, as progressive as they are and far more than the UK ones, don't go around discussing operational or strategic initiatives in public.

Hi R - Investing.com's averages are not to dissimilar to Statista's. They have YTD average to August at 67.08 vs Statista's 66.82. For August 21, along Investing had 70.51 vs Statista's 70.75. It was 80 cents lower than Statista for July, It's not dissimilar, but we can see averages on a real-time/day-by-day basis. We could use that as our benchmark and crown the winner on Christmas Eve ;-)

Doh - early morning blues. I meant to write "this link was provided by L3trader a while ago and thanks to him".

Hello P - this link is thanks for L3trader from a while ago.

https://www.barchart.com/futures/quotes/CBM22/options/jun-22?moneyness=allRows

It gives us put option pricing for various strike prices into 2024 and more. For next year, depending on the month (say June and after), put options in the high 60s/low 70s are priced at more than $5/bbl and not in the mid to high 2s. This is why Enquest may be more reluctant to take out Puts on their own. I'm sure if Brent gets into 80s and stays there for a few days, these options at circa 70 will get cheaper, but at current levels, that is a bit too expensive. They'll probably just go with collars and that is a bit sh**ty as oil could take off in 2022 in a perfect storm scenario.

lol, Jan. You may well be right here. In all honesty, NONE of us will really want you to be the one sipping on that bottle of Bollinger, do we? That would've been calamitous for our financial health/SP.

Miles - When you're doing stock fundamental analysis - BV is ALWAYS Total Assets Minus Total Liabilities, and that is the net equity number. We don't need complicated mathematical models required to figure net equity out as that number is clearly shown on the Balance Sheet in every quarterly/half-yearly/annual report. Page 23 of Harbour's HY report is the balance sheet page and you can see the Net Equity number of $1.736 billion.

You can't go cherry-picking what you assume to be BV just because it's an O&G company. HBR has $5.42 bill provisions on the balance sheet and most of this is the PV of future decomm liabilities for them, and this is what's pushing up liabilities/keeping equity down. If oil/gas prices stay high they may be able to write back impairments, but I haven't checked what the value of these are for HBR.

Price/BV is just one valuation metric though and I wouldn't be too hung up about that ratio in coming up with an investment case. One of m favoured investments is Devon Energy, an S&P 500 constituent, and they trade at a Price/BV of 2.67. What they do is though is have the most progressive dividend policy of any O&G company that I know of. They have a quarterly variable dividend component that's calculated on 50% of FCF after Capex/Abex spend. They've done this for 3 quarters now and it shows up in their SP. It's up 100% since they started this in February and it's a $20 bill market cap company now. If Harbour can do anything like this, that'll be phenomenal. Like Devon, Harbour's net debt/Ebitda ratio isn't too bad at around 1.5 and will keep falling into H2 this year. I believe HBR is well placed to ramp up dividends in the coming years and it'll be fantastic if they go down the Devon route and be UK's first variable dividend paying company.

To linger on the Price/BV topic for a minute, there are a few Canadian O&Gs I own (CPG/VET) who are valued at less than 1 on that metric, but they're not yet going all out with divs because of higher debt levels and this is where HBR is a positive, IMO. I've started adding after the results in the past couple of days as I do see the management as progressive and I do hope that this reasoning is vindicated in December.

Net equity (BV) on the balance sheet on 30/06 was $1.73 bill and the current market cap is £3.19 = $4.35 bill. Yes, Price to BV is circa 2.5. The $ 8.039 bill on the balance sheet is the net book value of Prop,Plant,Eqpt and that's not the same as net equity.

10p dividend is the most likely too, IMO. I'd suspect that the degree of their hedge losses over 2021/22 will constrain their handing larger divs at this time. The reality is that they probably could've wiped out the majority of their debt if they didn't need to book these hedge losses - their carried forward tax losses from PMO would've sheltered much of these gas windfall profits.

Jan - Average Brent for 2021 so far has been circa 68. I think it will end up nearer Romaron's predicted72 average, rather than yours or mine (74.5), unless Pelle's price jump in Q4 comes around. R will get to keep his bottle of Bollinger.

Hi P - You wrote "With new RBL loan there was rather big requirements hedge 1-2 year and we saw half year report the hedge was not fully there. And they only used half RBL.
So maybe they trying ride the upside in prices before draw remaining RBL , finalise GE deal and put additional hedge. Looks like they getting this right if that’s the case."

Drawing the remainder of the RBL was to happen when they were closing the GE deal. Whenever the deal closes was when the RBL would be drawn. I don't think there is anything more to it than that. I'm sure they're adding in more hedges - it would be good if they just did Puts rather than these collars. Based on the link that L3T has posted a few months ago, the cost for a put option was circa $2.50/bbl for an option that was circa $7 below the spot price a few months into the future - in this case that's close to $70 for say the H2 of 2022. Yes, you're right that it may be between say $13 to $30 mill for a range of 5 to 10 mill barrels. It just protects the downside in the event that OPEC opens taps OR Fed tapers OR Covid becomes a problem OR US production shoots OR Evergrande causes gloabl liquidity issues OR there's a very cold winter that pushes up gas consumption - leading to oil as a substiture OR any other black swan events.

I don't think $100/bbl can happen this year unless there is a supply side black swan event. I'm just not in that camp - it MAY happen sometime into 2022 after OPEC spare capacity whittles down - right now there are just way too many headwinds for oil and can't be the base case for me anyway.

Let's not forget that these current levels are great for Enquest anyway. However, I'm not anymore convinced that AB and co are really shareholder wealth creation focused and that shows up in why Enquest is so very undervalued and left to the vagaries of Brent to keep it up. I've given my thoughts to IR a few months ago and not surprisingly that's never been responded to. Let's see what they really do in the next few months!!!

Europe getting thrashed in the Ryder cup isn't leaving a good taste in my mouth tonight. :-)

I'm sure we can afford to spend a million quid for downside protection. I'd get put options for between 5 and 10 million bbls for 2022 at a 70 strike price and just ride the upside. Can the hedgers at Enquest at least get this right I wonder? The hedge cost per barrel would be between $2 to $3, but is fully worth it.

I know of only a few progressive US shalers' management teams whose bonuses are tied to shareholder returns (= Market cap).

I wouldn't be too bitter Squif - most UK oil companies have just not gone up much in the last 2 days. I'm sure we'll eventually catch-up with the recent Brent up moves - with or without any intervention from AB.