Member Info for londoner7

The section on operation risk closes with:

"Operational risks have been subcontracted to the Off-Taker, Harlequin. However, Georgina has executed a drilling contract for the Hussar drilling program on 20th May 2026 with Ensign Drilling Australia. Request for Tenders have been sent to all major suppliers for the supply of consumables for the Hussar drilling program ahead of expected commencement."

"However, Georgina has executed a drilling contract ..."

I'd guess, doubt in Harlequin funding will remain until a significant portion of the drilling costs is committed expenditure.

In Jan GEX provided a timetable for drilling Hussar with the first activity, "Order long lead items such as wellhead/casing" scheduled for Q1. We are now into the 2nd half of Q2, and the latest update is, "Long lead items to be ordered".

The accounts provide our first insight into anticipated returns to GEX from the Harlequin agreement:

"Impairment of investment in subsidiary

The Company’s principal judgement in the year ended 31 January 2026 relates to its impairment review of its investment of £12.7m in its subsidiary company, WMOG. The directors prepared a value in use impairment assessment which supports the value of the investment. In preparing this assessment the directors made a number of estimates and judgements in relation to the helium and hydrocarbon prices, reserves and costs which are considered subjective as the Company is still in the exploration and evaluation stage of the Hussar project. The value in use was based on estimated cash flows from the sale of helium and hydrocarbons from the Hussar project to Harlequin following an execution of a supply and off-take agreement signed between the two parties post year end. Should the cash flows from the Hussar project not realise then the framework agreement with Harlequin would cease and it would lead to an impairment in the investment."

A few facts I posted in Feb:

"The geology:

Magee-1 and Mt Kitty-1 had gas shows, but neither was commercial – not that you would know it from comment here.

There several reports on these drills. Here's one.

“Despite being technically successful, both wells suffered from poor reservoir quality. Magee 1 produced gas from a very thin (4.5 m) fine-grained sandstone (inferred as Heavitree Formation by WakelinKing, 1994) overlying crystalline basement, while Mount Kitty 1 lacked any subsalt sandstone, producing gas from fractured and weathered crystalline basement. Drilling of a third subsalt exploration well, Dukas 1, was suspended at the time of writing.” (PW Haines and HJ Allen – GSWA 2020)

Despite decades of drilling in the Amadeus Basin no commercial Helium has been extracted."

Central Petroleum had made a prospectus a condition of the GEX acquisition of their Helium assets. This was always a sticking point for GEX given the low chance of success assigned to Hussar in their 2024 prospectus. No doubt GEX wanted this condition removed and Central didn't concede. Hence Central's withdrawal.

Chance of Geologic Discovery (Pg) of Helium at Hussar is 8%. (Pg 251-252 of GEX 2024 prospectus).

8%.

Further, the prospectus goes on to say, "there is no certainty that a discovered resource will be commercially viable to develop, once discovered".

A year ago a contractor hired by GEX questioned the economic viability of re-entering Hussar, so it was no surprise when GEX stalled the Hussar project in pursuit of the CTPT transaction.

Having exhausted the funds from the July 2024 RTO, and been rejected by CTP, GEX introduce the 'Harlequin Agreement'.

"Under the terms of the Harlequin Agreement, for a period of 18 months, Georgina grants Harlequin an exclusive option to purchase 100% of production at its projects, subject to execution of the necessary project off-take agreement."

"Harlequin agrees to fund all relevant exploration and development costs reasonably required at the projects and shall, at its sole cost and risk, be responsible for the design, financing, construction, ownership and operation of gas processing facilities, helium and hydrogen separation units, cryogenic purification systems and all related downstream infrastructure."

This looks to me like it's Harlequin's project, should they go ahead. GEX are bystanders, and it isn't clear to me what GEX get out of it. At the end of the 18 months Harlequin will still own all the kit.

Perhaps the full year report, due by Friday, will provide some clarity on the "necessary project off-take agreement".

At the time of the sale last year Helical said, "The sale of 100 New Bridge Street, EC4 enables us to reward Shareholders for their patience in recent years and we can confirm that, in addition to our regular dividends out of the income earnings of the business, we anticipate returning capital to shareholders following receipt of the net proceeds of the sale when it completes in April 2026. We expect to recommend a minimum return to Shareholders of 50% of the realised net profits from the joint venture, and will give serious consideration to paying up to 100% of the realised net profits from the joint venture, subject to the requirements of the business.

Now they say, "Completing the sale to State Street will unlock significant returns to our investors, as we continue to deliver highly sought after real estate into supply constrained sub markets."

No mention of the capital return to shareholders in last weeks statement. Full year results out tomorrow. Let's see what they decide.

Good to see the EWT going ahead. It's been a long time coming and is the crucial milestone for the speculative interest here. Too rich for me but I wish investors a good outcome.

I think I last posted July 2025, with "The gas flow rate was c. 150mscfd, which is not particularly high. That's why the next step is for Mosman to conduct an extended well test (EWT) on the asset, before doing anything else. IMO if the helium disappoints the asset is still an oil play. But that needs capex on a drill - again the seller will have done their own numbers. The oil may be lucrative, but not likely a game changer."

There's no reason to expect any change in the Helium concentration - that's a given. The original flow rate was c. 150mscfd, which isn't commercial. Reasons have been given for the original low rate, including damage to well structure. This test should prove it once and for all.

I don't know what flow rate QHE will deem to be commercial, but I'd guess something substantially over 150mscfd.

For me, these are the most damming comments on Enquest's activities:

This trend is acknowledged by EnQuest Heather itself in an internal email dated 10 December 2023: “The deferral is not subject to the approval of the NSTA and we cannot be forced to complete this activity but have an obligation on this which we will honour with only the timing being an issue however we have been actively deferring this activity for a number of years and the NSTA are keen to hold us to a fixed schedule to complete the subsea well P&A.”

Despite acknowledging that the NSTA was “keen to hold us to a fixed schedule to complete the subsea well P&A”, EnQuest Heather believed that it “cannot be forced to complete [P&A] activity”, that the reputational consequences could be “manage[d]”, and that any penalty would amount to little more than a “small fine.”

EnQuest Heather risked the potential of “a small fine due to delay” but intended to “constructively engage with NSTA to seek alignment on the the [sic.] deferral of timing from 2026 to 2029.”

In recent years Enquest has rightly boasted its achievements in decom activities, most recently Thistle (6% WI) and Heather (37.5% WI). I think it's significant that for the decom activities which have been deferred Enquest holds a c.60% WI. Guidance on pricing in Mar 2023 was £348m, which equates to a gross cost to Enquest of c$280m, with the contribution from the UK exchequer of c.$112m in tax relief or, I assume, a cash rebate if the Enquest Heather business unit ceases its activities (one for the tax experts).

Rather than spend $168m (net cost) Enquest chose to risk sanctions. With a 5 year window Enquest has its wish of deferment to 2029, at a cost (fee) of £16.5m ($22m). The latest update indicated Kraken infill drill in 2028-29. Given the commentary and timescales I'd guess Enquest will be seeking a rig for the Kraken infill drilling and the sanctioned P&A activities. Financially, I guess the cost of the fee will be negated to some degree by combining these activities. Any additional inflationary cost of deferment from Mar 2023 is another factor. Harder to measure, AB will be hurt by the reputational damage to Enquest resulting from this sanction notice.

In their recent update Enquest referred to "Proactive GKA well P&A, in parallel with production operations". I'd guess this activity is being encouraged by Shell, who signed over decom management of the hub to Enquest in 2024. On Harbour's acquisition of Waldorf's North Sea assets, Harbour commented, " In addition, it facilitates a welcome solution to funding and decommissioning challenges for multiple parties in the UK North Sea." (No doubt Harbour had the GKA in mind, with the inclusion in the acquisition of 50% Scolty-Crathes (a tie back to GKA).

Enquest has a c.50% interest in the decom obligation on GKA, including tie backs. Managing Shell's obligations should negate some of the costs.

$1bn is the net value. This is copied from slide 20 of the presentation.

Tax assets more than doubled in 2025:

-$2.2 billion of corporation tax losses (end-2024:

$1.1 billion)

-$1.9 billion of supplementary corporation tax

losses (end-2024: $1.0 billion)

-$0.5 billion of Energy Profits Levy losses (end

2024: $156 million)

• Notional tax loss value of over $1 billion

"Under the terms of the Harlequin Agreement, for a period of 18 months, Georgina grants Harlequin an exclusive option to purchase 100% of production at its projects, subject to execution of the necessary project off-take agreement."

"Harlequin agrees to fund all relevant exploration and development costs reasonably required at the projects and shall, at its sole cost and risk, be responsible for the design, financing, construction, ownership and operation of gas processing facilities, helium and hydrogen separation units, cryogenic purification systems and all related downstream infrastructure."

This looks to me like it's Harlequin's project, should they go ahead. GEX are bystanders, and it isn't clear to me what they get out of it. At the end of the 18 months Harlequin will still own all the kit.

The original business case was that GEX would take the risk and prove up the commercial viability of Hussar, before an off taker took over and paid for the unrisked development of the project, with GEX taking a 'royalty' on the raw volumes at the well head. As I recall, a $ figure was quoted in an early draft agreement.

To date, GEX has spent peanuts on these projects and failed to prove them up commercially. With Harlequin now taking the financial risk what is the value of GEX's contribution?

If as some believe Harlequin is a fairy godmother, then I expect Cinderella will lose more than a shoe. She may end up naked and losing a leg to CTP.

I guess I have a different interpretation of how this fairy tale plays out to others here.

The CTP transaction is an interesting sub-plot. The 'Tier 1' funding covers the directors salaries until the next snake oil sale.

Https://www.gov.uk/government/publications/cambo-field-development

NAV_MIKE, I'm not entirely clear on the point of your question, but this might help.

O&G companies sell their production via whatever mechanism they have in place regardless of any hedges. It might go through pipes and priced on a daily basis, it might be offloaded to a tanker at at agreed price with the buyer, it might be taken by a larger player, a BP or shell, under some marketing agreement, and there may be other mechanisms I'm unaware of.

Hedges are financial instruments and are settled on an agreed date, if not closed earlier where there's an option. A few years back Harbour were deeply underwater on hedges and were required to provide liquidity to support their position. There are risks attached to holding these instruments if they go against you, but ultimately if you are a producer that can cover the delivery, you have a back stop.

My post was cut short so I'll repeat my closing line.

'That all said. I like the new dividend guidance. I see 2026 H1 EBITDA c.35% ahead of the 2025 number, and an even higher % gain on FCF.'

And while I'm here make a few other comments.

I view this hedging as a temporary blip, and to put it in perspective, adjusting Q2 oil hedging from 62K to 47K in my calculation increases EBITDA by c.$50m pre-tax, and FCF by c.$30m. That's my assessment of the missed opportunity in Q2.

I still see Ithaca as the company best placed to take advantage of the current UK fiscal regime, assuming it plays out as guided by government, given the organic development opportunities Ithaca has in the North Sea. Though, in the near term and the current crisis, there are other smaller North Sea players with higher risk reward parameters. In a few weeks we'll hear their hedging position, but given vulnerability to just a couple of assets, I wouldn't expect them to come close to hedging 80% of their Q2 oil volumes even if they wanted to.

I was pleased with yesterday's results and outlook, but I believe in the short to medium term the hedging impact is meaningful. This doesn't mean than I think Ithaca is a poor investment, but much of the near and medium potential from current pricing froth has been thrown away.

I see no other company in the sector release the level of detail on hedging that Ithaca releases, particularly the breakdown by quarter. If I look at Harbour, I see three expressions of their hedging position - by % exposure, the Dec 31st reported hedging position, and the hedging position in the latest presentation which isn't dated. I accept the Dec 31st reporting position, but the other two are not compatible with it, or each other. However, Harbour has provided clear metrics on the relationship between FCF and oil and gas pricing. They've effectively removed the calculations necessary to get to the same place with Ithaca.

The deeper I dig into Ithaca's hedging the more I see, but I'll keep it very simple and focus on the total hedging numbers and Q2 in particular.

Nov 18th 2025, total hedging 32 mmboe.

Jan 31st 2026, total hedging 43.8 mmboe.

Mar 17th 2026, total hedging 63.8 mmboe.

Note the recent jump, and I see little indication that much of this occurred after Feb 28th.

c.7 mmbo relates to oil through 2027 on ZCC at between $50-$90, with similar gas ZCC contracts at between 70p-100p/therm.

Let's not be greedy, or wish a economic crisis on the world, a $90 oil price through 2027 would be attractive, but after last nights developments I think 100p is too much of a constraint. I have a view on why these gas contracts might have been taken on prior to Feb 28th, but I'll ignore that for now.

To emphasise the step up in the near term oil hedges I'll use the simple metric of volumes of swaps and collars, ignoring ZCC, for three quarters,

25 Q4 26Q1 26Q2

Nov 18th 25 (Kbopd) 47 42 41

Mar 17th 26 (Kboepd) 68 62

It is a 4 month interval rather than 3 months (a quarter), but essentially, a continuation of policy would have suggested an announcement yesterday that c. 47K of oil hedged for Q1 26 and 42K of oil hedged for Q2 26.

By my estimate, 85-90% of Q2 oil has been hedged c.$69, and 45-50% of Q2 gas has been hedged at c.98p/therm ($76/boe). Again, I can see why they might have taken this action, ahead of 28th Feb, given the market concerns of a dip to the 50s for Brent during the first half of 2026.

This is why I use the term 'fluffed', rather than anything more serious. I saw a reference to March 3rd (from memory). There was nothing in the market on the level of Q2 hedging until yesterday's update.

Please feel free to pull apart my numbers.

That all said. I like the new dividend guidance. I see 2026 H1 EBITDA c.35% ahead of the 2025 number, and an ev

Looks to me they have fluffed their hedging, particularly 2026 Q2.

Jeez Dumbly. that is too much information to handle.

More North Sea production will not take a penny off the price of oil and gas. A much simpler message to process!

Romaron, amusing as always. I enjoyed your Scottish gag.

I have no doubt that behind closed doors the NS executives are putting forward a strong case for ending the EPL. But I don't think Wednesday was that sort of meeting. IMO it was political theater. Most of the attendees were 2nd in-command. I know Harbour sent their CFO, rather than Linda. Listen to the CFOs comments on the meeting in Thursday's webcast and you'll understand what I mean by cooing. He believes the government is listening, blah, blah, blah. What they say to camera is one thing, they are in discussions after all, but I don't think they have any serious expectation of an end to the EPL anytime soon. My investments in O&G are based on what companies have in their control, rather than the whims of government.

As for the Spurs result. I'm wintering in New Zealand and wasn't aware of the result. I last watched Spurs at St James Park from the Newcastle end - away tickets are hard to get these days - and we secured a very satisfying draw. My Newcastle friends didn't take it well, but they got their own back at Tottenham and were to keen to let me know.

But let's keep sports results in perspective. Last Saturday I left Wellington in transit to the UK for a friend's funeral. My visit was for just 48hrs, and as I was waiting in Brisbane, my flight to Dubai was cancelled. Given my schedule my only option was to get the next flight back to Wellington. I don't need to paint a picture to suggest how badly my week could have turned out if I'd landed in Dubai.

But the experience awakened me to how cocooned we can become so far away from the conflict zone. I'll spare you the detail but I've had a good week navigating the markets and the basis of my approach is that markets were looking for, indeed expecting, a quick resolution to the war and its impact. My advise to family members- those who take my advise - was to wait for the oil and gas to start flowing freely, and ignore the daily market noise.

I don't expect to catch the bottom, but keen not to catch a falling knife. Of course I'm referring to investments outside the O&G sector. If you're a pure O&G player, as some posters here appear to be, then the viewpoint is very different. My thoughts on O&G are are that if the oil and gas flows resume, in say the next week or two, Brent will quickly return to the $60s, but the gas price will be much stickier, given the need to refill European storage.

For a largely oil producer like Enquest, I think good hedging will be key, but easier said than done.

Forever Spurs!

The OBR’s fiscal outlook on Tuesday forecast that oil and gas prices would fall next year below the threshold for removing the tax before its planned end date in 2030.

I suspect that on the basis of this forecast Reeve's planned to announce on Tuesday that the EPL would end in 2027. The Middle East war and the impact on prices may have put paid to that outcome - the ESIM may not be triggered.

I see no change to the government's position - the EPL will stay in place until 2030 unless the ESIM is triggered. The discussion on Wednesday was political theater in an attempt to remove the North Sea debate from May's Hollyrood's elections, and to urge the energy companies to push forward projects to save British jobs. She's hoping for the benefit of investment to the UK economy without making any political investment to removing the EPL.

The North Sea executives will listen, making cooing sounds, but ultimately go back to their boardrooms and make the decisions right for their stakeholders. If or when the government moves on the EPL/ESIM, then North Sea investment will follow if the infrastructure still allows.

The operators will be alive to short term fast payback opportunities, even under the EPL, but the longer term projects will avoid reliance on infrastructure, particularly oil pipelines, rather using FSPOs, and the use of gas infrastructure will be centred on other supporting long duration fields feeding the pipe.

Perhaps, the perfect project is one that utilises the current EPL 38% tax allowance, and moves into production the day the EPL is dropped - assuming it ever is.

I first came across GEX in 2020 when they bought into Mosman's EPA 155 permit for AU$15K.

RNS 11th May 2020 - Farmout of Amadeus permit EPA 155

"Mosman owns one granted permit (EP 145) and one application (EPA 155) in the Amadeus Basin in the Northern Territory of Australia.

Mosman has entered in to a Farmout Agreement with an Australian company (the "Farminee") Westmarket Oil & Gas Pty Ltd a wholly owned subsidiary of unlisted public company Georgina Energy Plc, a helium focused business with various assets in Australia. The Farminee will be responsible for Native Title negotiations required for the permit to be granted."

Who thought then that it would be nearly six years before GEX announced a draft Aboriginal Land Rights Agreement (ALRA) on EPA 155. One day they might secure the permit and make the AU$300K payment to Mosman for transfer of the Oilco PTY Ltd title.

Given the time taken so far AH's closing line in the recent RNS is amusing, "Georgina looks forward to accelerating the Mt Winter prospect to re-entry."

I've said it for the last 5 years, but make you're own call.

A year ago a contractor hired by GEX questioned the economic viability of re-entering Hussar.

Today, "The Company is confident in undertaking the necessary preparatory planning and civil engineering works required to enable the drill testing of this exciting prospect in Q3, 2026."

"confident in undertaking the necessary preparatory planning and civil engineering works"

Does that statement give you confidence? If it does, load up. Stick a £ in your local slots machine while your at it.

Q3 will come and go! That's the certainty.

The geology:

Magee-1 and Mt Kitty-1 had gas shows, but neither was commercial – not that you would know it from comment here.

There several reports on these drills. Here's one.

“Despite being technically successful, both wells suffered from poor reservoir quality. Magee 1 produced gas from a very thin (4.5 m) fine-grained sandstone (inferred as Heavitree Formation by WakelinKing, 1994) overlying crystalline basement, while Mount Kitty 1 lacked any subsalt sandstone, producing gas from fractured and weathered crystalline basement. Drilling of a third subsalt exploration well, Dukas 1, was suspended at the time of writing.” (PW Haines and HJ Allen – GSWA 2020)

Despite decades of drilling in the Amadeus Basin no commercial Helium has been extracted.

I meant Rosebank.