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They havnt sold them. They have transferred them from the group of entities that made up the Harbour North Sea concert party of 37% or what’s commonly referred to as EIG investment management to the underlying investors. Those investors are expected to send their TR1s into HBR over the next few days so we should find out who they are.

Unfortunately I dont think there will be a short squeeze as there is no significant amount of stock sold short. The euroclear position is nothing to do with short positions and all about EIG breaking up the concert party and awarding the underlying holders their shares net of tax.

Rookie - EIGs 37% block came out of the lock up in March I think. So EIG have been free to sell since then. The fact that they have redistributed them to the underlying investors and are breaking up the concert party doesn’t affect the ability of the shares to be sold. The breakup of the concert party may have implications for corporate activity because there is no longer a block of 37% at the top of the share register. Uncertainty as to what would happen with that block has been removed. Also the rumours that HBr was being shorted can be dismissed now we know the SOL was all to do with this event.

Agreed. There’s little evidence for a big short position or lots of little ones on HBR. If todays rise was shorts closing then logically the rise in ENQ, SQZ etc would also be shorts closing but they don’t have 10% held at euroclear.
GIC selling (maybe sold out) is probably pressure to follow a green agenda.
Any corporate activity for HBR will almost certainly involve EIG so in my mind it’s worth keeping an eye on what they get up to.

It’s not GIC but EIG.
EIG hold 37% of HBR. EIG have just bought Repsol upstream business which I thought consisted of assets in Indonesia amongst others. (Who else do we know with assets in Indonesia?)
EIG paid billions for it and in order to raise funding for the transaction, may have put 10% of their HBR shares at euroclear in order to get a loan to help with the funding. Those were my dots but it’s only a theory and made more sense than shorting HBR when no other North Sea oilers had any stock held at euroclear.

This is the transaction I was referring to
https://www.reuters.com/markets/europe/exclusive-spains-repsol-talks-sell-25-oil-gas-unit-eig-sources-say-2022-06-07/

Yes that would definitely be a possibility too.
I think it’s a mistake to associate a high level of stock on loan at euroclear as being directly associated with shorting activity as there are other services that euroclear offer other than that.

LL if you look at the spreadsheet on the fca site, there are two tabs one for the present day and the other is historical since the regulation came in. It’s too big for me to download now but if you check your can see if anyone has ever shorted HBR (or at least disclosed that they have)

No not HBRs debt.
It’s the shareholder that uses the shares as collateral. I suggested EIG because they are the only shareholder with over 10%. EIG have just bought part of Repsol, so theoretically they could put some of their 37% holding with euroclear as a way of gaining access to funding to help pay for the Repsol transaction.
It’s only a theory though.

My understanding is that euroclear can act as a depository or a bit like an escrow account. So if a shareholder wanted to raise short term finance, they move stock to euroclear who hold it for the duration of the loan as collateral. The financing bank releases funds to the shareholder who then gets the stock back from euroclear once the loan is repaid. As there is no actual transfer of ownership, no TR1 is needed as the voting rights remain with the shareholder and don’t transfer to euroclear. That’s my basic understanding of the process.

LL - short positions are disclosed to the FCA daily and are published on their website at the following link
https://www.fca.org.uk/markets/short-selling/notification-and-disclosure-net-short-positions

Click the link for “public short positions disclosed to us daily update” to view the spreadsheet, about half way down the page

Jeff dont you think it’s a bit strange that US cfd investors would target HBR and none of the other North Sea oilers who seem to be facing exactly the same headwinds? And there would have to be at least 20 of them all just under the 0.5% reporting threshold? Or more sinisterly, a bigger short that’s not being disclosed despite the shenanigans with ARCM?
Surely it’s worth considering other possibilities such as EIG, who with 37%, is quite capable of lending stock as collateral for a loan, without having to release a tr1 as there isn’t actually a transfer of ownership, perhaps in order to raise capital say 400m as part of their recent transaction with Repsol? Seems just as likely to me as the shorting theory, but if HBR IR are saying that it’s US hedge funds then so be it.

Sure it’s a compelling possibility.
I don’t have access to euroclear data. If I did, I would check the amounts on loan for the other NS oilers. If they are all at 10%, then I can believe the shorting theory.
If they are not , then I’d say the stock on loan is down to some other reason and probably something to do with EIGs activities.

I agree LL. Lots of NS producers are down the same amount as HBR - SQZ, ENQ, HUR, IOG are all off 30/40% from the year highs. Do they all have 10% out on loan at Euroclear as well? If they do, then perhaps there is a lot of shorting going on by lots of institutions albeit in small parcels to remain under the 0.5% threshold. Perhaps it is indicative of a sector malaise arising from the WT. But if they don’t appear at euroclear, this 10% of HBR could be for something entirely different, afterall there are various reasons for stock to be on loan. I also think it’s very unlikely any of these companies are being shorted in any meaningful way given the lack of notifications on the FCa short selling spreadsheet for any of them. Surely if 10% was out short, then at least one of the institutions would have crossed the 0.5% threshold.

https://www.theyworkforyou.com/debates/?id=2022-07-05a.834.1&s=speaker%3A25399#g834.3

From the debate:

We have also been listening closely to feedback from industry. We published draft legislation for the Bill on 21 June to seek technical feedback. Two weeks ago, the former Chancellor met industry stakeholders in Aberdeen to discuss the levy—not just to communicate the aims of the levy and how it will fund vital support for families, but to ensure that the levy works as the Government intended. That is why I can confirm that the Government are making a change to the legislation. I confirm that tax repayments that oil and gas companies received for petroleum revenue tax related to losses generated by decommissioning expenditure will not be taxed under the levy. Since wider decommissioning expenditure is also left out of account for the levy, that change is consistent and fair. We are very grateful for the engagement that we have had with industry on the matter. When the Bill is published, this will be made clear.

I guess the very last thing we need is the strike spreading to U.K. workers in the North Sea

The last time we were under 330p was back in February and I remember topping up. A month later FY results propelled it up to over 500p. It’s hold your nerve time and hope for the same in August.

I’m still in two minds about the windfall tax and how much of an effect it will have. Some parts of the press have described it as a huge subsidy to the North Sea producers and that they may end up paying less tax than before. Others say it will drive investment away from the U.K. Some companies like SQZ have already responded saying that they can mitigate the tax but by doing so presumably only weakened their hand at the meeting with Sunak in Aberdeen. Their share price hasnt exactly returned to previous levels either. Cook seems to be lobbying hard against it and in hindsight it seems to me to be a good idea that the company has kept quiet until the details are finalised. Whether debt can be paid off as quickly as it has been before remains to be seen and I guess that’s what is holding back the shares at the moment.

Unfortunately it seems the windfall tax is already in effect and has been since 26 May. Isn’t that why we are down from 538 to 350p?!

https://www.gov.uk/government/publications/cost-of-living-support/energy-profits-levy-factsheet-26-may-2022

HBR need to stop as much decom spending as possible while the WT is in force and rejig investment spend to be U.K. focused for a while. Im sure it can be done and the managers need to get on with it given Sunak appears to be holding fast.

This is Cook electing to receive less shares as part of a share award so that the difference is used to pay the tax bill. Net settlement or ‘settling’ is where a company decides to make an employee share award through a combination of issuing fewer shares and in part using cash. The cash element is equal to the PAYE and employee NIC due and is paid to HMRC. The value of the shares received by each employee is equal to the post-tax (net) value that the employee would have enjoyed had they received all the shares and sold some to cover the PAYE and NIC due.

https://www.bdo.co.uk/en-gb/insights/tax/global-employer-services/net-settled-options-unintended-consequences-on-uk-corporate-tax-relief