Member Info for Sekforde

NAV Mike: the top 10 today are BASC 46.5%, Citibank 8.53%, EIG 8.28%, Helu Slim 4.31%, Citigroup 4.1%, Letterone 3.31%, Black Rock 2.39%, Vanguard 1.96%, Aberdeen 1.2% and Charles Swaub 1.16%. Of those the only seller from 2022 I can identify is EIG which company was selling at well above £4. BASC do want to sell but presumably not at this price. With the possible exception of EIG the others appear long term holders who paid much more for their stakes and have no particular reason to sell at this price. But to be frank if they want out so much the better in the long term. Better to buy low.

NAV Mike which of the present 10 top holders was selling during the last buyback in 2022?

And I cannot resist a little crowing. If you go back to my post of 1st August 2025 by some miracle I guessed all the key figures including the 1bn FCF, the $100m buybacks, the narrowing of production range and I suggested we close at 217p which now looks too pessimistic. So here are my revised predictions for the full year: $1.15bn FCF, 475k boe per day, capex $2.1bn, and sp £340p. Of course no real idea about the future sp. But FCF of 1 $1bn a year for 19 years using a discount rate of 5% has a net present value of over $12bn and we are a long way off that.

Yes we hold $2.7bn in cash. That is what they announced this morning. And it completely available for spending. Of course the net debt is the announced $3.8bn. Tax and capex are both tilted to the second half. So the cash will be marginally depleted by the year end. But it is a very strong position to be in.

So of the $2.7 bn sitting in cash the company plans to spend $100m on share buybacks by the end of this year. At current prices that would be 32,970,000 of the 1440,109,512 voting shares or 2.29%. But here is the thing, 81.78% of the shares are held by 9 institutions/companies and Carlos Slim. None would be inclined to sell at current prices or anything close. That does not leave many shares available in the market to absorb that spending.

It will not in fact be possible to buy shares tomorrow as the rules preclude paying more than 5% above the average price for the last 5 trading days. But to complete the programme by the end of the year will require $1m to be spent on average each trading day. At the current price Harbour should become a FTSE 100 company again attracting more interest and automatic buying from the tracker funds. I am not selling at anything starting with a 2.

And there has been some very good forward hedging carried out over the next 18 months. The book is showing a profit of $400m.

There is nothing not to like about the results. The four main points for me are 1. FCF forecast (far more important than accounting profits) is up to $1bn. 2. The cash is now $2.7bn. 3. We are to have buybacks of $100m. 4. Production outlook again narrowed upwards. Incidentally the revised FCF forecast is based on fairly conservative assumptions about brent and gas prices in the second half.

Precisely the opposite happened the very last time on 8th May 2025. The price rose by more than 9%.

The company pays Auctus advisers to provide research to the market. Its latest update came out minutes after the results were announced. It has free cash flow for 2026 of $345m. But that is on the assumption of 43kboe/d. If the Triton saga really is over that is too pessimistic. We were told yesterday that BKR was producing a little more than 21, 600 per day. Erskine, Columbus and Orlando 5,500. Triton should produce 25,000 per day and Belinda which starts at the beginning of 2026 at least 7,500. All that comes to a daily rate of at least 59,600. I am going to assume that natural declines will be compensated by improved efficiencies. I am also going to assume that the summer maintenance programme reduces overall production by 8,000 boe per day. That would give us an annual production of 51,600 per day or 8,600 above what is assumed. 8600 x (say) $68 x 365 is an additional $213,452,000 of revenue. Assuming an effective tax rate of 30% (note for Triton we now have protection against all three taxes) that is an additional $149.41m. FCF in 2026 could head towards $500m.

There are 1440116191 voting shares. The market cap in dollars is $3.6498bn. The dividend payable on voting shares is $380m, giving a yield of 10.41%. (There is of course $75m to pay on the Letter one non voting shares.) The company has net debt of $4.2bn. But it has $1.3bn in cash. Not every one likes share buybacks. But the lower the price the more compelling the argument. With any luck the company will be earning around 4% on its cash. But why in heaven's name not use some of that cash to buy an asset on which it pays 10.41%.? It has a mandate to buy 15% of the shares. At current market price that would cost $547.47m leaving over $750m in cash. My view is that it would not be possible to buy 15% of the shares at the current market price. A persistent buyer in the market for over $0.5bn of stock would inevitable force up the price.

Er I mean 7th August!

Four more trading days until we know the 1st half results. Here are my (featherbedded!) predictions:

1. FCF forecast for 2025 - $1bn

2. Capex narrowed further to bottom of the range.

3. Production in second quarter 490k boe per day.

4. Production for full year narrowed further to top of range (465k-475k)

5. Buybacks of $100m announced.

Any dissent?

6. SP at close of business 217p.

Any views

It is hard to know. But if the company takes out say $200m year of shares per annum without the price moving and maintains the annual dividend at $455m then the yield must rise each year as the money is divided between an ever diminishing band of holders.

I keep returning to the comment made last May "Our diverse portfolio, prudent financial risk management and strong performance year to date mean we remain well positioned to deliver on our capital allocation priorities. Depending on market conditions this includes the potential for additional shareholder returns via buybacks later this year". Market conditions are favourable. The price of Brent is $8 higher than when that announcement was made and yet the price of shares remains too low. So fingers crossed that the company announces $100 - $200m on buybacks on 7th August. The vast majority of shareholders by value are in for the long haul and would not contemplate selling at the present pathetic price . This includes BASF. So with a persistent buyer in the market for say $1.5m of stock every trading day until Christmas should force the price upwards as weak holders are shaken from their trees.

We will just sell the barrels for $72 rather than $67 six weeks later. Trying to be positive.

Very good chance of improvement in May forecast FCF ($900m) if production maintained at 500k boe (or even 490k) in the second quarter. Brent now above $69 (assumed $65) although it is true gas is below assumed level. Buybacks a racing certainty in view of what was said in May 2025. The price would have to rise to 240p to give us a dividend yield of "only" 8%. At 202p it is just a shade under 10%.

There will not be any debt paid off. The FCF in the 1st quarter was $700m and the forecast fcf for the full year was $900m. And out of the forecast $200m in the last three quarters of the year there is $455m to be paid in dividends. So the net debt will rise from the last update. But that does not matter. The debt is cheap to service and the company should have a similar or better 2026. Just cannot see the point of paying off debt saving 3.5% per annum when the shares yield 10%.

Fitch suggest that Aker BP will have overall negative FCF in 2025 and 2026. I accept of course that is attributable to much higher capex which should boost production in the longer term. I also accept that the hybrid debt needs to be included when looking at the net debt of Harbour. The cost of opex in Norway for Aker BP is around $7 a boe as compared to $11 for Harbour. But if Aker BP currently has an EV of around $20bn, I am struggling to see why Harbour's Norwegian business alone should not have an EV of around say $7bn. After all current production in Norway is around 180k boe per day as compared to between 390- 420k.

Yes Aker BP's dividend gives it a near 10% yield. But that is slightly less than Harbour's. And it is hard to see Aker BP being able to maintain that level of dividend. In contrast I expect that Harbour will announce buybacks for later in the year on 7th August. I wonder Stevo12 and Londoner7 if you agree that there is no justification for Harbour being valued at around 25% of Aker BP? Or am I missing something.