Member Info for Sekforde

The reported margin between "dated Brent" and the first tier of forward prices with ICE was $18 for April. Hence Harbour was receiving $120 a barrel. It is not certain that that has been maintained into May. But assuming it has we should still be receiving $120 a barrel and not the price shown with IG et al. Using the forward prices which have again been on the rise and allowing for weighted production in the first six months, I now have $100 brent for the year and $14 gas. So the FCF would be $600M plus (6x170m) plus (3 x $150m) = $2070m. Add the $400 from the December transactions and add a further say $200m on account of the clearly conservative production forecasts and we are back up to FCF $2670m for the year. A still further sum needs to be added on account of the interest savings owing on the more rapid than assumed repayment of the most onerous debt. Three imminent events will change this nonsensical valuation - entry into the FTSE 100 in about three weeks, the half year results, and the commencement of buybacks from the feckless few.

$14 dollar gas. FCF $1.9bn x 45% = $855m

Asartara I do agree that one must take into account the debt of Harbour when making fair valuation comparisons. But what really matters is not the gross value of the debt but the cost to service. The bonds inherited from Wintershall Dea carry exceptionally low interest. The most expensive debt carries an interest rate of just over 6% and the least expensive just over 1%. If we sold the newly acquired LLOG we would have a similar level of debt and yet still be producing almost 4 times that of Ithaca.

The fact remains that FCF of Harbour is much more than double that of Ithaca for the foreseeable future. Ithaca is paying $500m in dividends by using nearly all its FCF for that purpose. But Harbour will distribute much more than the declared $300m in base dividends. At $90 Brent and $13 gas we have $600m plus (5x170) plus (3x 150) x 45% = $810m in dividends/share buybacks for this year whilst paying down $1bn of the most expensive debt. Next year the pay out ratio should move close to 75% which should mean a distribution above $1bn. Moreover the capex of Harbour is much more than double that of Ithaca. Capex is often viewed as a cost but is really an investment for future returns to shareholders.

The 250m non voting shares if included in the calculation do mean that of HBR has a slightly higher current market cap. But HBR on any rational view is worth at least twice that of Ithaca. Mr Market has got this all wrong and needs to pay more attention. Roll on admission to the FTSE next month.

Yes I think we could also have positive FCF in the second half as well. Waldorf is a really nice gem to be heavily manipulated for rapid use of its tax losses. Loved reading the judgement that skewered HMRC.

The dividend of $150m will be paid shortly. But because of the current spot price of brent (presumably still around $117 based on the forward ICE contract) I think FCF in the first half will be around $1.8bn. I reach that figure based on a comparison with the first half of 2025 when we achieved $1.36bn with a realised price of brent of $71 and realised gas of $13. So net debt should indeed come down to around $5.3bn by 30th June 2026. There will be little if any FCF in the second half because of the timing of capex and tax payments. We have to then add the $400m coming in from Indonesia and Waldorf .

Entirely bizarre that Ithaca should enjoy a market cap the same as Harbour's. It will produce around 120k boe a day in 2026 against Harbour's 490k (mid point of forecast). It has much higher opex $20 per boe v $14. Admittedly it has only about $800m of net debt. But Harbour's net debt could be almost eliminated if it chose to sell LLOG for the $5bn it would now fetch. Last year FCF for Ithaca was below $700m against Harbour's $1.1bn and the difference will be much greater this year. Need to make it to the FTSE and then the market would start making comparisons.

I am still trying to get my head round the scale of the FCF announced. From 11th February to the 31st March net debt fell by a staggering $900m. That is just 48 days. But the real story is in the $120 "dated" Brent throughout April combined with 520,000 a day production. Huge further injection of cash.

Last August Barenberg provided a price target of 220p. Since then there have been two deals in December 2025 that net the company around $400m and add $900m worth of tax losses and 20k boe a day production. And there has been the purchase of LLOG for $3.2bn against a current conservative valuation of at least $5bn. The FCF outlook has been transformed by the huge increase in commodity prices. And yet all this justifies a price target increase of just 25p or about $500m? Nonsense.

On page 28 of the investors presentation this morning there is an interesting bar chart showing the expected FCF from 2030 onwards. It suggests around $1.5bn a year. If 75% were then being paid to shareholders that would be $1125m a year. Of course by then there will be far fewer shares in circulation so the yield would be much higher than the implied 18.75% at the present market cap. The company assumes only a $1bn debt reduction by end of 2028 which is extremely conservative for reasons we have all discussed. This just requires patience.

Value S. I am not saying it will not eventually be paid to shareholders. But LC suggested they would wait to the end of the year to find out what the FCF was before making distributions.

Sittingduck I think the board are following your approach and do intend to take an axe to the debt. Plenty left for share buybacks as well. But it seems that these will not start until next year when the FCF for this year is known. So in fact all the FCF (bar $300m) will be used to reduce net debt this year.

Sittingduck. I cannot worry about the debt. About 50% is at interest rates of less than 3%. Some as low as just over 1 %. Servicing it should be seen as a modest cost of doing business. There must be better things to do with all the money being generated.

Stevo I think you would agree that the "war premium" appears to persist into 2027. The ICE forward curve for next year seems to average about $80 brent. The company assumed $70 brent and $10 gas for 2027 when it produced that bar chart in March. I will wager $1.8bn FCF plus this year and $1.4bn FCF plus next year not counting disposals. LLOG is a dream.

The figure of FCF $1.4bn assumes $80 dated brent and $13 gas. Dated brent in April appears to have been around $120 given the reference to the disparity of $18 to the forward price with ICE. So $80 brent is too pessimistic. $90 is more realistic for the full year. That adds $340m. And we will do better than the revised 490k boe a day. I think 500k. We have rapidly rising production from LLOG and Waldorf contributing in the second half. The average for the first half should be around 513 boe if we can maintain April's figure to the end of June before the summer maintenance starts in the North Sea.

Sittingduck you are right. The debt reduction from 11th February to the end of March was $900m. But it will have come down by at least another $500m since then. Skewed figures but enough to secure great interest savings and improved credit rating outlook.

All very good. Debt has come down from the $7.2bn at the time of LLOG (11th February) to $6.3bn at the end of the quarter. However 31st March 2026 is a life time away. April has seen production surge to 520k per day (up from 506 for the 1st quarter) at a time of quite exceptional realised prices. (Note the difference between the near ice future contract figure and the realised price is stated as $18!) The FCF generated in April alone should exceed $500m. Of course it has to be remembered that FCF in the second half will not be any thing like the FCF of the first half because tax and capex are weighted to the second half of the year when production will also be lower. But we have Waldorf coming on stream at the end of June and that little gem is essentially tax free for the next few years.

Despite the fall in the sp today, ultimately the opening up of the strait will be good for Harbour. Nothing good would come from a collapse in world economic growth with the oil companies cast as the main villains. The out look remains excellent. In March the company produced forecast of FCF for 2026-2030 by means of a bar graph. 2026 was $0.6bn, 2027 $0.8bn 2028 $1bn, 2029 1.2bn and 2030 $1.4bn. This was on the assumption of $65 brent and $11 gas for 2026 and then $70 Brent and $10 gas subsequently. In 2026 using the current forward curves, we should now achieve $90 Brent and $12.5 gas. So this gives us $600m plus (5x $170m) plus (1.5 x $150m) or $1.65bn for 2026. For 2027 the figure is $800m plus (2x $170) plus (1x $150m) or 1.29bn. For 2028 to 2030 the forward curves are now more or less in line with the company's own unadjusted forecasts. So in summary FCF should be $1.65bn (2026) $1.29bn (2027) $1bn (2028) $1.2bn (2029) $1.4bn (2030). There is a further upward adjustment required. Because 2026 and 2027 will be above the company's March 2026 projections, more debt will be paid down than those projections indicate. This will reduce the interest cost in 2027-2030 and further enhance FCF. The FCF over the next 5 years ($6.54bn plus $0.1bn (interest saving)) exceeds the current market cap of the company ($5.9bn). Of this $6.64 bn roughly $4.7bn should be returned to shareholders and the balance of around $2bn used to retire debt. If $1.5bn is paid in dividends that would leave $3.2bn for share buybacks - enough at current prices to reduce by 50% the number of shares in issue.

Regardless of how the market has reacted the news is good. It means that the Waldorf transaction should complete by the end of this month.

It is really impossible to understand the extent of the extreme backwardation. There is no precedent ever. Normally future markets rise because of the effect of inflation. The current forward market assumes the strait will be open tomorrow and the flows will immediately resume. Normally I would say "do not buck the market"? Base all you assumptions on the forward markets being right. But I would not be surprised if we in fact see much higher prices this year and next.

The real reason for the lack of large movement in the sp relates to the fact that although the spot prices have risen the forward prices for 2027 and beyond have not. However looking at the forward curves for oil and gas for this year I now have $600m plus ($170m x 7) plus ($150 x 4) = $2.390bn. Add then the $400m from the two December transactions and we have almost $2.8bn. $3bn FCF remains possible for this year if production is at the top pf the range and we will have a good steer on that on 7th May with 4 months reported. Anything above 510k per day would imply right at the top of the 475 -500 range - perhaps even above. I want to see Waldorf complete and a good ramp up there as well as of course LLOG to counter the summer shut down.