Member Info for Megla

I think you’re correct on FCF, Sekforde. The combined group is more likely to produce around $1.5bln of FCF. Which after the divi, would leave around $1bln a year for buybacks/debt reduction.

It is, however, still an incredible deal. FCF will be after around $2bln a year in CAPEX, that will constantly allow Harbour to convert 2C to 2P, or simple stake stakes in new developments. Earnings will be constantly repeating, which should allow for a much better valuation metric.

Not to mention the forced buying that will occur due to the company being catapulted back into the FTSE100.

The best CEO in the industry by a clear mile.

Garydav,

I think they have to be. If not, there’s another couple of years praying oil prices don’t drop too much and that the company can keep decline rates in-check.

One thing that’s obvious is that the government of the day, or the government in waiting, isn’t going to ride to the rescue by removing the ridiculously designed EPL.

In my view, the company is too small and the debt is too high to operate successfully in the current environment. They need the firepower of merging with a rival to maximise the use of company’s assets, whether that be the tax losses, CCS or alternative energies.

From a buyers perspective, Harbour are a great example, they could burn through the tax losses in no time, whilst also vastly reducing the interest rate on the debt . 20p a share would seem a fair price to me from a buyer and seller perspective.

Only my views.

Exactly that Richy, yes the delisting has likely triggered some additional selling but oil prices are key. Enquest is one of the most price sensitive oil companies due to its debt and high interest costs, so it isn’t surprising to see the share price fall back with oil prices drifting.

Even at 12p the company is relatively expensive on a EV / FCF basis with oil at $75.

Enquest’s main selling point is the tax losses (I’m sure many will disagree with that statement) and I fully expect they’ll be a deal in the not too distant future that takes advantage of it (the delisting will make that future deal more straightforward). For that reason I’ve bought this morning.

IMHO there's likely some truth to the rumors. £1.5bln+ in revenue (and growing), next to zero debt and only a £400m market cap.

The problem of course is that the CEO hasn't been able to convert consistently growing revenue into a consistently growing PBT figure, which is why the share price is 45% less than when he took office in 2018.

Any buyer would be looking to take advantage of this dreadful performance to get a deal through. If there was an offer on the table of 300p+ then I think a lot of institutional holders would jump at the chance to get shut.

I hope there’s a bidder for the boards sake.

If there isn’t, there’s going to be a lot of questions about the pathetic performance of the share price.

270p would be fine with me.

Board must respond!

tullow a basket case. if oil drops equity is toast.

enquest would be a tax deal only (late life, high opex assets with a sizeable decomp bill) there’s probably only a handful of people in the country that have the knowledge (transfer of tax losses between complex corporate structures) to work out whether this would work or not. i’m sure harbour already know the answer to this.

ithaca maybe. but not until the fiscal review has been completed, or until we have sight of what the bat **** crazy labour party will do when in power.

energean would be my pick. high debt, but the group would be near 400kbpd with long life reserves.

The irony of writing an off topic post to moan about posters writing off topic posts isn’t lost on me here.

Filter button is useful and much quicker than having a moan.

Investing in Harbour a good 100p higher than the current price is embarrassing enough. Disagreeing about politics I can handle.

Enjoy the weekend.

Jeff, you’ve not proven anything, you’ve just given me your opinion on puppet masters that supposedly calling all the shots.

Anyways, back to sticking my head in the sand. I’m certainly looking forward to the day when the UN and WEF will allow the UK gov to soften the current O&G tax regime.

Jeff,

I speak with my local MP quite regularly, including about the windfall tax, he’s a decent bloke so would I strongly disagree with your comments.

Policy is ultimately dictated by public opinion. Okay, public opinion can be manipulated somewhat (that’s as far as I’m willing to go with that) but I disagree that we don’t have a choice.

Net-zero is popular, yet it hasn’t changed peoples behaviours. Now if you take away folks cars, holidays etc, then you’ll see a backlash that influences opinions then policy regardless of what the UN/WEF say.

But I do have a choice.

I know I’d never vote Labour who want to destroy the North Sea with their ‘proper windfall tax’ and the spending of $28bln a year of our money on a fools rush to net-zero.

By the time the next election comes round I believe the fiscal terms for O&G will have been improved. Let’s face it, with a realised effective tax rate of 79% in H1, I wouldn’t still be invested if I thought otherwise, so yes I do think they’ll be a choice.

As I’ve said before, I don’t have an issue with the push to renewables/alternative sources of energy, UK O&G will decline with or without investment over the next few decades (obviously quicker without) so it isn’t though we have a choice. But I do agree that it’s being done in the wrong way.

Jeff,

You implied the windfall tax wasn’t the doing of the Conservative party. It was. Whatever you think of the WEF/UN they cannot dictate UK policy.

So if you think they’re the puppet masters behind the windfall tax, then surely you’d be wrong if the UK decide to soften the current tax regime.

So if/when the fiscal review of O&G taxes completes AND a new tax regime is more favourable that what we have currently have, will you admit you were wrong?

Jeff,

I think it should go without saying the WEF & UN can’t dictate UK policy. So yes it was the Tory’s. It was their policy and they voted it through.

Yup, oil at $90 a barrel and most UK independent O&G companies trading in the gutter.

What a mess the Tory’s have created. Production down, investment down, jobs lost. And from the opposition? Well they want to make it make even worse. Absolute clown show.

Jeffrey,

Debatable. The boards goal is to deliver value to the company’s shareholders. Arguably, they would have done that it it wasn’t for the ridiculously designed windfall tax. Whether they care or not, who knows, but they have done a decent job.

Noangel, you could me correct. I need to ask investor relations a question so will ask them whether they have insight to what’s going on.

One thing that’s becoming clear is that FCF will be significantly lower next year, so maybe they just think we’ll get the Enquest treatment when it’s spelt out to investors.

Jeff,

Not everything has to be some kind of grand design.

Gas prices went ballistic leading to household bills becoming unaffordable. Labour are a socialist party so called for a windfall tax on O&G companies. This became a hugely popular policy and was adopted by the Conservatives. I think most would agreed that back then we were making enough money to pay a windfall tax.

Fast forward to today. Labour know this is still a hugely popular policy, so they’re pushing for it to continue and be made even tougher, knowing they don’t have to deal with the immediate consequences. Populist politics at its finest.

The result, we have a tax that’s doing huge damage to the sector, but yet it’s politically toxic to remove. Moreover, the gov need additional tax revenues and given the hatred of the sector, we’re an easy target without them losing too many votes.

Personally, I have no problems with the push to renewables, provided it’s done in the right way. Focussing on the supply of fossil fuels, rather than the demand for them is utter madness.

Whilst I agree that Harbour are a much better company, all Enquest’s result do is (once again) prove how absurd the EPL is. Their effective tax rate, even with the absolute mountain of tax losses they hold, looks to be around 45%.

The UK gov really have created a horrendous fiscal regime for O&G companies to operate within.