Member Info for kign

sorry for the typo, last sentence should read:

so in a way, yes you get taxed higher IF you have interests TO pay compared to a non-o&g company!

to be fair to L3trader, we need to compare the tax position in the case of a non o&g company to HBR as we are all competing for the same capital when it comes to shares.

so for a non o&g, you get to offset interests if they make up less than 30% of your gross profit and the rest gets taxed at 19%.

o&g I don't have to explain here but let's see what happens in the tax treatment of a 250m profit for a non-o&g Vs o&g co.

for 250m profit with 50m interest payment:
- tax for non o&g is 38m
- tax for o&g co is 167.5m
- 441% higher!

for 200m profit with 0 interest payment:
- tax for non o&g is 38m
- tax for o&g co is 150m
- 395% higher!

so in a way, yes you get taxed higher of you have interests up pay compared to a non-o&g company!

seems like a value trap so far... with the bad luck of paying for Looney's comments that led to the windfall tax!

But financially looks good currently, 200+kboepd production, big finds yet to be developed in Zama/Timpan, debt coming down quickly, huge undrawn RBL capabilities, hedges unwinding, inherited billions of tax credits from premier oil, etc....

... but you still have hedge funds shorting (something they know that PIs don't?), maybe linked to the 8%+ owned by bankrupt Noble Group?

Other negatives: Potential 2P reserves downgrade due to EPL where field CoP dates are brought forward, Zama dispute with Pemex, Tuna development in contested waters with China, conservative upper management still behaving like they are working for Shell/BP/Conoco (e.g. see 6Tcf Timpan discovery announcement), most of production is still in UK and may have to pay a premium to acquire significant international production, EIG still own 16% of all shares (can't be trusted)

so lots to read up on to make your own mind up.

Bill, you missed the reverse takeover news!

thanks Stevo, good explanation!

I thought Norway offers 100% cost recovery? Most developing countries offer a "cost+10-15% or higher uplift".

Stevo you've already spent the £1 on the next bet and there's no guarantee you'll get £1 back e.g. Solan or Dunnotar that PK said it was the well to watch. Also you cannot get a tax relief higher than the profit you've made and note production guidance next year is already down by 5% despite 1b in capex spend!

HBR's assets are mostly mature and there's no longer anything big enough in the UK for them to invest 2-3B except for CCS that does not qualify for this super deductions. So why are they still in it, I don't understand it either.

If you compare say Kosmos' GTA assets (15tcf recoverable reserves and miles bigger than Timpan) , tax is at 25%, 35% PSC + "cost gas" relief up to 75% of total production. Note GTA is facility constrained, so it's pretty much plateau production throughout until you get a big jump when phase 2 comes with alot more potential nearby e.g. BirAllah & Yakaar-Teranga

the casino analogy should be:

- you've already made £1.22 winning and £1 in your wallet
- you'll be taxed at 75% on those winnings in this special casino, and left with 30p and £1 in your wallet
- you can get up to a 91p relief only if you bet another £1 for the next round from your wallet
- if you do that, you'll have 21p remaining in total in your wallet now and a chance of a winning at the next round but there's rumours that 91p relief might be removed soon

- or you can walk away with 30p from the profit now and £1 still in your pocket = £1.30 and go to another casino that welcomes you

the casino analogy should be:

- you've already made £1.22 winning and £1 in your wallet
- you'll be taxed at 75% on those winnings in this special casino, and left with 30p and £1 in your wallet
- you can get up to a 91p relief only if you bet another £1 for the next round from your wallet
- if you do that, you'll have 21p remaining in total in your wallet now and a chance of a winning at the next round but there's rumours that 91p relief might be removed soon

- or you can walk away with 30p from the profit now and £1 still in your pocket = £1.31 and go to another casino that welcomes you

more independent CEOs voicing out:

EnQuest CEO takes shot at ‘particularly unstable’ UK tax system

https://www.energyvoice.com/oilandgas/north-sea/476464/enquest-ceo-takes-shot-at-particularly-unstable-uk-tax-system/

Mr Bseisu described the tax move as the “last thing” to do if a country wants the energy sector to have the cash flow to invest in renewables and low-carbon technologies, describing the decision as “short-termism”.
He said “The UK is particularly unstable fiscally, which I think affects the long-term views on investments. You can do short-cycle investments, but long-cycle investments are very difficult.”
Mr Bseisu added: “There’s a lot of public pressure to tax oil companies with high profits, even though the profits are not being made in the UK. For example, for many of the majors it’s maybe five percent now in terms of their net income in the UK.

https://www.telegraph.co.uk/business/2023/01/19/labour-will-end-north-sea-investment-says-sir-keir-starmer/

End UK CCS now, LC. Don't waste any more money.

Labour will end North Sea investment, says Sir Keir Starmer

"What we've said about oil and gas is that there does need to be a transition,” he said. “Obviously it will play its part during that transition but not new investment, not new fields up in the North Sea, because we need to go towards net zero, we need to ensure that renewable energy is where we go next.”

overall, a so so update in my opinion.

- ebitdax as expected
- debt reduction better than I thought
- quite worrying to see a significant increase % terms for opex as this will have an impact on the reserves unless a more optimistic price deck is used
- more clarity required for the material change in EPL impact?
- disappointed no news of Acorn withdrawal

hopefully the q&a later will reveal more about the status of acquisitions....

despite my recent negativity, I'm still staying in.

I think the GTA assets from Kosmos will tick alot of boxes with optionality to dispose the rest relatively easily. HBR should definitely take a look!

https://www.energyvoice.com/renewables-energy-transition/ccs/uk-ccs/475696/acorn-ccs-investors-withdraw-matheson/

withdraw please.

Scottish energy secretary Michael Matheson has warned MPs there’s a risk investors may “withdraw” from the Acorn CCS project in Aberdeenshire as timeline delays continue to rumble on.
Acorn, at the St Fergus gas plant near Peterhead, is relying on government funding to help deliver an industrial-scale carbon capture and storage (CCS) development and create over 20,000 jobs in its first phase.
Harbour Energy (LON :HBR) – which recently warned that the North Sea windfall tax risks “undermining” its CCS investments – is a partner in Acorn alongside Shell, North Sea Midstream Partners and project leader Storegga.
But the Track 2 process – the next tranche of a £1bn CCS development fund from Westminster – has been delayed, having been expected last year.
Michael Matheson told a Scottish Affairs Committee meeting that continued delays on progress could have repercussions, which he realised when visiting the site last year.
“When I was up in St Fergus in August of last year and met with all of the partners at the site, what was becoming increasingly apparent to me is there is anxiety about potential delays in the Track 2 sequencing process, which might result in partners who are already

Windfall taxes unfairly punish the North Sea independents we rely on for oil and gas

LC needs to be more vocal. Should not keep quiet and cancel CCS now to send a stronger message!

https://www.neptuneenergy.com/media/neptune-insights/windfall-taxes-unfairly-punish-north-sea

First, the new windfall tax should include a price floor – as is the case for power producers. If commodity prices remain high (as it forecasts they will) then the higher levels of tax should only apply to that proportion of revenue that is higher than historical averages. If they fall back to historic averages, it falls away.

Second, as a windfall tax, the EPL should target only actual profits by factoring in realised prices – in other words, the revenue that the companies actually earn when they sell their energy ahead of time, rather than at current high prices that reflect only a fraction of what they sell. Profit derived from production sold at or below the level of the floor price should be exempt.

Implementing these two simple changes will ensure independents can access finance, providing them with the capital to invest now for the future – not only for new sources of gas and oil, but also, importantly, for repurposing facilities for the energy transition

I think there might not as high a debt reduction as we all thought. Why? There may be a need to conserve cash to fund an acquisition.

The recent Shell almost deal leak is a hint that an M&A deal will be at a premium. That Energyvoice article that quoted HBR's UK NS chief's view that there's only 5-6 big enough projects to offset HBR's WFT responsibility is also a clear hint that they are giving up on the north sea and will just pay the tax.

I think our only hope of a good news is for HBR to exit UK CCS.

it's usually announced on this site for your future reference:

https://www.harbourenergy.com/investors/financial-calendar/

what's fairly priced for 95kboepd?

they should have leaked how much shell wanted for the assets...

95,067boepd if we use 6mscf=1boe conversion.

good that it has failed, besides Ormen Lange, the rest are declining rapidly