Member Info for Kokomo

So Jefferies has just upgraded HBR PT along with a Buy rating but at same time, downgraded ENQ (14p PT), SQZ…..etc. I believe as the year progresses, analysts will become increasingly bullish on HBR, especially as the Wintershall Dea deal closes and HBR enters the FTSE 100 with potentially even higher O&G prices.

Proactive Investors

Harbour Energy deal compelling and surpasses expectations

Harbour Energy PLC (LSE:HBR)’s share price climbed a further 5% on Friday as the City gave the thumbs up to its $11.2bn acquisition of Wintershall.

Analysts at Jefferies said the deal was “very compelling,” while the team at Bank of America said it “surpasses expectations.”

“Harbour’s proposed acquisition with Wintershall Dea has defied market expectations of what was possible from its stated M&A ambitions,” BofA said in a research note.

“To us, diversification from the UK and its associated fiscal uncertainty was always the major route to re-rating Harbour’s muted valuation,” it added.

“Yet we acknowledge that the company has achieved a feat of such scale, necessitating the use of equity, without major dilution to existing shareholders,” it continued.

BofA pointed out that Harbour would move from near UK pure-play status down to around 25% production exposure whilst at the same time upgrading its credit metrics and reducing its cost of debt, if the proposed deal materializes.

BofA has a buy rating and 460p price target.

Barclays noted the deal marks the fourth major acquisition in the group's history and as CEO Linda Cook states is the "most transformational step yet in our journey."

It explained that a key part of the Harbour investment case has been to deliver value through acquisitions.

The bank highlighted that Harbour anticipates an increase in the dividend of 5% per share upon completion, with the "potential for additional returns" post completion over and above the base dividend.

Barclays also highlighted comments on the conference call after the deal was announced from Cook who stated that Harbour remains well placed to look for further potential opportunities, but that this needs to be done with “discipline and patience. “

Cook said on the call "nothing else could compete" with the Wintershall transaction when looking at other opportunities presented in the recent past.

Barclays rates Harbour Energy ‘overweight’ and Jefferies has a ‘buy’ rating.

https://www.proactiveinvestors.co.uk/companies/news/1036996/harbour-energy-deal-compelling-and-surpasses-expectations-1036996.html?rel=scroll

energy voice, 3 january

harbour spuds ***o amid high follow-on hopes

"we hope that this exploration well will discover large oil and gas reserves, as we discovered through drilling the layaran-1 well," hudi said.

harbour energy has begun drilling the ***o-1 exploration well in indonesia.

regulator skk migas announced the company had spudded the well on december 31, in the andaman ii area. a representative of the regulator, hudi suryodipuro, said drilling should take 78 days and include well testing.

the company plans to drill the ***o-1 to a final depth of 11,733 feet.

the skk migas official put the well’s potential recoverable gas at 723 billion cubic feet, with 33.5 million barrels.

“we hope that this exploration well will discover large oil and gas reserves, as we discovered through drilling the layaran-1 well,” hudi said.

harbour operates andaman ii with a 40% stake, while mubadala and bp are also involved. the companies made a play-opening discovery in july 2022, with the timpan-1 well.

the companies booked the west capella drill ship for work and reported success at the layaran-1 well in december. mubadala operates the andaman south licence, where it drilled the layaran well.

the ***o prospect is southeast of timpan. harbour also has plans for the halwa prospect, to the northeast of timpan.

harbour acquired 3d seismic on the eastern part of the andaman ii licence in late 2022. the company acquired the project through its merger with premier oil.

https://www.energyvoice.com/oilandgas/asia/exploration-production-asia/544701/harbour-spuds-***o-well-following-up-timpan-success/

Brent, UK and European Gas prices all now nicely up and looking pretty bullish here at the moment:

https://tradingeconomics.com/commodities

Mind blowing! 2024 should be an incredibly exciting year for a New FTSE 100 HBR, Oil is now also starting to catch a bid:

Protestors Shut Down Libya's Sharara Oil Field

After false rumors of the closure of the giant Libyan Sharara oil field on Tuesday, a letter from Libya’s National Oil Company on Wednesday confirms the shutdown of one of Libya’s most important oil fields.

https://oilprice.com/Latest-Energy-News/World-News/Protestors-Shut-Down-Libyas-Sharara-Oil-Field.html

OPEC+ To Hold JMMC Meeting Next Month

https://oilprice.com/Latest-Energy-News/World-News/OPEC-To-Hold-JMMC-Meeting-Next-Month.html

Continuation of article from previous post

A complete data acquisition including wireline, coring, sampling and drill stem testing was conducted and the Layaran discovery well, which was drilled to a total depth of 4208 metres by the drillship Capella, flowed more than 30 MMcfd of gas. The successful Layaran-1 probe — Mubadala’s first operated deep-water well, which the operator said has the potential to be a 6 Tcf discovery — lies in a water depth of 1207 metres.

The partners are already considering options to exploit their Andaman Sea discoveries with development concepts on the table including liquefied natural gas and pipeline exports to Singapore, Thailand and Malaysia.

Harbour has a 40% operated interest in the Andaman II PSC and is partnered by Mubadala and BP with 30% apiece. Co-venturers in the South Andaman gross split PSC are operator Mubadala with an 80% interest and Premier Oil (Harbour) on 20%.

https://www.upstreamonline.com/exploration/harbour-spuds-ultra-deepwater-giant-gas-wildcat/2-1-1578012

upstream, 3 january 2024

harbour spuds ultra-deepwater giant gas wildcat

success at ***o-1 could further underpin andaman sea hub project

uk operator harbour energy has spudded the eagerly anticipated ***o-1 wildcat on the andaman ii production sharing contract offshore indonesia, where it is hoping to replicate the success of its potentially giant 2022 timpan gas condensate discovery on the same block.

indonesia’s ultra-deepwater andaman sea acreage is already giving all the correct signals that it could be the next hydrocarbon province in the republic and help the host government achieve its goal of boosting gas production to 12 billion cubic feet per day by 2030.

harbour subsidiary premier oil andaman will drill the ***o-1 exploration well to a planned total vertical depth (tvd) of 11,733 feet with the drillship capella.

hudi d suryodipuro, an official with indonesia’s upstream regulator skk migas noted that this well is intended to evaluate the hydrocarbon content in the bampo sandstone reservoir. the focus is on obtaining reservoir and fluid data from logging while drilling, wireline logging, coring and downhole sampling. ***o’s resources are estimated at 1.205 trillion cubic feet of gas in place, with recoverable reserves pegged at 723 billion cubic feet of gas and 33.5 million barrels of liquids.

"the current operational status shows that ***o-1 well is at the 36-inch conductor drilling stage with a sub-surface target tvd of 4230 feet," hudi said on 2 january.

"this drilling programme is planned to last for the next 78 days, including well testing activities.”

harbour’s timpan-1 exploration well, which was drilled to a total depth of 13,818 feet by the drillship west capella (now capella) on the andaman ii block, encountered a 390-foot gas column in a high net-to-gross, fine-grained sandstone reservoir with associated permeability of one to 10 millidarcies. this wildcat tested at 27 million cubic feet per day of gas and 1884 barrels per day of associated 58 degrees api condensate through a 56/64-inch choke.

preliminary results for timpan, which was targeting 1.4 tcf to 1.5 tcf of best estimate contingent gas resources, suggested that the discovery well had measured up close to pre-drill estimates, which were in the region of 300 million barrels of oil equivalent.

hudi added that skk migas really hopes that the ***o-1 exploration well will progress smoothly and will discover large oil and gas reserves as did mubadala energy with its recent layaran-1 probe on the adjacent south andaman psc, which encountered an extensive gas column with a thickness of more than 230 metres in the oligocene sandstone.

article continued via next post in

pursuing new reserves, harbour energy continues drilling of the andaman ii block

bloomberg technoz, jakarta - the special task force for upstream oil and gas business activities (skk migas) together with the british oil and gas company, harbour energy through its subsidiary premier oil andaman ltd., has started drilling the ***o-1 exploration well in the andaman ii block working area (wk) on december 31 2023.

the well drilling was carried out to continue efforts to search for potential oil and gas reserves in the block located at the western tip of indonesia.

head of the skk migas program and communications division, hudi d. suryodipuro, highlighted the great potential of the andaman ii wk, inspired by the discovery of significant oil and gas reserves through the timpan-1 exploration well in 2022.

"we, together with kkks, which is actively operating in the andaman sea, are trying to re-explore potential oil and gas reserves there, one of which is through drilling the ***o-1 exploration well," he said.

meanwhile, the ***o-1 well is currently undergoing vertical drilling using the west capella rig (drillship) with a final depth plan of reaching 11,733 ft true vertical depth rotary table (tvd rt).

https://www.bloombergtechnoz.com/detail-news/25470/kejar-cadangan-baru-harbour-energy-lanjutkan-bor-blok-andaman-ii

Mergers and acquisitions: Blockbuster oil & gas market consolidation moves in 2023

A portfolio expansion announcement also came from Harbour Energy, which inked a deal to acquire Wintershall Dea‘s entire non-Russian oil and gas portfolio along with carbon capture and storage assets in Europe to bring one of the world’s largest and most geographically diverse independent oil and gas companies to life. This $11.2 billion share and cash deal boosts Harbour’s portfolio with producing and development assets as well as exploration rights in Norway, Argentina, Germany, Mexico, Algeria, Libya, Egypt, and Denmark.

Additionally, the acquisition will enable the London-listed player to reap the benefits of increased reserve life and improved margins with lower operating costs and greenhouse gas intensity. The acquisition also supports Harbour’s energy transition goals, thanks to a strong pipeline of European CCS projects with the potential to store more than 10 mtpa of CO2.

Linda Z Cook, CEO of Harbour, commented: “The addition of Wintershall Dea’s assets will increase our production to over 500 kboepd, extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run. Importantly, the acquisition also advances our energy transition objectives by shifting our portfolio towards natural gas, lowering our GHG emissions intensity and expanding our CCS interests into new European markets.”

https://www.offshore-energy.biz/mergers-and-acquisitions-blockbuster-oil-gas-market-consolidation-moves-in-2023/

Article continuation from previous post:

Adequate Liquidity: Harbour expects that the cash consideration of USD2.15 billion will be funded through cash flows generated by the target portfolio between 30 June 2023 and completion, and an underwritten USD1.5 billion bridge facility. Based on our forecasts, the combined post-acquisition cash balance of Harbour, after drawing down of the bridge facility and payment of the cash consideration, should be in excess of USD1 billion.

Also, Harbour has replaced its reserve-based loan (limit USD1.3 billion) with a five-year unsecured revolving credit facility (limit of USD3 billion, including the letter of credit portion of USD1.75 billion).

In 2025, Harbour's post-acquisition maturities will include the USD1.5 billion bridge facility and a EUR1 billion bond ported from Wintershall Dea. We believe that Harbour has adequate time to address the upcoming maturities in 2025 and beyond.

https://www.fitchratings.com/research/corporate-finance/fitch-places-harbour-energy-on-rating-positive-watch-on-wintershall-acquisition-29-12-2023

Fitch Places Harbour Energy on Rating Positive Watch on Wintershall Acquisition

Fitch Ratings - London - 29 Dec 2023: Fitch Ratings has placed Harbour Energy PLC's (Harbour) Long-Term Issuer Default Rating (IDR) of 'BB' on Rating Watch Positive (RWP). This follows an announcement of Harbour's acquisition of substantially all of Wintershall Dea AG's upstream assets.

The deal will transform Harbour's business profile by substantially increasing its scale, geographical and asset diversification. Harbour's reserve life will also improve though will remain weaker than peers'. Our base case forecasts suggest that Harbour's credit profile would be commensurate with the 'BBB-' level after completion.

KEY RATING DRIVERS

Transformative Acquisition, Larger Scale: The acquisition of Wintershall Dea's assets will dramatically increase Harbour's scale and diversification. In 2024, the combined production is expected to be around 500,000 barrels of oil equivalent per day (kboe/d, around 60% of which will be natural gas), and management expects a fairly stable production profile in the next four years. Production will primarily be focused on Norway and the UK and, to a lesser extent, Argentina, Germany and Africa. The combined production would be broadly in line with that of US-focused Diamondback Energy, Inc. and Norway-focused Aker BP ASA (both rated 'BBB'/Stable).

The combined entity's reserves will also increase dramatically -management estimates 2022 pro-forma 2P reserves at 1.5 billion barrels of oil equivalent (boe).

Positive M&A Record: Harbour has demonstrated a record of acquiring assets and successfully integrating them, most recently through its reverse merger with Premier Oil, which increased its production by around 50% and made Harbour a listed company. Following acquisitions, Harbour focus has been on debt reduction, and pre-transaction net financial debt is minimal. We expect Harbour's financial policy to remain prudent.

Energy Transition Underway: Harbour's target is to become carbon-neutral on the Scope 1 & 2 basis by 2035 through minimising emissions and investments in carbon offsets. The acquisition of Wintershall Dea's assets is helpful in this regard due to the latter's focus on natural gas.

Post-acquisition, Harbour's scale will be comparable to that of other investment-grade independent exploration and production peers, including Aker BP and Diamondback Energy, Inc. (BBB/Stable). Harbour's production (2024 consolidated production, including acquired Wintershall Dea's assets: around 500 kboe/d) will compare well with Aker BP's guided 2023 production of around 460 kboe/d and Diamondback's of 447 kboe/d. Harbour's post-acquisition business profile will be more geographically diversified than that of Aker BP (focused on Norway) and Diamondback (focused on Permian basin in the US).

Continued via next post…

Article continuation from previous post:

Furthermore, Wintershall Dea is continuing its preparations for a separate sale of its stake in WIGA Transport Beteiligungs-GmbH & Co. KG (WIGA), which is not part of the transaction. WIGA is active in the German gas transport business; it is a joint venture of Wintershall Dea (50.02%) and SEFE Securing Energy for Europe GmbH (49.98%). WIGA’s operationally independent subsidiaries operate high-pressure pipeline networks, including GASCADE’s transport network, as well as OPAL and NEL.

Until closing, Wintershall Dea and Harbour will continue to operate as independent companies. There is no assurance that the agreed transaction will be consummated. The transaction is, among other things, subject to approvals of merger control and foreign investment authorities in several countries. Subject to these regulatory approvals, closing is targeted for the fourth quarter of 2024.

In the first half of 2023, the combined business had pro-forma revenue of $5.1 billion and EBITDAX of $3.7 billion. Overall, production volumes of Harbour and Wintershall Dea amounted to 513 thousand barrels of oil equivalent per day in the first half of 2023. In 2022, the combined business had pro-forma revenue of $13.5 billion and EBITDAX of $10.3 billion. Overall, production volumes of Harbour and Wintershall Dea amounted to 526 thousand barrels of oil equivalent per day in 2022. Combined 2P reserves stood at 1.5 billion barrels of oil equivalent at the end of 2022.

BASF has appointed Morgan Stanley & Co. International plc as exclusive financial advisor as well as Freshfields Bruckhaus Deringer as legal advisor in connection with the transaction.

https://www.coatingsworld.com/contents/view_breaking-news/2023-12-29/basf-letterone-and-harbour-energy-sign-business-combination-agreement/

BASF, LetterOne and Harbour Energy Sign Business Combination Agreement

BASF, LetterOne and Harbour Energy plc signed a business combination agreement to transfer Wintershall Dea’s E&P business consisting of its producing and development assets as well as exploration rights in Norway, Argentina, Germany, Mexico, Algeria, Libya (excluding Wintershall AG), Egypt and Denmark (excluding Ravn) as well as Wintershall Dea’s carbon capture and storage (CCS) licenses to Harbour. In exchange, at closing, the shareholders of Wintershall Dea – BASF (72.7%) and LetterOne (27.3%) – will receive total cash consideration of $2.15 billion (BASF share: $1.56 billion) and new shares issued by Harbour equating to a total shareholding in the enlarged Harbour of 54.5% (BASF share: 39.6%). The agreed enterprise value for the Wintershall Dea assets amounts to $11.2 billion. This amount includes the outstanding bonds of Wintershall Dea with a nominal value of around $4.9 billion that will be transferred to Harbour at closing.

With this transaction, BASF takes a major step towards achieving its announced strategic goal to exit the oil and gas business. After closing, the transaction creates optionality for monetization of BASF’s stake in the combined company, as Harbour is listed on the London Stock Exchange. “In addition to the cash component, the shares in Harbour that BASF will receive upon completion of the transaction offer significant potential for value creation and allow for a gradual and optimized exit from the oil and gas business over the next few years,” said Dr. Dirk Elvermann, Chief Financial Officer of BASF SE.

Wintershall Dea’s headquarters and the related staff are not part of the transaction. This will require further restructuring and ultimately the closure of the headquarters’ units in Kassel and Hamburg that currently have around 850 employees. Harbour intends to take on some employees from the current headquarters into the combined company. Further specifics will be agreed after a more detailed review between signing and closing. Employee representatives will be involved in the process according to respective legal regulations and established practices.

In parallel to the transaction with Harbour, the legal separation of Wintershall Dea’s Russia-related business is progressing as planned. BASF and LetterOne will remain the owners of the company holding the Russia-related business, for which significant federal German investment guarantees are in place. The Russia-related business includes stakes in the joint ventures in Russia, the ownership interest in Wintershall AG in Libya (Wintershall Dea share: 51%), in Wintershall Noordzee BV in the Netherlands (Wintershall Dea share: 50%) as well as the share in Nord Stream AG (Wintershall Dea share: 15.5%).

Article continued via next post…

Even prior to the Wintershall Dea “deal of the century” HBR was clearly very much undervalued, and now as others have highlighted, HBR is an undoubtedly a “multibagger in the waiting”.

Interestingly, HBR Shorts have rapidly/significantly reduced their positions here from a high of around +4% to now a mere circa 0.5% in just the past ~3 months in a clear sign of great times ahead.

Https://amp.fxempire.com/en/crude-inventories-fall-by-6-9-million-barrels/1398919

Crude Inventories Fall By 6.9 Million Barrels

On December 28, EIA released its Weekly Petroleum Status report. The report indicated that crude inventories declined by 6.9 million barrels from the previous week, compared to analyst consensus of -2.7 million barrels.

https://worldoil.com/news/2023/12/28/biden-administration-purchases-3-mmbbl-of-u-s-produced-oil-for-strategic-petroleum-reserve/

Biden administration purchases 3 MMbbl of U.S.-produced oil for Strategic Petroleum Reserve

(WO) — On Dec. 26, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3 MMbbl of U.S.-produced crude oil for the Strategic Petroleum Reserve (SPR).

BNN Breaking, December 27, 2023:

Harbour Energy, the British oil company, has unveiled its plans to acquire Germany’s only oil and gas company, Wintershall Dea, in a transaction worth $11.2 billion. An intriguing twist in the tale of Germany’s energy sector, this deal implies a change of hands from German to British ownership, thereby underlining the cross-border dynamics of the energy industry.

A Strategic Acquisition

Wintershall Dea’s upstream assets in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya, and Algeria, along with its CO2 Capture and Storage (CCS) licenses in Europe, are part of the acquisition. However, the deal explicitly excludes Wintershall’s Russian assets. This strategic acquisition is set to transform Harbour Energy into one of the world’s largest and most geographically diverse independent oil and gas companies. It will add material gas-weighted portfolios in Norway and Argentina and complementary growth projects in Mexico to Harbour’s portfolio.

BASF’s Role in the Deal

Upon completion of the transaction, BASF, which currently owns a massive 72.7% of Wintershall Dea, will acquire a significant 46.5% stake in Harbour Energy. A crucial element of the deal is the provision for BASF to nominate two non-executive directors to Harbour’s board. This adds a layer of corporate governance intrigue as BASF, post-acquisition, will have substantial stake and board influence in Harbour Energy.

Implications for the Energy Sector

This acquisition is expected to lead to further restructuring and closure of units in Kassel and Hamburg as the headquarters and related staff are not part of the transaction. Also, it will have an impact on PGNiG Upstream Norway (PUN), part of the ORLEN Group, which has signed an agreement with Wintershall Dea Norge for the swap of interests in upstream assets in Norway. The deal will boost PUN’s recoverable reserves of natural gas by more than 0.4 billion cubic meters.

The deal underscores the fluidity and strategic maneuvering that characterize the global energy sector. As Harbour Energy emerges as a more potent player on the global stage, the ripple effects of this deal are likely to be felt across the industry. The transaction is a profound reminder of the constant state of evolution in the energy sector, driven by strategic acquisitions and stake reshuffles.

https://bnnbreaking.com/world/germany/harbour-energy-to-acquire-wintershall-dea-in-11-2-billion-deal/

Viewpoint: UK offshore faces crucial year

The coming year looks set to be a crunch one for the UK offshore industry, with ongoing discontent about the country's windfall tax on oil and gas profits.

And while the ruling Conservative government has moved to bolster investment in the UK' offshore and to partially offset the effect of its Energy Profits Levy windfall tax, a general election is due that threatens long-lasting consequences for the sector's future.

The government in November committed to holding yearly licensing rounds in an effort, it said, to support economic growth and protect the UK from volatility in international markets. But the opposition Labour Party has said that, if it forms the next government, it will end new North Sea oil and gas exploration. Meanwhile, oil and gas discoveries not yet approved for development are also at risk.

One of these is the controversial 170mn bl of oil equivalent (boe) Cambo oil field, which analysts at investment bank Stifel estimates its operator Ithaca Energy has until summer 2024 to get a final investment decision through. Ithaca "probably has the balance sheet to go it alone" at Cambo, Stifel said, but the independent's management insists it needs a partner to join the project before sanctioning it. An imminent election, which polls show carries a high probability of a change in government, means Ithaca will find it difficult to sign up a partner.

"It's unlikely to happen, at least ahead of some kind of political clarity because you have no idea… whether the development will be approved and, if so, what the tax rate is going to be on the asset," Stifel told Argus.

Ithaca, which already warned that its production in 2024 will be lower than that for 2023 because of the effect of the Energy Profits Levy on its projects, could decide to find an alternative home for the $1.4bn in capital it has allocated to Cambo, Stifel said. The bank suggests an acquisition in the US Gulf of Mexico, Brazil, Canada or west Africa might be an option for the company, which is wholly focused on the UK offshore.

Harbour Energy, the UK's biggest producer, bought Wintershall Dea's entire upstream portfolio in the last days of 2023 in a mammoth $11.2bn deal that takes its production up to around 500,000 boe from 190,000 boe.

https://www.argusmedia.com/en/news/2522606-viewpoint-uk-offshore-faces-crucial-year?amp=1

Had a small holding here, checked out today and moved the relating investment to HBR which is about to join the big boys as an O&G major post what some call “deal of the century” by Linda Cook and Team. I still like SQZ but prefer HBR as a safer longer term buy and hold eventually moving into the FTSE 100, plan is to consolidate my O&G holdings for which I see much better times ahead, I certainly wish all the best for SQZ shareholders.

UK & European Gas Prices Rising Sharply Here Today with Brent steady at circa USD $81+

https://tradingeconomics.com/commodities

“Harbour Energy Plc : Stifel raises target price to 570p from 480p”

This is MONEY:

“Back in London, Harbour Energy marched ahead a day after it inked a near-£9billion deal to buy the non-Russian assets of German firm Wintershall Dea.

With Britain's biggest North Sea oil and gas producer on course to become a major global player, investment bank Stifel upgraded its target price to 570p from 480p.”

https://www.thisismoney.co.uk/money/markets/article-12894535/amp/MARKET-REPORT-JD-Sports-spooked-Nike-issues-sales-alert.html