Member Info for londoner7

To be confirmed by the legislators, but it looks like section 899 will be removed from the Trump's Big Beautiful Bill.

This morning a CNBC news anchor described other sections of the US tax code with similar tax retribution components, but it look's like the most onerous section (899) won't apply.

That's another of my spreadsheets heading for the bin, but it was an interesting exercise giving me some perspective into Breedon's US segment. In a recent call I picked up a comment that within (some period) the US segment is expected to be as large as the GB segment. My analysis indicated that it could happen by 2029 - much depends how effective the UK government are at their day job.

Romaron, thanks for the link, an interesting read.

I thought this bit is revealing, ""I support the windfall tax – let me be clear about that – and we did win some concessions around allowances," he said."

He is intimating he was involved in the retention of the 100% first year allowance. I think that's a bit rich as there was never any realistic expectation that the first year allowance would have been cut - it would have decimated the sector. Also, I don't recall him voicing any argument in support of investment in the North Sea sector at the time.

This is politics. Next May we'll have the Hollyrood elections. Sarwar knows that Labour are seen as weak in support for the North Sea sector and that will be a headwind to Labour's ambitions in the North East of the country. The SNP are also weak in this area, so no doubt he sees an opportunity to take advantage with supportive commentary now, which he'll no doubt requote in the runup to elections

I also see it as encouraging because if Starmer, or perhaps more importantly Reeves, is on the fence on North Sea policy changes, then Sarwar making a political case for increasing the allowance could swing it. (I posted here or elsewhere that I've thought that a change in the allowance would be an easier sell by Labour than a reduction in the 38% tax level - it supports additional investment rather than providing relief to existing production)

On your previous post, this bit interested me, "There are encouraging noises from Equinor who are attacking favouritism towards Orsted and Vattenfall who pull out of CfD contracts and hence cratering projects". This might be your opinion reflecting the recent termination of a offshore wind project - if it is I'm in agreement, though I don't recall the company involved. But if it's a recent news item I'd be interested in a link.

Cjm83, you talk of Helium in the oil column and drilling sub-salt at Sagebrush.

I suggest to read the RNS from 16th April.

The original drill was below the sub-salt and the appraisal of the drill tests show a 2.76% concentration of Helium in the Leadville formation. The well was completed at a higher level for the production of oil. The RNS states that the well could be recompleted in the Leadville formation at the cost of $100K.

However, the gas flow from Leadville was relatively low at 152-163 mcfd. I posted some numbers here that indicated that the revenue from Helium at that flow rate would be less than the current revenue from oil flowing 40 boepd (gross).

Mosman are planning an extended well test (EWT)on the existing well at Sagebrush to determine/confirm the gas flow rate from Leadville - I recall a comment somewhere that there might have been some damage to the bore ahead of the previous test. I guess the hope is that an EWT will produce a result above the previous 152-163 mcfd. The recent placing does not cover any drilling at Sagebrush - refer to placing RNS.

On the Vecta drills, it is clear that Vecta has not been willing or able to fund their share of the drilling costs (80% WI). The first drill was progressed to support Mosman's placing - Eagle Drilling's interest was unexpected, as was their decision to drill and defer Mosman's drill costs (100%) to July. Make of it what you will, but I felt at the time there was already some talk/agreement on the closing arrangement. Mosman's focus was on getting it's placement away - I was surprised by the AC's promotion of the enterprise on the closing day of the retail offer. It was interesting to note Mosman obtained a 10% share of Helium revenue, while Vecta, with a larger initial holding, went for an 8% working interest, which keeps the CO2 in play for them.

On the 2nd drill (reported today) I've no idea on Mosman's thinking to progress the well by taking the full $200K cost for a 90% share.

The question now is, will Vecta make any contribution to the cost of the 3rd drill, or will Mosman pick up the full cost again? Perhaps ED will get involved if Mosman are reluctant to pick up the full tab.

Meanwhile, I don't see anything which prevents Mosman progressing work on Sagebrush - EVT, seismic and development planning.

AC will need to develop a story at Vetra or Sagebrush to support the next placing - my guess is before year end.

Dubbed Trump's revenge tax - targeting counties like the UK with its Digital Services Tax (DST) - implementation isn't yet a certainty, but as outlined in the House and Senate versions of Trump's Big Beautiful Bill its impact on UK companies with operations in the US will be significant by 2029, with staged implementation from 2026.

Reeves is in early discussions with the US over section 899, but given the ideologues her party the removal of the DVT will be politically difficult, even if it's the correct thing to do fiscally. (Look no further than the impact of the EPL on the North Sea O&G sector.)

Given Breedon's segment breakout it's easy to work out the impact on earnings under various growth scenarios. But the degree to which it will influence future M&A or capital expenditures in the US is harder to determine - it's a negative, but weighed against a flat UK sector, there might still be a case for further US investment. However, there's no doubt section 899 will impact on overall investment in the US, which might lead to some watering down of of the bill.

Dumbly, this is my take.

The only substantial news today is that the Government has now set out the revised environmental rules which would meet the earlier judicial review.

It is now for Shell and Equinor to submit revised environment documentation which meets the revised rules.

The government has stated the submissions will not be approved before the autumn.

The environmentalist groups will continue their challenges, but if the government has structured the new requirements correctly, the previous judicial route has been closed.

"The unknown, for me, is Desert Eagle's involvement in the project beyond drilling the last 4 wells. Will they repeat the offer they made on the first lease?

Dsymons, claims to has inside knowledge and says, yes.

We'll know soon.

AC says, "I believe each of these wells has an excellent chance of discovering helium. The low-cost drilling of these wells enables data to be obtained quickly and at very reasonable cost."

I'd be surprised if Helium wasn't discovered. AC has repeatably praised the work of Vectra's geologists, but Vectra has been reluctant to fund either of their first two drills, preferring to include a clause in the terms that allows them to buy back their stake in the lease. The terms are not explicit in the RNS, but I assume a payment of 4x well cost (c$800m) would return Vectra to an 80% holding in the lease, leaving MSMN with 20%, and a net $600K return, towards future production costs.

I surmise that success for Vecta isn't simply the discovery of Helium, but the discovery of a high grade find similar to the often mentioned nearby 'Model Dome' field, with gas flow >500Mcfd and Helium concentrations c.8%.

Looking at the costs of drilling production wells, extraction and processing (HE1 numbers provide some guidance) I doubt Vecta would regard a c.2% discovery as sufficient to take up their rights under the Bard agreement. They would hope for better results on the remaining three drills, and hope that MSMN will fund those on similar terms. Vecta could then choose the most promising discovery, or walk away, at no drilling cost.

If this is how it plays out then MSMN will fund the remaining drills for a total of c.$600K, or walk away themselves as I don't think Vecta will be putting up any funds.

The unknown, for me, is Desert Eagle's involvement in the project beyond drilling the last 4 wells. Will they repeat the offer they made on the first lease?

It might be this:

"Section 899 of the One Big Beautiful Bill"

The bill was approved by the House Of Representatives 22nd May which marks the recent turning point in the share price , and I noticed general client alerts going out this week. I haven't seen anything specific to Breedon but they do now have US interests.

I may be off-beam, but that's my assessment.

Neversellshell22, continuing the thread from yesterday.

You said, "Harbour have made it very clear they want to pay down between 500 million and a Billion dollars in very near term."

In their presentation HBR has a goal to reduce net debt - to that range - in the 2025-27 timeframe. In 2028 they have a 1bn Euro bond due for repayment, so a $1bn reduction in net debt ahead of the repayment seems appropriate. They have optionality over the 800m Euro hybrid also due in 2028.

HBR had near term Capex in mind when they conducted their refinancing in March and April - they've planned for the knows, with, I'd guess, some margin for the unknows:

Oil & gas prices;

Small to Medium scale M&A opportunities;

BASF share sales.

Larger scale projects in Mexico and Indonesia might require a rethink on capital allocation, but these will have other considerations to resolve first, such as farm-in options.

Unless something has changed behind the scenes, FCF is expected to be c.$900m in 2025. Roughly half for dividends and half available for debt reduction and buybacks.

At the AGM HBR increased their ability to buyback up to 15% of voting stock ahead of next year's AGM, clearly expressing the likelihood that a good chuck of that is available to purchase BASF shares. BASF and HBR are separate entities with their own objectives but there is mutual benefit in BASF being able to exit in a controlled manner. At current share price 15% of stock would cost c.$600m. I'd say doable up to around $800m equating to a share price of 280p - would that entice a BASF sell down?

BASF hold 46.5% of HBR shares, so the overhand could continue for several years, but I'd be surprised if BASF isn't in sale discussions with 3rd parties. Time will tell if any discussions lead to a 3rd party offer.

In the meantime, if BASF is not ready to sell near-term, HBR are likely to implement an on-market buyback before year end.

Just my working assumptions.

* Does anyone know what UK fields have the '2x UK infill wells due onstream mid-2025'.

Sorry, my post was curtailed. I'm getting somewhat fed up with the posting failures I have with this site, so not minded to spend more time on it when the sun is shinning.

Ciao

I'm not aware that HBR has used the phrase, "prioritising debt repayment".

I'd appreciate someone pointing me to it so I can understand the context in which it was said.

This post prompted me to look back to the Q1 presentation pack, and I see a balanced allocation of capital. The target leverage of

I’d guess with HEX and HE1 In today’s news he wanted to keep GEX in the picture.

But that tweet is a very misleading conflation of information.

The Hussar-1 well was never drilled below the sub-salt level, so no Helium has been confirmed at this site. The proposed re-entry is to go deeper to test the sub-salt layer. The prospectus gives an 8% chance of geologic discovery of Helium on Hussar (page 252).

The tweet’s ‘gas flowed to surface’ comment relates to prospective additional wells which are held by companies GEX has approached for farm-in. Currently, GEX has no commercial interest in those wells. My guess is GEX has approached Central Petroleum on its interests in Magee-1 and Mt Kitty.

This is an independent summary of those wells:

“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 Wakelin King, 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)

“Gas was discovered at Magee 1 in 1992 where a test at a depth of 2,340 m flowed gas at a stabilised rate of 63 Mscfd, comprising natural gas, helium and nitrogen from a 6m zone of Heavitree Formation. Seismic data indicates a possible up dip location (Mahler) which has been identified as a site for a future exploration well.” (Central Petrolium)

"Even with Labour saying they will allow drilling will automatically add 10% to this share."

You might be right, but I don't understand why it should. Currently, HBR are allowed to infill drill on their NS assets and any current licences held, but I'm not aware of any desire by HBR to pursue new licences under the current EPL fiscal terms, given the optionality they have with Norwegian, Argentinian and Mexican 2C resources.

If the government's goal is to increase investment in the NS to support NS jobs and UK tax revenues I doubt allowing new licences without changing the EPL terms will move the dial.

Reducing the EPL rate from 38% would be good for investors in North Sea producers, but would it lead to much new investment. I don't think so.

If the government takes a step back on the EPL I think it's more likely to be around an increase in investment allowances - adding back the EPL allowance. They could sell this to voters more easily than say, a reduction in the 38% rate. An investment allowance adjustment wouldn't register with most UK voters, but it would be attractive to companies such as ITH, ENQ and SQZ, with new field developments in their pipelines. It's developments like Cambo and Buchan that will support North Sea jobs and taxes over the medium term.

HBR will see some benefit from an increase in the allowance or reduction in the EPL rate, but not of the scale ITH, ENQ and SQZ would see.

"Mosman retains a 5% royalty on helium and hydrogen". No royalty on hydrocarbons.

The EP145 licence requires seismic in the current permit year to August 25. Echelon might complete it to that schedule, but if they choose not to they can extend the permit for a further year. Something Mosman has done every year since they acquired EP145 in 2014.

In 2021 Mosman had a £1.5m placing to cover a work program on EP145 including seismic - see RNS 19/3/21. £1.5m was spent, but it wasn't spent on seismic. Over the years EP145 has provided good background cover for placings, so I can understand a minor tweak by AC to the terms to keep optionality on the areas Echelon doesn't progress.

You've misunderstood the EP145 transaction.

Perhaps this note from the latest accounts will help:

"An impairment of $1,066,176 was recognised in relation to exploration permit EP 145, bringing down the carrying value of the asset to $550,000. Subsequent to period end, Group announced that it had signed an agreement with Echelon Resources Limited with binding terms to sell 100% of EP 145 for $400,000, which excludes long lead items which are valued at $150,000. Mosman will retain a 5% helium and hydrogen royalty over the project, (based on sales price, no deduction of costs), however this does not form part of the carrying value of the asset, despite the potential future upside."

$1,066,176 written off the EP145 asset on the latest accounts, leaving $550K.

The next accounts will show a $400K transfer to cash. We'll see what portion of the $150K balance is carried forward.

Echelon, is a serious oil & gas production company. The RNS is clear that they are looking for hydrocarbons on EP145, not Helium. Commercial Helium is for the dreamers. AC knows this, which is why Mosman has exited Australia. The balance sheet note is clear - there's no realistic prospect of Mosman returning to EP145 other than as future optionality for funding. Over the years EP145 has provided significant funding for Mosman - the terms keep this prospect in play. But get real!

Ollycromwell, I touched on it in a post here about a month ago. In brief it's too speculative for my investment style. 30 years ago I was invested in this type of company, but when I reviewed returns they weren't very good, so I went more conventional. Perhaps I wasn't a very good trader, but looking back I realise I had a very poor knowledge of the underlying business. For better or worse, the internet offers a totally different level of insight into companies today.

Companies like Mosman still catch my attention and I enjoy following them because the news is dynamic and often make or break for the business. I enjoy digging into the business and gaining a level of understanding, in some respect as a penance for how poorly I understood my early investments 30+ years ago. Sometimes I'll put skin in the game, but it's rare.

I try to limit my posts on these plays. While I don't agree with all the points, I found Cjm83's post a refreshing change from the usual stuff. It prompted my response.

Cjm83, well done on putting together a coherent case for your investment in MSMN. I'd hoped it would lead to some discussion and examination of the points you raised. I've seen lots of ticks and single line favourable commentary, but nothing of substance.

I appreciate many of the people following this board will have little depth of knowledge on Mosman's activities, and are merely passing through in the hope of a quick and favourable trade. That's fine and adds to liquidity in the trading. But I'd guess some here are taking a longer term view, perhaps beyond the next few months into progress at Sagebrush.

My comments here are aimed at those longer term holders.

To be clear, as I've said before, I'm not invested here but follow Mosman's activities with interest, and have done since Feb 2016.

Cjm83 has referred to 'Sagebrush 1 re entry' and Sagebrush re-drill'. It may just be terminology, but my interpretation is that Mosman are planning an extended flow test on Sagebrush 1 to support the case for development, following confirmation of He in the Leadville formation seen in the 1993 gas samples. A clarifying comment from a presentation is this, "Sagebrush-1 cased through Leadville and can be re-completed to produce helium".

I'd imagine oil production will be suspended during this extended well test. Once complete the well will return to oil production, or perhaps not - I don't know the issues around such a test program at the lower level.

Assuming pressure was maintained during the test, the next step is a production feasibility study to determine optimal helium and

methane separation and sale.

The placing is to support the progression of Sagebrush development. It does not cover any drilling activity.

Does anyone see it differently?

My reference points are:

16/4 Confirmation of He at Sagebrush

25/4 Corporate presentation

30/4 End April cash, confirmed in placing

16/5 Placing

* The activities at Vetra are interesting, as was the lead up to the drill. I've a view on this but happy to let the current discussions play out before commenting. I agree with Cjm83 that Sagebrush is the key project in 2025.

Damofari, thanks for your link to ENI's comment. I hadn't seen it before.

I was aware of ENI's development of a satellite model, re: Norway and Angola, but this part caught my attention.

"The Combination reaffirms the commitment of Eni in the UK, where it is engaged across the entire energy value chain (oil & gas upstream, renewables, CCS projects, potential future development of magnetic fusion projects)."

Clearly, ENI's tie up with Ithaca is in the 'oil & gas upstream' arena, and not, for example, CCS projects. I'm also invested in HBR and I'm far from convinced of the attraction of their CCS projects. When, if, those projects require substantial capital investment I might be looking for an exit from HBR.

I prefer the focus of Ithaca on the North Sea, exemplified by their recent acquisitions which increased existing stakes by c. 18K boepd of production. To put that in perspective Rosebank adds c. 15Kboepd when in comes on stream 2026/27. Rosebank also carries risk. As an investor in Cairn Energy some years ago I watched the concurrent developments of Captain and Kraken. Captain exceeded 'boiler plate' capacity and achieved payback in 18 months. Kraken, while described as an engineering success, suffered delays and never achieved target production. As a consequence of the debt it's now likely never to achieve payback. (In 2019 I bought into Enquest, increasing my stake in Kraken on the expectation of a recovery from the bad start.)

I went off down memory lane there but my point is I've a greater preference for more 'current production' assets with fast payback - tax loses attached are a bonus. On a recent call an analyst suggested Ithaca may be the only North Sea consolidator in the market. I'd guess there's plenty of assets to go around but I'm hopeful Ithaca will dominate. I take ENI's merger with Ithaca as acknowledgment of that status.

Two follow up points:

1) I'm pleased to have Delek aboard who are aligned with my interests - jam today.

2) While I've never been more hopeful of some relaxation of EPL before 2030 it isn't my base case. As long as Cambo sits on the back burner I trust that is Ithaca's base case too.

Fbrj, frankly, I don't know the answer to your question.

Each of the two previous periods were unusual and IMO not representative of the coming year.

I expect two payments, one in Sept after the interims and a final paid in April 2026, totalling $500m. A while back Ithaca stated that their payment schedule would be 1/3 interim and 2/3 final, so that's my expectation, but I wouldn't be surprised by a $200m and $300m split. We have Delek, as keen as us retail investors, wanting to get the dividends ASAP.

Recently, the board highlighted a divide between a desire by Delek for income and a desire by ENI for growth. I think the recent acquisitions satisfy both camps in that they add to production and increase CFFO, albeit with additional debt. Supportive of CFFO in 2026 and beyond, which is my focus.

Answers a question frequently asked here. When is the drilling permit expected?

"Drilling Permit for EP513 and approval for EPA155 (Mt Winter) expected in 2025."

Another question is, who is the presentation aimed at?

The annual report (I'm expecting next week) will provide an update on the cash position 31st Jan 2025. All in all, it should be an interesting read.

A few months back I posed questions here on the the assertion that the directors have invested £2m of 'their own money', and on the probability of a successful outcome on Hussar-1. Nobody responded. The answers to both are in the prospectus.