Member Info for Sekforde

Neversellshell. Thanks for your kind comments. I enjoy your lists of reasons to be cheerful especially in these dark days. Londoner 7 when LLOG was completed on 11th February 2026 at $60 US the gross revenue for the rest of the year looked like $808m. Deduct say $250m Opex and $250m capex and say $140m on servicing the additional debt and say a tiny bit of tax and some legal fees etc and additional FCF looks from LLOG looks close to zero. I think the company is always cautious about the future. We saw this at the beginning of 2025 where they were forecasting $1bn with Brent around $80. It ended much lower but FCF was still $1.1bn.

Auson the debt on 27th February 2026 was $7.2bn and the market cap was $5.35bn so EV $12.55bn. The debt now is around $5bn and the market cap is $5.08bn so EV $10.08bn. I think all the FCF will be in the first half - may be more than 100% as it was last year. £9.36bn v £7.52bn.

On 27th February 2026 before the war began the price of brent was $72 and Harbour closed at 253p. At the time using the forward curves the company looked like making about $800m in 2026. I now have $600m plus (4 x $170) plus (2 x $150) = $1580m. Also the market could not have known that production would reach 520k boe in April 2026 which is why I believe that the company will achieve top of the range production for the full year which could add a further $200m to FCF. The forward markets for 2027 and for 2028 are higher than they were on 27th February 2026.

Londoner in the March presentation about 32 minutes in Alexander Krane suggested that the company could depreciate the acquisition costs and pay "very little tax". I think somewhere he went even further .

Londoner 7 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. That suggests to me that they are able to write off against tax the whole of the cost ie the $3.2bn and not merely tiny sums spent on professional fees and the like. And it also explains why between 2026 and 2030 the effect of the acquisition is to lift FCF by 60% despite daily production being in 2025 only 34k and by 2028 only 68k - a small fraction of the overall production. The market either does not understand this or does not believe the company. If FCF rises by 60% for an 11% dilution of share capital than that should enhance the value of each share by about 50%. Incidentally at the time of the LLOG purchase it did not affect the forecast FCF for 2026. This implies that the real enhancement will be greater than 60% between 2027 and 2030. I know nothing about US tax law and am simply relying on the company's public announcements about tax on LLOG's earnings. If my figures are right then your suggested $800m FCF for 2027 seems far too low because more than $600m should come from LLOG alone. And Waldorf is also a nice little earner because it has relief in all three categories of tax. But that transaction I suspect is being delayed by HMRC trying to appeal the judgment.

Londoner I am not sure I understand your question. The cost of LLOG was $3.2bn. No reason why the acquisition costs cannot be written off in 2026 as well as 2027. I do not know why it should be that the 23% tax is not payable for the rest of the decade but that is what the company has said is the effect of US tax law.

I have again revisited what we have been told about LLOG and that has caused me to revive upward my figures. Nigel Hearn stated on 22nd December that production would increase by 25% compound per annum from the 34k boe a day in 2025. If so that takes us to 53125 boe a day for 2027. (The graph produced showed greater than 68,000 boe per day in 2028 - so more to come.) Previously I used $68 but in fact the correct figure for forward US crude is $70 for 2027 even after the falls of recent days The gross revenue from LLOG using these figures is $70 x 365 x 53125 = $1.357bn. I assume $14 per boe Opex which gives us $271 to deduct and (same again) capex of $300m. I then deduct $150m to take into account the finance costs at 6% per annum. There is NO tax to pay on LLOG because the acquisition costs many be written off against tax (amazing). I arrive at a figure for FCF generated by LLOG alone next year of $636m. Please note one mystery which should be answered on 6th August. The bridging loan used to finance llog at no doubt high rates of interest was said at the time to be soon converted into a bond. That has not happened. I think it is simply because it has already been paid off by the outlandish cash generated in April and May of this year.

LLOG's production rises 25% over 2026 in 2027. This means it will be about 50,000 boe a day. There is no tax to pay. The gross income at $68 dollars a boe is $68 x 50000 x 365 = $1241m. Opex should be around $200m and capex around $300m. So FCF for LLOG alone will be above $700m in 2027. I have ignored that additional $2.5bn borrowing required to acquire LLOG as that additional borrowing has already been largely paid off by the spectacular earnings in the first half of this year. If you include it at 6% and assume none is paid off the debt servicing costs would be around $150m. But on the most conservative assumptions more than $500m FCF comes in next year from one small part of the portfolio.

Dan 222. Londoner is not right in that he has not appreciated that FCF is after tax. The purpose of attempting to work out FCF in 2027 and 2028 and beyond is to determine whether the market has properly valued Harbour. It just has not even with the forward curves coming sharply down in 2026 and 2027 but not interestingly in 2028 or beyond.

Londoner 7. FCF is after tax.

Once again using the forward curves and the company's guidance we now have:

2026 $600m plus (4x170) plus (3x 150) = $1730m plus $395m (waldorf and Indonesia) plus say $200m for top of the range production. (Brent now averages $85 for the full year (the average to date is $91) and gas averages $14 msfc) = $2325m.

2027 $800m plus (1x170) plus (1x150) = $1120m

2028 $1000m

2029 $1300m

2030 $1500m.

The ratio of debt to EBITDAX is already well below 1 so of the total fcf of $7245m between now and the end of 2030 over $5bn should be returned to shareholders and the remainder used to paydown debt. The present market cap is around $5.2bn.

Assuming that a large chunk of the FCF is spent on buybacks we could start 2028 with around 1.2bn voting shares. On the modest assumption that Brent is around $70 and gas is around $10 msfc. the company will be then eying FCF $1.5bn a year and rising as LLOG and Mexico form more important parts of the production. A market valuation of just $6bn would be $5 a share or £3.73p. The cost of eliminating 357m shares (to take us down to 1.2bn) would be just $1.22bn at todays price. The FCF for this year I now have at around $2.3bn (I am including Indonesia and Waldorf receipts). At the end of March the net debt was down $900m in just 47 days to $6.3bn. I think will be at the end of June around $4.8bn. We should not be afraid of taking it back up to around $6bn to take cheap shares off ready sellers. Servicing this modest debt from gross revenue of over $12bn a year is just chump change. The BASF share dumpers need to be removed from our lives once and for all.

When LLOG was purchased in December 2025 the company said that it would enhance FCF by 60% over the years 2027 -2030. By 2028 it should be producing around 68k boe a day and, with a capex of $300m a year, maintaining that for the next 20 years (at least). The FCF for LLOG alone looks like this in 20028 68,000 x $65 x 365 = $1.613bn less opex ($12 x 68,000 x 365) $297m less capex (say $300) so $1bn a year. There is no tax to pay at least to the end of the decade and then 23% per annum. The net present value of $1bn a year for 20 years at a discount rate of 5% per annum is $12,462M. Cut that in half and it is still worth more than the entire company.

If the FCF forecasts provided by the company are right, it has to work in the end. If we spend (say) $600m a year on buybacks and the share price remains at 253p the last man standing with single share would own the whole company after about 8 years!

It will all sort itself out when the buybacks kick in. Last year a $100m buyback was announced with the first half results. FCF was $1.36bn against an eventual outcome for the year of $1.1bn. I am expecting the buybacks to start on 6th August and to be much more than $100m. The opening of the strait will be a good thing in the long term. Harbour is good value with Brent at $65 never mind $85.

I spoke to soon. We are now just 1p above the 26th February close. The earnings for the 1st half are now in the bag.

On 26th February 2026 with Brent at around $67 Harbour finished the day at 253p. We are now just 7p higher (or around $140m) despite Brent being around $90 and having moved from FCF of around $600m to just over $2bn (I have excluded the sale proceeds from Indonesia and the Waldorf money) for this year alone.

Although the fall in spot prices of Brent has lowered the forward price for the rest of the year it has not affected the forward prices for 2027 and 2028. I do see therefore FCF exceeding current market cap during the period 1st January 2026 to 30th June 2029. I have now $2.5bn, $1.6bn, $1.3bn and $1.5bn. (The FCF for 2029 should be earned in the first 6 months). Of that $6.9bn I hope that $1200m is spent on dividends, $4bn spend on share buybacks and $1.5bn on debt reduction.

Jonhas IF the same metric applies for 2027 the base figure is $800m and we add 2.4 x$170m and 3 x $150m (the board assumed $10 msfc gas and $70 Brent) = $1.658bn.

Hi Krono. The $900m is the value of the tax losses on Waldorf. But it is not the same as FCF. The benefit of those tax losses will accrue over many years. It is why HMRC is so furious at the cramming down permitted by the High Court. When giving guidance the board always refers to average dated brent and average gas prices which I think take into account the hedging. Logically however if they have hedged more since 7th May then it will not be enough simply to know the spot prices. I hate the forward curves and do myself think that the price of Brent may stay much higher than the market thinks. But for valuation purposes one has to use them otherwise it is just wishful thinking. Still it is remarkable that we could sell forward all the gas and oil we produce and guarantee to make FCF equivalent to our entire market cap in just three years.