Member Info for Nobull

C*ckeye, it is nothing to do with the moral high ground: the West has propaganda too, but of a different type: it is called "marketing", a subject designed under capitalism to deceive consumers into thinking they are getting a better deal than they are, and it often involves lying too: capitalism is all about greed, and greed is good when it delivers innovation and efficiency, but not so good when it creates victims. The system in Russia of tenured thievery by the elite is slightly different, as is the propaganda style to conceal it, to say nothing of the need to create distractions (imagined foreign enemies). All I am saying is, having lived and worked under two totalitarian regimes, they can end very suddenly, even if they appear stable to outsiders, Syria being a more recent example.

"He [Putin] holds all the cards and the territory to go with them."

A combination of high inflation, high interest rates, and a growing awareness that the special military operation is a full blown war as Ukrainian drone attacks inside Russia become more widely known could make Putin the object of scorn of the ordinary Russian: his propaganda could cease to be effective?

Putin's war is existential for him, not Russia, so he will fight hard, but that does not mean he will win. I assume Trump will deprive Ukraine of support. All it needs is for Brussels to seize the £300m of frozen assets and hand them to Ukraine and maybe for Iran's mullah regime to collapse. I was in Iran for the collapse of the Shah's regime - these things happen very suddenly without warning.

KGInvest, thanks for clarifying those points. We are in agreement then. Sorry I got the wrong end of the stick.

Yes, JG68, I suppose there is a chance a dominant shareholder can extract our crown jewel business and leave us with the remainding less promising businesses. The impression I get is that we will not be able to trade out of this mess; rather further asset sales will be needed, but it was pointed out to me that just getting the basics right: only investing in margin-accretive work (i.e. not being busy fools) will go a long way to turning around the trends in ROCE and Operating margin, which in turn with the multiplier effect (of PE) will mean the sales prices of any businesses thus improved and earmarked for sale will go a long way to solving our debt problem. We have time to turn things around, although it probably will not be quick, I wonder?

KGInvest, you really do not want to cling on to a business that is redirecting the positive FCF from say, Alsa, or WeDriveU, to a business with ROCE-dragging down figure, like NASB.

I agree our net debt probably is not going to start coming down any time soon. But clinging on to NASB maybe is not wise in the circumstances. No, I do not like the price obtained for it, but we are where we are.

"Seriously? Feels like some of you don't bother to read or are just deliberately misinterpreting things. Who told you the NASB sale is debt neutral? It is covenant debt-neutral meaning the covenant gearing of 2.8x remains the same because EBITDA for school bus is removed."

My understanding is it is not FCF neutral (because of the heavy capex demands), and that means increasing the debt or having a CR. Not contributing to FCF means keeping NASB is not really an option. Why else do you think they arej getting rid of it?

"I wonder what the sp would be now if instead if agreeing to a fire sale without moving the debt needle, they retained NASB and did a cash raise?"

The problem is two fold: 1. NASB is capex hungry stopping debt being paid down and increasing dilution risk (making a CR more likely, or if not making a breach of the debt covenants more likely) 2. ROCE-destructive (those yellow buses tie up a lot of capital and do not earn a proper return due to them being idle between the morning delivery of kids and the afternoon collection of them, as well earning nothing overnight.

I think 1 and 2 might be the reasons the Board unanimously decided to get rid of NASB, even at a firesale price: the money can add value more by reducing debt, I wonder, than keeping it tied up in NASB.

Disapplication of pre-emption rights is bad for us. It means we can be diluted out by the issue of new shares at a discount to mates of the Board, or to themselves. The benefit is they can act quickly without recourse to us. I always vote against this stuff.

"Sabine covered this [Green hydrogen]- so why is ENQ playing around with it ?"

Somebody clever, don't know who, said it was like flushing the loo with champagne.

@JMax, yes that sounds right. "Spudded" maybe is the wrong term. They mentioned the poor connection between a water injector well and the resultant oil output in another well, meaning significant oil was being bypassed, necessitating the reserve write-down, a problem that seems fixable, albeit at extra cost.

@Bullseye, my understanding (listen to the AGM webcast) is that a producer well has already been spudded (sp?) and that the 4D seismic was completed early and below budget. Furthermore, there is an expectation by the BoD that the capex spend (not sure if it is this year's or next year's) will lead to reserve upgrades that will reverse the reserve write-down recently suffered.

Does it make sense to spend $230m on capex this year rather than use it to pay down debt instead? The answer I got was an emphatic yes. Not sure if the new producer well being drilled is included in the 50k-55k boepd guidance given for this year. Arguably, for the sake of prudence, it maybe should not be, but I do not know how these things work - never worked in the industry.

The WACC here is over 15%, so you do not blow $230m on capex unless you expect to earn over that. AIMO. DYOR.

The tax was first proposed by Labour in opposition but was adopted by the then Conservative government under Rishi Sunak in 2022 in response to the surge in oil and gas prices caused by the Ukraine conflict.

Mr Sunak initially said it would only remain in place while the windfalls lasted. However, he and then Labour subsequently decided to retain it until 2030, even though oil prices have fallen from a peak fo $139 a barrel to about $60 now.

Offshore operators say the tax is so high that there is now more incentive to decommission productive wells and claim the associated tax rebates than to expand production.

Serica, one of the largest UK operators, separately warned on Thursday that Ms Reeves’s windfall tax and Mr Miliband’s ban on new exploration was killing off the UK industry.

David Latin, Serica’s chairman, said: “The impact of the inappropriate fiscal environment, and the years of uncertainty, is taking a heavy toll. UK production fell 5pc in 2024, drilling activity is at a record low, 10,000 jobs have been lost and companies continue to exit the UK North Sea.

“All of this will reduce tax receipts going forward and, given demand which will not go away any time soon, lost production will have to be imported – imports which are worse for the environment since they involve significantly increased emissions.”

A government spokesman dismissed criticisms, saying: “The Government has reformed the Energy Profits Levy to support investment and give industry certainty and stability.

“We are delivering a fair and orderly transition in the North Sea, with the biggest ever investment in offshore wind and two first-of-a-kind carbon capture and storage clusters.”

The Conservatives, the original architects of the tax, said the political consensus on the windfall levy was gone forever.

Andrew Bowie, Conservative shadow energy spokesman, said: “The report shows in the starkest terms what many have been warning about for months if not years – that the windfall tax is killing the North Sea oil and gas industry.

“Up to 10,000 people have already been laid off with 250 in the last weeks alone. And the new jobs promised in renewables just do not exist yet. Labour must think again and speed up any future fiscal arrangement for the North Sea before we see an entire industry disappear.”

Richard Tice, energy spokesman for the Reform Party, said: “A Reform government would encourage people in the oil and gas sector to get ready to explore when we win the next general election. We are urging them to have new licences ready to approve on an accelerated timeframe.”

Https://www.telegraph.co.uk/business/2025/05/23/labours-tax-raid-to-trap-15bn-barrels-of-oil-and-gas/

Labour’s windfall tax on oil and gas producers will leave 1.5bn barrels of oil and gas stuck in abandoned North Sea oil wells, according to new analysis of the levy’s impacts.

The predicted output between now and 2050 has fallen 40pc from 3.6bn barrels of oil equivalent to just 2.1bn barrels, according to a report from investment bank Stifel.

The findings are based on data supplied by the North Sea Transition Authority (NSTA), the Government’s oil and gas regulator.

The slump in expected output comes after a surge in the number of companies abandoning productive wells, following Rachel Reeves’s decision to extend the tax on oil and gas profits to 78pc. Ed Miliband, the Energy Secretary, has also banned new drilling.

Christopher Wheaton, a Stifel analyst, warned that the tax take from oil and gas was also set to plummet, partly because of declining production volumes but also because the price of oil has fallen so far that there is no longer a windfall to tax.

The report said: “The UK North Sea industry is being destroyed by taxes that are too high, taxes which threaten energy security, jobs, investment and economic growth.

“The impact of lower investment and production is already being felt through job losses, lower tax receipts and more energy imports.

“The Office for Budget Responsibility’s current forecast for North Sea tax receipts to 2030 is £10bn too high due to declining production and lower energy prices.”

The forecast represents a potential headache for Ms Reeves, the Chancellor, who has left herself only a narrow margin to meet her fiscal rules and is already borrowing more than forecast.

The UK has about 280 oil and gas fields that last year produced 29bn cubic metres of gas and 28m tonnes of oil. These amounts were lower than a decade ago when the UK produced 38bn cubic meters of gas and 38m tonnes of oil.

The reduction has largely been driven by natural decline but experts have warned that recent tax raids on the sector have accelerated the North Sea basin’s demise.

The NSTA’s 2023 production forecasts said that the UK would produce oil and gas equivalent to 46m tonnes of oil in 2028. But its latest forecasts, just issued, downgrade that to 40m tonnes, falling further to 33m tonnes in 2030.

By 2040, the NSTA predicts the UK will be producing just 9m tonnes of oil and 4bn cubic metres of gas – way below what the country will still need by then, meaning more imports.

The fresh forecasts suggest the windfall tax, or Energy Profits Levy, has roughly doubled the rate of decline.

Robin Allan, the chairman of Brindex, an offshore industry trade body, said: “An accelerated decline of North Sea output will see UK dependency on imports reach more than 85pc by 2030. The windfall tax is self-defeating and it should be removed.”

...

"This is the reason- share price rising! From RNS 31 March [i.e. the buyback]

Respectfully, I disagree. The growth rate changed just after publication of the Finals. Before the 2027 eps forecast came out, we had a declining eps GROWTH rate (looking at 2025 and 2026 only). Now the growth rate has ticked up with the publication of a "never before" eps forecast period for 2027. The forecast eps for 2027 is over 5p.

Of course forecasts can be wrong, but this company has, touch wood, a good track record of guiding analysts, at least since I have been following this company (the last 2 years?).

"new CEO- who knows might change the name back to National Express"

Not sure it helps to rename the company back to what it was before: we probably will need to pay down debt with funds from asset sales (organically generated recurring FCF not coming in fast enough?), and keeping the Mobico name might give the new CEO more flexibility on which 'branded' business units to get rid of: we wouldn't want to preclude getting rid of the National Express coach business unit if that was the right thing to sell, would we?

"Free cash flow is currently the same at the market cap"

Not sure about that. The 2025 FCF will not be so good, ignoring the sale proceeds of School Bus, as I think they have to pay for all those coaches/buses they ordered (and took delivery of years ago)on favourable payment terms). This year the cash expense comes due for that. That said, I bought more yesterday first thing. Michael Cahill warns in his book "Making the right investment decisions - how to analyse and value shares" that margin recovery plays are fraught with difficulty - he warns you need a stable revenue background (ours is growing for now) otherwise the benefit of cost cutting is soon overwhelmed by revenue falls. The thing that concerns me most is the interest cover covenant (EBITDA: Finance costs) so I am stocking up on a new supply of incontinence pants to see me through to 2026 when hopefully FCF will improve to enable some decent debt pay-down from internally generated funds. The only person in this company I have any confidence in is the CFO. Good luck all long termers. PS. I am down on yesterday's purchase already! I see this as flat lining for a year or so before any improvement.

Yes, you were right on the dividend: my estimate of 30p was far too low. 51 cents. Great news.

2024, not 2023

Acrossthesea, my letter to KS was to sent in August 2023 when KS was refusing to give permission to Zelensky to use Stormshadow inside Russia. It would have cost nothing to the UK taxpayer to authorise stormshadow for use inside Russia. What I did not know then was that it was dithering Biden that was stopping Starmer from giving permission (the Anglo-French weapons relied on American navigation systems?). I don't need lectures from you about the virtues of pacifism. I was an aural witness to the killing of at least 200 (presumably unarmed) demonstrators in 1978 in Teheran (the Jaleh Square massacre). It is a perverse irony that had the Shah's regime killed more, a lot more people in Iran would have been saved since. I am, aged nearly 70, and do indeed think of going to Ukraine. Putin is utterly despicable. I worked throughout the Revolution and all the shooting in Iran, only leaving when expelled a few months before the seizure the American embassy. I think I can cope with bomb alerts in Kiev and I could probably help Ukraine in some small capacity (I do not need a salary), change my domicile (for IHT), become ordinarily non-resident for UK income and CGT and save on my income tax and take all my unrealised gains (very bad to pay CGT in the last years of your life before death if your estate is then going to suffer IHT) and put two fingers up to RR's confiscatory budget (transfer of unproductive capital from rich people to less productive use (government spending/waste). Ukraine needs it borders returning to the 1989 ones and they need justice for those war crimes. I trust that does not offend you.

ZF, thanks for that info. It is very interesting to hear your experience with your MP. Thanks.