Member Info for Krono5

@Stupmy 4.5m volume yesterday and 3m today and Friday while relatively average, is very low in context of a peace deal being announced and oil prices dropping precipitously. It's dropped 10% in the last week from 270p with no uptick in selling, just buyers stepping away it looks like.

240p is bottom. It's extremely oversold on very low volumes. You've got to remember there was institutional investors buying all they could off BASF for 255p a couple of weeks ago. I reckon this bounces off 240p and goes up steadily now until the first half results in August.

It's also important to note that the first few months until mid march were terrible, but it's the back 3 months of April-June that have pulled those averages up massively as oil spiked above $120 for a lot of time and we're still looking at Brent above $80 for the back half of the year once all the shorts in the futures market unwind.

Significantly more than that. If you consider that the pre-war numbers would be something like $600m projected FCF /365*161 = $264m projected FCF up until the end of June. Gas was actually down around $10/mcsf so we were losing money there to the tune of $53m and Oil was up at $70 average so we probably gained $75m there, bring the total to $286m FCF for Jan-June.

Now if we look at the the actual numbers we get an Average spot oil price of $94 a barrel and a gas price of $15.93/mcsf. so (5.8*$170m)+(4.93*$150m)/365*161+$264m =$1.025 Billion.

So we've actually made an FCF of $761m more than we would of, already in the first half of the year, plus the forwards curves are significantly elevated for the back half no matter what happens now.

The last date I have for actual spot prices in June 8th when it was $98. I doubt they drop like futures but who knows.

243p on 26th Feb before the invasion. 4 months of massively inflated oil prices and further years of price elevation baked in and we're back to 243p, with SoH reopening still likely to hit significant hurdles (such as Iran/USA claiming entirely different deals). Amazing.

I;d expect buybacks to be done off-market at a reduced price anyway, like the recent sales for 255p. It would be good if they did the full 15% they have permission to buyback now from BSAF, just before the half year update. Would only be about $600m at todays share price, much less than they can theoretically afford based only on H1 oil prices.

@Sekforde I still think relying on the futures markets with all the manipulation that is occurring is a massive miscalculation. The price history of Brent since March compared to what the futures market thought it would be bears this out. S&P Global think it will be $110 for the rest of the year and I'm much more inclined to trust their methodology than a market trying to keep oil prices down so as not to tank the global stock markets and cause a recession.

https://www.spglobal.com/ratings/en/regulatory/article/oil-price-assumptions-raised-as-hormuz-disruption-deepens-and-inventory-buffers-erode-near-term-henry-hub-price-assumptions-lowered-s101689190

Yes, I've re-entered over the past couple of days and have deployed all my available capital at an average of 265p. I'm happy with that and look forward to further updates in August and September dividend.

Https://www.rigzone.com/news/inventories_acting_as_shock_absorber_of_global_oil_system-01-may-2026-183585-article/

The latest numbers suggest we're around 7.81 billion bbl global inventory as of yesterday, drawing 7 mbd and hit operational stress zone of 7.68 billion bbl in late June. This is when demand destruction due to pricing needs to occur. At this point the next area of interest is Operational Floor of 6.88 Billion bbl that would be hit around September.

However it's worth noting this timeline is flexible depending on how high the prices go between these 2 points, creating more demand destruction. Under JPM's modelling if we approach the floor in August/September that's when prices could go parabolic to $150-200+ bbl. Finally there's already been a fair bit of demand destruction without economic effects from people switching to Ev's, catching Trains instead of flying etc. This is about 9% in China allegedly.

Ultimately it doesn't matter what is happening in reality, only what the "feelings" of the market are. Look at Tesla, this is a company that sales peaked in 2022, are massively overvalued on any valuation metric, are getting curb-stomped by the likes of BYD and losing market share. The only way is down and yet they're still valued at $1.5 trillion. All that matters is the narrative of fictional robots and self-driving. All the people are shorting them over the years have lost money despite being correct on the fundamentals, yet all the traders who have gone long have made money, so to be a good trader is not the same as going with reality.

Looking specifically at Oil, there's 2 things at play here, firstly the future's market is dead. Trump has successfully killed any upward pressure from repeated tweets and BS that trigger algorithms along with non-oil trader speculation - you know, retail morons that have been gambling on CFD's. All the serious players have stepped away from the future's market because of losing money to this, so volumes are incredibly low and made up of speculators and Trump insiders. This has had a knock on effect on spot prices most likely as when there is enough oil to go around the price is arbitrary so spot follows futures and vice versa.

The second factor at play is all the mitigation done by the world. It's like covid as an example. At the start you'd expect tens if not hundreds of millions dead, health systems breaking down on thew face of it, but with adaptation things were done like lockdowns, new treatments discovered etc etc

What has happened is SPR releases, refineries bringing forward maintenance, doing run cuts and even some use restrictions in Asia. On top of this the biggest factor is China cutting imports and relying on their vast reserves which is quite unexpected. This mitigation works until it doesn't which is soon approaching. If I'm right sometime by mid-July if SoH stays closed then physical barrels supply will become less than demand, even with all the adaptations and prices increase exponentially.

We'll soon find out how severe this crisis is. According to JPM analysts who I presume have way more information than me, the end of this month is when SHTF in terms of Global oil inventories hitting Operational stress levels, at which point the scramble for physical barrels and price spikes really start.

Some good points @Sekforde although I can't say I agree with you about forward curves. While they are lower, harbour have done all the hedging they will for 2026 and this is a problem with the futures market expecting a resolution back in April that still had not materialised and they don't reflect reality. Once December rolls around I have no doubt the spot price will be well above $86 no matter what the futures market says and at the end of the day it's the spot price that determines Harbours profits.

Where abouts in the guidance do they include the $900m? I was under the impression they can't legally include it until the deal is finalized, which is how the baseline only moved to $1.4 billion as expected for $80/$13, whereas it would of moved substantially more if it had been updated to include Waldorf. You are absolutely right about the Waldorf costs however and I should deduct $170m for that.

@grinleyboy You're right as they were right up against the character count. It wasn't much, I beleive the first one was "Enterprise Value and Stock Price." and the second one was a little blurb about structural headwinds to the stock price such as the overhang that made it in. Nothing too important.

Part 2:

Harbour energy currently has an E.V. (Enterprise Value) of $12 billion, based Net Debt of $6.3 billion and a stock valuation of $5.70 billion (1.58B shares \times 269p). Whether the market is pricing it accurately is another question but I want to look at how buybacks and debt reduction impact this.

Applying a 45% shareholder payout / 55% debt reduction split to $3.58 billion yields the following balance sheet breakdown:

Per CEO Linda Cook's framework structure, this capital is distributed in two parts:

The Base Dividend ($300 Million): This covers their committed baseline dividend of 16.10 cents per share for the year.

The Variable Excess Pool ($1.311 Billion): Because a $1.3 billion cash dividend on top of the base would yield a massive, unsustainable 30%+ single-year dividend yield, the board would deploy the vast majority of this excess pool toward aggressive share buybacks. Wiping out hundreds of millions of shares permanently inflates their earnings per share (EPS) and future dividend-per-share metrics.

The remaining 55% goes directly toward paying down the bank facilities and high-yield notes they drew down to fund their recent acquisitions.

Starting 2026 Peak Net Debt: ~$6.30 billion (following the closing of the LLOG transaction)

Direct Cash Allocation to Debt: -$1.97 billion

Ending 2026 Net Debt Position: ~$4.33 billion

Total Cash Dividend per Share~12.0p (16.10c)

Implied Dividend Yield ~4.5%

Cash Allocated to Buybacks$1.311 Billion (~£978M)

Shares Repurchased & Retired ~364 Million shares

% of Entire Company Bought Back~23.0% at 269p/share.

Now they can only buyback 15% of the company this year as things stand, so they may pay a higher dividend but for arguments sake this is what it does to valuations.

Ownership Increase=1/(1-0.23)-1=1/0.77-1≈29.87%

If the stock market continues to value Harbour at the exact same valuation multiples it does today, the share price must mechanically rise by roughly 30% to account for the higher cash flow per share. At a current baseline of 269p, a 30% structural lift pushes the theoretical value to ~350p.

New Equity Value=$12B (EV)-$4.33B (New Net Debt)=$7.67 Billion.

The total value of the equity pool expands by 34.5%. We take that new, larger equity pool ($7.67 billion) and divide it among the newly compressed number of outstanding shares (1.216 billion shares instead of 1.58 billion):

Target Share Price =$7.67,000,000,000 Equity Value /1,216,000,000 Shares Out =$6.31 per share

Converting that back to British Pence at our 1.34 exchange rate:

Target Share Price =$6.31/1.34×100=471p

In the actual stock market, "all else being equal" faces a couple of near-term hurdles that explain why the stock won’t instantly leap to 471p. BASF has been steadily trimming its equity position down below the 25% threshold (triggering the departure of one of their board nominees this week). This consistent corporate selling creates a temporary supply "overhang" th

So I recently took another look at Harbour's position to see what the remainder of the year could look like before deciding when to buy/sell and the outlook seems better than ever. So I was wondering if anyone can find flaws in my analysis and if I'm being unrealistic.

We know the FCF baseline from the most recent update is $1.41b based on $80 Brent and $13 TTF Gas with a sensitivity of $170m per $5 brent and $150m per $1 TTF gas. However the average Brent Crude price to June 1st this year has been $93 (data taken from https://www.eia.gov/dnav/pet/hist/rbrted.htm), while the TTF gas price has averaged €43.18/MWh.

Taking a middle of the road approach of $105 Brent (it's averaged $111 since march) and €50/MWh TTF Gas and converting to $/mcsf for the remainder of the year we arrive at full year values of $101/bbl and $15.93/mcsf respectively. With no resolution to the SoH crisis crude would likely spike massively sometime in the next couple of months, although that would boost share price but be bad for oil prices long term with demand destruction and economic collapse, while a swift resolution would likely drop crude to $90/bbl and maintain that for a long time. In terms of gas I can only see it being much higher when Europe begins refilling storage for winter and when winter rolls around, but I'm using €50/MWh as a very conservative number.

Estimated Total FCF:

Adding these impacts to the baseline:

Baseline: $1.400 billion

Oil Upside: $0.680 billion

Gas Upside: $0.4395 billion

Total Projected FCF: $2.5195 billion

This is already very good but it does not take into account many other company specific factors that can boost FCF substantially:

The Waldorf deal provides $350m of immediate cash that was set aside for decommissioning, along with $900m in UK tax deductions and 20,000 boepd additional production (which does not get included in guidance until the deal is complete). AI says $400m of this could likely be offset in H2 this year if the deal closes this month, with the remainder in 2027.

The Indonesia sale is worth $215m that while not technically counting as FCF from an accounting perspective, it can be used for debt repayment/buybacks/dividends making it FCF from a practical pov.

Dvalin North is coming online earlier than expected (Q3) along with the Fayoum-Messinian field in Egypt coming online before years end which will add a little to production, while overall production is above projections that are not modeled in the $1.4b figure, so could add ~$100m to FCF.

Given all this we arrive at the following:

Harbour Baseline 2026 FCF: $1,4b

Crude Oil Spot Upside: +$680m

European Gas Spot Upside: +$439.5m

Waldorf Inherited Cash: +$350m

Indonesia Divestment Inflow: +$215m

Waldorf H2 UK Tax Shield Impact: +$400m

Production Above Guidance: +$100m

Projected 2026 Cash Balance: $3,584,500,000

These are very impressive numbers when everything is factored in and in part 2 I will look at how this impacts Enterp

With the amount of FCF able to be dedicated to buybacks this year, 150-160 would be a dream if they can find enough sellers. Just running the numbers properly this morning and they came out at a potential $1.3bn in buybacks this year with what I would consider pretty middle of the road numbers. That's enough to fully buyout BASF at current prices, let alone 160. I might make a new thread on it later if I have time.

you people are completely delusional, iran has already won this war. they won it the second they decided to use their greatest weapon and close the soh. there's a reason no us administration has attacked iran since the '79 revolution despite wanting to and now they're forced into a decison: capitulate to iran's demands and make huge concessions in negotiations, giving iran everything they want like sanctions relief. or they can launch a full scale invasion and suffer casualties worse than vietnam at a mult-trillion dollar cost.

no one was surprised except those that know **** all about iran, including the crayon-munchers in the white house which is how they find themselves in a double-bind.

The most realistic numbers I have is £820m distributed between buybacks and dividend, for the full year so 50% in Sept. This is based on the lower 45% of FCF. There will also be significant debt reduction in the $1.5bn range.

It all gets quite complicated as buybacks reduce outstanding shares, but if we were to guess 50% buybacks/50% dividend we'd be looking at 15p/15p dividend for each half year and an 11% reduction in outstanding shares if my maths is correct. I'm not sure what the debt would be reduced to in this scenario, maybe $5bn or a bit above.

@dan222 oil trades in a global market and the main consequence of losing 10-15% global oil is a price shock and demand destruction from the poorest countries. this doesn't benefit the us in the slightest as they're paying the same price as everyone else and having the global economy **** the bed is bad for everyone and ****stan/sri lanka aren't exactly direct competitors to the us economy. in fact it is worse for the us given the massive ai spending occurring using debt which only makes sense in a booming economy.