Member Info for Sekforde

Property 1. Of course. FCF is after every possible deduction and all we are doing is using the company's own metrics and the market numbers for oil and gas. If the Strait does not open in the next three weeks we are bound to see much higher prices. $105 brent does not reduce demand by much. So the reserves of the world are being rapidly depleted.

In terms of calculating FCF the board are not going to count the $400m money accruing from Indonesia and Waldorf. On my figures which are based simply on the forward curves for Brent and gas FCF of $1.9bn is a total of $855m to share holders which is $300 dividend and $555m share buybacks. After making these payments the debt should be reduced by $1.045bn PLUS $400m . The net debt therefore should fall from its $7.2bn peak to about $5.755bn by the year end. That will be well below a ratio of 1 (debt to EBITDA). Spending $555m would involve purchasing just over 8% of the share capital if the price did not move. For the really long term we want BASF to be ready sellers.

The FCF for this year I have at $1.9bn excluding the $400m from the first two December 25 transactions and assuming mid point production. I am optimistic on production based on the first two months of this year and a pattern of conservative forecasting. But leave that to one side. For 2027 the company has forecast $800m on the basis of $10 gas and $70 brent. Using $ 13 gas and $80 brent I have FCF of $1.6bn. For 2028 the company has $1bn on the same basis. Using $75 Brent and $13 gas I have again FCF of $1.6bn. Shareholder returns should be 45% of $1.9bn or $855m followed by 75% of $1.6bn or $1.2bn and then 75% of $1.6bn of $1.2bn. After payment of the $300m dividend this would leave $555m plus $900m plus $900m for share buybacks. Ordinarily that would have a huge impact on the share price of a company with a market cap of $6.25bn. But we know we have one major willing seller - BASF. Still the scale of buybacks over the next three years should be enough to completely absorb its stake. Long term holders will have a much larger stake in what by then will be a much more valuable company.

Property1. I have seen those claims of $130 brent but I do not actually believe them. The spot price of Brent briefly peaked at about $119 but spent most of April around $100. My $200m extra is based on a belief that we will get to 500 barrels a day for the year. That is over $400m extra gross revenue subject to tax at various rates at various times with various allowances.... But there is still a lot of uncertainty and even $1.4bn is amazing for a growth stock with a market cap of $6bn.

It is so tempting to use the current price of Brent $103 and the current price of gas around $14 to work out FCF for the entire year. I think this may be the reality as I do not see the strait opening soon and we would need dramatically higher prices (than current) to cause a 15% reduction in demand. But religiously using the forward curves means average Brent should be $90 and average gas around $14. On that basis FCF will be $600 + (5x170) +(3 x150) = $1.9bn. Add then the $400m from the December 2025 transactions and we have $2.3bn. Add another $200m for top of the range production figures (based on the extremely good start to the year) and we still have $2.5bn. Apart from the promised $300m dividend, it is uncertain how this year that money will be allocated. LC suggested that it may not be allocated at all until the year end figures were known. In which case we will see a huge shrinking of the debt from $7.2bn to around $5bn. LLOG could probably be sold now for around $6bn. It was independently valued at $4bn before the huge increase in prices. The position looks great.

Nothing is ever really revealed in these calls. It is just a rehash of old news. Nothing said about production since end February. But I did like one bit of news which is that the FCF to be returned to shareholders will be in the form of buybacks. LC suggested $1.4bn FCf but that is on the basis of $13 gas and $80 Brent. Prices should average higher than both those numbers. So at some stage there will be some fierce purchasing in the market. We have two events in the next 30 days that will help the sp. First the trading update on 7th May will be excellent. I am looking for production in the first four months around 515k a day boe. Second we should get into the FTSE. We are the 86th most valuable company as of today. No need for US listing.

The sole preoccupation of this disaster of a president is to make money for himself. You simply cannot trust anything he says. He will undoubtedly making money out of all his announcements on Truth Social. And what a disgrace he has unsanctioned Russia having promised not to so so. I think a deal will be done eventually. But it will take several months. The market is assuming that it will be done quickly hence the sharp backwardation in the futures. World supply is down by about 15m barrels a day (some oil is coming from Saudi through the East West pipeline) but consumption has hardly been effected at all. Most oil and gas is consumed by rich countries and demand is very inelastic. So reserves are being rapidly depleted. It would take much higher prices to balance supply and production.

What we know so far is that Iranian oil remains blocked according to Trump. Ships can come through on payment of a toll. That is not opening the strait as at all. Few will pay the toll. Even willing parties would fear sanctions if they pay the Iranians. Will take ages to sort out.

All good in the long term. The strait remaining closed would have eventually tanked the world economy and led eventually to even more penal rates of tax. We have had 6 good weeks and can look forward to fairly good prices for the rest of the year. The removal of the EPL should now be back on the table.

The present price of gas and oil reflects the assumption that the strait will be open soon. May be. I am not sure. I don't trust a word Trumps says. The plain fact is that the increase in Brent from around $60 to around $95 has had minimal impact on demand. At the moment all available reserves are being depleted and if the strait is re-opened tomorrow then they will have to be rebuilt. Gas reserves are at an especially low level. If the strait does not open soon then I suspect we will have at some stage some panic buying and Brent well above $120. But I am just sticking to the best valuation method which is to assume the market is right and that is reflected in the forward curves for oil and gas. I still have HBR making $2bn this year in FCF and that will require $950m returned to share holders in the next 160 trading days. With a $300m dividend that leaves $650m for share buybacks. I am confident that buybacks will start on 7th May. And note that the bridging loan has not been refinanced. Why? That $1bn little fellow has I suspect already been cleared.

Thank you Neversellshell. I always enjoy your contributions. Tokuawa there will be some hedging for 2027 already but it will not have much of an impact. If we use your figures and the present metrics that would be $800m (the company's figure) + (3 x $170m) + (4 x $150) = $1.9bn. However, there are four factors that will help for 2027. First, the proportion coming from no tax US (the 23% is not payable because the entire purchase price is deductible!) should have risen. If we produce 45k barrels a day this year it should be 56.25k next year with no change to opex. So that would be $328.5m extra (11.25 x $80 x365). Second capex overall should fall in 2027. Third the interest bill should fall as debt is retired. Fourth we will have a full year's contribution from low tax Waldorf. I am not sure what the natural decline will be from Norway and the UK which will have an adverse impact. But using you assumptions you can get to more than $2bn. I personally would say that you should not really assume $80 brent because the forward curve is not much above $70 and $15 for gas is also a bit higher than the curve. But if $2billion is the figure 75% or $1.5bn should be paid to shareholders in one form or another because we will already be below a ratio of 1 (debt to EBITDA)

Hi Stevo I was following Alexander very closely when he made that calculation and immediately checked the forward prices for both brent and gas. He arrived at $1.4bn FCF by using $75 brent and $14 gas. His then calculations reflected the forward prices on 5th March 2026 and took into account the prices in January and February. However on the 5th March 2026 the forward curves for both brent and gas were lower than today even after the falls this morning and of course we now have to factor in 33 days of extremely high average prices between 6th March and 8th April. Also the sensitivities took into account the hedging book as it stood on the 5th March 2026. To the extent that further hedging has taken place between 5th March 2026 and last night that will be "in the money hedging" and strengthen the case I have attempted to make.

If the East West pipeline has indeed been struck post the ceasefire then that will be hugely impactful. It can export 7m barrels a day.

Yes Buzzard me too. Frustrating as this has bargain written all over it.

The spot prices of oil and gas have fallen by about 15% today but the forward prices much less so. Using these and the company's metrics I have Brent averaging around $85 for the full year and gas averaging around $16 mscf. So we currently have a company forecast FCF of $600m + (4 x $170M) + (5 x $150) = $2.030 bn. There is plenty of scope to exceed the middle of the production forecasts and we should not forget the $400m arriving from the two early December transactions. The fall today gives a market cap of just $5.64bn. The shareholders distributions at 45% mean $913m will be paid by the year end in one form or another. That is a yield of 16.18%. Apart from the previously announced $300m, the remaining $613m will I think be all share buybacks. Current shareholders will thus see their stake in the company rise by over 10% by year end unless of course the effect of the buying forces up the share price.

First, the chance of peace is welcome even though the sp fell this morning. Second Serica should not have fallen more than any of the other producers because it is the least geared and has one of the lowest costs structures. Should be corrected soon. Third whatever hedging was done in the last month will be "in the money". Fourth although the spot prices of Brent fell a lot the forward prices much less so. Fifth there is now a much better chance that the chancellor will implement the proposed changes to the windfall tax which she almost did before the war broke out. Serica really now needs to get the two remaining deals completed and make sure it delivers on production.

Just deplorable for a Head of State to behave like that. Obviously the talks with some unknown Iranians are not going so well. The Strait is not going to re-open any time soon.

Grinley boy why are you posting this? This research note is before the Iran conflict. Even Goldman Sachs would not make that forecast now.

Voice of reason. On 12th January 2026 Enquest was trading at 10.10p. So that is not "in my head" that is in the actual market before Iran. But I do think there is now a very good chance Enquest will outperform. It really can hammer down on the debt that has caused me to doubt its solvency at $60 brent. It has performed very well operationally and has nothing like the Triton issue to worry about. The deal with Bp over Magnus was really good. So I confess that having sold at between 10.5 and 12p I am tempted again at 20p!

I sold Enquest back in September 2024 onwards at prices between 10.57 and 12p or so. I moved into Serica at various prices the lowest being around 114p. It has definitely worked out well over all. And I make no secret of the fact that I have followed with interest and gratitude Stevo's analysis which has been highly analytical and accurate. In particular his analysis of the debt position with Enquest and the high cost structure was spot on. Enquest has been rescued by Iran which no-one could foresee otherwise it would remain languishing at around 10p or so. So certainly not bitter. Very happy of late. All opinions and personal abuse welcome.