Member Info for londoner7

When I read the research note I wondered if Oak Securities know what they are talking about: "After a DST, the gas was analysed and found to contain helium in concentrations of 2.7% which is well above the current commercial threshold."

Not referring to gas flow rates is a significant omission.

Good to see some of the posters here recognise the importance of the gas flow rate.

On the original test, way back when, the flow rate was 150mcf/day. Recent talk was that the original well was sub-optimal, so the hope was the DST would show a higher flow rate. When asked about gas flow rates in the recent interview the question was dodged. Draw your own conclusions.

From RNS 16th April 2026

"The next phase of operations will focus on the perforation and testing of the Lower Leadville Formation, the principal helium-bearing reservoir at Sagebrush, with perforation operations scheduled to start over the coming week as the programme moves into its key testing phase."

Was the Lower Leadville formation tested? Oak Securities say, no.

If not, why not?

That was the title of the FNS posted 24th Feb 26.

It went on to say, "The Agreement is being reviewed by Georgina and execution is anticipated subject to Traditional Landowners approval."

I posted:

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."

Four months on we get an RNS to say GEX has reviewed and accepted the ALRA. Yawn! But his line took the biscuit, "The Mt Winter permit EP155 has been under unsuccessful application for over 16 years when held by previous companies. Georgina will complete the settlement with Mosman Oil & Gas including the payment of A$300,000 (from current working capital) on granting by the Minister of the permit."

Mosman never applied because Mt Winter was a low priority. GEX initiated the Mt Winter farmout in 2020, and 6 years on they still haven't obtained the permit, which would prompt the AU$300K payment to Mosman (now QHE).

I guess they've stopped kicking dirt around on the Hussar airstrip, so nothing to report there, hence today's 'update'.

At the weekend the FT had an article, "

UK investors need to stop buying rubbish stocks"

It included this line:

"Junior mining companies that scrabble around in the ground for years and achieve nothing. Lifestyle companies such as these — run primarily to maintain the owner’s personal needs — while not technically frauds, certainly feel like them when investors realise they have been taken for complete mugs."

AH says, "We are pleased the deposit for Drill Rig Mobilisation for the supply of an Ensign Drill rig has been paid."

The wording implies that it was paid by someone else, presumably we are meant to think Harlequin. But if Harlequin paid, why not say so explicitly - given the doubts on funding. Harlequin gets only one mention in the RNS. "The drilling program and site infrastructure works required to develop Hussar into a producing asset will be funded solely by Harlequin and their partners."

GEX paid for a wind sock and some site preparations. When does the Harlequin funding kick in?

"The contracted Ensign Rig 970 is currently located in the North Perth Basin before being mobilised to site for Georgina once the access, site, airstrip and water well drilling works have been completed"

It's been 4 weeks since the last 'Pre-drill works' RNS, but what progress has been made since then? Nothing, judging by yesterday's RNS. But it does include a new target date. "The water bore drilling rig is expected to drill a maximum of two water bores on the Hussar site by the end of July 2026." Well that's something to look forward to. Got to be worth an another RNS.

What about activity on the long lead items schedules for 2016 Q1 - "Order long lead items such as wellhead/casing". As of yesterday, "Aztech have finalized detailed costings for the access roads, airstrip and drilling pad installation and will shortly complete costings for long lead items including casing, a well head, airstrip repair, water well drilling and reservoir evaluation services."

Ordered? No, but Aztech will shortly complete the costings.

Long lead items are labelled long lead for a reason. Yet, we are being told, "The drill testing timeline of Q3 2026 remains unchanged".

Put another penny in the slots machine.

TerryM1, I remember Brown's tax raid vey well. It's what politicians do - grab money where they see it.

Why do we tax people who work and contribute to society, to pay benefits to people who have chosen a lifestyle which doesn't include work?

Why don't we fully tax (@100%) land value gains which accrue due to community investment in local infrastructure? To be clear, investment in the land directly via improvement or property development shouldn't be taxed. The concept, know as Land Value Tax (LVT) is gaining ground.

I can only navigate the minefield presented.

TerryM1, I accept your point on the myriad of taxes applied to business. There's an excellent study on the taxes applied to a Starbucks coffee - google it if you don't know it.

I've never run my own business. Even when I worked as a contractor I chose to work through the company's books. It surprised some of my contractor colleagues, and annoyed them when my employment status qualified me for an unexpected company bonus and share options.

I'm looking at this from the perspective of someone who has accrued a portfolio through tax shelters over 4 decades. I wrote a long post about a SIPP spread sheet I produced in 2015 when Osbourne's 'pension freedoms' came in. I pulled the post as it was a bit longwinded but the message was plan and anticipate future taxation. In essence it dictated that I took early and significant SIPP income taxed at a basic rate - I retired at 50 - and maximised my ISA contributions.

Correction to the last line

(37,770 + £12,590) taxed at 15% = £7,554.

*Back to the game.

Couerdelion, your numbers are correct and highlight an error in my tax calculation.

Before I get back to that I want to clearly state the points I wanted to make in responding to Mommur's post of £14K tax in Mauritius on £100k of income.

I'd guess most people that have a substantial SIPP will also have a substantial ISA, so an ISA should also be considered a source of income.

I also wanted to highlight the not insignificant tax benefit of 40 years accumulation in a tax free shelter.

Also highlight the tax free component of the SIPP, which reduces a basic rate 20% charge to an effective 15% charge. (It was my oversimplification of this component which led to the error.)

I'll try again:

As before, £50,270 - £12,500 = £37,770. I'd draw this amount from my SIPP.

The tax on that at 20% is £7,554. However, I also get a tax free component. Grossing £37,770 gets me to £50,360, releasing an additional £12,590 tax free.

£100,000 - £12,500 - £37,770 - £12,590 = £37,140, which comes from my ISA.

This revised calculation increases the tax paid by £1,834, but reduces the cash taken from my ISA by £12,590, with a paid tax rate now of £7,554 (7.6%) against the previous £5,666 (5.7%).

Thanks for the feedback. Pls let me know if you see any error in my revision.

* To be clear on the effective 15% SIPP tax at the basic rate.

£37,770 taxed at 20% = £7,554

(337,770 + £12,590) taxed at 15% = £7,554.

Correction. I had my headings crossed in the table, but the LLOG $1,250m number holds.

$4,409m Intangible Assets

$2.994m Tangible Assets

$3,845m Goodwill

-------------

$11,248m

Sekforde, thanks for the reference. This is the transcript:

"A US Gulf tax 23% and the ability to depreciate the LLOG purchase price, means we expect to pay very little tax in the coming years."

I don't take " depreciate the LLOG purchase price", literally. Rather I believe he is referring to the allocation to Intangible Assets, which can be depreciated over the next 10-15 years. Something I'd missed in my earlier comment.

The other components of the $3.2bn purchase price will include an allocation to Tangible assets, with the balance assigned to Goodwill.

For comparison, lets look at the allocation of Wintershal Dea assets at a purchase price of $11.2bn.

$4,409m Tangible Assets

$2.994m Intangible Assets

$3,845m Goodwill

-------------

$11,248m

These numbers are described as provisional, so are likely to see some revision in the 2026 accounts, which will also show the level of Intangible Assets depreciated against tax in 2026. The Goodwill is a measure of the value Harbour attributed to the Wintershal acquisition. This is also valued yearly and any reduction can be written off against tax. But reducing Goodwill can be seen as an admission of failure, i.e. they overpaid.

Back to LLOG. In the absence of any directions from Harbour, and assigning the same weighting to Intangible Assets, leads to $1,250m. Worth approx. $100m/year off the pre-tax line.

I've run the numbers on 2027 using your revenue number, but upped OpEx to $17/boe for 2027, based on the guidance $19/boe for this year, and falling. I come out with c.$40m tax charge. That's 3% tax on revenues, which aligns with the comment, "expect to pay very little tax in the coming years".

I have a decent 2027 FCF number, but as a test I looked at 2026 - it's also decent. At $60 WTI oil in 2026 I still get a positive FCF number, which doesn't align with the comment, "FCF accreditive from 2027", which makes me think I missing something. But as I said previously, Harbour already includes LLOG and Waldorf in their FCF guidance.

* I'm an engineer, not an accountant, but decades of reading balance sheets gives me some knowledge. Perhaps there's an accountant out there that will comment further.

"UK taxed to oblivion"

That isn't my experience, but perhaps it's a generational thing - a whole different subject.

£100K gross p.a. is arbitrary, but let's work with this number. Here's how I'd utilise my assets, which consist of a state pension, SIPP & ISA. I've been building my ISA since the early days of PEPs and single company PEPs, as a result the value of my ISA marginally exceeds my SIPP..

I'd stay below the higher rate threshold. The state pension utilises my personal allowance.

£50,270 - £12,500 = £37,770. I'd draw this amount from my SIPP.

The balance is £100.000-£37,770-£12,500= £49,730. This amount would come from my ISA.

The SIPP amount of £37,770 is fully exposed to 20% basic tax, but I have a 25% tax free component which reduces the rate to 15%.

Tax is £37,770*15% = £5,666. An effective rate of <6% on 'income' of £100K gross.

Now I get the argument that the payments into the ISA were from taxed income, but I've enjoyed the benefit of a tax free wrapper on my gains for 40 years, and now feel in a very fortunate position. I don't begrudge paying £5,666 p.a. in tax on my lifestyle.

* No AI or financial advisors were required in the production of this schedule.

"the company has said that there will be "no or very little tax" to pay until the end of the decade on the LLOG earnings."

Please supply a reference.

Sekforde, the acquisition costs subject to tax relief are the costs of transacting the acquisition, typically the professional services relating to the transaction.

In a recent update Harbour identified $200m of acquisitions costs. I expect these relate to the Indonesian sale, Waldorf and LLOG, with the bulk on LLOG, but I wondered if you had seen a specific number for LLOG. The uncapitalised portion can be realised in 2026 - beyond 2026 the impact isn't significant.

Harbour's FCF projections already assume completion of the LLOG and Waldorf acquisitions. The slide included the following comments:

▪ Increasing high margin US GoA production driven by near term investment

▪ Significant financial synergies from 2027 driven by UK Waldorf acquisition

Sekforde, you say, "There is NO tax to pay on LLOG because the acquisition costs many be written off against tax (amazing). "

What do you have for the LLOG acquisition cost?

The deal closed in Feb 2026. Why wouldn't (uncapitalised) acquisition costs be utilised in the 2026 numbers?

I'm reminded of a recent comment by the Serica CEO on the advantage of utilising current EPL allowances (today) ahead of the removal of the EPL ('tomorrow').

Fotla fits the bill.

Habour's net contribution to Fotla is c.$170m - a significant part of the $700m UK CapEx they currently forecast.

Interesting to note CapEx forecasts for the UK are higher than Norway in 2027 and 2028. Perhaps Harbour still see life in the North Sea, or are they are simply reacting to the EPL switchback highlighted by the Serica CEO.

"It may be more relevant to compare Harbour to other oil companies to see how it's valued relative to them."

dan222, your comment prompted me to consider the impact of deferred cash tax payments on other NS companies, namely Ithaca and Serica.

Both provide reasonable guidance for 2026, but each focus on differing metrics to HBR. Neither offers the useful price sensitivity metric, but within dividend guidance there are clues on the impact of recent prices on their primary metric - Cash Flow From Operations, after tax (net CFFO). While reasonable estimates can be made on the 2026 numbers, the deferred cash tax component into 2027 is harder to estimate without the guidance on price sensitivity.

However, at a general level a simple rule applies. If the tax rate is 0% there's no deferred cash tax on increased profit. Norway operates on a 6 month tax cycle. The UK is more complex because of the differing tax treatment, a mix of CT/EPL and a level of predicted tax payments. But ultimately these differences should level out over a 2 year cycle.

My estimate of Harbour's current marginal tax rate is 70% (depreciation, capital allowances etc, have largely been captured within the nominal run rate, i.e. before the exceptional commodity pricing).

A starting point with Ithaca and Serica is that we know their current marginal tax rate is lower, but how much lower?

The Serica data is too noisy, given their production problems in 2025, which prompted tax refunds, and the uncertainty of this year's production guidance.

The Ithaca data is more consistent. A obvious metric is cash tax paid versus EBITDA.

For 2025:

HBR EBITDA $7.1bn Cash tax paid $3.5bn Tax rate 49%

ITH $2.1bn $263m 13%

Why the significant difference in the tax rate?

1. In Dec 2024 ITH had a net tax loss position of $2.1bn, expected to be fully usable over 5 years - c.$400m/year. The Japex acquisition in Mar 2025 added a further $420m. HBR doesn't have any UK losses, but will get $900m with closure of the Waldorf acquisition, worth c. $200m/year over the next 5 years.

2. ITH is spending more than HBR on CapEx. Comparing 2026 Capex forecasts against 2025 (realised) EBITDA, points to a 47% capital expenditure for ITH against 32% for HBR, resulting in higher tax allowances for ITH.

3. Is the low 13% rate a fluke of timing? I can examine this by using the 2026 cash tax forecast, which is $290m-$340, but at the mid point this only raises the rate to 16%.

Harbour's strategy has been to move CapEx away from the UK, high grading their portfolio (the timeline on Norwegian developments highlight this nicely), and frequently commenting on the optionality their portfolio offers outside the UK. But this does leave them exposed to the high UK tax rate.

Therefore, it was interesting to see Harbour taking a 45% interest in Ithaca's Fotla project. This has a gross CapEx of c.$375m, expected to be spent i

In my previous post I said, "This tax will largely be paid in 2027, impacting the nominal FCF that had been expected for 2027."

Having worked through some numbers I want to correct that. I now think the tax will be largely paid in 2026, but a significant amount, c.$470m will be due to 2027.

Here are my typed up notes. It's a non-accounting approximation and I might have missed some key elements so feel free to query the specifics.

March 26 guidance. 2026 FCF c.$600m, with sensitivity metric $320m / unit ($5 bbl oil and $1 mscf gas combined).

2026 FCF of $2bn requires (2,000-600)/320 = 4.4 units, say, $87 oil and $15.4 mscf gas.

EBITDA on additional 4.4 units = (482,500*80%*365) * 4.4 * $5 = $3.1bn.

$1,400m of addition FCF from $3.1bn of additional EBITDA, implies an additional cash tax payment in 2026 of $1,700m.

But what is the additional tax due?

The UK and Norway marginal tax rate is 78%, but other jurisdictions provide some of the of the (80%*482,500 boepd) = 386boepd production in question.

Using 2025 numbers, UK and Norway account for 324boepd leaving a balance of 62,000 boepd. The US with a tax rate of 23% is expected to account for 35,000 boepd in 2027, leaving c.27,000 boepd across other jurisdictions, mainly Germany with a tax rate of c.32%. This produces a weighted average tax rate of 70%.

Tax due @70% on $3.1bn = $2,170m.

$1,700m paid in 2026 leaves $470m additional tax due in 2027.

The March guidance had 2028 FCF at $1,000m based on $70 oil and $10 mscf gas. (Note, this guidance includes the US contribution and anticipated fiscal impact from Waldorf). Taking a straight line between 2026 and 2028 points to 2027 FCF of $800m, this guidance is before the impact from the Gulf war.

Therefore, my estimate of 2027 FCF is a base level of ($800m-$470m)= $330m, assuming $70 oil and $10 msct gas. I'm assuming same again sensitivity metrics of $170m/$5 oil and $150m/1mscf gas.

Today, July 2027 Brent forward is $76 and summer 27 UK gas 85p/therm ($11.7 mscf). Based on these future prices (in the absence of anything better) I have sensitivity gains on oil of c.$170m and gas of c.$300m.

My current 2027 FCF estimate is (330+170+300) = $800m.

Anyone still following will note this is the same as Harbour's March guidance for 2027 FCF. But my estimate includes $470m of additional cash tax paid.

Over the 2 year period FCF totals $2,800m. At 45% (min) that's a shareholder distribution of $1,260m. I'm expecting the interims to provide a good steer on the near term spilt between dividends and buybacks.

On debt, 55% of the 2 years of FCF knocks off $1,540m, well ahead of the $1,000m estimate for the 3 year period 2026-28.In the near term this will be directed to the $1,000m bridging loan. I suspect their debt repayments schedule, being ahead of March expectations, will prompt higher shareholder distributions and, or higher investment than envisaged in March - to be revealed March 27.

"Londoner 7. FCF is after tax."

Tax is paid on a 6-12 month lag after exceptional profits are generated.

To be clear c.$1bn of additional tax will be due on the exceptional cash flows HBR (and current pricing) is guiding to in 2026. This tax will largely be paid in 2027, impacting the nominal FCF that had been expected for 2027. On $70 oil I have confidence in the c.$1bn FCF forecast for 2028. The tax impact on 2027 FCF will lower the starting point for the 2027 guidance we'll see at the results next March - it's this starting point that is being overstated by you and others. IMO.

* Focus is on oil prices, but I think the price of UK & Euro gas will prove more robust through the rest of the year. This gives me confidence that 2026 FCF will come out at c.$2bn, even assuming a text book reopening of the Hormuz Strait from this week.

Assuming FCF in 2026 hits $2bn, that's $1.4bn above the original $600m guidance. In rough terms, at a marginal tax rate of 78% on the majority of HBR's cash flows, this means close to $1bn of additional tax, which will become due largely in 2027. HBR highlighted this tax lag in their recent presentation.

I'd guess some of the additional tax will fall within 2026 payments, but the bulk will fall in 2027.

Waldorf tax reliefs will be a positive in 2027, but I think predictions here for FCF in 2027 are very optimistic. This yo-yo effect is likely to lead to higher FCF in 2028 than 2027.

This assumes an effective resolution to the Hormuz Strait, which brings oil prices back towards $70 by the end of 2027. By no means a given, but I like to keep the downside in mind.

I'm sure there are a very wide variety of views on where the 2026 average oil and gas prices will land, alongside a wide variety of views on how the FCF should be spent - dividends, buybacks or debt reduction, and I'd add the possibility of further M&A.

No doubt there are different views on the allocation of FCF to shareholder distributions, but I'm holding on to a 45% split to shareholders. On the balance of 55% there are a variety of calls with debt reduction and M&A obvious candidates, but the are other calls which HBR have highlighted, namely $200m of addition WIP spend, one off transactions costs of $200m, and hybrid interest payments, which I estimate at c.$100m.

Based on last years FCF profile I expect net debt to bottom at the interims, so the question becomes what announcements will HBR make on capital deployments 6th Aug?

We'll see $150m towards the base interim dividend, but I'm hoping for more.

I'd be surprised if we don't see a buyback announced, but why wait until 6th August? I wonder if closure on one or both of the ongoing transactions (Waldorf and Indonesia) will be the trigger for an earlier announcement of buybacks. The level should be indicative of management's preference between dividends and buybacks.

That leaves debt repayment.

Looking at the debt profile it appears to me only the two debt facilities taken out to cover the LLOC acquisition are in line for near term repayment.

First priority will be the $1.0bn bridging loan.

Second priority will be an acceleration in the repayment of the 3-year term loan of $1.0bn to which I attribute an annual cost (capital and interest) of c$400m.

The next bond repayment is c.$1.1bn with an interest rate of 1.3% due in 2028. HBR will not be rushing to repay this bond, so I don't expect much beyond $1.4bn of debt repayments in 2026 ($2bn tops of they choose to exit the term loan),

An obvious black swan event to these considerations is another chucky acquisition. The news that Ithaca closed down talks with BP on a potential $2.7bn acquisition shows the degree to which M&A can upset the 'apple cart'.

* On the Waldorf $900m tax assets, it was my understanding that these would not be available till next year (2027) and last about about 5 years, so c.$200m/year benefit.

Krono5, HBR has authorisation to buy back up to 15% of the voting stock ahead of next years AGM. That equates to 237m shares.

That number can't be exceeded, without a general meeting and vote.